The official financial system has failed the citizens a few times, but there weren’t many alternatives to making an income until Bitcoin’s inclusion in the market in 2009. Although mining and investing have changed considerably since then, the Bitcoin price has stabilized, with a few volatility spikes here and there. Still, it can be considered reliable when compared to other cryptocurrencies.
As a beginner, it may be more challenging to get ahead of what’s the best cryptocurrency or method to start with to minimize risks. However, when it comes to avoiding volatility, things are not that different from stock investing, for example. You only need to set a certain amount of money in your portfolio and not be influenced by FOMO, which is a common problem people experience during periods of uncertainty regarding negative investor sentiments.
If you want to start investing soon but don’t know the best and safest options, here’s a brief introduction to some of the most reliable cryptocurrencies for beginners.
Bitcoin was released in 2009, and since then, it has increased in value and offered investors high results in liquidity. The currency has spread around the world considerably, and its adoption might happen at some point, proving it’s trustworthy. To invest in Bitcoin, you only need a secure internet connection and a bank account. You also need to choose a Bitcoin exchange from the ones provided and ensure it’s genuine and safe. Then, get a wallet to store your cryptocurrencies; it can be either one you can access from your browser or a physical-based one.
Managing your Bitcoin investments is the toughest part here. Initially, it would be best not to allocate more than 10% of your investment portfolio to buying coins, and you need to take that decision based on your fixed income. You need to be wary of Bitcoin’s volatility, so make sure you thoroughly research everything about the coin’s history.
Ethereum is the second largest cryptocurrency on the market in terms of market capitalization. It was released in 2015 and is based on similar data as Bitcoin, so they share a few things.
Considering its price has risen in the past years, some experts believe Ethereum might overtake Bitcoin at some point. Ethereum is special because it can be used for multiple purposes, so if you happen to be interested in coding or programming, you can use the Ethereum blockchain to create decentralized apps and use them for profit.
There’s no rule on how much you should invest. Even as little as $10 can set you up, so don’t worry about not yielding great results from the start. However, Ethereum is not as widely used as Bitcoin, so the possibilities of using it digitally might be limited.
Litecoin was released in 2009, and its purpose was to provide more efficiency than Bitcoin. This is the best option if you’re looking for a faster and cheaper alternative to Bitcoin. Surprisingly, Litecoin is widely accepted by multiple merchants and vendors since it’s a popular payment option demanded by customers. Moreover, Litecoin is four times faster than Bitcoin, so it’s the perfect cryptocurrency for small and quick transactions. Overall, Litecoin is a good long-term investment.
What you need to be careful of with Litecoin is the tight monetary policy by the Federal Reserve that has affected the cryptocurrency’s value, leading to a decrease in popularity. The demand for the coin might decrease, so the price will also be less beneficial for investments. Considering these aspects, the tech development of Litecoin has also slowed down, exposing the cryptocurrency to digital risks.
Cardano’s technology can be described as a mix between Bitcoin and Ethereum, improving both of their features. The open-source blockchain is one of its kind due to its unique approach of blending science and mathematics to solve problems and efficiently verify transactions.
Considering it’s based on academia, cryptocurrency has a high level of security, and the technology also enables one of the fastest transactional speeds without sacrificing safety or scalability. Even if you wish to start programming on Cardano, the knowledge base provided there and the community’s support make it a better choice than Ethereum.
One of the biggest disadvantages of Cardano is that it’s relatively new on the market, it was launched in 2017, and it took some time to develop. However, considering it’s more energy-efficient than other coins, it may return to popularity soon.
Tips for Investing Safely as a Beginner
Investing in cryptocurrency safely might be challenging because you’re not used to experiencing volatility spikes. However, what makes a good investor is knowing how to handle assets at the right time, which is something you learn over time and experiment.
Remember never to put all your financial resources into crypto investing and be mindful of your fixed income because this is the only base of your digital portfolio. As you continue investing, you’ll find that many other users buy or sell cryptocurrencies as a result of FOMO (fear of missing out) when there’s a bullish or bearish market. In most cases, the best thing you can do is hold your assets, but not all the time.
During a bull market, when prices are rising, it’s advisable to have a higher allocation of stocks, for which h higher returns will be yielded. For this method to succeed, you must diversify your portfolio and invest in multiple cryptocurrencies. On the other hand, during a bearish market, when investor sentiment is low, you need to invest more carefully since there are increased chances of loss, which is why it may be a better idea to hold your current assets.
The best strategy so far is investing in the long term, so you should also devise a plan for long-term cryptocurrency investments. Thinking five years ahead at least might offer you considerable sources of income.
Investing as a beginner is no easy task. You need to thoroughly research and be careful with your current income because otherwise, you risk losing a significant portion of your digital assets.