Cryptocurrency has become a buzzword in the investment sector due to its monumental success in the last few years. “Is cryptocurrency good for investment in 2023?” Should beginners Invest in this financial innovation?
Billions of people desire to earn profit from this financial innovation. These two important questions arise in their mind. You are going to seek answers to these two million-dollar questions in this post.
Two things mentioned below can help you achieve this incredible feat:
- Correct knowledge of the market.
- In-depth understanding of the market.
Are you planning to nest your eggs in it? Make sure you gain these two things first.
Read this post for this purpose. Take a good look at the list of things you will learn about this financial leap.
Table of Contents
- The Origin of Cryptocurrency Term.
- What Is Cryptocurrency?
- Forms of Cryptocurrency.
- Difference Between Coins And Tokens.
- Can Cryptocurrency Currency Investment Be Good For A Beginner?
- Steps To Identify The Best Cryptocurrency For Investment.
- Crypto Scam Types To Avoid.
- Some Tips To Stay Safe.
Let us now improve your understanding and knowledge of these things in-depth.
The Origin of Cryptocurrency Term
It is a term used to refer to digital decentralized money. This term is a combination of two terms mentioned below;
- Crypto
- Currency
The word Crypto has been derived from a word called Cryptography. The term currency refers to the money we use in our life.
Cryptography is an encryption technique used by the world’s best intelligence organizations like Raw, FBI, and Mossad only. They leverage the potential of this technology for the purpose of encrypting their important messages or communication.
This is the way the term cryptocurrency originated.
What Is Cryptocurrency?
This financial leap is a cryptographically secured digital decentralized currency. A decentralized ledger is used to keep records of all crypto transactions.
All transactions are instant. It is because all transactions are between you (the sender) and the receiver. All in all, crypto transactions are P2P (Peer-To-Peer). As a result, transactions get verified and confirmed within a couple of fractions only. Banks and other traditional financial institutions don’t play any role in transactions.
Forms of Cryptocurrency
Given below are two different types of this digital decentralized financial innovation:
- Coins
- Tokens
This is an important thing a new cryptocurrency investor like you must know about. Another important thing you must know about is the difference between the two.
Difference Between Coins And Tokens
Is Cryptocurrency a good investment for a beginner? It depends on various factors. One of those is the list of differences between coins and tokens. You must know about it in order to make the right investment decisions and choices.
There are a couple of differences between the two. All new cryptocurrency investors like you must know those differences. Your understanding and knowledge about it will help you move your portfolios the right way.
Crypto Coins
This digital decentralized fintech revolution is an asset you can trade or use as a means of exchange. What is more important is you can keep it as a store of value on a particular blockchain network.
Even payments for goods, fund transfer to others, and voting in DAO (Decentralized Autonomous Organisation) is also possible with coins.
Either you earn them or you mine them. Two methods mentioned below are used for this purpose:
- Proof of Work (PoW) mechanism
- Proof of Stake (PoS) mechanism
Crypto coins are not dependent on other blockchains. BTC (Bitcoin), ETH, (Ethereum), or LTC (Litecoin) are the best examples of it. BTC leverages the potential of Bitcoin Blockchain. The Ethereum Blockchain coin is ETH whereas LTC uses Litecoin Blockchain.
Tokens utilize smart contracts for fulfilling various purposes and are built on top of other blockchains. You buy, HODL, trade, or sell them like coins. However, you cannot use them as a medium of exchange.
Types of Cryptocurrency tokens have been listed below for your reference:
- Utility Tokens
- Security Tokens
- Payment Tokens
- Exchange Tokens
- Non-fungible Tokens
- DeFi Tokens Or Decentralized Finance Tokens
- Asset-backed Tokens
- Privacy tokens
The Use of Crypto Tokens
Developers make tokens for use within their blockchain project or a DApp (Decentralized Application). Project developers create or distribute tokens.
Can Cryptocurrency Investment Be Good For A Beginner?
Yes and No are both correct answers to this million-dollar question. Constant market study and in-depth research can help you climb the profit ladder easily. All you need is a solid strategy for this purpose.
However, remember, vice-versa can also happen. This market is highly risky, unpredictable, and volatile. Just a mistake and your investment game is over within a fraction of a second. Such is the level of risk, unpredictability, and volatility in this market.
The entire market swings like the pendulum of a clock all the time. You need to have a correct and in-depth understanding of the way the cryptocurrency investment market works.
You will have to do in-depth market research and study constantly and make an investment strategy for this purpose.
Let us help you on this front.
Steps To Identify The Best Cryptocurrency For Investment
There are some steps for this purpose. You must know and follow those steps. These steps or tips will help stay safe and move your investment journey in the right direction. Given below are those tips for you.
- Check their website first of all.
- Read the whitepaper.
- Understand their roadmap.
- Know about the team.
- Learn about the future projects the team is about to introduce in the future.
- Genuine crypto always introduces ICO (Initial Coin Offering), STO (Security Token Offering), or IEO (Internet Exchange Offering) campaigns on a reputed platform.
- Learn about their hard cap, soft cap, market supply, and distribution of tokens/coins among the team.
- Check their social media accounts on Twitter, Telegram, Reddit, Discord, YouTube, LinkedIn, Facebook, Instagram, and Medium, etc.
- Make sure the cryptocurrency you want to invest in is listed on a reputed exchange.
- The crypto of your choosing must be listed on CoinMarketCap.
