Cryptos are based on blockchain. This means that it is distributed, decentralized, and public ledger payment technology. Should the blockchain prove to be as scalable, efficient, and secure as its advocates claim, it could disrupt the legacy payment system currently being operated by banks. This is similar to how the internet disrupted traditional advertising, communication, and media.
Blockchains’ central idea is that the past powerful intermediaries are considered redundant when making deals and transactions. Therefore, it is unnecessary to use a bank or any other payment service provider to transfer funds. Instead, individuals and companies can trade in cryptocurrencies bypassing the traditional route.
Here are four ways to invest in the cryptocurrencies boom favoring IPOs:
Cryptocurrencies work on the ‘proof-of-work’ principle. It means they will require miners who can verify cryptocurrency transactions on their networks. Getting the right knowledge and experience, will see miners earn a regular income in BTC (bitcoin) or other cryptocurrencies.
To start mining, you will have to get hardware with high-performance processors. This is very important to make the necessary calculations. Whenever you are in the hardware market, ensure you always pay attention to price, performance, and electricity consumption.
Initial Coin Offerings
Initial Coin Offerings appear to be similar to Initial Public Offerings of the firm shares, although they are marked differently. When compared to an IPO, ICO will offer no legal rights or claim the underlying assets.
With the Initial Public Offering, an investor will, in most cases, have part ownership in the firm through shareholdings or purchase coins that can appreciate in case the business proves successful.
Since most of the projects funded through ICOs are early-stage start-ups, most of them have no minimum viable product. It means there will always be a high risk the firm will fail, and investors will lose their hard-earned money.
Trading on cryptocurrency markets
You will have to choose a crypto market before you start trading. Participants can always buy or sell real cryptocurrencies when they have a crypto wallet.
Purchasing, holding, and selling to crystallize a profit is the same principle as investing in commodities or shares. Trading cryptocurrencies involves risks that are never associated with the traditional asset classes. Most of the crypto markets are situated in risky jurisdictions. This means that there are no regulators to control them and guarantee trader rights. It is similar to lose money trading.
Since no person can ever predict market price movements, most people claim there is a great potential for BTC (bitcoin) to be worth $100,000 or more. Most argue that it is due to the limited supply. But the recent bitcoin forking to create BCH (bitcoin cash) undermines the confidence it will remain so.
Trading Cryptos using CFDs
You never own the cryptocurrency itself whenever you are trading contracts for difference. However, you can still trade it as a price change and go either long or short. When you go long, it means first purchasing at one price and selling later at a higher price. With this, you will always benefit from the price increase.
Going short will enable investors to benefit from the falling prices by selling at one price, closing the deal circle, and ultimately making a profit by purchasing later at a lower price. You can achieve this by using CFDs.
Most brokers offer the opportunity to trade CFDs on cryptocurrencies. But investors should select a regulated broker. However, it would help if you remember that you would be trading at your own risk. Hence, you could lose all the capital you had invested when you started trading. You should never, under any circumstance, trade with money that you can never afford to lose.