Cryptocurrency is a digital asset or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature. Transactions are verified by network nodes through cryptography and recorded in a dispersed public database called a blockchain.
If you want to start investing in cryptocurrency, you may wonder what are the benefits and risks of this new form of money, how to invest in crypto, how to buy and store cryptocurrency using crypto wallets, and how to protect your cryptocurrency from hackers. In this blog post, we will answer these questions and provide some tips and resources for beginners.
Benefits of investing in cryptocurrency?
Some of the potential benefits of investing in cryptocurrency are:
Potential for high returns. Cryptocurrency is a volatile asset class that can experience significant price fluctuations in a short period of time. This means that investors can potentially earn large profits if they buy low and sell high. However, this also comes with high risks, as the price can also drop sharply and result in losses.
Diversification of your investment portfolio. Cryptocurrency is an alternative asset that has low correlation with traditional assets such as stocks, bonds, and commodities. This means that adding some cryptocurrency to your portfolio can help reduce your overall risk and enhance your returns.
Exposure to new and innovative technology. Cryptocurrency is based on blockchain technology, which is a decentralized, distributed, and immutable ledger that records transactions without the need for intermediaries. Blockchain technology has many potential applications beyond cryptocurrency, such as smart contracts, digital identity, supply chain management, and more. Investing in cryptocurrency can help you learn more about this emerging technology and its implications for the future.
Risks of investing in cryptocurrencies?
Some of the potential risks of investing in cryptocurrency are:
Volatility. Cryptocurrency prices are influenced by various factors, such as supply and demand, market sentiment, regulatory developments, technological innovations, security breaches, and more, potentially making it a speculative investment. These factors can cause sudden and unpredictable changes in the value of cryptocurrency, making it difficult to predict and manage your risk exposure.
Security risks. Cryptocurrency transactions are irreversible, meaning that once you send or receive cryptocurrency, you cannot undo or cancel it. This also means that if your cryptocurrency is stolen or lost due to hacking, phishing, malware, or human error, you have no recourse or guarantee of recovery. Therefore, you need to take extra precautions to secure your cryptocurrency and protect your private keys.
Regulatory uncertainty. Cryptocurrency is still a relatively new and unregulated phenomenon that faces different legal and tax treatments across different jurisdictions. The regulatory landscape is constantly evolving and may affect the availability, accessibility, and legitimacy of cryptocurrency exchanges, wallets, and services. You need to be aware of the laws and regulations that apply to your location and comply with them accordingly.
Choosing a cryptocurrency to invest in?
There are thousands of cryptocurrencies available in the market today, each with its own features, functions, and prospects. Choosing a cryptocurrency to invest in can be overwhelming and confusing for beginners. Here are some factors to consider when making your decision:
Do your research:
Before investing in any cryptocurrency, you should do your due diligence and learn as much as you can about it. You should understand its purpose, use case, technology, team, roadmap, community, market cap, trading volume, price history, competitors, advantages, disadvantages, risks, opportunities, and more. You should also read its whitepaper (a document that explains its technical details and vision) and check its website and social media channels for updates and news.
Consider the project’s team and roadmap.:
A good indicator of a cryptocurrency’s potential is the quality and credibility of its team behind it. You should look for a team that has relevant experience, expertise, skills, vision, and passion for their project. You should also look for a roadmap that outlines their goals, milestones, achievements, challenges, and future plans. A clear and realistic roadmap shows that the project has direction and progress.
Look at the cryptocurrency’s market capitalization and trading volume:
Market capitalization (or market cap) is the total value of all the coins or tokens in circulation of a cryptocurrency. It is calculated by multiplying the current price by the total supply. Trading volume is the number of coins or tokens that are traded on exchanges over a given period of time. It reflects the liquidity (or ease of buying and selling) of a cryptocurrency. Generally speaking, a higher market cap and trading volume indicate a higher demand, popularity, and stability of a cryptocurrency. However, these metrics can also be manipulated or influenced by external factors, so they should not be the only criteria for evaluation.
Consider the cryptocurrency’s use case.:
A use case is the problem or need that a cryptocurrency aims to solve or address with its technology or service. A strong use case shows that a cryptocurrency has a real-world value proposition and a potential market. Some examples of use cases are:
Payment. Some cryptocurrencies, such as Bitcoin, Litecoin, and Dash, aim to provide a fast, cheap, and secure way of transferring money across borders without intermediaries or censorship.
Smart contracts. Some cryptocurrencies, such as Ethereum, Cardano, and Solana, enable the creation and execution of self-enforcing agreements that can facilitate various transactions and applications without third parties or intermediaries.
Privacy. Some cryptocurrencies, such as Monero, Zcash, and Dash, offer enhanced privacy and anonymity features that can protect the identity and data of users from prying eyes or malicious actors.
