Cryptocurrencies are the hot topic in the trading and investment worlds at the moment – and it’s not difficult to see why. These innovative and unusual tokens are perhaps some of the most technological investment options ever, and the design of the system behind them means that traders are almost totally anonymous when buying a token. This blockchain system is now reportedly under consideration for use in everything from government to business – which in turn increases the level of interest in, and hence the value of, the major tokens.
But becoming a crypto trader is easier said than done. A few years ago, Bitcoin was presented as a top choice for anyone who was looking to make a secure investment – and it seemed to be endlessly rising and rising in value. But in 2018 it plummeted, and by November of last year it had dropped by 75% compared to the year before. So what steps do you need to take in order to protect yourself as a crypto trader? This article will explore these issues and offer some practical advice on how to get the help you need as a newbie investor in this sphere.
Learn the tech
First of all, it’s worth spending some time familiarising yourself with the way the technology behind cryptocurrencies works. In some ways, crypto is like any other investment, in that you will need to trade real-world, physical cash in order to get a chunk of it and its value. But it also differs from traditional investments in a number of ways, and it pay to familiarise yourself with these.
When you purchase some cryptocurrency, you are essentially creating a record of your decision on a decentralised electronic ledger. Nobody is in charge of the ledger, and it’s entirely community driven – if a change needs to happen, it has to happen with the consent of the whole community. Some specific people, sometimes known as “miners” because of the computerised effort that they put into maintaining the ledger, have additional responsibilities. Investing early on in an intro book or training course about this unusual system is therefore wise.
Find a mentor
In terms of the history of the global economy and the way in which the investment markets have played out over the years, the crypto boom has really only just begun. However, that doesn’t mean there’s nobody to talk to when you start trading cryptocurrencies. There are plenty of people who have been involved in crypto for years, and it may well be worth joining an online or even an in-person network to find someone who can dispense advice and help you to navigate your way around this sphere.
A word of caution, however. Given the heavily digitised nature of the cryptocurrency world, there are all kinds of so-called mentors out there who appear to be helpful but who are in fact simply running marketing projects of their own, designed to lure in unsuspecting newbies. Training school, multi-level marketing schemes and even illegal or fraudulent schemes can sometimes exist in this space, so be careful to avoid these.
Take your time
The crypto world seems from the outside to be fast-paced, and there’s some element of truth to this. But it’s also the case that there’s no need to rush yourself too much. Hype is a big problem in the crypto sphere, and everyone – especially those with a vested interest of one kind or another – seems to have an opinion on just what the next big thing might be.
Instead, it’s worth investing in some tools that can help you to get an objective view on when the best time to strike might be. Price data, for example, is often used by traders both of cryptocurrencies and of other major investment vehicles to assess what caused a market to surge or decline in the past – and when that might happen again in the future. Gaining access to such data is a smart idea, and one that is likely to make your first crypto trades as informed as possible.
Crypto is a scary world to a newbie – and it’s one that can often seem impenetrable or overly risky. And that’s true to some degree, especially given that price volatility is a recurring issue that could wipe out your initial investment if you’re not careful. But by taking your time, looking for a mentor and familiarising yourself with the technology needed, it’s possible to give yourself a good chance of success.