Things to Consider Before Investing in Cryptocurrency

Published on: December 8, 2020 (Updated on: April 22, 2024)

As the world keeps developing so has technology taken over many aspects of our lives. The lock down this 2020 has shown many that were ignorant the relevance of technology in our day-to-day activities. Technology has affected the way we work, shop, study, our payment systems and many more.

4 Things to Consider Before Investing in Cryptocurrency
Things to Consider Before Investing in Cryptocurrency

What is cryptocurrency?

Cryptocurrency is an online or digital payment system that is independent of the bank. As a result, it doesn’t require bank verification for its transactions. One might now ask; How then is it secure? It uses Blockchain Technology to control the flow and mining of each coin preventing it from hackers.

It uses Blockchain Technology
Cryptocurrency uses Blockchain Technology

Blockchain ensures that each coin created cannot be used twice. It is the technology that has come to replace the use of cash for payments. It uses peer-to-peer system enabling everyone at any location to send and receive money without delay and much charges. They are also seen as good investment ideas. It has been recorded this 2020 that it is better to invest in cryptocurrency than gold.

Types of cryptocurrency

Just as there are so many currencies in use by so many countries, so is cryptocurrency. The top cyrptocurrencies include:

  • Bitcoin: This is the first type of cryptocurrency that came into existence. It started in 2008 by one “Satoshi Nakamoto”(real name unknown). Since then bitcoin has become a path of something great. Presently, bitcoin is struggling between 18,000 dollars and 19,000 dollars per one bitcoin.
  • Alt Coins: This stands for alternative coins. That is, every other cryptocurrency asides Bitcoin. They use the same Blockchain Technology but just some have a slight difference from Bitcoin while others are totally different with different algorithm. There are uncountable numbers of Alternative Coins. Some of them are Ethereum, Litecoin, Ripple, Bitcoin Cash, etc

Things to Consider Before Investing in Cryptocurrency

Value of each cryptocurrency

Value of each cryptocurrency
It is advisable to understand the value of each currency both in your local currency and in dollars

Before one invests in crypto it is advisable to understand the value of each currency both in your local currency and in dollars. This also involves taking note of the All Time High and Low of each currency. This helps you to know and understand the volatility of the currencies. How low or high it can approximately get before another trend. The present 24 hour high and low for Bitcoin is $19,299.05 and $18,629.54 respectively. While that of ethereum is $596.48 and $569.22 respectively

Candle sticks patterns

Candle sticks are names given to what looks like candles in crypto analysis chat. They are usually red and green or red and white. They are used to signify the rate at which the day’s market opens and closes. The market opens at the bottom of the green or white candle and closes at the top.

While the market opens at the top of the red candle and opens at the top. That is, the red candle signifies a reduction in value. And the green or white signifies an increment in value. A different color of candle can appear on the chat. It is usually blue in color which shows that the market opened and closed at same price.

Best trading platforms

There have been a production of so many applications for buying and selling of cryptocurrencies. These platforms can be likened to the physical bank. The coins are stored there and they can sell to you and buy from you. They also charge a percentage for the transactions because their liquidity is being used. Some of them include; Luno, Primebit, Binnance, Remitano, etc. Some of these platforms give restrictions to certain geographical areas. This is why it is good to find out which one works best in your country.

How to make a profit

The general rule of making profit is to sell higher than you bought. You need to take note of the value of one coin at the time you bought it in order to ensure you sell higher. Some of these platforms register this in your order page. All these being said, an in-depth knowledge is still needed before investing.