Decentralized applications. Some cryptocurrencies, such as EOS, Tron, and Binance Coin, support the development and operation of decentralized applications (or dApps) that run on a distributed network of nodes without a central authority or server.
DeFi. DeFi (or decentralized finance) is a movement that aims to provide open, transparent, and permissionless access to various financial services and products, such as lending, borrowing, trading, investing, and more. Some cryptocurrencies, such as Maker, Compound, and Uniswap, enable the creation and operation of DeFi platforms and protocols.
These are just some of the examples of use cases that cryptocurrencies can offer. You should look for a cryptocurrency that has a use case that aligns with your interests, goals, and values.
Ways to buy cryptocurrency?
There are a number of ways to buy cryptocurrency. Here are some of the most common ones:
Buy it from a cryptocurrency exchange. A cryptocurrency exchange is a platform that allows you to buy, sell, and trade cryptocurrencies using fiat money (such as NZD) or other cryptocurrencies. Some of the most popular cryptocurrency exchanges are Coinbase, Binance, Kraken, and eToro. To buy cryptocurrency from an exchange, you need to create an account, verify your identity, deposit funds, and place an order. You can choose from different types of orders, such as market orders (which execute at the current market price), limit orders (which execute at a specified price or better), or stop orders (which execute when the price reaches a certain level). You can also choose from different types of fees, such as maker fees (which are paid when you add liquidity to the market) or taker fees (which are paid when you take liquidity from the market).
Mine it. Mining is the process of creating new coins or tokens by solving complex mathematical problems using specialized hardware and software. Mining also secures the network by validating transactions and adding them to the blockchain. Mining requires a lot of computing power, electricity, and technical knowledge. Therefore, it is not recommended for beginners or casual investors. Some of the most popular cryptocurrencies that can be mined are Bitcoin, Ethereum, Litecoin, and Monero.
Receive it as payment for goods or services. You can also acquire cryptocurrency by accepting it as payment for your goods or services. This can be a way of supporting the adoption and use of cryptocurrency in your industry or niche. To receive cryptocurrency as payment, you need to have a cryptocurrency wallet (which we will discuss in the next section), a QR code or address to receive payments, and a way to convert your cryptocurrency to fiat money if needed. Some platforms that can help you accept cryptocurrency payments are BitPay, Coinbase Commerce, and CoinGate.
How to store cryptocurrency?
You can store cryptocurrency in a hot wallet or a cold wallet. A wallet is a software or hardware device that allows you to send, receive, and store cryptocurrency. A wallet has a public key and a private key. A public key is like your account number that you can share with others to receive payments. A private key is like your password that you need to keep secret and secure to access your funds and authorize transactions.
A hot wallet is a software wallet that is connected to the internet. A hot wallet is convenient and easy to use, as you can access your cryptocurrency anytime and anywhere. However, a hot wallet is also vulnerable to hacking, phishing, malware, or human error. Therefore, you should only store a small amount of cryptocurrency in a hot wallet and use it for daily transactions. Some examples of hot wallets are Exodus, Trust Wallet, and MetaMask.
A cold wallet is a hardware wallet that is not connected to the internet. A cold wallet is more secure and reliable, as it is immune to online attacks and theft. However, a cold wallet is also more expensive and less convenient, as you need to plug it into a computer or a phone to use it. Therefore, you should store a large amount of cryptocurrency in a cold wallet and use it for long-term storage or investment. Some examples of cold wallets are Ledger, Trezor, and KeepKey.
How to protect your cryptocurrency?
Cryptocurrency is your responsibility. You are your own bank. Therefore, you need to take extra precautions to protect your cryptocurrency from hackers, scammers, or thieves. Here are some tips for protecting your cryptocurrency:
Use strong passwords and two-factor authentication. You should use complex and unique passwords for your cryptocurrency accounts, wallets, and devices. You should also enable two-factor authentication (or 2FA) whenever possible. 2FA adds an extra layer of security by requiring you to enter a code or confirm an action from another device or app.
Be careful about who you share your private keys with. You should never share your private keys with anyone, not even your family, friends, or trusted partners. Your private keys are the only way to access your funds and authorize transactions. If you lose them or expose them to someone else, you may lose your cryptocurrency forever or have it stolen by malicious actors.
Keep your cryptocurrency in a secure location. You should store your cryptocurrency in a safe and accessible place that only you know and control. You should also backup your cryptocurrency regularly and keep multiple copies of your backup in different locations. You can use paper wallets, USB drives, or encrypted cloud storage services to back up your cryptocurrency.
Be wary of phishing emails and websites. Phishing is a common technique used by hackers and scammers to trick you into revealing your personal information or private keys by sending you fake emails or websites that look like legitimate ones. You should always check the sender’s address, the URL, the spelling, the grammar, and the content of any email or website before clicking on any link or entering any information.
