What is Cryptocurrency?
Cryptocurrency is a digital currency that is used to buy products and services same as other physical currency. These currencies use blockchain technology. Bitcoin was the first cryptocurrency that is still running in the crypto market as king of cryptocurrency.
The term cryptocurrencies originate from the cryptographic techniques that creators have put in place to safeguard against scam. This revolution addressed a problem confronted by earlier efforts to make virtuously digital currencies that how to prevent users from making duplicates of their assets and trying to use them twice. Cryptocurrency was a milestone in the era of financial assets and this created both opportunities as well as challenges.
Simply, Cryptocurrency is a crypto coin that shares the same common purpose as physical paper currency, which is to perform as a medium of interchange. Though people can use such cryptocurrencies to spend for goods and services, these digital currencies are more usually known as speculative sort of investment assets.
Opportunities and Challenges
There is a chance of rapid growth of investment as compared to other financial assets. If we look at the history of Bitcoin, dogecoin, Shiba Inu, and Ethereum, then it is very clear that cryptocurrency is giving good returns on investment with time. Opportunity can be benefited in terms of low transaction cost, peer-to-peer security, technology-based investment, Secure Technology, etc.
There are challenges like No value in a few places, chances of hacking, and extra wallet requirements. Cryptocurrency is not like other federal currency but it is just in digital form so it has online challenges also to safeguard the cryptocurrency.
There should be an investment plan with detailed steps where you do have a clear idea about the amount, risk and reward, returns timing, and investible cryptocurrency. You have to work on every risk and returns management so with a timeline, you can match and see the result as per plan. You should have an idea for a source of funds to collect or bring for investment.
This is the most important step that everyone must care well because a good trading plan will assure a good return and a bad trading plan will lead to a bad result. A trading plan must be made in keeping in mind that comprises position size, account size, free margin, used margin, leverage amount and percentage, take profit amount, stop loss amount, position holding times, risk mitigation plan, the cost to trade, spread, service charge, profit after tax, etc.
A trader should make a portfolio to minimize the risk of trading. A good portfolio gives to assure return with time. It is always suggested to divide your whole fund into different cryptocurrency trading. You can allocate some funds for Bitcoin, some for Ethereum, some for Unicoin, etc. Good traders never invest all their funds on single security if it falls or fails then you may have to bear a huge loss whereas if you invested in a portfolio then one loss may be covered by another security or cryptocurrency.
Type of Cryptocurrency
There are thousands of cryptocurrencies and all of those are not good for purpose of investment. Therefore, you should have to be selective in choosing the right cryptocurrency for your investment. There are Bitcoin, Ethereum, Dogecoin, Shiba Inu, and Unicoin and you can choose as per your investment capability as few cryptocurrencies are very expensive and few of them are cheaper. You can note one thing always that good performing cryptocurrency will give good results although that might be expensive to buy and hold. Bitcoin and Altcoins are offered by the cryptocurrency markets to you so you can analysis properly before choosing among them.
We have discussed the points before investing in cryptocurrency and we have concluded that you must have a clear idea about cryptocurrency and its risk-reward primarily. Then you should have an investment capital source, trading plan, portfolio management for your capital, and good performing legit digital currency. There are so many digital cryptocurrencies in the markets but you have to be very careful before choosing the right one for yourself. Reputed and licensed cryptocurrency exchange should be preferable for carrying out your transaction to avoid any kind of scam. Finally, it is suggested to do own due diligence before actual investment.