Crypto is going mainstream – artists sell NFTs, small businesses accept payments in crypto, and in some countries, it’s even possible to pay bills with cryptocurrency. Individual investors are interested in buying cryptocurrency to gain profit from it, though it may be confusing for newcomers.
So, in this article, we will discuss what you should know before buying and selling cryptocurrency.
What cryptocurrency to invest in?
Be careful and thoughtful when deciding on what cryptocurrency you want to buy. There are a lot of options nowadays, including stable and relatively safe Bitcoin and more unpredictable altcoins. Before buying any coin, consider studying them extensively.
Amongst other altcoins, we chose the six most promising ones in our opinion:
Solana (SOL)
Solana is often compared to Ethereum. Despite the similarities, Solana is easier to code and way cheaper. As long as Ethereum’s fees are this high, Solana seems like a rather strong competitor.
Solana works on a unique hybrid of PoS and PoH (proof-of-history) mechanisms. It makes transactions as quick and secure as possible.
SOL was launched in 2020, and back then, SOL’s price started at $0.77. By late October 2022, its price got around $31.15.
Monero (XMR)
Monero is positioned as a blockchain designed to maximize user privacy. It provides enhanced user anonymity by hiding this data and other transaction details.
The network provides transaction privacy on many levels by using special features. One of the most useful features is using stealth addresses. These one-time addresses are deleted after each transaction.
XMR is considered one of the most reliable coins out there and worth your attention if you prefer time-tested coins.
NEAR Protocol (NEAR)
NEAR Protocol was designed as a community-run cloud computing platform that provides an environment to host the creation of other decentralized applications (DApps) like non-fungible tokens (NFTs). The network launched its mainnet on April 22, 2020. NEAR has been used for processing transactions, storing data, running validator nodes, and providing governance for the network.
NEAR is a promising network with the capacity to host other applications. In the future, influential projects may be built on the network.
TRON (TRX)
TRON is a blockchain-based project designed to build a platform for digital entertainment. It is supposed to enable a fast and secure decentralized data distribution platform that is free from censorship. The platform seeks to provide its participants with a fair and reasonable distribution of the income generated by the platform’s content.
Network users can block their tokens for a while to gain the “power of TRON.” Although users cannot use tokens if they are blocked, this ensures that they will not be used by anyone else.
TRON has its advantages over other coins as it is much faster than some of the top coins.
Litecoin (LTC)
Litecoin is often a leading indicator of the rest of the cryptocurrency world. Traders will watch the price of LTC, even if they choose not to trade it. When Litecoin starts to take off, risk appetite spreads, and many smaller markets are about to have explosive gains.
The computer code behind Litecoin is almost identical to the code for Bitcoin. Litecoin has a fixed supply and a halving system like Bitcoin does. This means that the reward for mining blocks will be smaller as time goes on. Litecoin is proof-of-work, much like Bitcoin.
Litecoin has four times the supply of Bitcoin, with a cap of 84 million LTC. Litecoin also lowered the block generation time to just 2 ½ minutes versus 10 minutes on the Bitcoin network, making it a faster solution for sending and receiving.
Litecoin may have a substantial risk-to-reward ratio compared to other financial assets, that’s why it may be a relatively safe choice for newcomers.
Aptos (APT)
Aptos’ mainnet was officially launched on October 12, 2022. Aptos claimed its blockchain could process up to 160,000 transactions per second, making it one of the fastest chains. An Aptos engineer discovered the blockchain was very efficient in NFT minting. According to the Aptos official blog post, the devnet blockchain is able to mint millions of NFTs in less than an hour. Aptos believes that this number could increase drastically on the mainnet.
Aptos does seem like a potentially great investment, especially in the short run, due to its unique architecture and its proven success on its testnet. Besides, the solid reputation of the Aptos development team adds up credibility to the project. Ultimately, it appears to be a good investment to consider adding to your crypto portfolio.
Are you able to purchase cryptocurrency?
