cryptocurrencies

What is needed to invest in cryptocurrencies?

Before you buy your first cryptocurrencies, remember that these currencies are a high-risk, volatile investment. The bitcoin historical price chart is a good example of the typical fluctuations of this cryptocurrency. It is important to take into account the possible ups and downs and only invest money that you can afford to lose should the currency unexpectedly drop in value.

Regardless of the type of cryptocurrency you want to purchase, it is important to do it the right way to ensure the safety of your investment. Remember that when you buy a decentralized currency, you are responsible for protecting your own investment. Therefore, before investing money in crypto, take the time to familiarize yourself with the legal framework and learn how cryptocurrencies work. This is essential, as investing in cryptocurrencies is different from traditional banking systems and investments.

The first thing you will need is an account with an exchange or an agent that processes the sale and purchase of your crypto. It is important to understand the differences between these two types of sites in order to open the account that is best for you.

Exchanges

Exchanges, also known as exchanges, are digital platforms where users can trade cryptocurrencies directly with each other at market prices. Some of the most popular exchanges to invest in cryptocurrencies in 2022 are:

  • Coinbase
  • Binance
  • Gemini (site only available in English)

When establishing an account with an exchange, the next step is to open the digital wallet where you will store your cryptocurrencies. There are several types of wallets with different levels of security and access. The storage method that is best for you will depend on how often you plan to buy and sell crypto.

An agent, or broker, also works as an intermediary. However, in this case, the broker is the one who determines the prices of cryptocurrencies. Sometimes brokers also limit transfers outside the platform and offer their own digital storage system.

Where to invest in cryptocurrencies in 2022?

To help its readers learn more about the cryptocurrency market for 2022, Business Insider magazine interviewed various experts on the subject. Based on the performance of cryptocurrencies in 2021 and their market values, these specialists pointed out the following coins among the best digital assets for 2022:

  • Bitcoin (BTC)
  • Ethereum (ETH)
  • Sunshine (SUN)
  • Helium (HNT)
  • The Graph (GRT)
  • BinanceCoin (BNB)
  • Moon Moon)
  • XRP (XRP)

How to invest in cryptocurrencies safely?

Investments in cryptocurrencies carry a number of risks. From market instability to possible fraud, you must take certain precautions before making an investment of this type.

If you are interested in investing in cryptocurrencies, follow the recommendations of the Federal Trade Commission before making any decisions. The following questions can also help you decide which cryptocurrency is best for you as an investment:

  • What use cases does the coin have?
  • Is its total market value?
  • What are your historical prices?
  • How many coins are in circulation?

Some of the most common suggestions to protect your crypto and prevent theft of keys to your investments include:

  • install an antivirus on your computer;
  • check the security of your Internet connection;
  • keep your passwords in writing in a safe;
  • backup your data;
  • use a dedicated email account for your cryptocurrency transactions;
  • implement double authentication on all your accounts;
  • distribute your digital assets across multiple storage systems; Y
  • Protect the security of your cell phone.

Legal requirements

Each exchange or digital wallet has its own legal requirements. Some of the platforms that maintain the anonymity of their users and do not require identification are:

  • LocalBitcoins
  • Binance
  • Coinmama
  • Crypto.com
  • Stormgain
  • LocalCryptos
  • BISC

Other platforms use the “Know Your Customer” (KYC) identification process. With this method, exchanges and brokers verify your identity and monitor your transactions in order to prevent money laundering.

Each platform operates differently. Some verification systems take minutes, while others require days. In general, the KYC system requirements include:

  • photo identification (can be passport, driver’s license or state ID);
  • date of birth;
  • social security number (SSN); Y
  • Home address.

Risks of investing in virtual currencies

Just as there are benefits, there are also downsides to trading virtual currencies. Before investing in cryptocurrencies, it is important to know these drawbacks:

Instability: Cryptocurrencies are high-risk investments whose value fluctuates to a greater extent than traditional assets. This exposes investors to the possibility of large losses quickly.

Little regulation: Being such a new investment method, there are still many inconsistencies in cryptocurrencies, exchanges and agents.

Lack of protection: Cryptocurrencies are not associated with any government or company. This means that your investments do not have the same protections that exist when you trade with financial institutions or traditional investment vehicles.

Exposure to scams: Cryptocurrency payments are irreversible. If you are a victim of fraud or theft of your passwords, you can lose all your capital and there is no way to recover it.

Before investing in any cryptocurrency, take the time to research the digital currencies available and the storage methods that are best for you. To protect your investment, it is important to take the necessary security measures and diversify your portfolio.

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