- Make sure the crypto you want to invest in allows you to withdraw your funds anytime and without hassles.
- Learn to identify and avoid scams.
Let us now tell you about the list of scam types you should avoid. It is important for you to move your investment journey on the right track.
Read more: Reasons Cryptocurrency Market Recovery Could Be Delayed in 2023
Crypto Scam Types To Avoid
Every coin has a flipside too! How could this industry be scam-free?
Thieves, scammers, or swindlers from all parts of the world are waiting for one mistake by you to run away with your money. Many types of scams have gripped this financial innovation.
The list includes but is not limited to the following only:
- Bitcoin investment schemes.
- Phishing scams like spear phishing, smishing, vishing, and search engine phishing.
- Sextortion, whaling, and rug pull scams.
- Investment scams, and giveaway scams.
- Man-in-the-middle (MITM) attack.
- Ponzi schemes, and pump And dump schemes.
- Flash loan attacks, 51st Attacks, and automated trading scams.
- Employment offers and fraudulent employees.
- Fake crypto exchanges, fake ICOs/IEOs and STOs, and fake blackmail scams.
- Fake Emails, imposter websites, fake mobile apps, and romance scams.
- Fraudulent wallets, impersonation, and unregulated wallets.
- Social media engineering, and old school scams.
All in all, cryptocurrency investment is good for a beginner like you. Provided, you know about these scams spoiling the roots of this financial innovation.
Some Tips To Stay Safe
Avoid crypto scams to keep your funds safe. Implementation of the following tips will help you board the gravy train safely.
- Always verify the website. A genuine website will always have a lock sign and its URL will begin with HTTPS:// only.
- A cryptocurrency that does not have a social media account, website, and roadmap is always fake.
- A cryptocurrency that does provide information about the development team is fake.
- Stay away from offline events (MLM).
- Make sure you get a chance to talk to the developer. Otherwise, it is fake.
- Never fall for unbelievably large gains or double investments in a quick time.
- Make sure you get the withdrawal option.
- Accept crypto only as payment. Don’t transfer your crypto to people you cannot trust.
- All contractual obligations must be followed.
- Spelling and grammar errors in email addresses, email content social media content, or any other communication are also some indications of cryptocurrency scams.
- Stay away from manipulation tactics, like extortion, sextortion, or blackmail.
- Do not fall for promises of free money.
- Never trust unknown influencers or celebrity endorsements. Don’t trust especially the one that appears out of place.
- Stay away from a cryptocurrency investment scheme that offers minimal details about financial and investment movements.
- Multiple transactions in a day also indicate a scam.
Cryptocurrency investment for a beginner like you can be profitable. Provided, you are ready to implement the tips and knowledge given above. Otherwise, anything can happen.
What is more important is this post is not financial or legal cryptocurrency investment advice for anyone. You must do your research and talk to an expert before making your choices and movies. His or her wealth of experience can help you make the right money moves.
Keep coming back here to learn some more interesting stuff.
FAQs
Cryptocurrency terms are a combination of two words. The first is Crypto whereas the second is Currency. The term crypto has been taken from the word called Cryptography. The combination of these two terms became cryptocurrency.
Cryptocurrency is a cryptographically secure digital decentralized currency. This currency can be used for anything like buying. Trading, selling, fund transfer, and more.
Cryptography is an encryption technique. Governments and their intelligence networks leverage the potential of this encryption technology to encrypt their messages and communication.
Tokens are coins are the two different types of cryptocurrencies. Coins can be traded as a medium of exchange, payments for goods, fund transfers, and voting in DAO (Decentralized Autonomous Organisation). You can even use them even as a store of value on a particular blockchain network.
You can either mine or earn crypto coins. There are two ways to for this. One of them is the Proof of Work Mechanism (PoS) whereas the other is the Proof of Stake Mechanism (PoW).
Utility Tokens, Security Tokens, Payment Tokens, Exchange Tokens, Non-fungible Tokens, DeFi Tokens Or Decentralized Finance Tokens, Asset-backed Tokens, and Privacy Tokens are the types of crypto tokens.
Yes! You can earn profit from cryptocurrency investments. All you need is a correct and in-depth understanding of the way this market works. Just make your strategy accordingly. Entering this market without a strategy can cause you heavy financial loss as this market is extremely unpredictable, risky, and volatile also. There is no room for error.
Identify the best cryptocurrency for investment by checking their website, and reading their whitepaper. You should also value seeking details about the team behind it and understanding their roadmap. Learn about their future plans, distribution schemes and without falling for unbelievably high gains promised.
There are many types of cryptocurrency scams. Some common crypto scams are bitcoin investment schemes, Sextortion, whaling, rug pull scams, investment scams, giveaway scams, man-in-the-middle (MITM) attacks, Ponzi schemes, pump, and dump schemes, flash loan attacks, 51st attacks, automated trading scams (ATS scams), fake crypto exchanges, fake ICOs/IEOs and STOs, and fake blackmail scams, fake emails, imposter websites, fake mobile apps, romance scams, and phishing scams like spear phishing, smishing, vishing, and search engine phishing.
Stay away from cryptocurrency scams by verifying the website URL, social media accounts, roadmap, hard cap, soft cap, overall supply, market supply, and listing on reputed platforms and exchanges, availability of withdrawal options to help you withdraw your crypto funds. Stay away from offline (MLM) events. Never fall for unbelievably high gains. Pay special attention to spelling and grammar errors in their email addresses, domain names, email content, and social media content.