How to invest in Cryptocurrency ? What is an ICO ? What is a wallet ? When is the best moment to buy ? What is the difference between a stock portfolio and a cryprocurrency portfolio ? In this article we’re going to provide you with the answers to the most frequent questions investors deal with when wanting to buy cryptocurrency and transform virtual currency in real money.
Cryptocurrency investment on a decentralized exchange is one of the most profitable investments in the world right now. The surprise is that not the Bitcoin is the most profitable choice, but the cryptocurrencies that are going to be released through an ICO ( Initial Coin Offering ). Investment in a cryptocurrency might even get you a return of 425.000%.
The cryptocurrency market is more than $500 billion, and investors from all over the world are searching for ways to get a slice of the action.
Specialists present at the cryptocurrency event organized by IntelDev Technologies and Omega House claim that investing in a new cryptocurrency can be more profitable than investing in one that is already present, such as Bitcoin or Ethereum.
How to invest in cryptocurrency ?
There are two ways you can invest in cryptocurrency. Buying into one that was already released or investing in launching a new cryptocoin – ICO ( Initial Coin Offering ).
In the first case, the investment is made through exchanges. To be able to access such an exchange the user has to create a wallet ( virtual wallet ), which can be accessed by the user through an unique code called private key.
According to new regulations called AML ( Anti Money Laundering ), platforms should have information about the clients – KYC ( Know Your Customer ).
Some exchange platforms ask for a photo of your ID when creating the wallet or even a selfie of you holding your credit card, showing only the last 4 numbers of your credit card number to prove identity.
After the verification process is complete, users can start buying.
The second option is to invest in a cryptocurrency that is going to be released, a procedure called Initial Coin Offering.
What is an ICO ?
ICO is similar to the IPO ( Initial Public Offering ) and it is used to raise money for releasing a new virtual currency.
More than $3.4 billion were invested in 211 ICOs successfully launched in 2017.
The ICO takes place in three steps through which the company gives investors the possibility of buying cryptocoins to reach two capital milestones called Softcap and Hardcap.
The Softcap is the first capital milestone which most ICOs reach without problems and the Hardcap represents the total capital milestone which the company wants to raise for the virtual currency that is going to be released.
The first step is “Private Sale”. In this step a series of authorized investors and big players talk to the team behind the cryptocurrency and they are the first to invest in the virtual currency.
In the next step, called Pre-Sale, anyone can buy in.
The third step is the Crowdsale, and now anyone can buy. This is basically the moment when the ICO is launched.
For most investors, ICOs turned our to be the most profitable ways to invest in cryptocurrency. According to statistics, Ethereum launched at a price of $0,314 and the investment return was 340.000% two years later.
What is the Wallet and how can you secure it ?
The wallet is the first step you need to take to invest in virtual currency. The Wallet is a digital wallet and you can access it through a code, precisely your private key.
When you access an exchange and you enter the private key of your wallet, your wallet enters online and it becomes vulnerable to attacks.
Hardware developers searched for solutions and designed safer systems ( Nano Ledger S for example – it works as a flash drive that stores your private key. When you connect the drive to a computer you can use your key to access your wallet but it does not go online and this means that it remains protected and not vulnerable ).
If you lose your private key, nobody can restore access to your wallet.
When is the best moment to buy ?
Do not sell when the market is down. Then is the best time to buy. This is one of the words investors specialized in cryptocurrency live by.
The moment when an influential announcement from any corner of the world scares uninformed investors that start selling, the price goes down very much and gives investors the opportunity of earning a big profit from cryptocurrencies already launched on the market.
For example, on January 17, 2018, all cryptocurrencies were dropping by at least 20% and on January 18, the same cryptocurrencies were growing by at least 15%. An investor who entered the market on January 17 already had a ROI of 15%-50% the next day, based on the cryptocurrency the investor invested in.
The most popular Cryptocurrency
Bitcoin is the most popular cryptocurrency in the world. At this time, 12.5 bitcoins are released into the market every 10 minutes and the last Bitcoin is going to be released in 2140.
Bitcoin is also entering the retail market of the world as a currency and right now many airlines, hotels and even some real estate developers accepted the Bitcoin as a currency.
The Ripple virtual currency was considered ” the next Bitcoin” a month ago thanks to the impressive growth it recorded, from $0.25 to $3.16 in just two weeks.
The popularity of the Ripple currency came after UBS and MoneyGram announced they are going to use the digital currency in their own services and products.
Right now a Ripple is worth $1.24.
There are two emotions on the market: greed and fear
The cryptocurrency market is volatile and vulnerable and these weaknesses come from the lack of education of those who invest out of enthusiasm without doing proper due dilligence before and they end up being guided by fear.
Price fluctuations because of the imbalance between demand and offer, visible on any market, is more obvious on the virtual currencies market because everything can change in a few minutes. This market is being dominated by two emotions: greed and fear.
After every market collapse, guided by fear, a boom guided by greed follows. There are two clear examples on the market, and specialists refer to them as September 2017 and January 2018.
In September, just like in January, some countries announced that they are going to regulate the cryptocurrency market. This scared investors and they sold as quickly as they could.
After this has passed, investors got greedy and they increased the demand, which caused some virtual currency to grow by up to 50%.