Investing in cryptocurrency: main aspects, risks, solutions

If you want to get an additional source of income, you definitely need to know how to invest in cryptocurrency correctly. In addition, it is important to be aware of the main aspects of the process and be aware of modern mining options.

Which cryptocurrency should you choose?

Today there are a huge number of coins, each of them has its own advantages and disadvantages, but most of even experienced investors prefer the "grandfather" of cryptocurrencies bitcoin. Bitcoin is known even to those who are not interested in the foreign exchange market in principle, and so far, a large number of trades are conducted on BTC.

When choosing an investment object, you must definitely pay attention to the team of a particular coin; when choosing, it is advisable to give preference to the largest web service for hosting IT projects GitHub. As a rule, the most famous team members choose the "good" cryptocurrencies, so beginners are encouraged to follow such investors.

In addition, it is recommended to select projects that have not yet been “forced” (among such projects, as a rule, the youngest). Experts suggest paying attention to crypto coins that are definitely worth dealing with, these are bitcoin, Ethereum, IOTA, Monero, Cardano and Nem.

Below we will tell you about the features of the mentioned coins in more detail.

Bitcoin

For those who are not familiar with currency trading, you can talk about bitcoin simply and clearly. So, there is a category of people accustomed to bank deposits. They prefer not to think about the risk of being left without investments due to the dishonesty of the bank employee, that the bank monitors the financial transactions of customers and has the right to block accounts in case of suspicion or at the request of a third party that in the event of bankruptcy, depositors will lose their investments.

Some are sure that if they do not have a bank card, then they have nothing to fear, however, this is not so. Even if we ignore natural inflation and keep money “in the nightstand”, you can part with the money overnight by chance: banks can print new denominations of bills, and the old ones are invalidated.

Bitcoin was created to limit the power of banks. In 1998, thanks to the founder of Bitcoin, Satoshi Nakamoto, the world got acquainted with the cryptocurrency and the decentralized system. It is still unknown whether this is one person, or a group of persons acting under a pseudonym, but in any case, Nakamoto deserves a lot of thanks.

The unconditional advantages of cryptocurrency include the following:

    Receiving and owning a cryptocurrency does not require registration, therefore, all financial transactions are carried out privately (a digital wallet with a unique number is used to identify a client).
    Bitcoin does not have a single governing center, which allows it to operate in a decentralized manner.
    The system is reliable, since all information is simultaneously stored in multiple sources, in case of an attempt to falsify data on one device, the rest will immediately detect the changes.
    There are no additional commissions in the system, since transfers are made directly.
    The emission is strictly controlled, it is impossible to issue additional coins, therefore the amount of coins is limited.
    Refunds and cancellations of payments are not possible.

Many people are familiar with the image of bitcoin: a round coin with a large “B” in the center. However, this picture has nothing to do with reality; in reality, bitcoin is a digital code containing many symbols. A single indivisible part of bitcoin is called satoshi, it is equal to 0.00000001 bitcoin.

Experts use a simple example to show how bitcoin works. So, Maxim wants to buy new sneakers in the online store and he decided to pay for the purchase with bitcoins.

The buying process is as follows:

    To begin with, Maxim needs to enter the query “I want to transfer 2 btc from account P to account D”.
    The system algorithm independently chooses who needs to confirm the transaction (buyer or seller).
    At this time, mining will process and check if there are enough bitcoins in Maxims wallet to make this purchase.
    A block is formed, in which Maxims transaction is accurately indicated with all the necessary information.
    This block is updated on the devices of all users, bitcoins are transferred from Maxims account to the stores account.

Often, in order to save money, people seek to transfer them into something tangible, buying gold, jewelry, real estate for this. There is nothing to insure with bitcoin, so not everyone dares to invest in cryptocurrency. Those who have learned to use the digital system correctly and effectively know the positive aspects of bitcoin. They allow us to evaluate its advantages as an investment object, we will list them:

    the possibility of mining (the purchase of expensive equipment allows bitcoin to remain at a good level in the network);
    the complexity of mining (monthly miners spend large sums to buy even more expensive equipment in order to get even more rewards);
    the limited emission of bitcoin directly affects the coin rate;
    the principle of the network excludes fraud in transactions.

One cannot but pay attention to the fluctuations in the bitcoin rate. This happens usually due to changes at the level of states and governments, against the background of alarming world news, due to the emergence of any technological problems.

