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Do I have the financial and technical know-how to invest in or spot trading in cryptocurrency? This is a common concern that many prospective investors have each time they consider cryptocurrency. How is it that something that is already earning many people millions can be shrouded in so much controversy? You worry about losing everything in the market because you are a beginner investor. You are concerned about being scammed in the process. 

These are all valid concerns. However, did you know that even many of the expert investors in the market who have made millions from trading in cryptocurrency were at that very point you are? A lot of them actually made many mistakes before they got to the point they are in today. It is actually from theirs and other people’s mistakes that the cryptocurrency community has learned and grown so much that you have access to lots of information, to ensure that you never have to make similar mistakes.

To answer your question, at CoinCheckup, we believe that anyone can invest in cryptocurrency. You do not necessarily need technical or financial know-how to get started, but if you do, it will be a bonus for you.

Basic Cryptocurrency Information

Assuming you have zero-knowledge of cryptocurrency, there are some terms, concepts, and conventions you will come across all the time which you need to learn about. With this knowledge, you should be able to go about your investment without any concerns. 

• Currency and Stock

One of the terms you will come across is Fiat. This is a common term used in the world of finance to refer to the regular currency, like USD. It is interesting to note that while crypto is about currency, they actually are considerably more likable to investment stocks than currency. A possible explanation for this is because each time you purchase or sell cryptocurrency, you are pretty much buying stock in the blockchain.

• Exchanges

You might not be financially savvy, but you are aware of the stock exchanges like the NYSE. An exchange is simply a platform where investors buy or sell the cryptocurrency that they hold. In an exchange, you use fiat currency to buy crypto, or sell your crypto and earn fiat currency.

There are lots of exchanges available in the crypto community at the moment. As a beginner investor, you need to research and ready about them so that you know what or where you are investing your money.

When researching crypto exchanges, you will primarily be trying to ascertain the quality and reliability of the exchange. Not all exchanges share similar features, so you have to be keen on where you invest your money. Some of the features that you should be looking for include how secure the exchange is, the volume of investments traded, whether they have withdrawal or purchase limits, the transaction fees and so on. These are things that will affect your returns, so you have to give them the attention they deserve. Another thing you need, especially if this is your first time investing in cryptocurrency, is a good user interface. You don’t want something that is too complex or loaded with too much confusing information. You need a simple platform that is easy to understand.

• Exchange Wallet

Every cryptocurrency exchange has an online wallet where you store all the coins you buy. While online wallets are good and make your work easier, you might also have read about online wallets getting hacked. To avoid falling victim, you can store your coins using digital wallet services. These platforms take away that risk, and they also handle the task of storing your currency.

Building an Investment Portfolio

When it comes to investment portfolios, everything you do is going to be subjective. It is all about what works or feels right for you. You might have heard about a lot of people who made quite a killing in the crypto business online. While some of these stories are true, some are not. The best thing is to conduct due diligence to ensure you know what you are getting into. 

Regarding your portfolio, consider investing in cryptocurrency as you would gambling. Only stake the amount of money you are comfortable losing. Do not put all your eggs in one basket. These instructions sound simple, but many people ignore them and lose everything. Take note that these are investments pegged on a highly volatile market. Therefore, the market can be amazing for your investment at one moment, and then it goes under shortly after.

You also should not invest all your money in one currency. That is a big mistake because if the tide swings against you, you could lose everything. This is simple financial investment advice, by the way. If you have been an investor in the traditional financial markets, you should consider committing a portion of your capital to invest in cryptocurrency.

Points to Consider Before Investing

There is a lot that you need to think about when it comes to cryptocurrency investment, especially for the first time. Go over the following points to determine whether you are doing things the right way.

• What is your plan?

Why are you really investing in cryptocurrency? Are you just following the wave, or do you have a plan in place? Many people who invest in cryptocurrency without a plan have a high chance of losing everything. This is because when you outperform the market and earn some good returns, it is easier to get greedy and reinvest everything. That is where you lose. If you have a plan, you might apportion a percentage of your returns to savings, and some of it to reinvest in the crypto market.

• What is the coin’s plan?

