Introduction: Investing in cryptocurrencies
The first cryptocurrency that came into existence was Bitcoin, which was built on Blockchain technology and was probably launched in 2009 by a mysterious person, Satoshi Nakamoto. At the time of writing this blog, 17 million bitcoins have been mined and it is believed that a total of 21 million bitcoins could be mined. Other popular cryptocurrencies are Ethereum, Litecoin, Ripple, Golem, Civic and hard forks of Bitcoin like Bitcoin Cash and Bitcoin Gold.
Users are advised not to put all their money into a single cryptocurrency and try to avoid investing during the peak of the cryptocurrency bubble. It has been observed that the price has suddenly fallen when it is at the top of the crypto bubble. Since cryptocurrency is a volatile market, users should invest the amount they can afford to lose as there is no control from any government over cryptocurrency as it is a decentralized cryptocurrency.
Apple co-founder Steve Wozniak predicted that Bitcoin is real gold and will dominate all currencies like USD, EUR, INR and ASD in the future and become a world currency in the years to come.
Why and why not invest in cryptocurrencies?
Bitcoin was the first cryptocurrency that came into existence and thereafter around 1600+ cryptocurrencies were launched with a unique feature for each coin.
Some of the reasons that I have come across and would like to share, cryptocurrencies were created on the decentralized platform – so that users do not need a third party to transfer the cryptocurrency from destination to another, unlike fiat currency where a user needs a platform like Bank to transfer money from one account to another. cryptocurrency built on very safe blockchain technology and almost no chance of hacking and stealing your cryptocurrencies until you don’t share your critical information.
You should always avoid buying cryptocurrencies at the peak of the cryptocurrency bubble. Many of us buy the cryptocurrencies at the top hoping to make a quick buck and fall victim to the bubble hype and lose our money. It is better for users to do a lot of research before investing money. It is always good to put your money in multiple cryptocurrencies instead of just one as it has been noticed that few cryptocurrencies grow more, some on average if other cryptocurrencies go into the red zone.
Preferred cryptocurrencies
In 2014 Bitcoin held 90% of the market and the rest of the cryptocurrencies held the remaining 10%. In 2017, Bitcoin still dominates the crypto market but its share dropped sharply from 90% to 38% and Altcoins like Litecoin, Ethereum, Ripple grew rapidly and captured most of the market.
Bitcoin still dominates the cryptocurrency market, but not the only cryptocurrency you need to consider when investing in cryptocurrency. Some of the top cryptocurrencies you need to consider:
Bitcoin
Litecoin
Ripple
ethereal
tron
Civic
golem
Monero
Where and how to buy crypto-currencies?
While a few years ago it was not easy to buy cryptocurrencies, users now have many platforms.
As of 2015, India has two major bitcoin platforms, Unocoin Wallet and Zebpay Wallet, where users can buy and sell only bitcoins. Users must buy bitcoins from the wallet only, but not from another person. There was a price difference between the buying and selling rates, and users had to pay a nominal fee to transact.
In 2017, the cryptocurrency industry grew tremendously and the price of Bitcoin rose spontaneously, especially in the last six months of 2017, which forced users to search for alternatives to Bitcoin and crossed 14 lakhs in the Indian market.
As Unodax and Zebpay are the two major platforms in India which dominated the market with 90% market share – which only dealt with Bitcoin. This gives room for other organizations to grow with other altcoins and has even forced Unocoin and others to add more currencies to their platform.
Unocoin, one of India’s leading cryptocurrency and blockchain companies, has launched an exclusive UnoDAX exchange platform allowing its users to trade multiple cryptocurrencies in addition to trading Bitcoin in Unocoin. The difference between the two platforms was as follows: Unocion only offered instant buying and selling of bitcoin, while on UnoDAX users can place an order of any available cryptocurrency and if it matches to the recipient, the command will be executed.
