Crypto Investments: How To Do It Responsibly?

Initially, when cryptocurrencies were first introduced in 2009, it was mostly viewed as an overhyped phenomenon. While foreseers like technology enthusiasts and traders viewed it as an innovative technology with a potential for flourishing, the rest did not consider paying much heed to it. 

A very limited population took interest and put faith in its potential. In passing years there has been the emergence of various new cryptocurrency brands as well and the world has witnessed several of them disappearing. 

There is no doubt that the issue of volatility is ingrained in the concept of the cryptocurrency market but currently, it is regarded as important as fiat currencies by the people.

The main reason why people refrain from investing in cryptocurrencies is because of the limited knowledge of how to invest in cryptocurrencies in spite of realizing their potential. With time the world has witnessed the rise of Bitcoin as a flag bearer of cryptocurrencies.

Although there are certain other standard alternatives, it has the potential to take over and overthrow the concept of sovereign currencies in the approaching decades.

Tips To Invest In Crypto Safely 

From assessing risk to choosing the right investments, this guide will help you navigate the process with confidence, ensuring a safer journey towards your financial goals.

1. Start By Investing A Smaller Percentage Of The Portfolio

Allocation of the percentage of portfolio one is willing to invest in cryptocurrencies has to be predetermined. The current status of the market displays price variations, especially of Bitcoin, making it a difficult task to decide rationally. 

Investment is oftentimes a matter of either gluttony or fear of missing out.  Irrespective of the ebbs and flows in the market,  cryptocurrencies should cover only a specific limited part of the entire portfolio. The tentative percentage revolves around 5 to 10%.

The concept of crypto investment is substantially different from that of investing in stocks. For example, this kind of investment will not pay interest or dividends. It is completely dependent upon the market value and its fluctuations.

2. Use Gambling Blockers like GameStop

Crypto trading, like gambling, can lead to addiction. Gambling platforms in the UK are controlled by the GamStop scheme – a non-profit organization that excludes players from all UK-licensed gambling sites. 

Even gambling platforms without GamStop have their own self-exclusion tools. So, if you want to do crypto investments responsibly, try blockers like Gamban, NetNanny, Betblocker, etc. Using these tools helps you handle risks better and make your crypto investments more sustainable.

3. Selecting the Correct Currency

The overbearing number of options often gets people bewildered so it is advisable to do proper research before diving into investing. A survey in 2021 concluded that 97% of the investors are keen on digital assets. 

According to the current statistics, bitcoin is holding the number one position among all other currencies and hence attracting the biggest crowd, while Ethereum is holding the second position. Other options like Dogecoin, Dash, Zcash, and Ripple are suitable for consideration.  

While Bitcoin is dominating the market due to its stability it always has to be noted that the volatility factor is common in every cryptocurrency available.

4. Selecting the correct platform for buying cryptocurrencies

Neither investment brokerage firms nor banks offer to sell cryptocurrency. Only a few cryptocurrency exchanges are available to perform activities like buying, holding, and selling cryptocurrencies. Also, the first thing you will need to decide is whether to choose a direction toward decentralization or centralization

Gemini, Coinbase, Unify Money, Binance, and so on are platforms that are dedicated to crypto trading which almost takes after brokerage firms. Every transaction using cryptocurrencies is subjected to a transaction fee.

5. Storage of Cryptocurrencies

Cryptocurrencies are stored in wallets of either hot or cold types. This wallet is a computer program that serves as storage for prices and public keys regarding the blockchain in which the currencies exist. This would grant access to making transactions using cryptocurrency, in addition to which the records of it are stored in the blockchain. 

There are different types of cryptocurrency wallets like desktop wallets, online wallets, mobile wallets, and hardware wallets which people can choose according to their convenience. 

6. Security of the Cryptocurrency

Securing the currency one owns is an essential part of owning currencies. Every time a transaction is made it has to be made sure that the investment is followed by a security step. The usage of a VPN ensures the complete encryption and security of the transactions. 

Guiding Principles for Cryptocurrency Investments: Essential Rules 

Responsible crypto investments require thorough research, diversification, staying informed about market trends, and maintaining responsible trading behaviour. Even Gamban has expanded its coverage to include blocking crypto platforms. So, to be a successful trader, follow the next rules:

1. Have a Better Understanding  

The baseline of understanding cryptocurrencies is the fact that these currencies are backed by absolutely no asset or cash flow. When a person buys stocks, it is essential for them to understand the companies better. The same goes for buying cryptocurrencies. 

One needs to understand their functionality and growth rates in the case of trading using them. Unlike the stock market,  the assets of the crypto are mostly reliant upon The market. Understanding the potential ups and downs is essential as it might lead one to a complete loss. 

2. Looking Forward

As a futuristic way of the investment itself,  it is always encouraged for people to look into the future instead of the past and evaluate the future possibilities of the market before starting to trade.

3. Factor of Volatility

We can look into the feature of volatility in the case of cryptocurrencies as one of its prominent features. The prices are prone to dropping within seconds and rise with equal intensity. Without grasping the fundamentals of the market it is almost impossible to predict the patterns. 

While it is easy for beginners to get their instincts shaken deeply due to the turbulence, traders with a high appetite for risk are on the lookout for buying at a low price and selling at a high. People try to play safe and as a result, 65% of the cryptocurrency users are the owners of Bitcoin.

4. Risk Management

Risk management is of high importance for short-term traders when it comes to highly volatile assets like cryptocurrency. While traders with a high-risk appetite can stick by it, short-term traders have certain boundaries to sell when the graph has fallen by 10% so that they do not have to recover from any major losses. 

5. Having Strict Boundaries

This holds true for every kind of investment. Investors are suggested to have strict boundaries around what they can afford to lose, be it in terms of time, money, or any other assets.

Also Read : How to Protect Your Cryptocurrency Investments

Summing Up

While crypto investments have made a lot of early investors millionaires, one should never underestimate the highly volatile nature of cryptocurrency.

Also, the crypto space has seen enough cases of market manipulation, inside trading, and others, spoiling the reputation of the overall crypto market. Furthermore, crypto investors should also be aware of crypto scams and Ponzi schemes existing in the crypto space to save their hard-earned money. 

That is why it is advisable to research before investing and consider your risk appetite. Also, choose popular and reliable platforms over newly launched platforms that promise you impractical returns.

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