You need to know what the plan is for your preferred currency. The dev teams behind different coins usually release white papers detailing their mission, goals, and objectives of the project. This way, you can treat this as you would an investment prospectus before you buy stock in the stock market. These documents tell you a lot about the coin and what the future plans are. If it aligns with your personal goals, you can invest in the coin looking forward to great returns, both financially and psychologically.

With more people getting in on the cryptocurrency wave, the investment market has gotten more innovative. Customer demands are dynamic and unpredictable. Therefore, it was always going to be a matter of time before investors could mirror the gains that have been achieved in the traditional financial markets into the crypto world. In line with this school of thought, trading bots have since become one of the most searched for terms in the crypto world.

There are many reasons why investors, researchers, and crypto enthusiasts could be interested in learning about trading bots. For the most part, many users circle back to outperforming the market. This is actually one of the primary goals behind any investment strategy. By outperforming the market, you have a better chance of earning more profits from your investment.

As you can imagine already, there are quite a number of trading bots out there. Your challenge is to figure out the best that can deliver the returns you seek and give you confidence and peace of mind while trading. Depending on how much crypto you own, it is worth mentioning that the value of your assets might rise or fall at any given time. The crypto investment market might work in the same way as the conventional financial markets, but the determinants of the values of your digital assets are influenced by factors that you might not be able to predict. You, therefore, need access to trading bots that can help you take advantage of specific market positions.

What are Trading Bots?

By definition, a trading bot is a program built specifically to trade on an exchange on your behalf. Without trading bots, you would have to physically type each transaction into the exchange. There are lots of details needed by trading bots to make your work easier. They pull information from the account you use in the exchange and use this to trade on your behalf.

One of the benefits of using trading bots is that they act at a precision level that you cannot expect of any human. Such is the benefit of computerization in cryptocurrency investment. Your work is to set specific rules or guidelines on how the trading bot should respond to certain changes in the market, then let it act accordingly when the predetermined conditions are met.

There is so much that you can do with trading bots, which explains why many investors currently look for them. Other than trading on your behalf, you can use trading bots to create incredible indexing strategies or perform arbitrage from one exchange to another in real-time. There is virtually an endless list of things that you can do with the right trading bot.

How Do They Work?

At this point in time, you probably have come across or learned about machine learning. Machine learning is a branch of artificial intelligence that relies on algorithms and precise datasets. From these datasets, the machines learn how to interact with different decisions and even make predictions. They are effectively trained to make decisions similar to what you would have made in such a position. The good thing about this is that they do not take as long a time to make a decision or go through data as you would. Therefore, through machine learning, trading bots are able to make the right decisions for you based on your preferred choices. There really is a lot that you can achieve when you implement trading bots into your investment strategy for cryptocurrency.

First, the bots scour the exchange for data relevant to your user account. To make this possible, your trading bot will need access to your API keys (private and public). It is important that you provide these keys so that the exchange is aware you authorized a bot to act on your account automatically. 

Why Should You Use Bots?

In machine learning, we teach computers to think and act like we would, based on, or facing similar circumstances. The same principle applies when using trading bots. The idea is to try and reduce the complexities involved in cryptocurrency trading. At CoinCheckup, we understand that most of the tasks associated with crypto trading can be difficult or complicated for many people. Some of the tasks are time-consuming, others are too sophisticated for the average user. 

With all these in mind, it makes sense for you to use a good trading bot to smoothen the investment process for you. Once you implement the right bot that meets your needs, you will no longer have to monitor trades to your account manually. You also do not have to keep manually adjusting your portfolio. The trading bot takes care of this and can act on any changes in the market during the day or at night, regardless of whether you are there or not.

We live in a world that is fast embracing machine learning and artificial intelligence. In the realm of financial investments, we have seen these systems in use for years. For example, today banks can easily detect and prevent fraudulent activities on their customer accounts by monitoring behavior patterns in the respective accounts. Of course, of the millions of user accounts that banks have, they cannot assign account managers to actively monitor them all the time. To do this, therefore, they employ machine learning models to proactively monitor and secure accounts.

