Introduction
Cryptocurrency’s here to stay, and if you’re willing to do a little research, it’s easy to make a decent bit of money from this new trend. But how do you invest in cryptocurrency? And what kind of investments are out there for you to choose from? You can find many cryptocurrency exchanges online, like Immediate Connect. This article will cover the different investments you can make with cryptocurrency and how each works.
What Kinds of Investments Are Possible With Crypto?
The answer to what kind of activities is permissible in the realm of cryptocurrencies is essentially anything that is legal. For instance, investing in a cryptocurrency-based startup can be done by purchasing their tokens from an exchange and holding onto them until their value increases. In the event that the startup is unable to generate profits and ultimately fails, this will result in a loss of investment. However, if the startup becomes successful, it is possible to sell the tokens and generate a profit. You can also invest in companies that accept cryptocurrencies as payment. This is riskier because no one knows how much demand there will be for crypto payments – especially when so many people are holding onto their coins rather than spending them.
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Suppose you’re looking for a long-term investment. In that case, a good option is investing in something like Bitcoin or Ethereum directly rather than buying tokens from an exchange or ICO (initial coin offering).
Exploring the Different Investment Options With Crypto
Investing in the cryptocurrency market is exciting. It’s also risky, and it can be hard to understand how much risk you’re taking.
Let’s look at the investments you can make with cryptocurrency.
- Investing in Crypto Projects
The first type of investment is investing in a cryptocurrency project. This is where you buy into an idea or product, like an altcoin or token, which has value because it will be used as part of a larger ecosystem. It could be an application that runs on top of a blockchain or something like MasterCard, which uses a blockchain for payment processing.
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- Investing in Real Estate
Another way to invest in cryptocurrencies is through real estate purchases or rentals using cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), or Litecoin (LTC). The most popular way to do this is through real estate crowd funding platforms like RealtyShares, which allows people to invest directly into property projects via equity crowd funding campaigns.
- Buying Crypto Directly
The original method, buying cryptocurrency directly, is the simplest and most direct type of investing you can make. Generally, this involves buying crypto, storing it until the value rises, and then selling it at a higher price for a profit.
There’s two ways you can invest like this:
- HODLing: HODL stands for “Hold On for Dear Life,” and it’s one of the most popular crypto investments. This way generally involves buying a bunch of valuable cryptos (like BTC, LTC, or ETH) and storing it for a long, long time until its value is far higher than what you bought it at.
- Day Trading: Day trading is the second option. While it generally takes less cash for day trading, it requires greater attention to detail. This method involves buying some crypto and selling it for a profit by the end of the business day. As you might’ve guessed, this means you’ve got to keep an eye on the price for hours. Day traders also use a stop-sell order that instantly sells their crypto once the price falls to a certain point. This helps them avoid a total loss on their investment.
- Buying From Initial Coin Offerings
Also known as ICOs, new coins and tokens are offered at ICOs by the developers for a certainly low price. If you’re good at researching, it’s not hard to invest early in ICOs that offer cryptocurrencies rooted in real-world use, i.e., the ones with a future.
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On the other hand, you need to avoid ICOs for coins with no real use case, meaning that, in the end, people have no real reason to use these cryptocurrencies.
The Takeaway
In the end, there’s almost no end to the types of investments possible with crypto. There’s a lot you can do, but keep in mind that the only way of not turning a loss is making sure that you’re reading everything you can about the cryptocurrency you’re investing in. Talk to the developers, read the whitepaper, and talk to traders to see what the crypto world thinks of it before making your investment!