May 3, 2021

How to Invest in Cryptocurrencies

by Jens Ischebeck

Several cryptocurrencies exist in the world today.

Bitcoin, (BTC), is widely considered the pioneer in the world of cryptocurrency.

Since its inception in 2009, it has become the most popular cryptocurrency and a trendsetter.

Other popular cryptocurrencies are:

● Ethereum (ETH) which was released in 2015 and is the second largest after bitcoin,
● Litecoin (LTC) was launched in 2011,
● Cardano (ADA),
● Polkadot (DOT),
● Bitcoin Cash (BCH) came into existence in 2017,
● Stellar (XLM),
● Chainlink,
● Binance Coin (BNB),
● Tether (USDT) and,
● Monero (XMR)

What is Cryptocurrency?

A Cryptocurrency is a virtual and digitally-encrypted currency. It is an intangible online currency which is used as a medium of exchange. Unlike conventional currencies, cryptocurrency is devoid of centralized control by government agencies.

Why Africa is Becoming a Hotcake for Cryptocurrency Investments:
Investment in cryptocurrencies is gaining ground in Africa as many investors have embraced the digital currency.

The following factors help corroborate this statement:

● African countries’ economies are prone to fluctuations, hence the need to invest in other currencies to beat local currency devaluation. Cryptocurrency provides the much-needed alternative to circumvent inflation.

● Mobile banking is doing wonders in Africa. For instance, M-Pesa in Kenya has revolutionized digital money transfers. The introduction of cryptocurrencies provided similar qualities to mobile banks. In fact the cryptocurrency exchange platforms quickly incorporated mobile money transfers as a mode of payment.

● A majority of cryptocurrency investors strive to escape poverty. Such a notion has driven majority of youth to invest in the best cryptocurrencies.

Why Invest in Cryptocurrency?

People invest in cryptocurrencies for different reasons. The most common reasons are:

● For trading; Investors under this category buy low and sell high. As a trader, you need to be online 24/7 to monitor crypto markets. Trading in cryptocurrencies is conveniently facilitated by crypto wallets which make it possible to monitor markets through mobile phones.

● Online Purchases; You can use cryptocurrency to buy things online from stores that accept it as a payment option.

● To store wealth; Do you have excess funds and wish to store for future use? Investing a certain percentage of your portfolio in cryptocurrencies guarantees diversification of your income streams.

● For investment. Here, it is common to ask questions like; How do I invest in cryptocurrencies? How do I start investing in cryptocurrencies?

If you are acquiring cryptocurrency for investment, it is prudent to buy and wait. Here, you buy, HODL (crypto slang for hold) and hope the price continue rising. Majority of cryptocurrency investors prefer to invest for long term.

Who Can Invest in Cryptocurrency?

Cryptocurrency investors can either be institutions or retail.

Institutional investors includes endowment funds, banks, mutual funds, family offices, asset managers, and insurance. Institutional investors have client’s interest to secure. For them, regulatory requirements, risk management and traditional investment processes need to be observed.

Those institutions seeking to invest in cryptocurrencies need the technical infrastructure to manage them easily, efficiently and securely.
They are faced with the problem of converting cryptocurrencies to bankable assets like stocks and bonds.

Retail investors buy and sell in small round lots. They are usually young, techno savvy individuals who wish to diversify risk and increase earnings. Under this category you invest in cryptocurrencies by buying when the value is low and selling high.

Is Investment in Cryptocurrency a game of Chance?

Oftentimes people hold the belief that investment in cryptocurrencies is similar to gambling. Whatever you call it doesn’t matter. It is just like any other forex trade, though with high risks because of its volatility. The catch phrase here is ‘high risks, high returns.’

Trending questions like ‘How do I Invest in cryptocurrencies?’, abound everywhere. The answer is in how you cleverly manage your portfolio. Invest in cryptocurrency a certain percentage that you can afford to lose in case the markets crumble.

The Process of Investing in Cryptocurrency

Cryptocurrencies are available in the marketplaces facilitated by cryptocurrency exchange platforms such as Binance and Paxful among others.

Investors around the world, trade at any hour of the day through peer-to-peer (P2P) marketplace which is open 24 hours.

