Investing in Cryptocurrency

With cryptocurrencies being all the rage these days, a growing number of people consider investing in them. Because the Blockchain technology appears mysterious to newcomers, there are many myths surrounding it.                                                                                                                       

In truth, there are only two ways to go about investing in cryptocurrency: directly and indirectly.     

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Direct Cryptocurrency Investment

 

To start  cryptocurrency investment directly, you will need to obtain them first. The easiest way to do this is via a broker-wallet like Coinbase/GDAX. Such services allow for buying, selling and storing Bitcoin.

For investors interested in cryptocurrencies other than Bitcoin (altcoins) or multiple cryptocurrencies, services offering cryptocurrency-to-cryptocurrency trading are the best choice (i.e., Bittrex). These allow for buying multiple cryptocurrencies using real money and trading them for other cryptocurrencies on an exchange. Cryptocurrency exchanges are numerous, and each has its highlights and downsides. There is no universal rule on which one to pick. Like with all investment-related things, it is best to read the offer and choose which one suits your goals best.

There are two ways to invest in cryptocurrencies directly: in person or via a custodial service (i.e., Coinbase).

In both cases, the procedure is the same. You will need the following:

  1. A cryptocurrency wallet (or more than one)
  2. A cryptocurrency broker or exchange — there is also the option of mining cryptocurrencies or selling goods
  3. A platform where to cash out cryptocurrencies

Indirect Investments

Indirect cryptocurrency investments can be performed in various ways. You will need one of the following:

  1. The GBTC trust sold on the stock market
  2. Bitcoin futures
  3. A cryptocurrency Individual Retirement Account (IRA), which allows for investing in cryptocurrencies using retirement savings
  4. A private fund (investor accreditation)
  5. A cryptocurrency-related stock (i.e., NVIDA, AMD and RIOT)

Cryptocurrency for Beginners: Selling Cryptocurrencies

Cryptocurrency for beginners: a cryptocurrency investment is similar to all other investments. The goal is to buy cheap and cash out big; the only difference is the actual asset.  Well, perhaps it’s not the only one. Arguably, the biggest benefit of the Blockchain technology is that it is decentralized: there are no middlemen, save for custodial services, if you decide to pick one. 

So, how do you sell cryptocurrencies? In actual fact, there are only a couple of exchanges that offer users the option to sell cryptocurrencies for real money, and even they have pre-set limits. Because of the limited offer, it would be best to turn to an exchange (e.g., Kraken or Coinbase) that has no limits, but takes a percentage in return. 

Among the best cryptocurrency exchanges are Exmo, Kraken, BTC-E, Poloniex and Bittrex. 

Exmo

Usually overlooked, the Spain-based Exmo has actually been around for a while. The exchange allows for trading Dogecoin, Ethereum and Dash, among other altcoins, against dollars.  

Kraken 

Kraken is best known for Bitcoin transactions, although it supports additional altcoins, including Ripple, Ethereum Classic, Monero and ZCash. All the pairs can be traded against Bitcoin, Euros or dollars.

BTC-E

 

BTC-E is one of the oldest cryptocurrency exchanges supporting a number of altcoins, including Ethereum, DASH and Litecoin. The pairs can be traded against Bitcoin and fiat currency pairs. 

Poloniex

 

Poloniex is an established cryptocurrency exchange famous for listing the greatest number of altcoins. It was one of the first exchanges to offer Ethereum Classic. Other altcoins offered include Ripple, Litecoin, Monero and Factom.

 

Bittrex

 

Bittrex seems to be an unavoidable cryptocurrency exchange. It is generally considered to be among the best platforms for individual currencies that generates large trading volumes.

Storing Cryptocurrencies

There’s nothing wrong with buying and selling, but where do you store cryptocurrencies? Many tend to have sleepless nights over this issue, but the good news is that there is a seamless solution!

Cryptocurrencies being virtual assets, it is only natural that they’d be stored in an online wallet. For long as your online wallet is active, you will be able to store your cryptocurrencies there safely. Many exchanges — including Bittrex, Kraken and Coinbase/GDAX — offer online wallets, but keep in mind that exchanges are meant for trading, not storing. For long-term solutions, it’s best to look for offline wallets.

Cryptocurrency Wallets in a Nutshell

 

A cryptocurrency wallet is a virtual space where encrypted passwords representing coins are being stored when investing in cryptocurrency. Some wallets are specific to a single cryptocurrency, while others can be used for more than one. Some wallets are self-managed, and others are custodial (i.e., those hosted by exchanges).

A cryptocurrency wallet is software used to view your cryptocurrency balance and make transactions. There are several types of those, including online, offline, desktop and mobile wallets. The most common ones are:

  1. Custodial wallets: don’t allow self-control of keys directly. Most exchange wallets fall under this category.
  2. Full node wallets: allow self-control of private keys in addition to hosting a full copy of the blockchain. Every cryptocurrency has its own official wallet that can be found on its official GitHub.
  3. Desktop wallets: commonly used wallet type, normally connected directly to a client.
  4. Mobile wallets: wallets for a smartphone (app).
  5. Online wallets: web-based wallets that store data on a server.

Investing in Cryptocurrency: Keeping Informed

 

To keep informed about investing in cryptocurrency, it’s best to consider our crypto events calendar Asia. Why? Because Blockchain is a developing technology, set to yet disrupt multiple industries. It is still being used but moderately, due to multiple reasons discussed elsewhere. However, any serious investor planning to cash out massively should always be kept informed about the developments.

Although Blockchain may appear confusing to beginners, the simple truth is that cryptocurrency exchanges are just like traditional exchanges. You fill out a form for buying or selling a cryptocurrency and a regular currency, or a cryptocurrency and a cryptocurrency. You perform analyses, keep informed and make decisions when to buy and when to sell. The only difference is that your asset is digital. Therefore, make sure to stay tuned!

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TOKENOMX

Battle of the Blockchains

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27-28th February, 2019

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