Cryptocurrencies are any method of payment or exchange that is exclusively electronic. Digital money is not tangible like the dollar, euro or pound that you can get on paper or coins.
Cryptocurrency operates exclusively in the digital realm.
In the “Cryptocurrencies” section, there is a useful explanation about the origin, uniqueness and credibility of this system.
Since the beginning of 2009, with Bitcoin as the first global cryptocurrency, a financial revolution has taken place.
Most of us are primarily familiar with traditional currencies. Cryptocurrencies require a quantum leap in our way of thinking about money. This website aims to offer an understanding and easy access to the world of cryptocurrencies.
To navigate with virtual currencies we only need a Smartphone, Laptop or PC.
- Virtual Currencies can only exist in digital format
- Not a tangible asset like cash or gold
- It is another type of financial asset that works differently from the ones we already know
All monetary value is rooted in global agreement and regulation. Cryptocurrencies have entered the financial domain and their value is gaining momentum.
The cryptocurrency was created as an alternative financial system at the time of the global financial crises of 2007-2008.
Basically, it offers a new model for global financial transactions, and is outside the regulation of global governments.
The blockchain system is created in a way that the system is regulated within itself, with no room for “human” manipulation or interference.
Here lies its genius and imagination and also what makes it different from all other financial systems.
Of course, the market prices are going to decide the rise and fall in the value of the cryptocurrency. They are operating in a realm outside of government policy and their value is decided by a growing independent international financial community.
Bitcoin, with a high emphasis on security, generally takes longer (10 minutes or more) to complete a transaction. It was originally created for the storage of wealth rather than for daily trading.
There are other cryptocurrencies such as Ripple and Cardano, which use a different technology than Bitcoin. Here, transactions work much faster.
Different ways to use cryptocurrencies
- First of all, after buying, you can keep the coins in cold wallets. As an investor with a long-term perspective, you are speculating on the price, hoping to achieve a higher price.
- Secondly, it can be used as a means of exchanging products or services, since it has a multi-currency listing system. It is good to remember that not all virtual currencies are accepted for the exchange of goods or services. Without a doubt, the most accepted Cryptocurrency worldwide is Bitcoin.
Third, cryptocurrencies can also be stored in hot wallets. Basically, hot wallets are for short to medium term trading. The type of trading you want to do will influence the platform you choose. We will talk more about this later.
To continue understanding more, it is interesting to read how Cryptocurrencies, and in particular Bitcoin, originated.
There are relative risk levels to consider
There are four investment profiles:
1. Investor (Invest capital for long-term profit)
2. Swing Trader (attempts to capture profits in the short and medium term, using analysis and trends)
3. Day Trader (buy and sell on the same trading day)
4. Scalper (based on the strategy to prioritize obtaining large volumes of small profits)
When it comes to building the investment portfolio, traders generally opt for diversification, but also with a reasonable amount of concentration.
It is recommended to consult with a professional, have a plan and follow it to minimize financial risk.
investor psychology
There must be awareness of personal emotions because each person is responsible for their investment. You must be prepared to win and lose.
Some psychological factors must be considered.
1. Our emotions control our actions.
2. We have to be logical, but flexible.
3. Greed and fear are important emotions to be aware of.
4. Trust your system (have a plan when to go in and when to go out).
5. Accepting fluctuations and losses may be a required necessity.
Structure to face investments
1. Understand what type of investor profile you are.
2. You should not use the capital necessary for daily life.
Remember that this article was made for informational purposes. It is good to consult a professional before making any type of investment.
Continue your learning with the article: 3 steps to invest in virtual currencies.