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9 tips to reduce risks in your first invest into the world of cryptocurrencies

9 tips to reduce risks in your first invest into the world of cryptocurrencies

9 tips to reduce risks in your first invest into the world of cryptocurrencies

Cryptocurrencies have gone from being an exoticism typical of geeks, gangsters, or financial adventurers, to becoming the object of desire of millions of people worldwide. According to data from different reports, we say “object of desire” because, such as the Finder global cryptocurrency adoption ranking. Around 19% of surveyed adults have cryptocurrency in their possession.

Other interesting data that emerges from this study is demographics, where we see that globally men have cryptocurrencies in a more significant proportion than women. In degree of adoption, Spain ranks 23. with a 12% rate; Vietnam is first, with 41%, while Belgium, with 26%, leads the EU. Bitcoin is the most common cryptocurrency.

Cryptocurrencies, the jewel in the crown to invest?

Cryptocurrencies have been with us for just 12 years, since the emergence of Bitcoin on the world financial scene back in 2009, after being theoretically proposed in the 80s of the last century. Bitcoin is the quintessential cryptocurrency based on blockchain technology, which at this point is a term that has remarkably permeated society. With proof-of-work algorithms to carry out all cryptographic operations that guarantee the security and traceability of the chain of blocks where the transactions carried out with Bitcoins are kept.

9 tips to reduce risks in your first invest into the world of cryptocurrencies
9 tips to reduce risks in your first invest into the world of cryptocurrencies

After Bitcoin, other cryptocurrencies called “altcoins” began to arrive, the alternative currencies to Bitcoin. Any crypto other than Bitcoin is called an “altcoin.” They have a similar technological foundation, where transactions are recorded in the blockchain on which each cryptocurrency is based using different algorithms such as proof of work itself or proof of stake.

Currently, there are more than 10,000 cryptocurrencies, although not all of them have a financial interest. The most common after Bitcoin (BTC) are Ethereum (ETH), Ripple (XRP), Litecoin (LTC), Bitcoin Cash (BCH), Cardano (ADA), Stellar (XLM), or Dogecoin (DOGE).

An unstable financial product

After these years, cryptocurrencies have eliminated reluctance about their future or survival. At least the main ones are here to stay, although subject to variations in their value that depend on milestones that cannot always be predicted using the patterns followed in other fields, such as the stock markets and the traditional actions.

The decisions of governments such as China prohibiting mining and transactions with cryptocurrencies, for example, are the cause of falls in its value that can represent very significant percentages of its exchange rate before these movements. When he allowed Bitcoin to be used to buy his Tesla cars, Elon Musk caused it to rise dramatically (and, therefore, that of other currencies such as Ethereum), but when he banned it, it caused another earthquake in this market.

9 tips to reduce risks in your first invest into the world of cryptocurrencies

9 tips to reduce risks in your first invest into the world of cryptocurrencies

Any regulatory or commercial decision related to cryptocurrencies entails changes in their valuation, which is why we are dealing with a high-risk financial product.

In addition, it must be taken into account that, is operating with cryptocurrencies, it is necessary to have a digital wallet where to store them. Maintaining these wallets is essential to ensure that our Bitcoins or Ethereums, or the currency in question, are in our hands. In many cases, third-party wallets are used, subject to hacking or embezzlement.

It is not the first time a company with managed wallets has been attacked, leaving customers with nothing. Although no company (regardless of the sector in which it is dedicated) is susceptible to hacking, it is essential to know how to choose where to put our money and to understand what security measures have been implemented to reduce this risk as much as possible.

However, it is possible to enter this world progressively and consciously thanks to platforms such as Bitpanda, which are in a position of “facilitating intermediaries” between the world of large markets and the needs of small investors. It is possible to dedicate small amounts of money. It can start from 1 euro to invest in cryptocurrencies and stocks or metals thanks to the fractional investment modalities, a proposal that only Bitpanda makes available to users in Europe. But let’s see how to manage our money with some security.

1. Investing is a job

To enter the world of investment, be it 1 euro or 1,000, it is advisable to adopt a proactive attitude. Investing is not gambling and, eliminating elements of risk (at least, those that depend on us), it is convenient to spend time knowing what we are going to bet on. Bitpanda calls it “quality investing.” In this article, you can find this advice developed.

2. Investing carries risks, always, so you have to assume them

However, no matter how much you prepare, you are never exempt from suffering losses. The key is to see losses as part of this investing activity. Not everything depends on us, and nobody has the magic wand of truth.

The point is to think in terms of probabilities and smooth out those that have to do with losses. Bitpanda does this through products such as crypto indices and ETFs, where it combines different cryptocurrencies and different stocks (in ETFs) so that the failures of some offset the gains of others and vice versa.