This is a good example of machine learning in use in the financial sector. There are many other industries and sectors that currently enjoy similar benefits. The cryptocurrency market is another example. Given the benefits and exploits of machine learning in different industries, it was only a matter of time before people asked about the feasibility of applying this technique and knowledge alongside trading bots in cryptocurrency investments. Before we delve into machine learning, let’s first debunk the myth that machine learning, or artificial intelligence, in general, is about computers taking over. No, this is simply a diverse field where computers learn to make decisions from data, without our explicit programming.

Machine Learning and Cryptocurrency

One of the common assessments you will come across online is that it is possible to predict the future price of certain investments. This is something that all investors know. With data on specific decision points, you can easily predict what might happen to the price of a given stock. The other question you would expect is whether this can work effectively for cryptocurrency as it would in the forex market or stock exchange market? Why not?

Let’s try to explain this:

The cryptocurrency market and the conventional financial market work in pretty much the same way. Other than the fact that you are now trading in decentralized digital assets, most of the concepts that underline this market are similar to the investment market you are used to.

While it might not be easy to tell whether the price of say Bitcoin will fall or drop, there are some events that have happened in the past that can help you figure this out. Recently when the Bitcoin price was on a slump, the majority of the altcoins in the market suffered too. Therefore, this is a bit of information that you can work with. AI models learn from historical events, and other decision making patterns that we use on a daily basis. From here, they can make similar decisions in our absence without us necessarily being there to program them to act a certain way. With this in mind, the AI model you have in place could turn a fortune for you while you enjoy your nap, or get you out of a risky position while you are away on holiday, in the process saving your portfolio from untold losses.

Setting Investment Goals for your AI

While the AI models are built to think and act on their own, this does not necessarily mean they are autonomic from the very beginning. They need instructions, clear and precise instructions from where they can perform the actions you need. 

So, how do we get there? 

Now, AI models need input data and an output. In a different session on machine learning, you will learn about different types of AI systems, algorithms and how they operate. Basically, in this case, we are talking about supervised and unsupervised AI systems. In the case of supervised systems, you instruct the model on how to make decisions based on certain data to deliver a specific outcome. In unsupervised learning, the model learns from the data, identifies patterns and uses this knowledge to arrive at decisions.

To set investment goals for your cryptocurrency AI, you will use supervised learning algorithms. With this in mind, you provide data to your AI and give it instructions on what to do with that data. These instructions are part of your goal-setting agenda.

At this juncture, you also have to be very careful about the way you go about it. In many cases, a lot of people provide generalized goals for their AI. The problem with this is that you end up with models that do not give you specific results. 

There are different kinds of investment goals that you can set for your AI. perhaps you want an AI model that can predict possible changes in the price of your cryptocurrency pairs, or maybe you want the model to predict the possible value of your cryptocurrency account in a few weeks or months from the moment you deployed it.

The next thing you want to ask yourself is what happens when your account or the prices get to the specific point? For example, you can instruct your AI to buy some crypto assets if their market price falls to a certain threshold, and sell when they rise to a certain threshold. With your input or not, the AI will keep monitoring the market, and at such a time when the aforementioned happens, it will perform your desired action.

Data Sources

Regarding your crypto investment, we have discussed so much about data already. So how does this tie into your AI model? You need credible data sources for your AI. Remember that this is about your investment. If you feed in the wrong data, your AI will make important decisions based on wrong values, assumptions, and facts. Therefore, the source of your information is something you want to be very keen about.

As far as cryptocurrency investments are concerned, some of the factors the experts at CoinCheckup often advise you to look at including the following:

• What is the day of the week?
• The correlation between the time of the day and market activities (you have to research on this to come up with a valid hypothesis)
• Technical market indicators like the volume of assets traded, and the prices
• Social factors like trending topics on cryptocurrency on social media and Google Search
• Economic factors like the level of unemployment, inflation, prevailing interest rate and so on.

Once you figure this out, you can map your AI model to help you make intuitive decisions in the cryptocurrency market.

Your interest in trading cryptocurrency has gotten you this far. You are probably thinking of making some good money, millions even from your crypto assets. After all, you have read about so many people who are making a killing online by trading in cryptocurrency. This market promises to be an exciting one for many an investor, and you wouldn’t want to miss out on sharing the cake either. However, succeeding with crypto investment is not as simple as that. 

