Finances

4 Things You Need To Check Before Investing in Cryptocurrency in 2021

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Written by Quentin Hack

Investing in digital currencies is very popular option in recent years, and it is not a surprise at all when we check the prices of Bitcoin, Ethereum, and other popular coins. Also, one of the main factors that makes them so attractive to investors is the frequent oscilations of the prices, which represents a great potential for investors to make big profits by investing in the right moment. the most popular cryptocurrency, Bitcoin, has many ups and downs in value since it got introduced more than 10 years ago. The current price is near a record in 2017, when it was near $20,000. There are also hundreds of other tokens, but not all of them share the same popularity and potential. Therefore, you should learn more about factors that might shake the rate of cryptos on the market in any way. 

When we focus on current trends, there is a great probability that even more people will start using e-wallets as a standard way of transactions. Nonetheless, keeping your funds converted into cryptocurrencies might be a great method of protection during the recession, which, according to many experts, is likely to happen during the next year. Nevertheless, experts are also suggesting that investing in Bitcoin is a great choice because its price might be over $100,000 in the next five years. However, those are only speculations because many factors might cause the value to change directions more often. In that matter, you should learn more about this market before deciding to buy any type of digital asset. Here are some important things to check before investing

There is Always a Risk 

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The marketplace of virtual assets has become huge, with thousands of different units. Many people who are attracted to buying cheaper options are hoping that they will find another token that will reach the value and popularity of Bitcoin. However, you have to know that most of those tokens will never become competitive on the market.

Therefore, you should check more about their platforms, founders, and is there anything special that they are offering, which will attract more investors and affect the rise in value over time. You should never rush with your decision to buy any sort of digital assets. The best example is Bitcoin in 2017 and 2018. Individuals who decided to purchase it at its highest price lost a lot of money if they sold it afterward. On the other hand, if you bought BTC in the first quarter of 2020, you can now sell it for six times more in price.

Official Regulations

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One of the main advantages of the complete implementation of blockchain technology and cryptocurrencies in the global monetary system is that people can avoid banks and their expensive fees. Also, this system is completely decentralized, which means that there is no chance for any institution to follow your transactions.

However, that also raises the awareness that e-wallets might represent the perfect solution for criminal activities to remain anonymous and untraceable. Therefore, you should always follow news related to the future of cryptocurrencies. In case that countries decide to make them illegal, most of them will become worthless. On the other side, there are many indications that most countries will start using cryptos in standard transaction processes.

Security

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While e-wallets represent one of the safest methods to store data online, you have to know that hackers are also following the most recent trends and trying to break these complex codes. There were already some cases of cyber-attacks where hackers managed to steal millions from online crypto-converting platforms. Therefore, you should check what is the safest way to store your coins. Currently, the safest option is offline e-wallet. Nevertheless, you should keep your passwords and other data related to your wallet in a safe place as well. In case you lose the password or your PC breaks under malfunction, you might be unable to find all of your resources on the e-wallet.

Prices Are Determined by Speculations

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Another important thing that you should check is related to the real potential of a particular cryptocurrency. Many investors have a strategy where they would find some cheap token and invest a large amount of money into it until it hits a bigger price. In many cases, they would sell all of their tokens and stop investing in them.

That will decrease the value immediately. In that matter, you have to learn more about volatility and all of the factors that are causing it on the market. Also, we have to mention that there are some pyramid schemes as well, which are related to some virtual currencies with no background and inflated price.

The Bottom Line

Blockchain technology indeed represents a revolution in terms of secure and fast transactions. Also, it is getting easier to convert funds from your e-wallet with the rise of available ATMs with blockchain support all around the world. Besides that, you can acquire a credit card and link it to your crypto account, which is even more convenient. The blockchain is positively affecting many industries since they could use it for advanced development.

On the other side, the most important feature for investors is the potential for a particular digital asset to become more valuable over time. You should learn more about investing processes if you want to become more effective. There are many similarities with other trading processes that include a lot of speculations, as the market of shares. One of the most efficient methods for trading with Bitcoin and other cryptocurrencies is to use an online platform or a smartphone app where you can follow current values and read about various statistics that might help you to make the right choice.

You can use tools where you can set various limitations for your daily trades, which is very useful because it could save you from unexpected losses, especially if you are interested in day trading. One of the best tools is a Bitcoin Union, for more info check bitcoins-union.com.

About the author

Quentin Hack