Other major exchanges available to trade cryptocurrencies in India are Koinex, Coinsecure, Bitbns, WazirX.
Users need to open an account in one of the exchanges by signing up with an email ID and submitting KYC details. Once their account is verified, one can start trading coins of their choice.
Users should research well before investing in coins and not fall into the cryptocurrency bubble trap. Users should look for credibility, transparency, security features of the exchange and many more.
All exchanges charge a nominal fee on each transaction. There are two types of fees: Maker fees and Taker fees. In addition to the transaction fees, you have to pay the transfer fees, if you want to transfer your cryptocurrencies to another exchange or your private wallet. The fee depends only on the coins and the exchange, as different exchanges have different price module for transferring coins.
Main Altcoins other than Bitcoin
As mentioned above, Bitcoin dominates the market with a 38% market share followed by Ripple, Ethereum, Litecoin, Bitcoin Cash. Exchanges like UnoDAX, Bitfinex, Kraken, Bitstamp have listed many other coins like Golem, Civic, Raiden Network, Kyber Network, Basic Attention, 0X, Augur, Monero, Tron and many more. If one of the coins matches your wallet, you should buy it.
But, you have to put the money in the market that you can afford to lose because the cryptocurrency market is very volatile and no government has control over it.
When to buy?
There are no hard and fast rules when buying your favorite cryptocurrency. But you have to look for market stability. You shouldn’t but at the height of a cryptocurrency bubble or when the price crashes permanently. The best time is always considered when the price is relatively stable at a low level for some time.
Method of storing cryptocurrencies
Before buying any cryptocurrency, you need to understand how to protect your cryptocurrency.
Generally, all exchanges provide a storage facility where you can keep your coins safe. One should not share one’s user information, password, 2FA when holding cryptocurrency on exchanges.
Paper Wallet, Hardware wallet, Software wallet are some of the channels where you can store your cryptocurrency.
Paper wallet: The paper wallet is an offline cold storage method to hold your cryptocurrency. It prints your private and public key on a piece of paper where the QR code is also printed. Just scan the QR code for their future transactions. Why is it safe? No need to worry about your account being hacked or any malware attacking. You just need to keep your piece of paper safe in a locker and if possible keep two to three pieces of paper wallet under your full control.
Hardware wallet: The hardware wallet is a physical device on which you protect cryptocurrency. There are many forms of hardware wallet, but the commonly used hardware wallet is USB. When storing your cryptocurrency in a hardware wallet, you just need to keep in mind that you should not lose your hardware wallet because once it is lost, you cannot get your cryptocurrency back.
A famous incident, where a person has mined more than 7000 bitcoins and stores them in his hardware wallet and keeps it with another hardware wallet. One day he threw away the hardware wallet he was storing his cryptocurrency in instead of damaged hardware and he lost all his bitcoins.
What can buy cryptocurrencies in India?
Most people assume that buying and selling all cryptocurrencies is just for investing and earning high returns in the long and short term. Bitcoin influencers and investors believe that in the coming years, Bitcoin will dominate all fiat currencies and be accepted as an international currency.
Dell is one of the largest e-commerce companies accepting bitcoin as payment. Expedia and UNICEF are other examples.
In India, Sapna Book Mall accepted bitcoin as payment using the Unocoin merchant service. People were booking movie tickets through BookMyShow or recharging their mobile using the Unocoin platform. According to the report, they have stopped the service but plan to start again in the near future.
Conclusion:
cryptocurrency is one of the growing investment sectors and it has given good returns than real estate, gold, stock markets, etc. in the past. You can buy the cryptocurrency and hold it long-term for good returns or go short-term for a quick profit, as we have seen many coins grow 1000%+ in the past. Since cryptocurrency is a volatile market and no government control over the industry. One should invest the amount in any cryptocurrency that they can afford to lose.
You can store your cryptocurrency in hardware wallet, paper wallet, software wallet if you don’t want to keep the exchange you are trading from.