How can you get bitcoins? For a start, you can try to get them, although, even with special equipment, it is almost impossible to cope with such a task alone. Therefore, miners gather in pools, directing the power of all equipment to the direct mining of bitcoins. In addition, you can use the Cloud Mining service, thanks to which equipment is temporarily leased.

Alternatively, you can consider obtaining a cryptocurrency of lower power, and, having typed the required amount, pay them for the purchase of bitcoins on the exchange. In addition, in large cities there are special terminals where it is possible to buy bitcoins for cash, or, if you plan to sell something, you can try to negotiate with a potential buyer to pay for the purchase with bitcoins.

Ethereum

Ethereum is a powerful platform for creating decentralized online services based on the blockchain and the monetary unit of the same name. The platform is used to develop applications using special algorithms (smart contracts) that ensure the execution of operations only if certain requirements are met (the requirements are set by the developer). As an explanation, lets give an example: a company of friends made bets on winning Eurovision and a smart contract was created according to the terms of the rates. Based on the results of the competition, the program will automatically determine the winner of the dispute and send the won amount to his account.

Ethereum (ETH) is the second cryptocurrency after bitcoin. Ethereum mining requires expensive video cards (worth at least 500 USD) or mining farms.

To store Ethereum, you can use various wallets - official, online wallets, multicurrency, hardware. The latter type of wallet is preferable to others due to its greater security.

Ethereums prospects depend on many factors. Here is the demand for smart contracts, consistently high interest from cryptocurrency holders and investors, loyalty from the largest cryptocurrency exchanges.

IOTA

IOTA is a platform for efficient data transfer and commission-free payments. Like all cryptocurrencies, IOTA uses a special registry with available source code, but its protocol operates on the basis of Tangle technology. In other words, the cryptocurrency does not have a block creation process, it does not have traditional blockchains, there is no mining (it cannot be mined), and there are no smart contracts.

The only way to get IOTA Coin is by buying it on the exchange. The system is distinguished by a high level of protection of digital assets, as well as the absence of inflation due to limited emission.

IOTA was created to work with a rather interesting and promising technology, with the Internet of Things (a network that connects a variety of devices without human intervention).

IOTA transactions do not require a fee, as participants pay for transactions with device capacity. The system allows you to carry out financial flows, store and transmit important information. All network members have the same incentives and rewards, which eliminates hierarchy.

Monero

One of the leading cryptocurrencies, the main advantage of which is the privacy of transactions. The technology allows you to hide all information about transactions, including the data of the participants in the transaction and the amount.

Monero runs on a PC with low RAM, a video card is enough for mining. Cryptocurrency is intended for confidential transactions, transactions on stock exchanges, currency exchange (including fiat currencies), online purchases, and can be used in virtual casinos and in massive online games. Having appeared in 2014, Monero is one of the top most demanded currencies among miners and traders.

Lets consider the advantages and disadvantages of this cryptocurrency. Among the advantages are such qualities as the use of the mechanism of hidden addresses, a high degree of protection, the ability to "adjust" to the needs of the trader, open source, among the disadvantages - the slow operation of the system, the problem of compatibility with certain types of wallets, as well as negative attitude in society due to the use of coins in illegal activities.

You can buy Monero on the exchange (you will need bitcoins to purchase it), get it by transfer, or get it through mining.

Cardano

A decentralized digital system aimed at addressing scalability and bandwidth issues, as well as addressing major Ethereum and Bitcoin weaknesses. The open source project aims to develop smart contracts with advanced protocols. Its creators plan to use a democratic governance system, which contributes to the development of the network and attracting investors.

The main feature of the service is the division of the block system into two levels. The first level is for the circulation and distribution of the coin, the second is for the processing of smart agreements. Due to this, the platform gains in the speed of operations, as well as provides increased security.

Currently, work on the system is carried out in three directions, each of which is dealt with by separate organizations. The Cardano Foundation works to promote the resource, attract investors, unify activities and protect copyright, the engineering organization IOHK deals with the technical side of the blockchain, and Emurgo works with projects based on a digital asset and funds startups.

