India, like the entire world, is rolling in cryptoasset mania. From celebs to financial experts to common investors: everyone wants to cash in on this new digital gold. Everyone wants to get just one thing out of this rush for cryptoassets: Returns!
But, how do we maximize these returns? What is the best strategy for investing in bitcoins/cryptoassets? When and what to sell and buy? These are all pressing questions that need to be asked and answered before purchasing any cryptoasset. Let’s explore some of the strategies that you should follow to maximize your returns on cryptoasset investments.
Try to get a basic understanding of Blockchain technology
Before investing your hard-earned money in any asset, you must understand how that investment instrument works. Treat cryptoasset just like any other asset and learn its ins and outs.
- Imagine cryptoasset as a small pocket of data which has monetary value and can be tracked using blockchain technology.
- Here, you need to visualize blockchain as a public ledger that is being updated in real time as and when any transaction takes place. Moreover, everyone who holds the cryptoasset, say bitcoin, has a copy of this real time public ledger.
- The blockchain for bitcoin is designed in a manner that you can see how many bitcoins each bitcoin-holder has and who transferred to whom, or how, by whom or where a transaction was initiated. But this does not mean it is not anonymous. The blockchain features wallet addresses — not actual user names, so unless you know who a wallet belongs to, you cannot trace transactions.
- This also creates a playground for illicit activities off the radar. Keeping in mind the current scenario where scams are prevalent in even traditionally “safe bets” such as the traditional banking sector, it might be worth it to explore your options and try something that is based on a decentralized technology. Governments across the world are taking measures to regulate this space so if your transactions are clear, you have nothing to worry about.
Learn the basics of different cryptoassets
There are several cryptoassets apart from bitcoins one can invest in. All these assets function based on the same technology, but differ a little bit in usage and applications.
- There are some more suited to multi-level business transactions — such as Ethereum and Ripple.
- There is your classic Bitcoin, then there is a spin-off of the same as Bitcoin Cash which is better suited for faster transactions and has greater units as compared to Bitcoin.
- Then there are cheaper and smaller assets available in the market such as Dogecoin and Litecoin.
All these assets make for good investment options depending on the amount you’re willing to invest and your financial goals.Understanding risks
Just like any other instrument is prone to market risk — so are cryptoassets. We need to understand the inherent risks.
- They are not illegal, they are simply unregulated which makes them exist in a gray area with respect to the law.
- This puts your investment at slight risk of being declared illegal and you losing your money in the same, but the chance of this happening is very small as most of the countries are deciding upon the regulation with respect to digital assets.
- Though, what could happen is that government may recognize some assets and declare some illegal. Therefore, one should be careful before investing in the crypto-market. Further, the volatility in the market also makes your investment susceptible to losses. Therefore studying and learning about the factors that can impact the value of your asset is very important.
Update yourself on cryptoasset news
Reading crypto-news will give you a recurring insight into the factors which can impact the value of your investment. There are several good portals that will keep you updated about the crypto-news. Unoversity News is one such all encompassing portal when it comes to international or domestic crypto-news.
Open a brokerage account
To deal in cryptoassets, you will need to create a digital wallet with a trading portal, where you can hold your asset, and exchange it for money. One such portal is of course — Unocoin, which offers a simple user interface using which one can easily deal with cryptoassets. On Unocoin, you can trade in Bitcoin, Bitcoin Cash, Bitcoin Gold, Litecoin, Ethereum and Ripple!
Choosing the assets to invest in
Bitcoin is the oldest and the most well-established asset in the market but that should not make you feel that you have missed the train on bitcoin investments. There are close to 4 million more bitcoins left to be mined! There is scope for seeing a rise in the value of bitcoin. Further, you need not buy an entire bitcoin — you can invest a small amount and buy a part of a full bitcoin.
Then, there are several other cryptoassets in the market — called altcoins. You can make an investment as per your appetite, and them once you start making returns, start diversifying. You can invest in other assets using the returns you have earned in the market. Thereby, steadily building a diversified portfolio of digital assets, which will prove beneficial for you in the long-run.
Being smart with your money
This is very general advice anyone will give you about your investment — play safe, don’t get carried away in the investment frenzy, you need not invest all your life savings into the market, just take it slowly, understand the market, invest what you can lose without feeling the pinch if you suffer a loss (though looking at the market trend that’s highly unlikely, but who knows).
To conclude, cryptoassets are the future of exchange, and sooner you take a plunge, the better it will be for you. You need not start as a user but do not miss out the chance of jumping in as an investor. The crypto-market has enough for everyone to offer and staying back will only hamper your own interests as an investor.
Keep yourself informed, stay smart and only play with the money you can afford to lose. Who knows, you might come out making a decent bit of money if you play your cards right and do your due diligence!