Do your research before investing in any project or service. There are many fraudulent or shady projects and services in the cryptocurrency space that may promise unrealistic returns or benefits but end up stealing your money or compromising your security. You should always do your due diligence and research before investing in any project or service. You should look for reviews, ratings, testimonials, feedback, complaints, reports, audits, regulations, licenses, and more.
What crypto exchanges are available in New Zealand
If you're looking to buy cryptocurrencies in New Zealand, there are a few different options available to you. Here are a few of the most popular options:
Easy Crypto: Easy Crypto is a New Zealand-based cryptocurrency exchange that offers a wide variety of cryptocurrencies to buy and sell. They also offer a variety of payment methods, including bank transfer, credit card, and PayPal.
Swyftx:Swyftx is an Australian-based cryptocurrency exchange that also offers its services to New Zealand residents. They offer a similar range of cryptocurrencies to Easy Crypto, and they also offer a variety of payment methods.
Kiwi-Coin: Kiwi-Coin is another New Zealand-based cryptocurrency exchange. They offer a smaller range of cryptocurrencies than Easy Crypto or Swyftx, but they do offer some unique features, such as the ability to buy and sell cryptocurrencies with cash at over 100 locations around New Zealand. .
Binance: Binance is a global cryptocurrency exchange that also offers its services to New Zealand residents. They offer the widest range of cryptocurrencies of any of the exchanges listed here, but they also have some of the highest fees.
When choosing a trading platform in the crypto market, it's important to consider a few factors, such as the fees charged, the range of cryptocurrencies offered, and the payment methods accepted. It's also important to make sure that the exchange is regulated by a reputable financial authority.
Once you've chosen an exchange, you'll need to create an account and deposit funds. Once your account is funded, you can start buying cryptocurrencies.
It's important to remember that cryptocurrencies are a volatile asset class, and their prices can fluctuate wildly. As such, it's important to do your research before investing in any cryptocurrency.
Here are some additional tips for buying cryptocurrencies in New Zealand:
Start small: Don't invest more than you can afford to lose.
Do your research: Learn about the different cryptocurrencies before you invest.
Store your cryptocurrencies in a secure wallet: Don't leave them on the exchange.
Be patient: The cryptocurrency market is volatile, so don't expect to get rich quick.
Should I invest in Bitcoin?
Bitcoin is the most popular and valuable cryptocurrency in the world. It was created in 2009 by an anonymous person or group using the pseudonym Satoshi Nakamoto. Bitcoin is a decentralized, peer-to-peer, and open-source digital currency that operates without the need for intermediaries, such as banks or governments. Bitcoin transactions are verified by network nodes and recorded in a public ledger called the blockchain.
Bitcoin has attracted a lot of attention and controversy over the years, as its price has soared and crashed repeatedly. Bitcoin reached its all-time high of nearly $69,000 in November 2021, before plunging to below $16,000 in December 2022. As of March 2023, one bitcoin is worth around $27,000, according to Coinbase.
Many people wonder if they should invest in bitcoin and what are the pros and cons of doing so. We will explore some of the reasons why you might want to invest in bitcoin, as well as some of the risks and challenges involved.
Why You Might Want to Invest in Bitcoin:
Bitcoin is scarce and limited. Unlike fiat currencies, which can be printed or created at will by central authorities, bitcoin has a fixed supply of 21 million coins that can ever be mined. This means that bitcoin is immune to inflation and devaluation, as its value is determined by supply and demand. As more people adopt and use bitcoin, its price is likely to increase over time.
Bitcoin is transparent and immutable. Bitcoin transactions are recorded in the blockchain, which is a public and distributed ledger that anyone can access and verify. The blockchain ensures that bitcoin transactions are transparent, traceable, and irreversible. No one can manipulate or falsify the blockchain, as it is secured by cryptography and consensus among network nodes.
Bitcoin is fast and cheap. Bitcoin transactions can be sent and received across the globe in minutes, without the need for intermediaries or intermediaries’ fees. Bitcoin transactions are also cheaper than traditional payment methods, especially for cross-border transfers. For example, according to BitInfoCharts, the average transaction fee for bitcoin in March 2023 was $0.36, compared to $1.75 for PayPal* or $25 for a wire transfer*.
Bitcoin is innovative and disruptive. Bitcoin is more than just a currency; it is a new and revolutionary technology that has the potential to transform various industries and sectors, such as finance, commerce, media, social networking, gaming, and more. Bitcoin enables new business models, applications, and services that are decentralized, peer-to-peer, and censorship-resistant. Bitcoin also empowers individuals to have more control and sovereignty over their money and data.