The acquisition of ADA (Cardanos cryptocurrency) gives the user a liquid asset and a chance to become an investor in a modern financial holding company. The coin is available for mining and for mining using a wallet with a deposit in the role of computing power The Cardano network is an attractive and demanded tool with minimal risks due to the use of an initially serious platform for creating a project.

To store ADA, a secure multi-platform Daedalus wallet is used, designed specifically for these coins.

You can buy Cardano on any exchange for bitcoins. Bitcoins, in turn, can be purchased in exchangers or on exchanges that accept fiat.

NEM

NEM is a system for introducing blockchain into business and a cryptocurrency of the same name. This blockchain also has a second cryptocurrency, XEM, which is used to stimulate a network of public nodes, to process and record all transactions.

The NEM project is used to exchange data using two blockchain systems, Mainnet (a public network for open data exchange) and Mijin (a private blockchain for companies and corporations used to protect data and ensure privacy within a company).

The NEM cryptocurrency is mainly focused on business, so it is rather difficult to objectively assess its popularity (not everyone wants to demonstrate support for one platform or another).

NEM helps in solving most of the problems of modern business and public administration, so the expectation of growth in investment in this cryptocurrency is quite justified.

NEM cryptocurrency is available for mining, as well as for buying on the exchange.

ZCASH

Zcash is an open source, decentralized private transaction platform. Transactions are formed into a public chain, but the participants data and the transaction amount remain closed. The system has a secure protocol.

Both private and public transactions can be performed through Zcash. When sending payments from protected addresses to transparent ones, the balance is displayed, but if the transaction is carried out from a transparent address to a protected address, then the received value will also be protected. A serious plus of the platform is the execution of a large amount of calculations without failures and errors.

The coin is available for mining even on weak hardware, however, for a number of reasons, it is quite difficult to mine this coin.

The Zcash crypto coin can be stored in various types of wallets, preferably hardware (as the most secure) and local (allows you to run a client and a network node on a personal device). To work with a local wallet, you must download the required program (depending on the operating system used), for example, from one of the following links:

    https://github.com/zcash/zcash/wiki/1.0-User-Guide.
    https://winzec.com.
    https://github.com/kozyilmaz/zcash-apple.

The coin is traded on the largest exchanges and is available for purchase in crypto exchanges.

Luxcoin

Lux Coin is the coin of the Luxcore blockchain platform. The platform is intended for the development of security products and is a set of tools for creating intra-organizational blockchains.

LuxCoin is based on a hybrid PoW / PoS PHI1612 algorithm, the main task of this system is to create a fast low-cost crypto coin and ensure the reliable functioning of the platform. The algorithm allows working without interruptions, developing ready-made solutions for the security of private clients and large companies.

The platform includes two open source elements (blockchain and the LuxCoin coin itself) and two closed ones (LuxGate and parallel Masternode). LuxGate is a technology that creates conditions for the interaction of verified blockchains, and parallel masternodes are a function of the blockchain to speed up transactions and increase their reliability. The interaction of these elements provides communication between blockchain chains and significantly expands their capabilities.

LuxCoin (LUX) storage is possible in a cold wallet (selected for the operating system), in addition, storage on the exchange and on the web wallet is acceptable, but unsafe. For mining Luxcoin, powerful video cards are used, the process itself takes place using the ccminer and cryptodredge miners.

LUX has high potential, investors are advised to follow its forecasts. The number of coins is limited.
Which cryptocurrency is the most profitable for investing

Any investment involves both reward and risk. Is it possible to ensure the safety of investment when choosing a cryptocurrency?

Investing in cryptocurrencies in the short term is pointless. There is no need to strive to take possession of the cryptocurrency in the hype, it is better to wait for the achievement of the "red zone" (when the coin falls in value), or a period of long-term stability of the coin rate.

If there is a sufficient amount for investments, it is better to choose several types of cryptocurrencies for investments at once. In this case, the loss on one coin can be offset by the win on the other. It is better to start the practice of investing with “long-livers” like bitcoin, acquiring it at the moment it is in the red zone. You can supplement the "investor portfolio" with the following cryptocurrencies:

    Ripple (XRP): A very well-known coin, but experienced investors do not recommend buying it due to suspicions of fake transactions.
    Ethereum (ETH): An active and strong coin to invest, among the disadvantages only the huge total number of coins is noted.
    Bitcoincash (BCH): Has a great chance of hype.
    EOS: a coin recognized as an analogue of ether, the advantage of the coin is that, depending on the state of its main competitor Ether, there is hope for hype.
    Litecoin (LTC): recognized as an analogue of bitcoin, recommended for investment.
    Iota (IOTA): a popular cryptocurrency among investors, recommended for investment.

