Investing in cryptocurrency: basic tips from Mila's blog

Modern exchanges legally carry out transactions with cryptocurrencies. Here you can buy cryptocurrency for any amount. How to smartly invest in cryptocurrency, and what you need to know about tokenized equity, let's talk about it in the article. As an investment, cryptocurrencies are quite popular. The investment amount depends on the token that is planned to be purchased.

Bitcoin remains the most popular. The reason is that  bitcoin is  the first known digital currency that has weight as a payment system, is quite reliable and is protected from inflation. But the bitcoin exchange rate fluctuates, and investing in it is recommended for the long term.

Many exchanges set limits on minimum and maximum opportunities to purchase cryptocurrency. To form an investment portfolio based on the advice of specialists, 10% of investments in the form of cryptocurrencies is enough. Although you should start investing in crypto-assets even with smaller amounts: let it be 2-5% of the total investment.

Depending on the investment strategy, you should choose the assets that will make up the investment portfolio. If the investor is inexperienced, it is better to choose popular and well-known cryptocurrencies: Bitcoin and Ethereum. It is also worth paying attention to  the Whit eBIT token  — an internal token of one of the largest European cryptocurrency exchanges, WhiteBIT. Usually, in terms of percentage, 40% is invested in Bitcoin and Ethereum, and 20% in other cryptocurrencies.

When choosing cryptocurrencies for investment, the following indicators are used:

- cost;

- trading volume per day;

- market capitalization;

- dominance. 

In addition to Bitcoin and Ethereum, there is high demand for Cardano and Polkadot. Newbies in cryptocurrency investing often fall into the trap that when the price of a digital asset drops, they start quickly shedding coins. And when the value increases, they try to buy as many assets as possible. It is necessary to do everything the other way around: when the price falls, buy assets, and the peak value is the moment to sell in order to earn maximum profit.

The investment portfolio consists of cryptocurrencies and other: securities, ETFs. These instruments are traded on exchanges. To fill the portfolio, it is important to choose a strategy. The speed and amount of possible profit depends on it:

- Short-term investments are the purchase of resources or digital currencies and their sale after a short period. A speculative mechanism works here: the difference in price that can be obtained due to small fluctuations in the exchange rate. In this way, it is reasonable to invest volumes that you can safely risk.

- Medium-term strategies are suitable for building a moderate type of portfolio. Reference points for such investors are the price, politicians' statements, demand for assets.

- Long-term investments are designed for a period of at least 5 years. Investors do not pay attention to price fluctuations in short periods, and hold cryptocurrencies, waiting for big growth.

You can choose a strategy for any period, changing it depending on the circumstances. Currently, the cryptocurrency market is volatile, accessible and open.

The choice of investment site depends on the volume of investment. If the depositor operates with large sums: as much as 50 thousand dollars, then it is better to carry out financial operations on OTS platforms. Such a platform acts as an intermediary between the parties to the agreement, and takes a percentage for checking digital assets: their origin and legality. The most famous platforms are B2C2 and Circle Trade. OTS platforms provide high-quality financial and documentary verification of the parties to the agreement, provide the required volume of cryptocurrencies.

For investors with small sums, a profitable purchase can be made on the following online resources:

- exchanges;

- cryptocurrency exchangers;

- electronic wallets.

Among the popular crypto exchanges: WhiteBIT, Kraken, Coinbase. When choosing an exchange, pay attention to its reputation, history of work and existence in this market. Another important factor is security. The WhiteBIT platform has extensive experience in cooperation with cyber security service providers. Also, almost all digital assets are stored on cold wallets. The AAA security rating makes WhiteBIT one of the most reliable cryptocurrency exchanges.

Wallets are the primary way to store and transact with cryptocurrencies. Hot wallets are a type that must always be connected to the network. Such software is more vulnerable to hacker attacks. Cold wallets require access with an individual key. This private key is a set of special symbols and signs, known only to the owner of the wallet. Losing your private key makes it impossible to access your cold wallet, and the funds will be lost forever. Therefore, it is necessary to make several copies on reliable media. Investors usually have both types of wallets. Hot allows you to constantly carry out financial actions with digital assets. And the cold one is used exclusively for long-term storage. Cryptocurrencies have already become part of the financial system and continue to gain momentum. They are used not only as investments. Digital coins are used for payments, such as payment for services or goods. Therefore, financial literacy includes the ability to use electronic wallets, study the system of operation of crypto exchanges, investments in digital assets, which are the future.