Investing in cryptocurrency projects: a mini guide for beginner investors

Are you ready to boost your wealth with cryptocurrencies? To go further on your understanding of investing in cryptocurrency, check out this mini guide.

  (photo credit: INGIMAGE)
(photo credit: INGIMAGE)

    Are you ready to learn how crypto-assets can boost your wealth? Although some experts are still skeptical, it is undeniable that blockchain technology and its many uses will be part of our future. 

    Cryptocurrency investment and trading can be made in many ways. You can go for long-term investment, day trading, scalping, investing in upcoming crypto projects, or investing in stocks from the crypto sector.

    To go further on your understanding of investing in cryptocurrency, check out this mini cryptocurrency investment guide.

    How to select an interesting crypto project?

    Choosing a project to invest your savings in can be complex. Every day, hundreds of tokens appear or disappear. Stories of scams and thefts frequently appear in the news. Many self-proclaimed experts advise betting on the "next Bitcoin." In summary, getting lost in a jungle of information about a market that never closes is easy.

    As in the stock market, no one can determine with certainty whether a company will increase in value or not. However, we can limit the risks and maximize the chances of betting on a crypto project that has potential.

    Analyze the documentation and media at your disposal

    Spend some time scrutinizing the documentation and materials available on the web about the crypto project you are interested in. The website is the first step: it usually allows you to disqualify or not a crypto project.

    The white paper should be easily accessible on the website. This document is comparable to the business plan of a start-up company. It should explain:

    • the objectives of the project;
    • the technologies used;
    • who is in charge of developing the project;

    Also, check the legal notice and contact pages. Information concerning a company's status and the representatives' identity is generally accessible from the bar at the bottom of a site's page.

    What cryptocurrencies to invest in?

    As a newbie in the field of cryptocurrencies, it is not recommended to seek, at all costs, the next nugget. Maybe you will get there one day by improving your understanding of the crypto markets. Here are some ideas for investing in cryptocurrency in 2022.

    Cryptocurrencies favored by beginners

    To start, it is safer to focus on already well-established cryptocurrencies: Bitcoin, Ethereum, Cardano, and Solana. One of the essential reasons is that the information available on these cryptos and their blockchain is understandable and easily accessible.

    Bitcoin (BTC) is the preferred cryptocurrency for most beginners. Often compared to a digital version of gold, Bitcoin is the most traded cryptocurrency in the world.

    Ether (ETH) is also positioned as a good starting point. Ethereum blockchain technology is used in the majority of decentralized finance projects. These projects use Ethereum to r issue smart contracts. The growing adoption of decentralized finance is creating a strong demand for Ether.

    Other crypto-assets, called "alternative coins" or "altcoins," emerged in 2021. According to many blockchain specialists, Cardano (ADA) and Solana (SOL) are among the tokens with high development potential. They will probably rank among the major caps in the years to come.

    Invest in crypto projects without buying cryptocurrency

    The sometimes extreme volatility of tokens scares away many investors who fear a speculative bubble. Others are anxious about making a mistake or not securing their cryptos well. Fortunately, there are solutions to expose yourself to the blockchain innovation, metaverse, and cryptocurrency sector in other ways.

    Investing in crypto ETFs

    Futures contracts are financial instruments that anticipate changes in the price of an "underlying" asset in the future: a stock market index, a share, or a digital asset such as cryptocurrency. This financial asset is bought and then sold at a determined price and quantity on a date scheduled from the purchase of the contract.

    The main interest of this ETF is that you can invest in it by buying shares via a securities account without buying Bitcoin directly.

    Build a basket of targeted stocks on the stock market

    Apart from ETFs, it is possible to buy shares of listed companies already present or planning to invest in the blockchain sector. Here are some examples :

    Coinbase (NASDAQ: COIN): crypto platform;

    Block (NYSE: SQ): payment application, blockchain innovation with Square Crypto;

    Nvidia (NASDAQ: NVDA): the world's largest producer of graphics processors used to mine cryptocurrency;

    IBM Blockchain (NYSE: IMB): blockchain research and development.

    Choose wisely a platform to invest in and trade cryptocurrency.

    Players have multiplied in this very lucrative market. 

    We strongly recommend that you refer to a platform whose legitimacy is certified by the financial authority in your country. 

    There are, of course other criteria to take into account when choosing a platform:

    • its date of creation;
    • the cryptos exchanged;
    • its costs;
    • accepted deposit methods;
    • the opinions and feedback of its customers;
    • the level of liquidity of the platform.

    If you opt for automated trading without using a trading intermediary, you should perform a similar selection process. Whether you are choosing a brokerage company or auto trading software, getting as much as possible info about the company is essential. The reviews, such as Biticodes review, in the case of trading software, are a rich source of detailed info regarding the platform's features and reliability.

    Automated trading

    As we mentioned above, auto-trading cryptocurrencies is also a viable option, especially for newbies in the market. Nevertheless, these auto trading tools are also used by professionals since they are designed to detect minor movements on the market, undetectable to humans. So, if you have already dedicated some funds to investing and trading cryptocurrencies but are concerned about your skills, bot trading is a great thing to try out. 

    However, venturing into trading without at least basic knowledge about how the market works is not recommended. Therefore, even if you go for bot trading, make sure you dedicate some time to learning the principles of some trading strategies and the main factors that affect price movements.

    Last but not least: never invest the funds you cannot afford to lose. Never put at risk the money you need for your everyday life and expenses. Make sure to have dedicated funds only for crypto trading. Finally, start small and with caution, one step at a time. We hope this mini guide was a useful piece of info and the first step towards your successful trading career. 

    This article was written in cooperation with Markhur Studios