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How to Invest in Cryptocurrency

It was in the year 2009, that the first-ever cryptocurrency named Bitcoin was introduced to the general public. It came as a revolution in the currency market. The world also became aware of the mining process through which Bitcoins are developed and transactions are carried out using blockchain technology.

Ever since then, cryptocurrency has been able to maintain the craze amongst the investors around the globe. Even after a slight decline in the Bitcoin market, the investors have not restrained themselves from investing in cryptocurrencies, and cryptocurrencies continue to remain amongst the most talked and researched about investment products.

Investing in cryptocurrencies is indeed altogether different. This is why we have come up with this article to provide a guide for investors like you who are planning to make an entry into the investment world of cryptocurrencies.

In this article, we are going to cover the following aspects:

  1. What is Cryptocurrency?
  2. Mechanism of Cryptocurrency
  3. How to Invest in Cryptocurrency?
  4. Options to Invest in Cryptocurrency
  5. Use of Softwares for Investing

Let’s start our discussion.

What is Cryptocurrency?

Before we move on to the process of investment in cryptocurrency, let’s first understand the meaning of cryptocurrency.

A cryptocurrency is a form of digital currency. It makes use of encryption techniques to ensure that the generation and exchange of currency units is transparent and secure. They are based on blockchain technology, a technology that uses methods to ensure that the integrity of transaction data is maintained.

An interesting feature of cryptocurrency is that they are not issued by any central bank but instead they can be exchanged between private individuals or entities (known as “peers”) without the involvement of any intermediary such as a bank.

Nowadays many user-friendly trading softwares are there that make use of advanced strategies to help you derive maximum gains out of your trade. That is how BTC Loophole and Bitcoin Traders work and serve you.

Mechanism of Cryptocurrency

You might have heard about blockchain technology. Cryptocurrencies are also based on this technology. The technology gives rise to a chain or a network of registration and distribution of information that is not under the control of any single institution like a central bank.

The data relating to cryptocurrency is stored in a public ledger. Transaction data, as well as the ledger, are encrypted and being controlled directly by the users and computer algorithms.

In the case of cryptocurrency, a software named cryptocurrency wallet is used by peers to share transactions. The software is used by the peer that creates the transaction to initiate the transfer of cryptocurrency balance to the account of another peer. Private keys are used to facilitate the transfers.

The transactions are encrypted and then added to the public ledger which can be then accessed by you if you are the user of the cryptocurrency. However, you only view the transaction amount and not the name of the party who initiated it. Since, all transactions are added to the ledger sequentially, the concept is known as blockchain.

How to Invest in Cryptocurrency

If you are planning to add cryptocurrencies as an asset class into your investment portfolios, a digital wallet is the first thing that you will need. A digital wallet is a storage medium used to store the cryptocurrencies that you buy. It allows you to store and transact the currency that you own. It is secured by cryptographic keys.

To invest in cryptocurrencies, you would need to choose a platform through which you will buy or sell the currency. These platforms direct you towards a marketplace where the currency can be traded between the investors. There are majorly two ways in which you can invest in cryptocurrency i.e. either through an exchange or a trading platform.

Talking about cryptocurrency exchanges, one of the good options is iwanttobuybitcoin.com, which is an EU regulated exchange and offers to deliver currency units into your digital wallets within just ten minutes. You can save a good amount on processing fees too if you choose this exchange.

If you want to use a trading platform, a feasible platform is BlockFi, which not only helps you manage your crypto assets but also helps to optimize your portfolio. It does not charge any fees from the users and provides competitive pricing.

After you have made up your mind about the exchange or the trading platform that you will trade on, you need to select the cryptocurrency that you want to invest in. Some of the most popular cryptocurrencies include Bitcoin, Ethereum, Ripple, and Litecoin.

Options to Invest in Cryptocurrency

If you are looking for ways by which you can deploy your cryptocurrency to earn money for you, there are three ways in which you can do so.

  • Mining

Mining refers to a process through which new units of cryptocurrency can be brought into existence. Those persons who own these currency units are called miners. This is a very lucrative option that lets you own crypto without the need to fulfill the KYC procedure.

If you are looking for software for mining cryptocurrency such as Bitcoin, Bitcoin Miner may be a great choice for you. It lets you mine Bitcoins that you may trade for real-world currencies over the trading platforms or the exchanges.

  • Trading

You can buy or sell various cryptocurrency units either through an exchange or a trading platform and make profits by way of arbitration.

  • Investing

Apart from directly trading in cryptocurrency, you can choose to invest in interest-earning options, derivatives, index funds, IRA plans, etc.

If you are not sure how you can earn interest on your cryptocurrency assets, you can refer to BlockFi. The service provider helps you earn interest income on your currency units by creating an account with them.

As far as IRA plans are concerned, BitIRA is one of those service providers that help the customers to attain the advantages of cryptocurrency assets within their retirement savings portfolio. They help you grow your cryptocurrencies under special tax-deferred status.

Use of Softwares for Investing

If you are a beginner and getting accustomed to the concept of cryptocurrency you may want to deploy trading software that is automated, technology-driven, and helps you smartly invest in cryptocurrency assets. They make use of advanced programming and algorithms to ensure a high success rate for its users.

If the crypto world excites you and you want to begin your investment journey, you may use trading software like Btc Loophole or Bitcoin Traders (Non-Incent) that does automatic trading for the users to let them gain profits.