3. Start with small investments

A platform like Bitpanda supports investment in cryptocurrencies and shares from 1 euro. It is an extraordinary opportunity to enter this world without compromising economic stability. A fundamental rule is not to invest more money than you are willing to lose without causing your finances to falter.

Yes, you may think – if you win – that you could have harvested a more significant amount if you had invested more. But you would also have lost more otherwise. Remember, we are not playing the lottery: it is a job, and you have to become familiar with the basic operations of trading before you can take on more significant investments.

4. Study, study, study

There are hundreds of educational resources available online to familiarize yourself with investment terminology and strategies. Before getting down to business with large-scale movements, it’s good to practice taking advantage of how a platform like Bitpanda makes it easy.

Bitpanda itself has educational resources, and in many cases, you will be able to put the described strategies into practice directly from our asset management app. Acting quickly can be critical in some strategies, so it is essential to understand the tools at our disposal fully, have funds in our fiduciary money ( fiat ) account, take part of that flow to our wallet to carry out transactions, etc.

5. Crypto operations are irreversible: be careful

It is important to note that operations with cryptocurrencies on their network ( blockchain ) are irreversible: once a transaction has been made, there is no going back. So be very careful when sending crypto from one wallet to another.

The good thing about cryptocurrencies is that they cannot be hacked (note that wallets can if the companies are not trustworthy). Before choosing a company to trade crypto with, make sure it is reliable and reputable while having the right tools for you.

6. Choose your assets well

This tip is pretty obvious, but high-level decisions need to be made to invest in cryptocurrencies. Some currencies are more stable than others, subject to less variability. Bitpanda allows trading with more than 80 cryptocurrencies. Bitcoin is usually the gateway for many investors; it is the first, the most popular, and approximately 40% of all investment in the crypto market is in Bitcoin. 

For those who do not know which crypto to choose when they start, Bitpanda has crypto indices. Some “baskets” include the 5, 10, or 25 most essential cryptos in the market and are readjusted every month.

9 tips to reduce risks in your first invest into the world of cryptocurrencies

7. Do not get carried away by impulses.

In investment, psychological phenomena have their equivalent in other areas of our lives. Like FOMO ( Fear of Missing Out ), which makes us feel overwhelmed thinking that we are losing an opportunity by seeing others doing something, be it going to an event or investing in a cryptocurrency.

Making decisions under the influence of these emotional states is not the best idea for investing. The ideal is to adapt your strategy and stick to it. Choose suitable assets and follow the evolution in the long or short.

8. Investing is fine, but do not lose sight of the profits.

In investments, it is essential to know when to reap the harvest. The dynamics of the asset itself can hook us, but if there comes a time when the profitability is within what we expected as a goal, their thing is to monetize the assets and move on to something else. Or the same, but differently, starting from a solid base.

Diversifying is a strategy that contributes, well carried out, to soften the statistics, cushioning possible losses (and possible gains, of course). In other words, we move out of the pitch and into the quieter investment. Balls are more like the world of betting than investing; remember that.

9. Maintain security policies for your data

Trading with an app like Bitpanda or from a computer has its advantages. However, if you have money at stake, remember to define strict security policies for your devices and applications. Use double factor authentication in your accounts, install antivirus, and do not load applications of doubtful origin. Do not leave your device to anyone, and make sure that no one takes photos of you when you use your passwords, such as those of the wallets.

If you have hardware devices to store your data, they should be encrypted. Any precaution is minor when it comes to protecting our investment.

Invest yes, but with access to our funds

An important detail, especially if we are users on foot, is how we dispose of our assets if we want to mobilize them. Some platforms do not make it easy to convert our cryptocurrencies into a way to pay or buy. Bitpanda, on the other hand, has created a complete platform that allows both investing and trading with our digital assets.

The way to offer services such as fractional investment is by creating an intermediate platform conveniently certified and secured by the most rigorous standards of the EU. Bitpanda manages the digital assets that it makes available to its clients, transforming them into intermediate financial products offered to users of the platform.

The user sees digital assets even when the exchanges are closed or infractions, but it operates on the Bitpanda platform in practice. It, in addition, offers its clients a debit card, which is backed by user funds within the Bitpanda platform, to its token ecosystem: 

BEST is built on the Ethereum blockchain and is a token designed to reward users’ trust in the Bitpanda platform. In this way, users can earn BEST based on their trading activity amount of BEST they have invested while receiving exclusive benefits. It is also possible to invest in BEST as we would in any other crypto asset on the platform since it also fluctuates in the market.

In short, the attraction to the universe of cryptocurrencies is becoming more robust. However, it is advisable to enter it with caution and in the hands of a solvent and reliable company.

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9 tips to reduce risks in your first invest into the world of cryptocurrencies

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