Bitcoin, the first-ever cryptocurrency, emerged in 2012 and has since become the dominant force in the crypto world. In its early days, you could have purchased a single Bitcoin for under $100, but as supply and demand dynamics took over, its value skyrocketed. Bitcoin's first major bubble occurred in 2018, witnessing a surge in its price, and it continued its roller-coaster ride, reaching its peak during early 2021 before experiencing a significant correction.
Ethereum: The Worthy Alternative
Ethereum, the second-largest cryptocurrency, offers a worthy alternative to Bitcoin. Launched in 2014, it quickly gained popularity among developers and tech capitalists due to its blockchain technology. Ethereum's cost per unit is considerably less than Bitcoin, making it more accessible to investors. While it experiences similar price fluctuations, Ethereum provides an opportunity for those who want to avoid the high cost of Bitcoin.
Dogecoin: The Popularity Contestant
Dogecoin, a relatively low-priced cryptocurrency, is a peculiar yet popular choice among speculators. Initially started as a joke by developers, it quickly became a serious vehicle for transactions and trading. While it may not hold the same value as Bitcoin or Ethereum, Dogecoin's popularity has attracted a significant number of traders and investors.
First Steps to Buying Cryptocurrencies
Getting into cryptocurrencies is relatively straightforward. Before making your first transactions, consider a few essential factors, including a reliable internet connection, a suitable payment method, and proper documentation, as most financial institutions adopt a "Know Your Customer" approach. Additionally, research and choose a suitable platform or broker that aligns with your investing and trading goals.
Choosing a Platform or Broker
When selecting a platform or broker for your cryptocurrency transactions, consider Coinbase and Binance. Coinbase, one of the oldest platforms in the crypto market, offers extensive information, news, and views. Binance is another popular choice with a wide selection of cryptocurrencies and guidance for beginners and experienced traders.
Selecting Storage for Your Cryptocurrencies
Safe storage of cryptocurrencies is crucial due to the risk of hacking. You can choose between hot wallets (online) and cold wallets (offline, like flash drives). Ensure you have a backup strategy in case your wallet is lost or stolen.
Cryptocurrency ETFs: A Derivative Approach
If you prefer a less direct involvement with cryptocurrencies, consider cryptocurrency exchange-traded funds (ETFs). While several ETFs are available outside the United States, major U.S.-listed ETFs for cryptocurrencies are expected to launch soon.
Golden Rules for Cryptocurrency Success
Here are some golden rules to follow when dealing with cryptocurrencies:
· Do your homework and conduct thorough research before investing.
· Avoid borrowing or trading on margin when dealing with highly speculative assets.
· Start with a transactional approach and use cryptocurrencies for payments in business transactions.
· Buy incrementally and dollar-cost-average to reduce the risk of market fluctuations.
· Maintain diversification across different assets to mitigate risk.
· Understand the reasons behind your investment decisions and have a clear exit strategy.
· Be a contrarian and buy low, sell high to take advantage of market trends.
· Be aware of political and regulatory risks that can impact cryptocurrency values.
Digging into Cryptocurrency Resources
To further explore the world of cryptocurrencies, consider utilizing resources like, Investopedia, Coin Gecko, Coin Desk, Bitcoin Magazine, Coin Market Cap, Cryptalker, and LinkedIn groups dedicated to cryptocurrencies. These resources can provide valuable insights and information for both beginners and experienced traders.
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