Whether you like it or not, you cannot neglect it. The global phenomenon of cryptocurrency has greatly impacted India as well. Furthermore, the recent budget has offered insight into the Indian Government’s stance on digital assets, reducing the probability of potential future prohibition.
Even though cryptocurrency traders are experiencing significant profits, the 30% tax imposed on it does not appear to discourage many individuals. However, should this indicate that one should promptly begin investing in the same?
Before investing any money, it is important to have a clear understanding of what one is getting into, as is the case with any type of investment.
When cryptocurrency comes to mind, one of the first things people think of is probably “complicated.” Despite being around for over a decade, many still struggle to fully understand the concept—and it’s understandable why.
When Bitcoin was first introduced in 2009, it attracted the interest of the finance and tech sectors. Initially, people were not particularly interested, but that changed when the price per Bitcoin reached $19,783 in 2017. This marked the height of the excitement surrounding cryptocurrencies, leading to a sudden surge in people wanting to participate in the trend.
As technology advances and e-wallets and cashless payments become more prevalent, alternative cryptocurrencies like Ethereum, Ripple, Litecoin, and others have emerged alongside the original cryptocurrency as competitors. They have also gained stability and have become viable investment options in the digital space.
Cryptocurrency anyway
Before proceeding, it would be beneficial to ensure that we are all in agreement. In simple terms, cryptocurrency refers to a form of currency that solely exists in digital form. Its underlying technology endeavors to address certain challenges associated with conventional paper money.
One advantage of owning cryptocurrency is that blockchain technologies eliminate the requirement for a governing body like a bank to print and distribute it. Instead of going through an intermediary, transfers are conducted directly between individuals. Additionally, this enables instant transactions without incurring excessive fees. Below, we will discuss the various benefits of owning cryptocurrency.
Top advantages of cryptocurrency
Crypto transfers are a simpler and more direct way to send money to someone, compared to traditional methods. There is no need for intermediaries, such as agents or brokers, nor any additional fees like brokerage fees or commissions. This streamlined process enables faster, easier, and more cost-effective transactions.
All transactions conducted with cryptocurrency are encrypted, ensuring security and confidentiality. They are also largely anonymous, preventing anyone from spying on your financial activity or accessing your account history like banks can. You are the sole authority to access and view your recent transactions.
Globally, there exists a population of approximately 7 billion adults who do not have access to banking services. This implies that they lack accounts with financial institutions or mobile money providers.
The reason for this is the rigorous application process and strict requirements imposed by financial institutions on their depositors, which can pose a significant obstacle for many individuals. In contrast, cryptocurrency allows for immediate account creation without encountering such barriers.
With quick international trade, the time it used to take to transfer money, which could be days or weeks, can now be accomplished in a matter of seconds through cryptocurrency. Due to the nature of these online transactions, there is no requirement for money to be transferred between banks, resulting in reduced waiting times for money transfers regardless of one’s location in the world.
Bitcoin arrived a while ago and there are currently approximately 5,000 altcoins circulating in over 20,000 markets, presenting a growing investment opportunity.
As the world adjusts and addresses the requirements of the post-modern population, this industry is bound to experience further growth in the future. Numerous coins from this sector are already being utilized and circulated presently, presenting an excellent investment opportunity for individuals interested in engaging in their trading.
Before starting to trade in cryptocurrencies, there are a few tips that should be kept in mind.
Caution first
Due to its recent establishment within the last decade, the crypto market remains in its initial phases, characterized by high volatility and absence of regulatory oversight. Consequently, in the event of fraud or cyberattacks, reclaiming investments becomes exceedingly challenging. Furthermore, there is a significant risk of encountering deceptive cryptocurrencies that initially appear genuine but ultimately reveal themselves as scams.
Invest only what you can afford to lose
Ensure that your long-term financial security is prioritized by investing in Fixed Deposits, Equity Mutual Funds, Debt Funds, necessary insurances, emergency funds, etc. If you have any additional funds left over after securing your finances, you may consider investing in cryptocurrencies, as any potential losses would not have a significant financial impact on you.
Do your research
By relying on advice from friends or acquaintances, it can be simple to invest without careful consideration. However, it is important to remember that the responsibility for the investment lies with you alone, and there will be no assistance in the event of failure.
It is advisable to have a good understanding of the cryptocurrency market before making any investments. Start by studying popular cryptocurrencies like Bitcoin, Ethereum, Tether, Polygon, and others. Gain knowledge about their applications and possible prospects to make informed investment choices.
Use a reliable exchange while employing a systematic thought process.
When considering the sequence of actions, it is advisable to create an account with a reputable and established cryptocurrency exchange that is known for its reliability, as it is somewhat frequent for these platforms to experience hacking incidents or deceive investors. Additionally, it is important to confirm that the chosen exchange offers insurance options to safeguard your assets in the event of a security breach.
Learn the technicalities
If you have a stronger interest in cryptocurrency investments, it is logical to acquire knowledge on creating your own digital wallets or buying a reputable hard wallet to protect your investments. Expand your understanding by gaining insights on liquidity mining, staking, decentralized finance, and other relevant topics.
Find reputable news sources
There will always be a multitude of contradictory viewpoints regarding cryptocurrencies and their owners. Numerous individuals believe that crypto is merely a passing trend, and those who participate in it will ultimately experience disappointment.
If you are already confident in the potential benefits of this, then rely on reliable sources and ignore the opinions of those who doubt. To become a successful investor or altcoin owner, focus on factual information.
Be prepared for volatility
Cryptocurrency’s lack of stability compared to traditional currencies is widely known, exemplified by Bitcoin’s rapid surge to nearly $20,000 per unit less than three years ago. Accordingly, one must exercise agility in decision-making and prioritize assets based on the present circumstances.
Even if you consider yourself an experienced crypto trader or owner, don’t be surprised if you still struggle to understand the trends of these virtual coins.
Venture into other altcoins
It is important to realize that bitcoins are not the sole factor to consider when dealing with cryptocurrency. It is advisable to not invest all your resources in a single option, as this could lead to more losses than gains. It is crucial to conduct thorough research and identify which coins are performing well and have practical applications that you can take advantage of. The decision of how you will utilize your cryptocurrency assets will ultimately be yours, so it is recommended to make wise choices.
Learn the uses of both hot and cold wallets
Even though cryptocurrency is digital, there are still options available for storing it both online and offline in the form of hot wallets and cold wallets.
For beginners, the convenience and versatility of easily accessible offline wallets will be beneficial. On the other hand, cold wallets provide additional safeguards against hackers and other malicious individuals. As you venture into diversifying your assets, it is important to familiarize yourself with both types of wallets.
Be vigilant
Although cryptocurrencies have higher safety ratings than traditional money, it is still beneficial to remain vigilant.
In order to trade or possess significant amounts of altcoins on your mobile wallet, it is essential to consider the risks and vulnerabilities involved. Take the time to explore various approaches for handling your newly acquired assets and find a suitable way to responsibly and conveniently manage your funds.
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Before getting into crypto investing, the initial and most important step you should take is conducting thorough research. Often, investors have a fear of missing out on significant profits and end up investing their money without considering the consequences. However, this can be prevented because you are dealing with the money you worked hard for. Prioritize ensuring your financial stability with other reliable and regulated instruments.
Becoming an expert in cryptocurrencies requires time and patience, so don’t expect to become knowledgeable right away. Similar to any other skill, it necessitates continuous learning, practice, and dedication to discover how to maximize the potential of your digital coins, whether for trading or everyday transactions.