There are many people who assume this is a walk in the park, and it gets them in trouble. We reckon that there are many investors like yourself who fall for the get-rich-quick schemes and lose everything in the process. With this in mind, you have to learn to exercise restraint and caution when investing in cryptocurrency online. In the next section, we will discuss some simple tips that will help you trade in cryptocurrency online on your own.

Understanding the Investment Profile

One of the biggest mistakes many budding investors make when they make a foray into the world of cryptocurrency is that they do not know the risks they are taking. Some of them even ignore the risks altogether. There is a simple principle in the world of finance, that to enjoy high returns, you must be willing to take proportionate high risks. It is okay to take risks in the hope of earning good returns, but at the same time, if you are not taking calculated risks, you could be trading on a Hallelujah.

There are two ways you could invest in cryptocurrency. You could invest long-term or short-term. Whichever the case you choose, you must ensure you know what benefits and advantages there are. 

Short-Term Investment

Short-term investment is a situation where you invest in cryptocurrency with a view of holding onto the assets for a brief period. The holding period is relative depending on your personal investment motive and goals. You might hold onto the assets for a few minutes and sell them, days or weeks. Remember that the short-term period also depends on your personal investment profile. For some people, holding onto currency for a few months sounds like a long-term plan, while for others, it sounds about as good a short-term plan as possible.

Many investors who engage in short-term positions with cryptocurrency hope that the value can appreciate within the prescribed duration, during which they will sell their crypto assets and exit the position. You sell when the price is right, or when you feel the price cannot go any higher. It’s almost like flipping a house.

While short-term investment sounds ideal for many investors, it comes with some challenges too. First, remember that this is a market whose asset values are highly volatile. Therefore, you have to be proactive when aiming for short-term gains. Prices change quickly and as a result, you might miss your window of opportunity in minutes. You have to set aside time to study the markets carefully so you can preempt certain positions.

One of the other challenges that many people struggle with, in as far as short-term investment is concerned is the inability to reign in their emotions. To some extent, investing in cryptocurrency online or even investing in the financial markets is more like gambling. You wager some money and hope that you can beat the market.

Long-Term Investment

Let’s talk about long-term investment now. Just like we mentioned that the acceptable duration of a short-term investment depends on the investor’s profile, the same applies to long-term investment. However, the general consensus is that a long-term investment is an investment position you hold for at least one year. Why would you hold onto an investment for a year or more, especially with the knowledge that the cryptocurrency market is highly volatile?

Now, this is where things get interesting. Long-term investors are people who are armed with lots of valuable information about the market, and the cryptocurrency assets they hold. If you are such an investor, you probably believe that even if the price of the asset crypto falls, it will not stay low forever. You have faith that the price will still rise in the future, and will probably rise higher than it is at the time you purchased it.

Let’s go down memory lane for an incredible example. The year is 2011 and Bitcoin is trading at less than $1. Investors who purchased Bitcoin in 2011 and held on for another six years would have sold them in 2017 for close to $20,000. Please don’t do the math!

One of the biggest risks involved in assuming a long-term position in crypto investments is that no one knows what the future holds. You don’t even know if you will be there to reap the benefits if there are any. Many times, assuming a long-term position means you forego the prospect of short-term gains. While everyone else might be selling their assets for a quick buck, you hold on for future gains, which might also not be a guarantee.

Many long-term investors also tend to be less proactive in the market. The reason for this is because you don’t have a reason to. Short-term investors are always looking for information that they can act on instantly and make a killing. Long-term investors generally do not analyze the market with such zeal. As a result, most of the news concerning the crypto assets you hold, or the market in general, might pass you by. That being said, however, in this market, you need to remember that whichever position you take as an investor, you have to stay informed.

One important lesson no one will probably tell you, which you should know by now is that in any investment, you cannot make profits all the time. You can, however, make losses all the time. You must be keen, learn to research and stay armed with relevant information. This way, you can accept losses when they happen, learn your lesson and use it to make wiser, bolder investment decisions later on.

