How to Invest in Cryptocurrency? Investment instruments or products are getting easier, more diverse, and of course more sophisticated. Crypto investment is one of the investment instruments that was successfully born because of the sophistication of the technology that exists today.
Crypto or cryptocurrency investment is a type of investment that offers high returns. Cryptocurrency itself is a digital currency that only exists and can be used in cyberspace. Crypto investment, especially bitcoin was first introduced by Satoshi Nakamoto in January 2009.
Used for various transactions, such as purchasing game services and accessories to shopping for other things such as goods to wear. From there, buying and selling bitcoins became more and more popular, until other cryptocurrencies emerged. In addition to the very popular bitcoin, examples of other cryptocurrencies are ethereum, ripple, litecoin, dogecoin, mrai, dashcoin, and so on.
Is Cryptocurrency a Good Investment?
Cryptocurrency is a digital or virtual currency that is guaranteed by cryptography. With cryptography, making cryptocurrency almost impossible to counterfeit. Cryptocurrencies can also be used for transactions such as payments or transfers from one person to another online.
Cryptocurrency can be used as a means of payment for online purchase transactions and exchanged into other currencies such as Dollars, Yen, Rupiah, and other currencies.
Since the Covid-19 pandemic, investment is increasingly being idolized by investment lovers, especially the millennial and z generations who know what kind of big profits can be obtained from investing in crypto. Crypto assets such as Bitcoin, Ethereum, Degocoin, and many more are becoming one of the investment instruments that are in demand by investors.
How to Use Cryptocurrency as an Investment
The way to invest in cryptocurrencies is to buy and sell assets on an exchange. This exchange functions like a marketplace, a platform that brings together buyers and sellers to the transfer of crypto assets. Crypto asset transactions occur between members or merchant members of the exchange.
In contrast to transactions on the stock exchange, where investors have to go through a broker as an intermediary, in crypto exchanges, transactions take place directly between investors. There are no intermediary brokers in transactions on bitcoin exchanges.
The storage of bitcoins or crypto assets is done in a ‘wallet’. Exactly the same as when we have money, it is stored in a wallet or safe, but the difference is that bitcoin storage is done digitally. Wallets are provided by exchanges or investors can have their own wallets. Just like customers who keep their money in the bank or at home.
In order to transact crypto assets, investors must choose a ‘pair’ of coins to be traded. An exchange will provide various pairs on the platform. An example is Bitcoin / Rupiah (BTC / IDR).
Because bitcoin transactions occur between exchange members, the price of buying and selling bitcoins between exchanges can vary. Investors can monitor it at any time on the internet to find out where the most competitive bitcoin price is.
The following is the order of the process for opening a new account for investments and cryptocurrency transactions
- Open an account on a Bitcoin Exchange, or a Bitcoin exchange.
- Get KYC verification
- Make a deposit
- Choose a crypto asset pair
- Start order
- Next, do the buying and selling transactions
- Paying fees/fees based on the number of transactions
- Transfer crypto assets to a wallet where crypto assets are stored.
- Choose the trading feature for those who want to focus on cryptocurrency trading.
Types of Crypto Investment
For those who only know that crypto investment is the only bitcoin, don’t get me wrong. Here are some other types of crypto investments that you can try:
How to Invest in Cryptocurrency With Bitcoin
Bitcoin is the first type of cryptocurrency that is still very popular today.
This type of cryptocurrency first appeared and was introduced in 2009 by a party named Satoshi Nakamoto. Nobody knows if it’s the name of a person, group, or company and nobody knows where they came from either.
As of November 2019, there were more than 18 million bitcoins traded with a total market value of around US$146 billion, Investopedia wrote. To date, about 68% of cryptocurrencies are bitcoins.
How to Invest in Cryptocurrency With Litecoin
Litecoin is a type of cryptocurrency that was also present at the beginning of digital currencies starting to attract the attention of many people.
This type of cryptocurrency was precisely present in 2011 as a peer-to-peer (P2P) digital currency that generates new blocks (which make up the blockchain) at a faster rate.