It may not be suitable for everyone as you should invest a considerable sum of money to get a big profit. It’s not recommended to invest in Bitcoin before achieving other short- and long-term financial goals. Investors should pay off any consumer debt and ensure they’re investing enough to take advantage of their companies‘ matching contributions to retirement plans without putting any strains on their finances.
Aside from that, buying cryptocurrency does not necessitate a significant financial commitment. Users can buy in dollar increments or less on several internet marketplaces.
Can you afford to lose all the money?
Cryptocurrencies are still much like a gamble. That’s why there’s always a chance of you losing all of your money. Be thoughtful and invest only what you can afford to lose before buying and selling cryptocurrency.
What sales strategy will you adopt for your cryptocurrencies?
Decide what kind of investor you want to be first. This will help you to find the strategy which works for you. Look for underappreciated gems of crypto or invest in reliable, popular coins – it’s up to you to decide.
There are three main strategies – the buy & hold strategy, swing trading, and day trading.
The buy & hold strategy suits those who:
- Are new to crypto but want to get involved fast;
- Don’t want to stress much about the crypto investment process;
- Want to check how their crypto portfolio is doing as rarely as possible;
- Believe in the long-term potential of crypto & prefer a passive approach;
- Do not want to keep up with crypto news all the time;
- Are okay with volatility;
- Are interested in projects with strong fundamentals that will be around in 5-10 years.
Swing trading suits those who:
- Notice a bull market or a particularly volatile period and wants to make the most of it;
- Have some understanding of the market already;
- Are interested in investing in solid long-term projects but is also willing to buy/sell for short-term profit.
Day trading is for those who:
- Have a deep understanding of the crypto market;
- Have a high-risk tolerance;
- Are willing to put themselves in high-stress situations;
- Care more about profit than general concepts.
Where to buy cryptocurrency?
So how to start buying cryptocurrency? It’s not possible to just regularly buy crypto at a bank. Firstly, research buying and selling crypto and learn cryptocurrency buying tips. The responsibility is on you, as crypto exchanges are mostly unregulated, and there’s always some kind of risk. So take your time to compare and examine different services.
Talking about services that help people to buy cryptocurrency, there are several options:
Financial apps
Many financial apps do not allow you to trade cryptocurrency though you are still able to buy coins. Apps do charge you a commission, so keep that in mind.
Crypto exchanges
Crypto exchanges offer the lowest costs possible for trading cryptocurrency. If the cost is a key factor for you, that is an option. What makes them better – they don’t charge mark-ups (hidden fees built into trading prices) either. Ordinary fees differ on various exchanges.
The following platforms are considered to be the best sites for buying cryptocurrency:
- eToro
- Pionex
- Bitstamp
- Crypto.com
- Binance
Trading apps
Usually, charge no fees but spread mark-ups are charged. Here you can also buy stocks, options, and ETFs.
Traditional brokers
That’s unusual for traditional brokers to sell crypto, but some services allow users to do it. With traditional brokers, you are able to buy futures contracts for crypto or buy crypto directly.
ATMs
Buy crypto directly through ATMs. Commission there is highly likely the highest amongst other ways to buy crypto. Sometimes ATMs also allow you to sell crypto too, using cash or a credit card.
Conclusion
Perhaps, the 5 questions to answer before buying any cryptocurrency are something that any investor should keep in mind prior to taking action. But more important than simply knowing the questions is identifying the right answers.
Also, do not forget to choose a cryptocurrency wallet to keep your money in there. Choosing a good crypto payment processor is a great decision as well. The main principle is to always compare and analyze all the services you want to use before actually using them.
* The information in this article and the links provided are for general information purposes only and should not constitute any financial or investment advice. We advise you to do your own research or consult a professional before making financial decisions. Please acknowledge that we are not responsible for any loss caused by any information present on this website.
Source: https://coindoo.com/questions-to-answer-before-buying-cryptocurrency/