5 tips for investing in cryptocurrency

Before you start investing, we recommend that you DYOR (do your own research) and never invest money you can’t afford to lose. Remember that historical returns are no guarantee of future returns.

1. Familiarize yourself with what cryptocurrency is and how blockchain technology works.

Understand that different cryptocurrencies can be quite different from each other. For example, there is a big difference between NFTs, so-called “layer 1” cryptocurrencies, Bitcoin, “defi” or gaming projects. These all have different properties even though they are all cryptocurrencies. Cryptocurrencies can be divided into lots of different categories and subcategories. There are always different trends going on in the crypto world. Try to get an overview of what’s shaking. And what categories of cryptocurrencies you find interesting. Pages likecoingecko.comlet you explore these.

2. Feel free to read up on the different currencies, and take a look at their so-called “white paper”.

A white paper is simply a document that explains the idea, the technology behind it and the plan for a cryptocurrency project. Think of it a bit like a business plan for a startup. You would never invest in a new business before you knew their business plan, right? White papers can easily be found on the official website of the relevant cryptocurrency, or by googling “bitcoin white paper” or “ethereum white paper”, for example. If you can’t even find a white paper or something like it, this should raise a few red flags.

3. Get inspiration and tips from experts and your friends and role models in the crypto world, but don’t copy them.

Remember that no-one, not even “professionals”, can guarantee any kind of return or that the market will go in a specific direction. When you listen to crypto experts, what you’re hearing is their subjective opinion, not a conclusion. Also, remember that sometimes it can be a bad time to buy a cryptocurrency right after a celebrity or influencer has talked about it on social media. There’s a high probability that a lot of other people will also act on this at the same time and that you will be buying at the top of a “hype”.

You can learn a lot from so-called finfluencers. But you should also always be critical of finfluencers, and always DYOR (do your own research) by reading about the project for yourself. Here are some great sources of information:

4. Diversify your portfolio.

You’ve probably heard the phrase “Don’t put all your eggs in one basket”, and this is a good rule of thumb that is about diversification and risk spreading in an investment portfolio. Savings account, funds, stocks, real estate, gold, various different cryptocurrencies… There are many different ways to diversify.

Ultimately, only you know which investment strategy is best for you. Go for what suits your finances and your appetite for risk.

5. Get an overview of the market.

Even if you invest long-term, it can pay to actively follow the news landscape, how the prices of the various different cryptocurrencies are changing and so on. Why not check outCoinMarketCap, for example. Be aware that it’s the major cryptocurrencies such as Bitcoin and Ethereum that largely control market developments.