What you need to know about investing in ICOs.
Are you ready for a new kind of investment? Give cryptocurrency a try.
If you have been keeping an eye on financial news, or even the regular daily news for that matter, you may have found that Bitcoin has made a splash in finance and investing. You have probably heard things like “invest in Bitcoin” or different opinions on how the Bitcoin market is doing, or the phrase “mining for Bitcoin.” What is Bitcoin? Why is it all over the news?
Bitcoin is part of a bigger financial movement called cryptocurrency, a digital cash system with a fairly recent birth. To help you grasp the idea, we’ve laid out the basics of cryptocurrencies including what they are, where they came from, and what to do with them.
If you are nervous about investing in ICOs, or initial coin offerings, here are a few tips to get you familiar with the process.
What is Cryptocurrency?
Most simply put, cryptocurrency is digital money that uses cryptography for security. Cryptography is writing and solving puzzles. With the cryptography step, it is difficult to counterfeit. The currency does not have a central authority and can be used for a variety of things such as buying goods and investing.
- Do your research
Whether you are thinking of investing in more well-known cryptocurrencies like Bitcoin or newer coins that are still in the ICO phase, it’s always important to know exactly what you are investing in.
When a new cryptocurrency appears, the startup company uses ICOs to raise money and create a whitepaper that explains how the currency will work. The document will tell potential investors how much money will be needed and all other details that investors will need to know. With this paper, a potential investor will have all the information they need to make a decision on whether or not they’ll choose to invest, such as how long the project will take to launch, what kind of money is accepted, and how much of the tokens the startup members will keep for themselves.
Know exactly what the startup is hoping to achieve. It can be easy to fall into scams. Avoid investing in ICOs found on social media, emails, and blockchain community groups.
- Invest what you aren’t afraid to lose
Don’t forget that you are taking a risk with cryptocurrencies. While digital currencies have the potential to earn you money, the worst thing you can do is invest your life savings.
The crypto market is very volatile and tends to make huge swings in price. While you may see that cryptocurrencies are at an upswing, doesn’t mean it will stay that ways. Experts recommend setting aside an amount of money that you are okay will losing entirely.
If the currency is a huge success, then you made a great investment. If not, you aren’t losing the money you need for you and your family.
- Find a crypto-friendly nation
Many countries, like the People’s Republic of China, for example, have strict laws surrounding currency. ICOs have been banned and cryptocurrency exchanges have been frozen. Bitcoin mining is regulated and cryptocurrency or any internet activity surrounding crypto has been banned. Many nations are concerned with the security of the currency. Others aren’t willing to introduce a new currency into their economy. These nations are shutting down exchanges and refusing services to cryptocurrency companies.
Other nations, however, are excited about what crypto can mean for their economy. These crypto-friendly countries are the best places to conduct digital currency business. We have listed some of the most recognized countries that are encouraging the use of cryptocurrency around the world.
- Look around
There are so many different kinds of cryptocurrencies in the world today, with more developing around the clock. Don’t limit yourself to just one. Like any other portfolio, diversification could help bring in more profit and hedge yourself from a bad investment.
Here are a few different cryptocurrencies available now:
Bitcoin- This is the first and most common form of cryptocurrency.
Litecoin- Launched in 2011, Litecoin is one of the first cryptocurrencies and is often referred to as the silver to Bitcoin’s gold. It is very similar to Bitcoin but it has a faster block generation rate which means faster transaction confirmation.
Ethereum- This cryptocurrency allows Smart Contracts and Distributed Applications to be built and run without fraud, control, interference, or downtime.
Zcash- Zcash is different because it offers added private and selective transparency of transactions that are recorded and published on a blockchain.
- Ask for help
If you aren’t sure about making an investment of this kind, or just need help with your portfolio in general, it’s a good idea to call upon the knowledge of an SEC-registered investment advisor. These advisors are familiar with various markets and are there to help get the best returns from your investments.
At Alpen Partners, we believe the journey through financial planning and investment shouldn’t be done alone. Whether you are well-educated in the world of finance or you are just hoping to earn money through simple investment, an advisor can be by your side, guiding you through every step.
When looking for a wealth manager, don’t you want to know that your investments and wealth are in good hands? So do we. That is why Alpen Partners has chosen to register with the Securities and Exchange Commission as an investment advisor. SEC-registered advisors are certified and tested and can offer elite financial planning and investment advice.
Still have questions?
If you are still figuring out the world of cryptocurrency, read our introduction to cryptocurrency.
To help you grasp the idea, we’ve laid out the basics of cryptocurrencies, including what they are, where they came from, and what to do with them. The world of cryptocurrency is new. Don’t be left behind!