This was in 2009, but since then, bitcoin – a type of cryptocurrency – has had a volatile trading history. But as crypto markets matured and more entities entered, millions of people around the world started investing in them.
Many young investors who invested in cryptocurrencies, excited by the power of the blockchain technology and its future as an asset class, have been rewarded. Today, many of them are bitcoin millionaires and billionaires.
While bitcoin surged in value, other cryptocurrencies – Etherum, Dogecoin, UFT, CAKE, Ezy and some 4000 others – cropped up. The end of 2017 saw the biggest boom in cryptocurrencies, sweeping in over 3 million new investors and miners in the next two years. Bitcoin hit a whopping $63,000 per coin in April this year, even though it has dropped to around $46,399 currently.
If you are suddenly overcome by FOMO, do not despair. You too can become a crypto investor. But you must tread with caution and first understand the basics about cryptocurrencies and how they work.
Though cryptocurrencies were designed to be free from bank and government control, they were neither issued by banks or governments to begin with. Currently, governments around the world are waking up to cryptocurrencies and some are launching their own legal cryptocurrencies. Many others have taken policy initiatives towards arriving there.
How to buy cryptocurrencies
Cryptocurrencies can be traded on crypto exchanges just as stocks can be traded on stock exchanges. There are a number of private players who have created exchanges, where you can buy and sell cryptocurrency through digital platforms and mobile phone apps. In a bid to woo potential investors, crypto exchanges offer many value-added services, sometimes even free of cost.
If you plan an investment foray into cryptocurrencies, researching on reliable platforms, following the news regularly, and scanning the analytics will go a long way in building your own grasp of cryptocurrencies. Time spent on your exchange terminal can help you understand the nuances of trading. There are online tutorials as well that explain how to read graphs and leverage your investment. There are other indicators to show the movement of currencies, which can be learnt only through practice.
How payments are made
You may buy or sell cryptocurrencies through User Payment Interface (UPI) connected to your bank account. The exchanges also have their own interfaces that accept payments. Like in all other financial transactions, the one time password (OTP), captcha and Quick Response Code are the safe instruments of payment that crypto exchanges have also facilitated.
If you are a midlifer, or on the verge of retirement and wish to invest in cryptocurrencies, you could take the help of a younger family member who may understand the nuances of the crypto market better.
The initial investment can be as low as Rs 5,000 or Rs 10,000 going up to Rs. 50,000, which should be a part of your disposable income. A serious investor in crypto, even if it is in the initial stages, must diligently follow the market movements at least for 5-6 hours a day. One advantage is that crypto exchanges work 24×7 unlike the equity market.
Top crypto currencies of the world
Bitcoin, Ethereum, Binance coin, Solana, Dogecoin, Cardano, Litecoin, Polkadot, Bitcoin cash, Stellar, Chainlink, Tether and Monero.
Tread with Caution:
Start small as the cryptomarkets can be quite volatile, Limit your investment to just 5-10 percent of your income.
Select your cryptocurrency carefully, understand the markets and limit your portfolio to no more than 2-3 currencies.
Select your exchange carefully, particularly exchanges that offer you features such as safe transactions, storage of money in case of non activity etc
Select a cryptocurrency wallet that allows you to transact currencies with legal tender.