Cryptocurrency tokens, despite initially being tipped to replace their traditional fiat counterparts, have primarily contributed to investors since their inception. In recent years, tokens like Bitcoin and Ethereum have risen to dominate the market, each worth tens of thousands of dollars, piquing people’s interests as a new angle of the economy opens up. While prices of established currencies have set people out of the growing market, a host of new coins exist that allow new investors to test the water.
Understand the risks
The first thing to consider with cryptocurrencies is that, whether cheap or expensive, they are inherently risky investment products.
They tend to fluctuate and are easily manipulated by those with a monopoly over the market known as “whales”.
Cryptocurrencies are also poorly regulated, leaving people uniquely open to scammers with little recourse.
Read white papers
Every legitimate cryptocurrency should have an easy-to-find white paper that explains the aim behind the project that founded it.
These should contain an exhaustive list of details about what the project leaders hope to achieve, how long in which they hope to do it, and a general overview.
Hard-to-find or absent white papers are a red flag for investors, as they are ultimately left without vital information.
Find a reputable platform
Armed with a community and the information they need to trade, cryptocurrency investors need a platform where they can spend their money.
This part of the process can be daunting, as crypto enthusiasts have established a range of platforms, each of which may have a different speciality.
Coinbase is among the best for beginners, with others such as Kraken and Crypto.com geared towards experienced traders and those on the go.
Know your limits
As with any investment, people should know their limits and ensure they only use money they can spare.
Beginners should start with cheaper currencies and build up confidence, keeping their bank balance in mind as they work up the chain.
Those who invest beyond their means risk ruin, and there is a long-documented history of severe investment addiction and losses.
The information in this article does not equate to financial advice. Anyone considering investing in cryptocurrency should understand the risks involved.