Why You Might Not Want to Invest in Bitcoin:
Bitcoin is volatile and unpredictable. Bitcoin prices are influenced by various factors, such as supply and demand, market sentiment, regulatory developments, technological innovations, security breaches, media coverage, and more. These factors can cause sudden and dramatic changes in the value of bitcoin, making it difficult to predict and manage your risk exposure. For example, in April 2022, bitcoin dropped by more than 50% in a month, from over $60, 000 to below $30, 000, according to CoinDesk*.
Bitcoin is insecure and vulnerable. Bitcoin transactions are irreversible, meaning that once you send or receive bitcoin, you cannot undo or cancel it. This also means that if your bitcoin is stolen or lost due to hacking, phishing, malware, or human error, you have no recourse or guarantee of recovery. Therefore, you need to take extra precautions to secure your bitcoin and protect your private keys (the passwords that allow you to access your funds).
Bitcoin is unregulated and uncertain. Bitcoin is still a relatively new and unregulated phenomenon that faces different legal and tax treatments across different jurisdictions. The regulatory landscape is constantly evolving and may affect the availability, accessibility, and legitimacy of bitcoin exchanges, wallets, and services. You need to be aware of the laws and regulations that apply to your location and comply with them accordingly. You also need to be prepared for potential changes or interventions by authorities that could affect the market or your holdings.
How Much Should You Invest in Bitcoin:
There is no definitive answer to how much you should invest in bitcoin, as it depends on your personal goals, risk tolerance, and financial situation. However, here are some general guidelines to help you make your decision:
Only invest what you can afford to lose. This is the golden rule of investing in any asset class, especially cryptocurrency. You should never invest more than you are willing to lose completely, as there is no guarantee that you will make a profit or even recover your initial investment. You should also avoid borrowing money or using leverage (borrowed funds) to invest in bitcoin, as this can amplify your loses and put you in debt.
Diversify your portfolio. You should not put all your eggs in one basket, as this can expose you to more risk and volatility. You should diversify your portfolio by investing in different asset classes, such as stocks, bonds, commodities, and cryptocurrencies. You should also diversify your cryptocurrency portfolio by investing in different cryptocurrencies, such as Bitcoin, Ethereum, Litecoin, and more. This can help reduce your overall risk and enhance your returns.
Do your research and due diligence. You should never invest in something that you do not understand or trust. You should do your research and due diligence before investing in any cryptocurrency. You should learn about its purpose, use case, technology, team, roadmap, community, market cap, trading volume, price history, competitors, advantages, disadvantages, risks, opportunities, and more. You should also read its whitepaper (a document that explains its technical details and vision) and check its website and social media channels for updates and news.
Have a clear strategy and plan. You should have a clear strategy and plan for your cryptocurrency investment. You should set your goals, risk tolerance, time horizon, budget, entry and exit points, and exit strategy. You should also monitor the market and your portfolio regularly and adjust your strategy and plan accordingly. You should also be prepared for different scenarios and outcomes, such as price fluctuations, market crashes, regulatory changes, security breaches, and more.
Be patient and disciplined. Investing in cryptocurrency is not a get-rich-quick scheme. It requires patience and discipline to achieve long-term success. You should not let your emotions or impulses dictate your decisions. You should not chase the hype or follow the crowd blindly. You should not panic or sell in fear when the price drops or buy in greed when the price rises. You should stick to your strategy and plan and focus on the fundamentals and the long-term vision.
Conclusion
Investing in cryptocurrency is a risky proposition. However, it can also be a very rewarding one. If you are considering investing in cryptocurrency, do your research and make sure you understand the risks involved. You should also follow the best practices for choosing, buying, storing, and protecting your cryptocurrency.
If you want to delve deeper, here are some additional resources that you may find useful:
A table of the top cryptocurrencies by market capitalization: [CoinMarketCap] is a website that provides real-time data on the prices, volumes, market caps, and other metrics of thousands of cryptocurrencies. You can use it to compare and analyze different cryptocurrencies and track their performance over time.
A list of the most popular cryptocurrency exchanges: [CryptoCompare] is a website that provides reviews, ratings, and comparisons of hundreds of cryptocurrency exchanges. You can use it to find the best exchange for your needs, preferences, and location.
A guide on how to set up a hot wallet and a cold wallet: [CoinSutra] is a blog that provides guides, tutorials, and tips on various topics related to cryptocurrency. You can use it to learn how to set up different types of wallets and how to use them safely and efficiently.
A list of tips for protecting your cryptocurrency: [CryptoSec] is a website that provides security tips, advice, and resources for cryptocurrency users and investors. You can use it to learn how to secure your accounts, wallets, devices, and transactions.
We hope you found this article helpful and informative. If you have any questions, comments, or feedback, please feel free to reach out and contact us below. Thank you for reading and happy investing! 😊
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