How to Invest in Cryptocurrencies

Here it is prudent to ask oneself questions like: How to invest in cryptocurrencies? How to start investing in cryptocurrencies? What does it entail?
Investment in Cryptocurrency entails the following processes:

1. Opening a wallet with a reliable crypto exchange platform
2. Verification of details
3. Acquiring cryptocurrency
4. Selling cryptocurrency

1. Opening a Cryptocurrency Wallet

Whether you intend to trade, store, or invest in Cryptocurrency, you need a wallet. A wallet is like a bank account. It serves two purposes:

● for transactions (buying and selling), and;
● as a store for value to keep your bitcoins.

You obtain this wallet through a reliable platform which facilitates the buying and selling of cryptocurrencies. It is free to open a cryptocurrency wallet. You only need to have an email address, ID, phone number, smartphone, and photos.

This process is facilitated by cryptocurrency exchange platforms such as Binance, Paxful, CEX 10, Local Bitcoins, eToro, among many others.

Binance wallet enjoys popularity because of its array of features such as:

● Its support for multiple cryptocurrencies. If you are into diversification, then this feature suits you.
● It is very secure and trusted world-wide. It accepts users from around the world.
● Its competitive rates
● Its interface is user-friendly coupled with availability of a selection of cryptocurrencies such as Bitcoin, Ether, BNB, XRP and Tether including major altcoins.

2. Verification of Details

After successful registration, your account is then verified against the details provided. An SMS message is sent to your phone. Similarly, a link is emailed to your address to validate email address.

You must secure your account by use of strong passwords supported by two-factor authentication (2FA) i.e. for every login you get a code in your phone.

Upon confirmation, you are given a unique reference number which is your identification criteria. You can use it when someone is paying you in cryptocurrency. The same reference number can also be used to earn when referring friends and family.

Once verification is done, you are set to begin your cryptocurrency investment journey.

3. How to Start Investing in Cryptocurrencies

This is where the real action begins. Don’t worry, it is normal to get intimidated at first. There is nothing strange, but only frightening terms that you will encounter and conquer along the way.

You now have an account, and the next step is to load it. Lots of excitement here as you are about to own Bitcoin’s for the first time. There are three ways of kick-starting your investment in the Cryptocurrency journey:

● By buying cryptocurrencies at the marketplace, usually referred to as peer-to-peer (P2P). Here, buyers and sellers of cryptocurrencies are connected through the exchange platforms:

● Buying by way of Credit and debit cards;
● By requesting clients to pay you in Cryptocurrency for goods and services offered. In addition to other payment platforms such as PayPal, most online businesses pay for services rendered to them by cryptocurrency.

Buying Cryptocurrency at the P2P marketplace involves the following steps:

1. Logging into your account and clicking on ‘buy’ window.

2. Select your preferred currency and payment mode. There are over three hundred payment modes available. The most popular payment modes in are M-Pesa, Chipper cash and bank transfers. Make sure to fund your payment mode beforehand for fast transactions.

3. You will find several offers under the above parameters. The best priced offers normally top the list whilst the most expensive offers appear at the bottom of the list.

4. Next, you need to exercise caution by making sure the seller is genuine. As is characteristic of online businesses, scammers abound. You want to ask, how do I identify an online scammer? Look out for red flags by subjecting the seller to an online appraisal.

5. Let your decision be guided by checking the number of successful trades and positive feedback earned by the vendor. Cryptocurrency exchange companies have made provisions whereby for each successful trade, the trading partners leave feedback to each other.

6. Once you settle on a particular seller, click on ‘buy’ window. The cryptocurrencies are automatically sent to escrow to secure them until the completion of trade.

7. A chat window that appears during trade facilitates exchange of payment details with the seller. Make sure you follow the instructions as given by the seller.

8. If you are satisfied with the arrangement, send money to the seller and click on “paid”. On receipt of funds, the seller releases the particular cryptocurrency. Finally, you’ve got cryptocurrency!

9. What if there is a dispute? The reason why funds are held in escrow the moment you initiate a trade, is to enable moderation in case a dispute arise.

