Important Factors To Consider Before Investing In Any Crypto
Posted by CryptoSorted | Jul 16, 2020
One of the biggest mistakes you can make in your crypto investment journey is not doing your own research and getting all caught up in the hype and brain bursting burbles.
To become a successful crypto investor you must have an eye for identifying and picking the best and most valuable projects that will still be here 5 to 10 or more years from now.
But nobody knows what will be in that length of time, how do you know such projects? You may not be a future teller, but there are factors to consider when looking to invest in cryptocurrencies.
In this article, we will be looking at 5 critical factors to consider when investing in any crypto project to ensure that you dont fall for scams or end up investing in shitcoins.
What to look for when investing in any crypto project
Ip And Dns Leak Prevention
As VPNs for crypto trading are all about enhancing your privacy and security, itâs important to make sure that they do so without any interruptions. Again, a single slip can result in your activities being exposed.
When connected to a VPN server, your browsing data travels between their device and the VPN service through a secure and encrypted tunnel. All of that data is impossible to eavesdrop on by 3rd parties, such as the ISP or the government. IP or DNS leaks occur when the secure and encrypted VPN tunnel leaks your browsing data.
Itâs entirely up to the VPN provider to make sure that nothing of the sort happens. However, not all providers are successful in doing this. To check if your VPN provider is not leaking any information, you can test how secure your VPN connection is on IPv6-test.com and dnsleaktest.com. If either of these tests show your real IP or location when youâre connected to a VPN server, itâs a good time to find a new provider.
Do You Have To Pay Taxes On Cryptocurrency
If you buy and sell coins, its important to pay attention to cryptocurrency tax rules. Cryptocurrency is treated as a capital asset, like stocks, rather than cash. That means if you sell cryptocurrency at a profit, youll have to pay capital gains taxes. This is the case even if you use your crypto to pay for a purchase. If you receive a greater value for it than you paid, youll owe taxes on the difference.
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Before You Buy Bitcoin Consider These 3 Things
- As bitcoin soars in value again, many people may be moved to buy the digital tokens.
- Before they do, financial and behavioral experts have a few reminders.
It’s been a good few days for bitcoin investors.
The digital token is trading at nearly $50,000, its highest point in months. And many people who’ve stayed on the sidelines are probably wondering yet again: Is it time to buy the cryptocurrency?
Before you put your money into the still highly volatile asset, however, there are three helpful things to consider, according to financial and behavioral experts.
Join An Online Community Of Cryptocurrency Enthusiasts
Because the digital currency space is such a trendy area, things tend to develop very quickly. Part of the reason for this is that there is a robust and very active community of digital currency investors and enthusiasts in communication with one another around the clock.
Get plugged into this community to learn about the buzz going on in the cryptocurrency world. Reddit has become a central hub for digital currency enthusiasts, but there are also many other communities online with active discussions going at all times.
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Why Is Crypto Mining Such A Big Deal
If youre interested in crypto, you should know that mining is an integral part of the process. You can earn cryptocurrency without having to put money down. This means there could potentially be a big long-term profit if you play your cards right.
Theres a reason why huge mining farms exist that work continuously without breaks to mine as much crypto as possible. As crypto is such a valuable commodity today, getting your hands on this appreciating currency is a good thing, through whatever method you choose.
Mining crypto also means you get to be a part of growing the blockchain and supporting the blockchain system. Without miners, the blockchain wouldnt work.
Know Your Crypto Lingo
There is a lot of jargon out there in crypto land and often it can be difficult to decipher.
Use this helpful list to make the most of the best crypto tips and dodge common cryptocurrency mistakes that could blow up your trading account.
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Tip#7 A Tip About Crowd
During an ICO , startups offer the general public an early chance to invest in their idea through a crowded sale. In return, these investors are allocated tokens at a lower price with a promise to sell them at a much higher price when listed on an exchange.
Time has proven that ICOs can quite successful withrecords showing that some tokens ended up more than ten times the value of the projected returns.
But whats the catch in this, you might ask
ICOs have attracted a large number of investors clearly due to their high returns however, another large number of ICOs have turned out to be total scams. People have lost millions worth of investments.
Theres a need for one to be more than cautious when looking to invest in any ICO. Knowing when to or not to invest in an ICO is not about science rather, its about paying close attention to those details that most people seem to overlook while only focusing on the promised returns.
