This article was originally published on Cryptorials.io and is republished here with permission.
If you are thinking about investing your money into cryptocurrency then 2019 may well prove to be a great year to do it. But please be very careful and make sure that you understand the risks.
Cryptocurrency markets are inherently very volatile. That means the value of your investments can change very rapidly. Sure, you can make a lot of money in a relatively short period of time compared to traditional financial markets. But you can also lose everything just as rapidly. Cryptocurrency investments should always be considered high risk, no matter how confident you are in your choice of coin or token, and you really should only invest money that you can afford to lose if the market turns against you.
With that said, 2019 is shaping up to be a great time to enter this market. Fundamental data has been showing signs of growth for a while now, and more recently technical indicators are starting to turn positive. All of this may possibly mean that the bear market is finally over, and crypto is gearing up for another bull market.
What you need to invest in crypto
If you are entirely new to this space and are wondering what you need to do to start investing in crypto in 2019 then this section is for you. Be aware, however, that what we are talking about here is minimum requirements for beginners, not a complete guide.
When choosing an exchange you should consider what fees they charge (fees can sometimes be levied for withdrawals as well as trading, so make sure you consider this), what order types they offer, what KYC / AML requirements there are to open an account, whether they have strong security measures, and how much trading volume there is for the cryptos you are looking to trade.
Some people choose to leave their coins at the exchange where they bought them, storing them their ready to sell later. Unless you are day trading this is not a good idea. Unfortunately exchanges can be hacked, suffer theft from employees, or even use customer funds to support their business operations if they are struggling.
It is much safer to withdraw your funds to an appropriate wallet and store them there. There are many different blockchains, and each one has its own stable or wallets, so your choice of wallet(s) will very much depend on which coins or tokens you are buying. It may take some times to research this, and you may end up with multiple wallets if you buy a range of cryptos, but believe me it is well worth the time.
The 2 main ways to invest in crypto
Choose your coin(s)
Do you think you understand the crypto market and can pick the winners? If so then selecting individual cryptos to buy and hold may be the best choice for you.
If you choose this path then it is often recommended that you should diversify: hold multiple cryptos, ideally with very different characteristics and target markets. Because things change rapidly in this space, it is also recommended that you have a good amount of time to spend keeping up with the latest news – both for the projects you invest in but also for potential competitors.
Investing in indices or baskets
A popular alternative to picking individual cryptos is to invest in an index or a basket. For example, you can choose to buy each of the top 20 cryptos by market cap, or buying all tokens involved in blockchain gaming. If you don’t mind dealing with multiple exchanges you can create these indices yourself, but many people prefer to use an investment platform which offers them – there are several around so these days so choosing the right one is the topic of a future article.
Of course you may also choose to stick with the longest running and most trusted cryptocurrency and just buy Bitcoin. This is something which many people choose to do and is probably the most conservative option.
Whatever you decide to do in 2019 good luck with your investments and enjoy your journey into crypto!