Investing is always a risk, especially when we are talking about cryptocurrencies. The main point in the whole process is making your money work for you, and the crypto world offers great opportunities. Of course, it can bring up incredible gains, as well as crushing losses.
So, before you begin, you must be ready for anything.
It is not a secret that the cryptocurrency market is extremely volatile and needs serious preparation. If we are talking about long-term crypto investment, panic selling and fear-of-missing-out buying, may not be the best strategy. Actually, to smooth the thing out, you may want to have a look at the bigger picture.
Altcoins as a long-term investment
Well, owning altcoins such as Bitcoin, Ethereum, Litecoin, Stellar and others is definitely a good way to start. And because there are much more investors in Bitcoin than altcoins like Litecoin for example, when an altcoin crashes, Bitcoin gains may save the portfolio’s worth.
The risk
For both, long-term and short-term strategies, there is a risk of losing everything. Unfortunately, there isn’t a risk-free way of achieving the goals you have, and only intuition and relevant knowledge can help you walk out with a victory.
The blockchain industry is the perfect place for scams and frauds, and it is crucial to invest only in projects you believe are truly valuable. Even if you see an asset rising in value, that doesn’t mean it is worth the investment. So, to capitalize on a project, you must first identify its value.
Where to buy cryptocurrencies
Cryptocurrencies can be bought, sold and stored in different exchanges, existing on the web. There are two main types - centralized and decentralized exchanges.
Centralized exchanges
Centralized exchanges are looked at also as the simple approach. They function in the same way as the traditional exchanges, to facilitate trading. The bids are being collected by an order book and the price of an asset is being calculated from the supply ration on the order book.
Decentralized exchanges
Decentralized exchanges are the alternative technical approach. They have gone through multiple iterations over the years.
Modern decentralized exchanges are posing a threat to some centralized exchanges, as they lock pairs of tokens in liquidity pools, instead of using an order book to track bids. The ratio of the tokens determines their price.
What kind of exchange should I choose?
Both decentralized and centralized exchanges have their pros and cons. Centralized exchanges are reliably fast and have multiple teams of experts working to provide the best experience on the platform.
Furthermore, CEX are a bigger target for hacks, but at the same time they are more likely to pay back for any losses, unlike decentralized exchanges.
What crypto to invest in for the long term?
Many investors choose to stick with the top coins on the crypto market, such as Bitcoin, Ethereum and XRP. This is a good sign of what the community sees as a valuable investment.
New projects also are able to enter the top rankings, but it is just as fast as they leave the market. So, no matter how tempting it is to invest large amounts into risk assets, it can be extremely crippling.
Future of cryptocurrencies
Short-term investments in cryptocurrencies may seem like an easy way to make a quick profit, but it requires some knowledge and experience. Same for the long-term investment, as it also requires a lot of patience and good intuition.
Decentralized money and the crypto industry may be young, but they are definitely here to stay. As more and more people choose to invest in them, they seem more like an investment in the future economy. So, when we are talking about cryptocurrencies, we should mostly think of the long-term picture.