Conduct a background check on the team behind the project and analyze their ability to deliver on their promise. In addition, you should also look at the viability of the idea behind the ICO, poke holes in the projects white paper and seek answers where necessary.
That will ensure that no stone is left unturned and, if by the end of it you still have doubts about the project, youre better of passing than chance it investing in that ICO.
Understanding The Terms: Centralized Decentralized And Distributed
Generally, money systems tend to become more centralized with time and more central access to regulate the system.
There has been some critique over decentralized cryptos, namely altcoins, such as coins operated through the ethereum blockchain network. Blockchains that use proof of stake may be less decentralized. Stakers holding more tokens may have an advantage in the network over those with fewer.
On the other hand, proof of stake can achieve consensus and speed up the network process while consuming less energy. These systems are still highly transparent and decentralized because they use blockchain encryption.
The central bank is centralized because to use it to exchange money, we rely on a third party to hold our money and do our transactions. This reliance is a trust system that Bitcoin does not have. Bitcoin is known as a trustless system.
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Dont Put In More Than You Can Afford To Lose
Crypto is riskier than many other investments. Nothing is guaranteed other than volatility. Whats more, its unregulated in most cases. There is no FDIC insurance for this stuff, nor is there a buyer of last resort. The prices of crypto coins swing wildly from minute to minute. While the market is basking in the glow of bull run, it has endured painful and protracted corrections and almost certainly will again.
Danger varies in degree. Bitcoin, the original cryptocurrency, has been around for more than a decade and its significantly less likely to disappear than most other coins. But its not free of risk either.
Hence, don’t bet the proverbial farm, or your life savings, on any coin.
Vpn For Crypto Trading: What To Look For
Disclaimer: The text below is an advertorial article that was not written by Cryptonews.com journalists.
VPNs are meant to increase your privacy and security online, which is crucial to some crypto traders. To put it broadly, a VPN hides your real IP address, by changing it to a different one. This way it secures your privacy and allows you to bypass geographical restrictions. In addition to that, while the VPN is on, all of your traffic is routed through an encrypted tunnel, making it impossible for third parties to eavesdrop on your activities.
On the other hand, browsing the internet without a VPN connection leaves you exposed. Your traffic is not secured and can be monitored by your Internet service provider or the government. This is important to those, who live in privacy-restricting countries or simply value their privacy.
This is why premium VPN providers offer not only secure connections, but additional features too, such as kill switch or double encryption. They add an extra layer of security for those who might need it. At the same time, some work as fail-safe tools that are there to ensure that your data will remain secure no matter what happens.
This article is meant to help you find out what features a provider should offer, so you could be sure that all your crypto trading activities will remain private.
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Crypto Whitepaper: The Ultimate Guide For Beginners
Crypto Whitepaper: The Ultimate Guide for Beginners
Thats how much Initial Coin Offerings have raised in the first half of 2018 alone!
When you consider the fact that thats nearly double of what ICOs raised in the entirety of 2017, you can see why they have become such a hot topic.
Before ICOs became a household name, companies in the fiat world were already doing IPOs or Initial Public Offerings. The idea is very simple. Private companies become publicly traded by selling shares of their company to the public. IPOs require a lot of due diligence, formalities, and paperwork. Because of this, several deserving companies lost out on lucrative opportunities.
This is when ICOs came in and changed everything.
Developers and entrepreneurs finally had the chance to raise millions of dollars without going through excruciating paperwork. The only thing that they had to do was to present a whitepaper.
Now, consider this for a moment.
The entire fortune and the future of the company, is revolving around the quality of this whitepaper. This is the reason why it is so important to get the whitepaper right. This single PDF, if done correctly, can fetch you millions of dollars in under 24 hours.
Choose A Purchase Method And Make Sure It Is Reliable
Even though the fact that the choice is still quite wide, it has become increasingly difficult to buy bitcoin recently, because the states are actively taking care that you do not get involved with malicious cryptocurrencies. But as always, who wants to, will always find how.
For you, there are still available exchanges Bitfinex, WEX, , YoBit and others. If you are going to trade currency, the exchange suits you the most. Choose the platform that supports convenient payment methods, and after the purchase, you can choose any other for trading, at least the same Hotbit .
