Guide: How to Invest in Mysterious Cryptocurrencies

The market for investing in cryptocurrencies is large and difficult to predict. But there can be big gains to be made. Here's an easily accessible 4 step guide to getting started.

If you belong to a group of investors with a penchant for short-term trading and want to accept the high risk associated with cryptocurrencies, then the crypto market can be a good place to try.

The so-called cryptocurrencies are a common term for several thousand different digital currencies that have in common that they are traded in a decentralized, open network around states and banks.

At the beginning of 2017, the total market value of cryptocurrencies was around DKK 120 billion. KR.

During the year, the value of the currencies developed explosively and to an extent never seen before in, for example, equities. When the digital currency reached a preliminary peak a year later, the market had grown to a staggering amount of around five thousand billion kroner.

"With Bitcoin, you have a market-leading currency that is traded a lot, and which has shown that it is resistant even in the periods when cryptocurrencies have had a hard time" - Christian Due, investment expert, knowledge portal Min Investing

However, it plunged quite violently in 2018 and is today calculated in terms of size at DKK 1.6 trillion in just over 3,000 different currencies according to Coinmarketcap. A good picture of the development that presented itself to the growing number of crypto investors in the world.

"Cryptocurrency is one of the investment areas where it is going strong, so if you want to trade with a short time horizon or to rise on the next price rocket, then it is an investment that can move something quickly," says investment expert Christian Due from the knowledge portal My Investment.

Here you can download knowledge and guides on how to get started as an investor in, for example, the crypto market.

Bitcoin first and foremost

Cryptocurrency has taken the world by storm. Or at least the parts of it that are interested in the crossroads between investment, trade, and technology.

Bitcoin is the largest and by far the most talked-about of the many currencies. It alone accounts for a market value of more than 1 bio. When the unit was most valuable shortly before Christmas in 2017, it cost more than $ 20,000 each, while today the value is almost half.

When cryptocurrency has gained as much interest as it has in a short time, it is because the currency is interesting for two types of people. One type is the investor who believes that the currency will be worth more in the future and that money can thus be made through speculation.

The other type is him or her who needs to be able to shop digitally outside of the banks and the more classic money system.

The challenge has been that when you send something digital, it can be a document or a picture, it is done in the way that a copy of that person is sent. It thus reaches the recipient without disappearing from the sender.

Of course, it does not go with money, as you will then be able to spend the same money several times.

But that is exactly the problem that was solved in 2009 when Bitcoin was invented. Here we succeeded in creating a currency that can be used digitally and where there is control over the ownership. Since then, many more have been added, and among other major currencies are Ethereum, Ripple, and Litecoin.

Facebook on the field The

the technology behind cryptocurrency is called a blockchain. It is quite complicated, but the essential thing in an investment context is to understand that the currency seems to have gained a foothold.

Most recently, Facebook, along with a string of major players, announced the launch of Libra Coin in 2020 as a clear offensive move in the spread of the currency. The large exchange rate fluctuations in the currencies make them a risky investment opportunity, but in a broad portfolio, one may well find room to also move further out of the risk-return curve.

You can shop for quite a few hundred kroner, and it takes less than an hour to set up the necessary accesses. According to investment expert Christian Due, it is advantageous to follow four steps to get started with speculation in cryptocurrencies.

Step 1 - Choose a Platform

Cryptocurrency is a complicated concept and it can take a long time to learn to understand the technology behind it.

If you have not tried crypto trading before, Christian Due recommends that you start with a user-friendly platform, where the trading takes place in a way that is similar to what you may know from stock trading.

There are various exchanges where you can exchange your money for Bitcoins, for example, as you know it from banks and exchange agencies that exchange kroner for dollars or the like. But it requires the creation of an electronic wallet (Wallet) for storing the currency. Here, however, the risk of hacker attacks is a topic that should be taken seriously, and it is worth spending time researching the security level of the various wallet services one has to look at.

“Cryptocurrency is a market with high volatility, and the relatively short history shows that there can be both large gains to be made and large losses to suffer. As an investor, you must also be able to handle it ”- Christian Due, investment expert, the knowledge portal Min Investing

Seen in that light, it can be a good idea for a beginner to choose a trading platform that offers a total solution. At Min Investing, the eToro platform is preferred.

“Trading platforms such as eToro have made it easy for users to get started because they automatically create a wallet where the cryptocurrency is stored. At the same time, they are responsible for everything with certainty, ”says Christian Due.

eToro offers trading with the most common cryptocurrencies, and at the same time, you have the opportunity to copy other investors' trades automatically so that you can benefit from the knowledge of others.

Step 2 - Find your cryptocurrency

Once you are registered as a user, you need to find the cryptocurrency in which you want to invest.

Here, as with the shares, it requires a lot of research on the different types of currency. Each of them is started to make a difference in different types of trades, industries, or otherwise.

Here, a visit to the websites of the different currencies, general blogs about crypto trading, or perhaps inspiration from debates with other investors can be the way to more information about the individual currencies and perspectives in investing in them. It is about spotting the strengths and weaknesses of individual currencies.

If you do not have unimaginable amounts of time for research, then according to Min Investering, bitcoins can be a good place to start. Bitcoins are the largest of the various types of currency with a market share of almost 70 percent.

“With Bitcoin, you have a market-leading currency that is traded a lot, and which has shown that it is resilient even in the periods when the cryptocurrencies have had a hard time. At the same time, Bitcoin has the advantage that it gives access to invest in other cryptocurrencies, and this helps to increase the demand for it and thus the price, ”says Christian Due.

Step 3 - Choose Quantity and Buy

There are different ways to speculate about cryptocurrency. On eToro you can buy currency and get to own your Bitcoins or similar currency. However, this is not the case on all portals.

One can also trade cryptocurrency as a so-called CFD trade. It is a trading method where you do not buy the underlying coin yourself, but pay another unit a fee to keep the coin for you. It is a geared instrument where you can speculate in both price increases and price drops.

As with equities, it can be a good idea to spread your investments over several different types of cryptocurrencies to reduce risk. Unlike the stock market, one must keep in mind that cryptocurrencies are unregulated assets without investor protection and that one can end up losing all of one’s invested funds if things go wrong.

Step 4 - Follow the market and consider selling again

When you have invested as you would like, it is quite obsessed just to follow the development in the market and possibly sell again at some point. It can be via the platform you have chosen or other media that calculate course development and the development within the industry.

In any case, cryptocurrency is an asset that requires you to have a certain amount of ice in your stomach.

“Cryptocurrency is a market with high volatility, and the relatively short history shows that there can be both large gains to be made and large losses to suffer. As an investor, you must also be able to handle it, ”says Christian Due.