So one of the advantages of Litecoin is that it allows users to make transactions faster without the need for a powerful computing system.
How to Invest in Cryptocurrency With Dogecoin
Dogecoin appeared in December 2013. As the name implies, Dogecoin is a cryptocurrency that makes the Shiba Inu dog its mascot. Dogecoin has a much lower value than bitcoin. The use of this type of cryptocurrency is usually used for small transactions, donations, and tipping.
How to Invest in Cryptocurrency With BitcoinCash
BitcoinCash was launched in August 2017 and is currently in the top five cryptocurrencies. This type was launched because of a group of Bitcoin users who did not agree with some of the applicable rules.
They then broke away and created their own digital currency called BitcoinCash. The group also made some improvisations that it says are better than the first cryptocurrency, bitcoin.
How to Invest in Cryptocurrency With Feathercoin
Feathercoin is a type of cryptocurrency that is open source. This type of cryptocurrency was created by Peter Bushnell, an IT officer at Brasenose College, Ofxord University in April 2013. Feathercoin also has similarities to Litecoin and is under the MIT/X11 license.
Advantages of Investing Cryptocurrency
Here are the advantages that can be obtained from investing in cryptocurrencies:
Cryptocurrency investment is one type of investment that is known to provide high returns or high profits in addition to stocks. The price of cryptocurrencies like bitcoin can increase quite drastically.
In just a matter of months, the value can penetrate the new all-time high. The price of bitcoin has increased by 354% in 2020 which makes it able to beat the returns of other financial assets.
With the right strategy, you can buy currency cheaply but can sell it at a high price like stocks.
The whole world can use cryptocurrency. Therefore, cryptocurrencies are considered universal because there are no conditions to become users, even users do not have to use their real names and include any personal data.
Fast and Easy
Transactions with cryptocurrencies are faster than transactions at banks. For example, international bank transfers can usually take up to more than a day. Meanwhile, bitcoin trading only takes about a few minutes to an hour.
Every cryptocurrency user can see all transactions that have been made. However, of course, users will still not be able to find out who the transaction was made by because it is only in the form of numbers without an identity.
Can be used as a payment tool in many e-commerce
Now bitcoin cryptocurrency can be used as a means of payment in some digital transactions, although not many.
PayPal, which is also the largest online transaction payment tool in the world, already accepts payments with Bitcoin. PayPal users can store and make transactions with Bitcoin on PayPal.
Can be used as a means of payment for buying and selling online for several international/overseas e-commerce such as e-Bay and Amazon.
Safe and Legit
Crypto investment has received legal certainty regarding the allowability of Bitcoin trading, making investing in this crypto asset safer according to regulations.
Crypto Investment Risk
There is no investment without risk, here are some risks of investing in cryptocurrency that you must know before deciding to buy cryptocurrency:
The phenomenon of rising and falling exchange rates of cryptocurrencies can happen very quickly and sometimes can be very extreme. The value can be very high, but after that, it can drop sharply. Like stock investments, cryptocurrency investments have the characteristics of High-Risk High Return.
Vulnerable to Cyber Crime
Cryptocurrency itself is technology-based, therefore this investment is very vulnerable to cyber-attacks. If that happens you will find it difficult to get if your crypto is lost or stolen.
There have been reports that many buyers have lost their investment due to being hacked. If you want to find out more, try checking on the intermediary for exchange burglary cases in various countries, especially in 2019.
Regulations regarding cryptocurrency are still quite new in Indonesia. Although this regulation provides legality for this investment to be solid in Indonesia, there are also a number of provisions that can pose risks to customers.
Also Read: How to Invest in Crypto For Beginners
It’s very profitable if you understand
Behind the ease and benefits of investing there is definitely a risk, but that doesn’t mean it can’t be avoided or minimized. By understanding the type of investment that is chosen properly, starting from the benefits, profits to losses, you can automatically carry out any investment more safely and comfortably.