If you just want to convert the accumulated fiat currency into cryptocurrency, we can advise you to use the LocalBitcoins website. Here you can choose a seller geographically close to you and arrange a personal meeting. This option provides safety if you are careful and cautious. The main reason why this service is so popular is the ability to pay in any way you have agreed, even in cash. And as a result, despite the commission, it is often still more profitable than throwing money to third-party payment systems, especially foreign.
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Are Cryptocurrencies A Good Investment
Cryptocurrencies may go up in value, but many investors see them as mere speculations, not real investments. The reason? Just like real currencies, cryptocurrencies generate no cash flow, so for you to profit, someone has to pay more for the currency than you did.
Thats whats called the greater fool theory of investment. Contrast that to a well-managed business, which increases its value over time by growing the profitability and cash flow of the operation.
For those who see cryptocurrencies such as bitcoin as the currency of the future, it should be noted that a currency needs stability.
Some notable voices in the investment community have advised would-be investors to steer clear of them. Of particular note, legendary investor Warren Buffett compared Bitcoin to paper checks: It’s a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money too. Are checks worth a whole lot of money? Just because they can transmit money?”
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This price volatility creates a conundrum. If bitcoins might be worth a lot more in the future, people are less likely to spend and circulate them today, making them less viable as a currency. Why spend a bitcoin when it could be worth three times the value next year?
Tip#2 Set Profit Targets And Make Use Of Stop Losses
If youve not heard of the term stop loss in trading, check out this link to help you understand what its all about.
Every trade we get into requires us to know when to get out, whether were making a bitcoin profit or not. Establishing a clear stop loss level can help you cut your losses a skill thats very rare in most traders.
Choosing a stop loss is not a random activity, and perhaps the most important thing to note here is that you shouldnt be carried away by your emotions a great point to set your stop loss is at the cost of your coin. If, for instance, you acquired a coin at $1,000, set that as the minimum point youre willing to trade your coin. This will ensure that if the worst comes to pass, you can walk away with what you invested in the first place.
The same applies to profit levels if you target to get out of the market after hitting a certain minimum profit stick to that. Dont be greedy its never a nice color on anyone!
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What Are The Best Crypto Indicators For Trading
We prepared a list of 6 most commonly used indicators for cryptocurrency trading. The list of course is not finite. There are more complex indicators. But I believe that the best ones are those that are used by many traders. In other words the most popular indicators are the best.
Look at it this way. Why do indicators work in the first place? Because many people believe they do. If price reaches for example Fibonacci Retracement level, it means nothing to the price of the commodity. But, what if many traders believe that this exact Fibonacci level is the turnpoint for crypto price? Theyll start buying or selling as soon as price reaches that level. Making the price bounce in the opposite direction of the retracement level. So, this is the reason why traders, especially new ones should trust the most popular indicators.
So, the most popular crypto trading indicators are:
- Moving Averages
Miners Verify The Blocks Hash To Ensure The Block Is Legitimate
What is cryptocurrency mining hash verification? Before a block gets added to the blockchain, the network must verify the information contained on the block using the hash.
To verify a block, miners must collect the transaction data and assign it a hash. To verify the next block in the blockchain, miners will have to collect another set of transactions and then find a new hash. Each blocks hash contains the hash of the last block, plus a new hash created from its transaction data.
The hash is the primary security element in the blockchain. For a malicious actor to change any data in a block, the hash would change.
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Final Thoughts On Cryptocurrency Mining
What is cryptocurrency mining for? Why should you be involved?
How crypto mining works is by releasing new crypto into the system and verifying and adding transactions. Mining is a crucial part of the crypto ecosystem.
Because the blockchain is a public ledger, mining is a novel process for creating digital money. Blockchain and mining have changed the way we look at currency, banks, legislation, and decentralization.
The challenge of mining comes down to the cost versus the reward of earning cryptocurrency. Mining is not only the pursuit to earn crypto.
It doesnt matter if you are an individual with the hope of being a successful miner or a massive mining farm funded by corporate or government money. Mining will impact the future.
Mining is a legitimate means of being a part of a future where centralized banking becomes obsolete, replaced altogether by decentralized blockchain technology. It is also a movement that is changing the world.