How to start investing in cryptocurrency
The first thing you need to know is that there are two different kinds of coins:
- Utility tokens — these are coins that can be used to purchase goods and services on a specific platform. For example, if you buy tokens for a platform called “Super Cool Video Sharing Platform”, then you can use those tokens to buy videos on that platform. Utility tokens are also sometimes called app coins or user tokens.
- Security tokens — these are coins that represent an investment in a company or project. If you buy security tokens, then you’re buying shares in the company or project (similar to buying stock). You can also trade security tokens on exchanges like any other coin, but unlike utility tokens, they don’t have any inherent value outside of their investment potential.
Security tokens are also sometimes called equity tokens or tokenized securities. If you want to invest in cryptocurrency for the long term (and not just day trade), then it’s best to stick with utility tokens — they have real-world use cases and will probably be around for years to come (unlike many security token ICOs).
However, if you want to day trade cryptocurrency and make money by flipping coins quickly, then security token ICOs may be your best bet (although they’re still very risky).
How to Start Investing in Cryptocurrency: Day Trading vs HODLing
Day trading is the process of buying and selling coins within the same day.
This is a risky strategy because you can lose money if the market moves against you. However, if you have a good strategy and play your cards right, you can make a lot of money day trading.
HODLing (an acronym for “hold on for dear life”) is the opposite of day trading — it means that you buy coins and hold onto them for as long as possible. This strategy is much safer than day trading, but it doesn’t make you any money unless the price goes up.
If you want to start investing in cryptocurrency, then you should probably do both — day trade and hodl.
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How to Start Investing in Cryptocurrency: Day Trading
To day trade cryptocurrency, you need to know how to read charts and understand market trends. You also need to have a solid strategy for buying and selling coins. For example, if you’re day trading Bitcoin, then you might want to use a strategy like “buy low, sell high”. This means that when Bitcoin is low (like $6,000), then you buy as much as possible. Then when Bitcoin is high (like $20,000), then you sell it all and take your profits.
However, this strategy isn’t foolproof — if the market moves against you (for example, if the price of Bitcoin goes down instead of up), then you could lose money.
The best way to learn how to day trade cryptocurrency is by doing it yourself — there are plenty of guides out there that will teach you how to do it. Just remember that day trading is risky and can make you lose money fast — only invest what you can afford to lose!
How to Start Investing in Cryptocurrency: HODLing
If you want to invest in cryptocurrency for the long term (and not just day trade), then the best thing to do is hodl. This means that when the price of a coin goes up or down by a lot, don’t panic — just hold onto your coins no matter what happens.
If the price goes up 10x or 20x over the course of a year or two years or five years, then great! You made some good money! But if the price goes down 50% or 80% over that same time period… well… don’t worry about it too much either. Just hold onto your coins and wait for them to go back up again.
It might take a while… but eventually they will go back up again! And when they do go back up again… guess what? You made some more money!
This strategy works best with utility tokens because they have real-world use cases and will probably be around for years to come (unlike many security token ICOs).
However, even with security token ICOs, holding onto your coins can still be profitable in the long run because sometimes those tokens go up in value too (although they’re still very risky). The only problem with hodling is that it doesn’t make any money unless the price goes up — so if you want to invest in cryptocurrency for short-term gains instead of long-term gains, then hodling isn’t for you.
Instead of hodling coins until their prices go back up again… why not just buy more coins at lower prices? That way if their prices go back up again later on, then great! You made even more money! And if their prices don’t go back up again later on… well… at least now you own more coins than before! More about what is cryptocurrencies.
This strategy works best with security tokens because they have no inherent value outside of their investment potential — so if their prices don’t go back up again later on… well… at least now you own more shares than before!
And sometimes those shares can pay dividends too (although they’re still very risky). The only problem with buying more coins at lower prices is that it takes time before those lower prices actually pay off — so if time isn’t on your side and/or patience isn’t one of your strong suits…. well…. maybe just stick with hodling instead?
The bottom line: To start investing in cryptocurrency successfully requires both knowledge and patience — so choose which strategy works best for YOU personally.