What is investment in simple words, why it is worth investing in cryptocurrency
08/08/22
#Crypto Crew

Investment – what is it?

Contents of this article:

There are several ways to earn on cryptocurrency and one of them is investment. But there are different ways to invest. It is worth understanding to figure out how to do it, what strategy to choose and what is the meaning of investing. We will tell you what investments are in simple words and why it is profitable to invest in cryptocurrency.

What is investment

The investment of money in assets means in simple words investment. The goal of the investor is to return the invested money and earn more. Investments are made to increase capital but not for the sake of simple savings.

There are several ways to invest in crypto:

  • To buy a coin and store it. The price of a coin can increase significantly in the long term, but it is also possible that it will decrease, so it is wiser to diversify your portfolio.
  • To invest in a business whose activities are related to cryptocurrency. For example, invest in mining companies.
  •  To invest in funds that work with cryptocurrency. There are crypto-focused funds that manage investors’ assets by investing in cryptocurrency itself or cryptocurrency companies.
  • To put cryptocurrencies in a liquidity pool. These are crypto storages that exist for lending, decentralized trading and maintaining the security of the exchange. Investors earn interest on transaction fees in exchange for lending their assets.

Separately, it is worth understanding what venture capital investments are. It is a contribution of funds to completely new projects, the success of which is in question.

Venture investments are the most highly profitable, but the most risky at the same time.

Benefits of investing in cryptocurrencies

It is worth understanding whether you need to invest in cryptocurrency having understood what investments are. There are many advantages to investing in crypto:

  • Diversification. The investor can choose among thousands of coins. The more diverse the portfolio is, the more chances are to earn, even if some assets do not live up to expectations.
  • Passive or active earnings. You can simply store it and wait for the price to rise in order to sell it at a higher price later having bought a crypto. You can even trade and increase your capital every month.
  • Additional possibilities. Shares, bought on the stock market, can only be resold. Today some goods and services are paid for with cryptocurrencies, and there will be more companies accepting cryptocurrencies as payment in some time.

What difficulties do beginners face

A novice investor will definitely face difficulties. The first one is the choice of cryptocurrency for investment. You can evaluate the prospects of crypto, using technical and fundamental analysis. You need to learn how to predict and analyze, it means that you need to dive deep into the topic, figure out what affects quotes, how to track the dynamics and use the situation to your advantage before investing.

Another problem is asset storage. There are several types of crypto wallets, each of them has advantages and disadvantages. The topic is also important to study before starting to invest.

How to evaluate risks

So, what is investment in simple words? It is an investment in order to get additional profit. Be aware of the risks if you are investing in cryptocurrencies. The volatility of the cryptocurrency market is high, so the price of a coin can drop significantly. For example, at the end of 2021, Bitcoin is worth $67,000, and in June 2022 it falls below $22,000.

The main risks of investing in cryptocurrency are volatility and speculation by large market players, which lead to a sharp increase and decrease in the price of coins by their actions.

The Crypto Crew team will help you to learn how to assess risks. Our educational course and community are designed for those who want to develop in the field of investment and trading. You will learn not only what investments are in simple words, but also how to safely invest in crypto, how to work with exchanges without risking capital, and how to correctly form a portfolio during the training.

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