We all need a helping hand from time to time. When it comes to cryptocurrency investments, many people need a helping hand. These assets are not your average volatile assets you would expect in the financial markets, they are extremely volatile. This certainly means that if you are the kind of investor who buys and holds assets for the long-term, you might be in for many painstaking moments. Generally, short-term traders find the cryptocurrency market quite an interesting place to be, since you can make so much in less than a day.

This brings us to the concept of investors vs traders. An investor in the cryptocurrency market would generally purchase some crypto assets, hold them for some months or years, then sell them. A trader, on the other hand, can buy assets and sell them in a few hours when the price is right. Therefore, while the investor might loathe the volatile nature of the cryptocurrency market, a trader, on the other hand, will love it.

How Bots Work for Your Investment

Before we look at how your cryptocurrency investment will benefit from the use of trading bots, it is important to look at how they work. There are different bots out there, and you will come across many more over time. However, there are three important steps that trading bots perform, and this is the foundation that most of the bots you come across use.

Most trading bots work in a three-step process:

• They generate signals
• They determine and apportion risk
• They execute decisions

What happens in each stage will depend on the type of data available. For the best results, you have to ensure you use credible sources so that your trading bots can make decisions relevant to the market, and your investment plans.

What happens at signal generation? It is at this stage that the bots first make the decisions that determine your predictions. They make use of the data available to make a buy or sell decision.

After this, the risk allocation takes place. In risk allocation, the bots determine following the buy or sell decision, the number of crypto assets to purchase. This will also depend on your decision pattern. Should the bot invest all your capital or just part of it? Should the bot purchase all the assets at the same time, or perhaps create averages and buy-in proportionately? Of course, buying everything in one go doesn’t sound like a good idea. You might get into the market at the wrong time and lose everything. Then again, if you are a high-risk investor, this sounds like something you might be interested in.

At this point, we have already figured out what your trading bots are about to do. They have determined whether to buy or sell based on specific instructions, they have also figured out how much assets you are willing to move, or capital you wish to invest. The only thing remaining is executing the transaction.

Depending on how much you are about to buy or sell, it is always wise to execute such trades in stages. You do not wish to flood the entire market with money. Say you are about to buy $8,000 worth of cryptocurrency assets, buying this at once would be a mistake. You will certainly not get the best price. Think about it this way, what if there are other individuals like you out in the market, using the same trading bot, and are all about to make the same decision you are about to. This is why you will not get the best price. It is wise to meter down your investment in stages.

The workings of such bots, however, require a deeper knowledge of artificial intelligence or machine learning algorithms that are beyond the purview of our discourse.

Why You Need This Service

Do you really need to use trading bots for your investment? This is one of the first questions many investors ask themselves. Primarily, you are leaving everything about your cryptocurrency investment in the hands of some code. Here are four important factors you need to consider, which will help you make the right decision.

• Transaction Processing Ability

Bots are very fast. Even the not-so-good bots in the market can process gigabytes of data every second. Unless you know an investment manager who can perform transactions with similar or better speed, you really could benefit from using bots for trading.

• Intuitive Trading

Trading bots rely on statistics and data available to them. It is up to you to provide credible sources of data from which they can read and make decisions. They do not depend on heresy or emotion. More importantly, trading bots are not afraid to execute transactions because they are afraid of losing, neither are they driven by greed in the pursuit of a favorable position.

• Precision in Operation

The reaction time and thought process of an investment bot is faster than any human you will come across. They make split-second decisions based on factual information available in the system. They, therefore do not need time to rethink, regroup or consult. They make decisions based on what is going on in the market at any given time.

• Real-Time Investment

You need to sleep, you need to take a holiday and a break. You also need to have a social life, go out with friends and so on. Bots do not need that. While you are away, bots are always working as long as the cryptocurrency market is open, which is 24/7.

Based on this information, we can now go back to the initial question of whether we need investment bots to handle our cryptocurrency trades. The choice is ultimately yours.

One thing that we have seen over the years at CoinCheckup is that you must have a personal investment profile. You need to have clear goals of why you are interested in buying specific crypto assets over all the others in the market. Without investment goals, you will end up chasing prices all over the market, and this never ends well. 