4. How to Sell Cryptocurrency

You now have cryptocurrency, but want to sell them either to make a profit or just to liquidate them into cash. You must go back to the marketplace. There are two ways of going about this:

● By creating own offer, or;
● By looking for buyers at the P2P marketplace

Here, you follow a process similar to when buying. Remember, you want to make the most out of the sale by offering at a profit. You must be careful when giving out your payment details. Release cryptocurrency immediately you receive payments.

How to Become a successful cryptocurrency Investor

With hype and excitement over cryptocurrency, emotions may take center stage over common sense. It is wise to learn from mistakes earlier committed by others. As a rule, keep in mind the following key points before fully immersing yourself into cryptocurrency trade:

● Evaluate the crypto market carefully to understand its operation.
● Never use brokers or accept to deal outside the platforms.
● Always invest with secure wallets.

The inherent risks of investing in cryptocurrency?

Cryptocurrencies are considered highly volatile. Their value often oscillates sharply upwards or downwards in a short period. It is almost impossible to manually monitor the performance of cryptocurrency at each and every minute.

Investing in Cryptocurrencies is a new concept characterized by new technology. Cryptocurrencies investments are risky ventures. Skeptics distance themselves from such investments. The technology behind cryptocurrency is still evolving, and prone to failure if not carefully threaded.

Furthermore, there aren’t many experts in this industry yet. It is difficult to precisely predict what will happen next. Everyone is thus learning. Similarly, the future of cryptocurrencies cannot be ascertained.

To navigate around or and these risks, a solution comes in the form of a trading bot.

Trading Bots in Cryptocurrency

Bot is an automated which trades on behalf of an investor by placing purchase and sale orders based on set parameters.

Trading bots guarantees speedy response to market instability.

The success of a bot is dependent on the following:

1. Efficiency and co-ordination between the bot and the interface.
2. The effectiveness of your programmed strategy.
3. Market fluctuations.
4. Flexibility.


HODLBot

HodlBot has automated the cryptocurrency trade thus saving you valuable time. You can adjust the bot to serve your personal needs. It helps users to index and create custom portfolio across the market.

HodlBot Automatically realign your portfolio to keep it on track to avoid deviations from targets in case markets change.

HodlBot offers other features such as portfolio tracking. Unlike other bots, HodlBot employ a weighing strategy, rather than signals. It builds portfolios by establishing past performance of cryptocurrency.

Features of HodlBot

Backtesting - historical data is tested and used to forecast the performance of present similar conditions. It means you go back to a situation that occurred in the past and test it. It is an act of backdating a solution.

Indexing - Here, your portfolio is diversified by holding a variety of coins. The same are weighted in order to determine the average return of the market.

HODL indices track the performance and risks of the entire crypto market. You are encouraged to choose a HODL index that suits your strategy.

You can index the market using pre-ordered indices ranging from HODL10 to HODL 30.

● The HODL 10 index strategy, is where top ten coins in your portfolio are weighted.
● The HODL 20 Index allows you to diversify top 20 coins.
● HODL 30 looks at top 30 coins.

You are also encouraged to create your own custom portfolio using any coins listed in Binance.

Conclusion

Bot trading is a useful tool that reacts to market fluctuations.

The following are advantages of HodlBot over other trading bots:

1. Easy to use-The bot is easy to use and simplifies trading. As opposed to trading coins one by one, you can create a portfolio collection. Signing up is quick and easy. You can easily plug into your supported exchanges.

2. Cheap- The smaller the portfolio, the less the cost. You get it free the first 7 days after which you pay subscription fee of $3per month for accounts below $500.
For accounts with a portfolio of between $500-$1000 the subscription is $6 per month, whereas portfolios over $1000 attracts subscription fees of $14 per month.

3. Transparent–HodlBot interface has got material features appearing on the dashboard. You can get a clear status of your portfolios at a glance.

4. Secure- It is secured by encryption and 2FA

Trading bots require investment on time, experience and knowledge for it to function well.

You can lose money if you fail to decipher the right strategy for a given market.

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Tags

investment, trading bot


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Risk warning: Buying and trading in cryptocurrencies, foreign exchange and contracts for difference (CFD) poses a high risk to your invested capital. Therefore, only use money that you can bear to lose. These products are not suitable for every investor, so please ensure that you fully understand the risks involved.

Users who make investment decisions based on the published content act at their own risk. The published information does not justify any liability claims.