With high potential returns, cryptocurrencies are attracting more and more investors around the world. But diving into this world, where volatility reigns supreme and scams are commonplace, requires caution and solid preparation.
Here are 5 essential steps to help you enter the crypto world with all the cards in your hand:
Step 1: Get trained and understand the fundamentals of cryptocurrencies
Investing in cryptocurrencies without knowing the basics could expose you to costly mistakes. Between volatility, cyberattacks and various regulations, the risks are numerous and can lead to significant financial losses. So, before embarking on this adventure, take the time to fully understand the fundamental concepts and regularly follow the news on dedicated sites, such as CryptoNeet. This is a crucial step in reducing the influence of emotional investment. This step is crucial to reducing the influence of emotional investment and adopting an informed approach.
Here are a few tips to help you along the way.
- Blockchain: the technology behind all cryptocurrencies
- The different types of cryptocurrency: Bitcoin, Ethereum and more
- Consensus mechanisms for validating transactions on a blockchain: Proof of Work (PoW), Proof of Stake (PoS)...
Step 2: Choose a secure exchange platform
By definition, an exchange is a service that enables users to buy, sell and trade digital assets. There are two main categories: centralized platforms (CEX) and decentralized platforms (DEX).
Managed by private companies, CEXs generally offer a more user-friendly experience, with intuitive interfaces, advanced functionalities and more. But beware: security risks are not insignificant. Before registering with a platform, be sure to check its reputation and the licenses it holds. As part of the registration process, most CEXs require a KYC (Know Your Customer) check to ensure compliance before transactions can be carried out.
DEX, on the other hand, lets you trade directly with other users, without any intermediaries. So you can keep control of your assets. What's more, you don't need to open an account; all you need to participate is a digital wallet and cryptoassets. This type of exchange can, however, be less user-friendly for beginners and offer less liquidity.
Step 3: Select cryptocurrencies and draw up an investment strategy
Once you've chosen your exchange platform, it's time to select the cryptocurrencies in which you want to invest. invest. Each asset has its own characteristics, opportunities and risks that all potential investors should be aware of before committing themselves, in order to make the best decisions.
In any case, diversification is the golden rule. Avoid concentrating your funds on a single cryptocurrency to minimize risk. Instead, spread your investments over several assets with varied profiles. For example, you can focus on well-established cryptos such as Bitcoin and Ethereum to ensure stability, and include newer or more specialized projects to boost your portfolio's potential returns.
You also need to develop a sound investment strategy to succeed in this sector. To do this, base yourself on your risk tolerance and financial goals. If, following your documentation, you believe in the long-term growth of cryptocurrencies, you can opt for HODLing, a technique that involves holding your assets over a long period of time. Alternatively, you can take advantage of short-term price movements by adopting the active trading strategy.
Step 4: Store your assets safely in a portfolio
Although exchange platforms often offer storage options, it is generally recommended to use a personal wallet for better control of your funds. There are two main types of digital wallet, depending on the value of the assets and the frequency of use.
- Hot wallets (online): connected to the Internet, these wallets are suitable for users who want to access their assets on a regular basis or interact with decentralized applications. The downside is that they are vulnerable to cyber-attacks.
- Cold wallets (offline): these solutions offer enhanced security for long-term storage. They are particularly suited to large investors or people who do not need frequent access to their cryptocurrencies.
Step 5: Monitor and manage your portfolio regularly
To optimize success and minimize risk, portfolio performance monitoring remains essential. Monitor your assets so that you can adjust your investments in line with market fluctuations and emerging trends. This will help you secure your profits, spot buying and selling opportunities, and rebalance your portfolio according to your objectives.
Several analysis and tracking tools are available to optimize this management. For example, you can rely on CoinMarketCap or CoinGecko, platforms that provide real-time data on price, capitalization and trading volumes. Some exchanges also integrate reporting functionalities to help you analyze your portfolio's performance over time.