If you have been keen on the investment business, you probably know about automated trading systems. For the sake of everyone else who might not be financial investment-savvy, this process is also known as system trading, automated trading, mechanical trading systems or algorithmic trading. 

What are they about?

These are systems where investors set some rules to define their entry and exit when trading within their investment portfolios. Once these rules are set, a computer executes their trades automatically. Interesting, huh? Here’s an even more interesting fact, more than 70% of shares that people buy or sell in the stock market in the US alone are executed through automated trading systems.

So, since the cryptocurrency investment market is pretty much similar in principle to the traditional investment market, is it possible to use automated trading systems? 

Of course, it is possible.

Cryptocurrency might be the new kid on the block, but considering that this is supposed to be a viable alternative to traditional fiat currency, the crypto market must operate in many ways in a manner similar to the normal financial market. There are many benefits of owning cryptocurrency and the fact that you can trade like a normal stock market further makes this an interesting spectacle. Let’s explore trading in crypto using automated software and see what it’s all about.

The Concept of Automated Trading

Investors can make use of crypto software to enhance their trading experience. To do this, you will basically be using similar rules and techniques used in traditional money management not just to trade, but also to monitor what goes on in the market. In as much as you might be interested in specific cryptocurrency pairs, there is no harm in monitoring the others too. After all, this is a market where the value of tradeable options keeps fluctuating randomly, so by monitoring the rest of the trading pairs, you might identify a viable investment opportunity.

For the most part, investors struggle to trade in person due to a lot of inconveniences. Perhaps you are held up at work, and miss out on an opportunity that might have earned you significant returns. You might also find yourself in a situation where you do not have access to the internet or electricity for some reason. Such issues are common, but they should not prevent you from benefitting from the crypto market. With a reliable automated crypto trading system, you should not have much to worry about.

Besides, one of the biggest challenges that investors have is getting emotive with their trades. As a result, you can end up holding onto a crypto pair longer than you should have. You might also avoid investing in a given currency because you might not be interested in it, while it is a viable investment opportunity. Automated crypto trading takes away the risk of emotion in trading. Your trades are executed automatically as long as they meet specific conditions.

What To Look for In Automated Cryptocurrency Trading

With many people opening up to the prospect of investing in cryptocurrency, there are a few pointers that should guide you on choosing the appropriate automated cryptocurrency trader in the market. There is quite a number already, so armed with information, you can check out a few, compare them and choose one that suits your needs and your investment style.

• Market Access

One of the important features you need to look for is access to different exchanges. You need a trading program that gives you access to a variety of exchanges. When investing in cryptocurrency, or any other investment for that matter, you should not limit your options. The variety gives you a better shot at getting better deals. Other than exchanges, an ideal program should also give you access to live market stats, so that at any given point in time, you know how the market is performing.

• Currency Support

For investment purposes, you need access to as many cryptocurrencies as possible. There are several investment opportunities, not just with the major cryptocurrencies. You should also be able to trade in other currencies like Dash, Litecoin and Ripple other than Ethereum and Bitcoin.

Other than access to many currency options, the trading software you use should guarantee you live market data from all or any of the exchanges you prefer.

• Technical Indicators

One of the other features you need in automated trading is the ability to trade cryptocurrencies according to specific investment rules, like statistical arbitrage or using technical indicators. This is no different from what you would expect in the normal financial markets.

• Account Management

Automated crypto trading programs should also have a feature that allows you to manage your accounts. By account management, this means you can download currency pairs, exchanges and accounts into the program. With this feature, you have intuitive control over your trading accounts.

Apart from that, the program should also allow you the ability to trade different currency pairs on several exchanges. Without limitations on exchanges where you can trade, you should be able to benefit from different rates across the board.

There are many people who are not conversant with the trading programs but would still wish to trade in cryptocurrency. For this reason, a good platform should have a simulation account. A simulation account allows you to practice trading before you can invest in the live market with your currency. This makes it easier for you to learn and perfect some of the strategies necessary for investment trading in cryptocurrency. 

