Presented by Revix

5 considerations before investing in cryptocurrencies

Investing in cryptocurrencies has become a controversial and much talked about topic. One of the biggest arguments for investing is the volatility of the asset class and the unmatched return potential.

This is not a guaranteed property of cryptocurrencies though, and there are a few considerations to be made before making your first investment.

1. Never invest above your means

The nature of the volatile crypto markets provides the opportunity for large gains and also large losses. Investing in this asset class, therefore, is not recommended to anyone wanting to make an investment with money that they are likely to need in the short-term.

2. Make sure you know what you are buying

As the Russian proverb says “trust but verify. We shouldn’t blindly trust anyone. When you buy a car, you make sure that it’s in a roadworthy condition and mechanically sound before handing over your money, and the same principles should be applied to investing in cryptocurrencies.

3. Diversify

There are two main ways to look at diversification:

  • Diversification intocryptocurrency
  • Diversification ofcryptocurrency

Diversification into cryptocurrency is the further diversification of your investment portfolio to include cryptocurrencies. Whereas, diversify of your cryptocurrency portfolio is by buying multiple cryptocurrencies to mitigate losses as well as compound gains when a single asset appreciated or appreciates.

4. Make notes

It’s incredibly important to keep track of your portfolio and factor in all the costs involved such as:

  • Purchase price
  • Trading / purchase fees
  • Blockchain fees
  • Withdrawal fees
  • Bank transfer fees

5. Secure your cryptocurrency

There are many ways that you can secure your cryptocurrency:

  • Mobile walletsare quite common, however, there can be serious implications if your phone is lost or stolen, so unless you are planning on spending the cryptocurrency that you keep in your mobile wallet, you should not hold very much crypto on your phone.
  • Exchangesare also vulnerable to attack, but generally, have policies and practices that are in place to mitigate the risks of hacks and vulnerabilities. A good exchange will put stopgaps in place to minimise the risk of losses should they be hacked.
  • Hardware Walletsare wallets where the private keys to your cryptocurrency wallets are stored on the device itself.
  • Cold Storageis the practice of generating cryptocurrency wallets with an airwall — in other words, generating cryptocurrency wallets and storing those private keys on a computer or device that has no internet access. This creates a scenario where it is impossible for funds in a cold storage wallet to be sent because there is no way for it to connect to a network.

Your first introduction into investing into cryptocurrencies need not be as intimidating as it might seem. While there is a lot to learn, Revix provides customers with the tools to help newcomers easily invest in cryptocurrencies for the first time:

  • We provide customers with a factsheet for each of our bundles to assist with research
  • We provide safe and secure custody
  • All of our Bundles are diversified
  • Our fees are simple and open to everyone to see
  • We connect customers to multiple global exchanges so we can get the best available prices for our customers
  • Our platform helps you easily keep track of your portfolio and each Bundles’ performance

Find out more by visiting the Revix website.

This article was published in partnership with Revix.

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5 considerations before investing in cryptocurrencies