What is Cryptocurrency?

What is Cryptocurrency? And what to keep in mind before investing?


Over the past few years, technology has totally changed the world and how the things around us work. Everything has changed and so does the way of investing. Introduced in 2009 and the current hottest investment instrument cryptocurrency is also a gift  of technology.  Probably everyone has heard about Bitcoin by now. It was the first cryptocurrency to be introduced. But now there are more than 2,000 different types of cryptocurrencies, and more are developing each day.

Before investing in crypto, let’s learn what is crypto first.

A cryptocurrency is an encrypted form of digital currency. Cryptocurrencies use blockchain technology and don’t depend on financial institutions to verify transactions. The main aim of crypto was to fix the problems of traditional currencies by putting the power and responsibility in the currency holders’ hands.

Cryptocurrency got its name after the way it works. Cryptocurrency uses encryption to verify every transaction. This means advanced coding is involved in storing and transmitting cryptocurrencies between wallets and to public ledgers.

The aim of encryption is to provide security and safety to the investment made by people. With Bitcoin (BTC) being one of the most renowned cryptocurrencies, some of the other emerging currencies are Ethereum (ETH), Dogecoin (DOGE), Binance Coin (BNB). 

Lately, a lot of investors have started investing in crypto as a part of their investment strategy. And the things you should know before investing in crypto are: 


Crypto is unstable, so never invest more than you can afford to lose: With the power of investing, the risk of losing comes alongside.  There’s no denying that crypto is unstable, and there's’ a risk in investing. Someone sneezes and the price drops!  But with the right strategic and research-based investment, the risk can be minimized, the risk tolerance can be maximized and the benefit of potentially high returns can be availed. 


Conduct your own research: One should conduct thorough reasonable research before investing in any instrument. And investing in crypto is no different. Before investing in any coin one should: Understand the market capitalization of the coin they are planning to invest in. Understand the Use Case of the coins you are investing in.

Diversify Your Investments: Investing in just one coin is highly risky and one can even end up losing all the invested capital. The best strategy to avoid this situation is Diversification. Investing in multiple coins rather than just one will minimize the risk and can even get you good returns. 

Never act based on FOMO: Investing on the basis of FOMO is one of the biggest mistakes one can make while investing. With aggressive PR campaigns to celebrity endorsements, the hype about the coin is created which makes a lot of beginner investors jump in blindly without conducting proper research.

Like every investment, both risks and rewards are associated with cryptocurrency. You should look at all of your options before deciding. To try out forex without risking any real money,

open a free demo trading account to practice and once you feel comfortable, go ahead and get started with Capital Sands.

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