We can talk about cryptocurrencies for investment for a long time, but after analyzing the advantages of investing, we note the following: 30% of users prefer investing in bitcoin, 20% preferred Ether, 10% were divided between Monero, Iota and Zcash, Binancecoin, Ethereumclassic, Bitcoincash each have 5% of votes.

When choosing a cryptocurrency for investment, experts recommend paying attention to the following important points:

    Coin Development Team

The development team must be transparent, immediately weed out those who wish to remain private. A project for future investment should not have pitfalls and unanswered questions. Even in the case when the development team of the coin is transparent, but its founders are little known, it is better to exclude the coin from the list of options. Choose leaders, so the chances of reward will be greater and the risks are less.

    Portal selection

If coins with a suitable team have already been selected, you can go to the choice of a portal where you can track the activities of developers regarding the project (we recommend the Github portal). All work done with the project will be displayed in red rectangles, which will help users to immediately focus on the desired element.

    Social network

Such networks will help determine the activity of a coin, find out about its position on the exchange, find information about the advisability of investing in each individual coin. By and large, the steeper the PR of the coin, the more reliable it is. At the same time, it is important to pay attention not only to the activity of the coin itself, but also to the content of the posts under it: the “correct” coin has many posts with meaningful text.

    Purpose of the coin

The next step will be to determine the main task and purpose of the selected coin. Focus on coins that aim to create something new, unique in their own way. Only then will it be in demand, which means that it can be considered as an investment object. Features such as privacy, decentralization and the creation of smart contracts are a mandatory basis for coins, that is, this is a conversation about everything and nothing.

    Coin and company status

There are several statuses of coins: fully working product, prototype, beta version, alpha version, idea only. In the first case, the coin is active, and this is the best indicator, the next two types of status speak of stability, and only in the latter case, you need to be careful. Such coins, in general, have existed for a long time, do not carry much value, projects are likely to be completed soon, since their desire for development is not observed. However, some projects in the process of active work simply forget to update the status of the crypto coin, so you should not make hasty conclusions. It is recommended to pre-analyze the information about the coin in different forums for other important points.

    Circulation of coins

This item can be considered floating. On the one hand, the smaller the number of coins, the more chances for a reward, but, as practice has shown, coins even with a large circulation often manage to shoot successfully. Typically, coins issued in large numbers will not increase in value much.

Another negative point here is that inflation is inevitable with a large number of coins.

    Stock exchange

Check if your chosen coin is listed on the main exchanges and how many active trades it contains. As a rule, even a little-known, but actively developing coin is necessarily present on the exchange.

    date of creation

The last and one of the most important points is the age of the coin: the older it is, the more HYIPs it has. Sometimes a coin may not have such an active shot at all, in this case try to find a younger analogue (often the developers create an improved version of the coin).

When you have reasonable confidence that the coin is active, developed by a good team, and has a positive status on the social network, then it will be considered a worthy investment.

It should be remembered that the owners of such investment portfolios cannot immediately count on large rewards. Recall that cryptocurrency is not a quick investment; it can take a lot of time to reach heights. When investing in promising coins, one should not forget about the risks, some crypto coins may not survive in the "harsh winter".

Often, investors, considering two crypto coins with similar positive characteristics, find it difficult to choose. In this case, it is recommended to do the following:

    Create a table by writing out all the crypto coins you are interested in in the first column.
    In the header of the table, enter information about the team, portal, social network and other evaluation criteria discussed above.
    Rate each cryptocurrency according to these criteria on a 10-point scale, while being guided by your opinion.
    Summarize the information entered and make your choice.

It is impossible to unequivocally answer the question of which coin can be considered more promising. If the coin satisfied you on all of the above points, then it will be the most promising for you. For example, having analyzed the parameters of a promising crypto coin, it is worth noting bitcoin (it is recognizable and in demand all over the world), and Ether can be considered the next coin (it is also very popular and stable).

Subject to all the above parameters, it will not be difficult for you to choose an investment cryptocurrency portfolio and make profitable investments in cryptocurrency.