At CoinCheckup, we believe that there is so much room for growth for investors who are keen on expanding their portfolio with crypto assets. However, like any other investment, this calls for discipline on the part of the investor. You must conduct due diligence before you invest in any asset online. Automated trading platforms will make your work easier, but you have to put in the work, to find the right one. You also need to figure out the ideal parameters or conditions within which you can set the trading software to deliver impressive results.

A lot of people are increasingly excited about the prospect of investing in cryptocurrency. With access to information and brokerage firms available, there is so much potential in this market if you are willing to give it a try. There are many online brokers today whose platforms you can use to invest in cryptocurrency. You must first understand what it means to invest in crypto, and how to go about it.

 

Before you invest in anything, it is always advisable to understand the core dynamics. First, what are cryptocurrencies? These are digital currencies with the following features:

• Decentralization

A decentralized currency means that you are trading in currencies that lack a central point of control. While fiat currencies have central banks in each country, cryptocurrencies do not. Instead, they are owned and controlled by the community of investors like yourself.

• Peer-to-peer

One of the challenges you experience when dealing with fiat currency is that transfer from your bank to another person’s bank in a different country can be tedious. It will take a few days, and it will also be costly. Once they receive the currency, they also have to incur costs of conversion into their local currency, which means that they will either end up with less money, or you have to send them more to cover the transaction costs.

Peer-to-peer in the case of cryptocurrency means that you can easily transfer your coins to another person in a different part of the world almost instantaneously and without incurring the costs involved in transferring fiat currency. After all, there is no central government or middlemen involved to demand transaction costs.

• Very fast transactions

How many times have you been to a bank and told your transfer will complete in 2-5 business days? This is a problem you don’t get to experience with cryptocurrency. Most transfers will terminate in seconds or a few minutes depending on the cryptocurrency you are trading.

• Affordable 

One of the benefits of trading in cryptocurrency is that it lowers the cost of transactions drastically. It is possible to send currency in the value of millions of dollars to recipients in any part of the world, and it will only cost you a few cents. 

If you think about these features, investing in cryptocurrency is a good idea. There are a number of online brokerage firms that can help you with this. You just need to be careful so you invest with the right one. At Coincheckup, we encourage investors to perform due diligence on the platform they want to invest in. You are making a financial decision that will impact your investment and your wealth, so it is only fair that you find an online broker that is worth your while.

Factors To Consider When Investing in Cryptocurrency

So what do you need to invest in cryptocurrency? The following section outlines all the important factors you need to consider:

Sufficient Capital

You need to have some money set aside for this investment. How much money depends on what you are comfortable with, and the cryptocurrency you are investing in. Generally, you can purchase cryptocurrencies for as little as $1. This is because there are so many currencies available in the market, and some of their values are so small a dollar could get you quite a number of currencies.

Even when purchasing major cryptocurrencies like Bitcoin, you can still purchase fractions of the currency. For example, at the time of this writing, Bitcoin was trading at $7,290. However, you might not have that much money, but still interested in investing in Bitcoin. If, for example, you have some $50 lying around, you can purchase roughly 0.0069 Bitcoin.

There are many places where you can check the prevailing market price of different cryptocurrencies so you can make an informed decision on which one you can invest in with the money you have. As a rule of thumb, always make sure that you are investing only the amount of money that you can comfortably lose. Like any other investment, there are risks associated with investing in cryptocurrency, so invest wisely.

Storage Facility

You must have a digital purse where you will store your currencies once you buy them. There are many digital wallets out there, designed with backup, send and receive features to make your work easier.

For someone to send some crypto to your digital wallet, you must share the wallet address with them. This is like your account number. The backup feature in your digital wallet is to help you backup your public and private keys in a safe location offline. You can keep this in a flash disk or even write it down somewhere. Imagine a situation where a few years down the line, the cryptocurrency in your wallet is worth so much, but since you lost access to your keys, you cannot access your wealth. Remember that in the world of cryptocurrency, anything is possible. You might wake up a few weeks from now and find Bitcoins trading at $20,000, so it is important that you do your best to protect your investment.

Find a Reliable Exchange

An exchange is a platform where buyers and sellers trade digital currencies. This is no different from the exchanges you come across at the stock market. There are different types of exchanges you can use. These include merchant exchanges and trading exchanges.

