You hear about it around you more and more frequently, your friends and work colleagues have also invested in recent months, seeing the trend and opportunities related to cryptocurrency investments. Indeed, 2021 is in some ways the peak year for cryptocurrencies, approaching a market capitalization of almost .4 trillion, according to the specialized platform CoinMarketCap.
When investing in crypto-currencies, be aware that it is not a regulated market like that of stock market investments. Consequently, the risks in terms of fraud, and the market is characterized by high price volatility, and therefore an overall high risk for this category of investment.
To get started in the world of crypto, you will need to open an account on one of the most reliable platforms called “exchanges”, such as Binance or Kraken. These trading platforms are mostly in English and allow you to transfer money from your bank account to your virtual wallet.
Regarding the amounts to invest, there is only one rule to remember for beginners: invest only amounts that can be lost. We recommend making your first investments in cryptocurrencies that have already proven themselves and have been around for several years, such as Ethereum and Bitcoin. Keep in mind that the larger the market capitalization, the less risky the investment.
After several months of experience in the world of virtual currencies, you will be able to diversify your portfolio by investing in altcoins , alternative cryptocurrencies.
The cryptocurrency wallet is simply the virtual storage place for your crypto-assets. This wallet also allows you to carry out your transactions. There are two main forms of wallets, which are called Hot wallets and Cold wallets .
Hot wallets are connected to the Internet; these are software and applications storing your crypto-assets as well as your private keys, which will be used to transfer or spend your Bitcoins. This type of wallet is very practical for daily use of your cryptos and if you have small or medium sums. On the other hand, the hot wallet being regularly connected to the Internet, it is subject to more computer attacks than if your private keys were kept offline.
The Cold wallet is the safest wallet to store your private cryptocurrency keys. Indeed, these wallets, disconnected from any Internet access, are most of the time physical objects such as a paper document or a specific USB key. Among the most secure keys, we find those of Ledger (Ledger Nano S) or the Safe-T of Archos.
The Cold wallet is currently the most secure solution for storing your crypto-currencies, especially if you have large sums.
As you will certainly have understood, the cryptocurrency market is extremely volatile: sometimes their prices drop suddenly and sometimes their value doubles in just a few hours. It is for this reason that an investment in cryptocurrencies requires great attention and dedication: it will be essential to monitor prices, announcements and news that concern the general market. To give you an idea of this volatility, last week Tesla CEO Elon Musk announced that he would no longer accept BTC out of environmental concerns, resulting in Bitcoin dropping from nearly ,000 to ,600 in only a few hours.
The other risk factor is the vulnerability of these digital products to cyberattacks. Indeed, the whole universe of crypto-currencies depends entirely on computer networks, and the personal data stored and exchanged are necessarily subject to the risk of hacking.
In the longer term, some experts like Coinbase also mention the risks related to financial regulations that could be imposed on cryptocurrencies in the future.
It is essential to be rigorous in terms of security when investing in cryptocurrencies, for all the reasons we have cited above.
We recommend that you implement these few best practices, which will help you manage your investments with complete peace of mind:
You are now ready to invest safely in the amazing cryptocurrency market. If, however, you find this type of investment too risky, do not hesitate to read our article on stock market investments.