Even as you plan to invest in cryptocurrency, one thing that you should remember all the time is that this is an investment market that is highly unpredictable. Things change so fast, and you must be very fast and sharp to take advantage when things go your way. There is no definite way to determine whether the price of Bitcoin, for example, will rise of fall in the future. This is unlike the traditional investment markets where you can predict that floods in a certain area will cause the price of a given stock to fall. However, what we know for a fact is that changes in Bitcoin prices usually affect a lot of other cryptocurrencies.

In less than a decade, cryptocurrencies have exploded onto the scene and significantly changed the way we think about money and investments. Where in the past, Bitcoin was written off as being just a passing fad, it has quickly grown into something else entirely, faster than a horse in the Kentucky Derby. What was once the domain of dark web users and even criminals, has become one of the hottest investments of the 21st century.

Loved and hated in equal measures, crypto-assets can be an extremely risky proposition due to its unregulated nature. However, the massive risks have paid off spectacularly for a few very lucky individuals. It is this fad that has provided investors with an incentive to snap up any and all kinds of cryptocurrencies wherever possible. 

Despite having hit highs of $10,000 and above in 2019, it would appear that things are nowhere near as rosy at the time of writing with prices sliding continually downwards. 

Experts have remarked that a combination of market pessimism caused by Mark Zuckerberg’s underwhelming congress performance and developments in Google’s quantum computing research have renewed fears that Bitcoin mining would be changed irrevocably.

With all of that in mind, the question has to be asked, what does the future of cryptocurrency look like? And how can investors manage their risk? Join us as we take a look at how you can protect your crypto portfolio.

1. Diversifying your crypto portfolio

It’s no secret that crypto-based assets are extremely volatile. In just a matter of moments, prices can fluctuate by as much as 150% with little or no warning. Such high levels of volatility mean that fortunes can be made or lost in just a blink of an eye.

Hence, one of the simplest and most effective ways of managing your risk is by diversifying your investments. While Bitcoin is without a doubt the mainstay of many portfolios, it is by no means the only investment available to you. From Ethereum to Ripple, there are dozens of reputable coins on the market that you can choose to purchase.

When planning out your crypto portfolio, it’s best to opt for a healthy mix of assets. Ideally, your portfolio should consist of a backbone of stablecoins and a sprinkling or riskier assets. Splitting up investments into different types of coins ensures that in the long-term, your portfolio will not be wiped out by a single catastrophic event. 

While the returns may be slightly lower when compared to investing in riskier coins, your risk exposure is significantly reduced.

2. Short selling assets

Short selling is an investment strategy that can be used as a means of hedging your assets. For example, you take a short-selling position by borrowing a digital asset such as Bitcoin from any of the crypto exchanges. You then sell the Bitcoin at the current market price to a willing buyer and repurchase it at a lower price before having to return it to the exchange. 

From here, you’ll be able to earn a profit on the difference in prices. Short selling is a complicated hedging maneuver used by investors when they expect the price of a said commodity to fall in the near future. This allows them to sell borrowed cryptocurrency at a higher price while repaying it a lower rate when the price falls.

This strategy is not without its fair share of risk as theoretically speaking, the price of cryptocurrency can suddenly increase without any warning which forces you to take a loss. On the other hand, being able to correctly predict a sudden fall in prices not only hedges your risk but returns a healthy profit.

3. Utilize derivatives

Being a widely traded commodity, dozens of crypto exchanges offer derivatives which are a great way of managing one’s risk. If you didn’t know, derivatives are defined as financial instruments that derive (hence the name) their values from the price of an underlying asset.

Common derivatives include contracts, options, futures and swaps. Take futures as an example, they are essentially an agreement between two parties to buy or sell a particular commodity at a fixed price at some point in the future.

Derivatives are especially useful in the world of cryptocurrency trading. Due to the extreme volatility of cryptocurrencies, derivatives allow an investor to exercise some degree of control over the buy/sell price of their crypto assets thus reducing their risk exposure.

Investing in cryptocurrencies is a risky proposition that can either make or break you. Always remember that it’s best to stay up to date with current affairs in order to avoid getting blindsided.