Like any other form of investment, cryptocurrencies are not different considering the opportunities, potential risks, and returns. Crypto adoption has increased in the past decade, and the gains through that period make cryptos look and feel like a good investment in the long term. 

With ever-rising threats of targeted and random cyberattacks, crypto owners need to use best practices to limit security loopholes and exposures to such hazards. Cryptocurrency holders need to safeguard their digital assets, given the rising cases of hacks and scams that have resulted in the theft of at least $19 billion worth of coins in the past 10 years. 

This article highlights ways to start or improve your cryptocurrency investment carefully. 

How to invest in cryptocurrency? 

Although crypto is volatile, its value has risen significantly since 2009, when the first coin launched. Day-to-day fluctuations are still drastic, with most cryptocurrencies losing or gaining up to 20% in just 24 hours. 

Crypto investment mainly involves trading and holding digital currency on crypto exchanges. Here are tips on how to safely invest in crypto!

1. Invest Only Amounts You Can Afford to Lose

Cryptocurrencies should account for a small portion of your overall investment portfolio. Before investing, decide how much of your portfolio you want to put into cryptocurrencies. Making such a decision may be difficult given the bearish and unpredictable markets for top and even smaller cryptocurrencies.

Two main factors rule an investment process – an appetite for more returns and fear for potential losses. So, while investing, you should stay alert on the latter consequence and only invest what you can afford to lose. This calculated investment style creates a buffer for the investor if a trade goes wrong and results in major losses. So, you can keep your appetite for more returns in check and reduce the impact of huge losses on your portfolio. Consider these key points:

• While you are the one to decide how much you spend on crypto, the investment should make up just a reasonable proportion of your overall portfolio. A modest proportion not exceeding 10% of your income is a good place to start.

• Main crypto investments earn gains for investors when the price of crypto they purchased rises. This is unlike traditional investment options like stocks which pay dividends and interests.
• Inherently, crypto is a medium of exchange and a way of transferring – not mainly an investment option. Since most digital currencies are characterized by limited supply, they are deflationary and a likely viable option to government-issued fiat currency. There’s growing adoption of crypto payments, but the technology hasn’t gone mainstream yet.

• While investing, note that cryptocurrencies’ value is solely established by the market, given their decentralized nature.

2. Select a Coin to Invest

There are nearly 20,000 cryptocurrencies in the market today. For a beginner, selecting a coin to invest in can be overwhelming. You need to invest in a reputable cryptocurrency, not one that will be gone before you know it.

BTC remains the most popular, dominant, and valuable cryptocurrency in the market today. Other top cryptocurrencies include ETH, BNB, Cardano (ADA), and XRP, come in to play, but BTC remains the most trusted coin and has become synonymous with crypto. The token is widely tracked by individuals on social and even mainstream media. Although BTC’s trend often dictates the trend in the crypto markets; some coins may outperform BTC during specific periods.

Bitcoin’s dominance and overall performance make it a top coin and a good buy for an amateur crypto trader. The other top coins are also safe to start your crypto investment. It is advisable to diversify your crypto assets as it helps to spread risks mitigate financial and security vulnerabilities while offering you multiple options to earn higher returns.

3. Select a Trading Platform

Cryptocurrencies are traded mainly on crypto exchanges. There are at least 450 cryptocurrency exchanges in the market today, each offering unique services to meet the diverse market demands of crypto traders. Selecting the right exchange for you is also critical to a crypto investment and will contribute to higher returns.

Regardless of your experience as a crypto trader, you need to select a trading platform that is simple and convenient for your investment needs. Here are some top exchanges that will serve beginners and experienced traders well:

• Coinbase: Launched in 2012, Coinbase is one of the most popular exchanges worldwide, with 70 million users in over 100 countries. Its subsidiary, Coinbase Pro, is one of the best digital coin trading platforms for professional traders and institutional investors. The exchange has barely any security incidents with users’ crypto assets. Unlike many exchanges, Coinbase Pro is regulated and licensed to operate in almost all US states, Canada, and many European countries.

• Binance: Binance is the leading exchange by trading volume globally, offering the widest varieties of altcoins (400+ coins), low transaction fees, and peer-to-peer (P2P) trading. The exchange accepts deposits from 40+ fiat currencies, in addition to multiple payment options for purchasing crypto.
• eToro: eToro features some of the best resources for beginners and advanced traders. Among the features is copy-trading, which investors can deploy to replicate the trades of successful investors on the platform. This is especially important for investors with little-to-no experience in crypto trading.

• Crypto.com: Crypto.com exchange supports multiple crypto activities and products, including staking, trading, investing, wallets, and non-fungible tokens (NFTs). This exchange supports at least 160 different tokens, fair fees, and great discounts for holders of its native token, Crypto.com Coin (CRO).

Other top exchanges are Kraken, ByBit and Bitfinex.

4. Secure Your Crypto Assets

Losing cryptocurrencies presents a more complex situation – the underlying blockchain technology that is built for anonymity and immutability makes it practically impossible to identify wallet owners and reverse malicious transactions. So, an investor with a compromised crypto wallet may lose all their crypto assets, never to recover them.

The most common way to store BTC and other coins are in a cryptocurrency wallet – a piece of software that holds your private and public keys through which you can connect to your blockchain and access your cryptocurrencies. These wallets may either be online or offline storages, commonly known as hot and cold wallets, respectively. Some common types are desktop, mobile, online, and hardware wallets. Here are some tips to secure your crypto:

• Use multiple wallets: You can choose to have both a hot and cold wallet, depending on your trading activity. If you trade often, a hot wallet will be convenient, and if your trading activity is low, you may choose to store much of your assets in offline storage.

• Deploy safe cybersecurity practices: Ensure your device is up-to-date with the latest security patches and that you execute maximum precaution to offer your crypto wallet utmost security. For instance, you may deploy multifactor authentication (MFA) to add a layer of security to your wallet.

Remember: A wallet doesn’t keep your crypto. It allows you to access your crypto on the blockchain.

5. Be Ready for the Bumpy Ride

After buying and safely storing your crypto, be prepared for the huge price swings that lay ahead. Highly volatile crypto markets are marred by fear, uncertainty, and doubt, or FUD as commonly known in the crypto world. And to this, enthusiasts respond with HODL, a crypto slang that attempts to encourage the trader to hold their crypto assets as crypto markets stumble and prices slump. Despite the growing adoption of crypto, a considerable portion of the world’s population has not interacted with these tokens, and this is where much of the speculation stems.

Despite the volatility, crypto has been on an averagely upward trend, with the market cap well over $1.5 trillion. Successful crypto investment requires a critical balance of risks and potential returns. Going all-in to a crypto trade may be an ill-informed idea, given the uncertainties in the markets. Ensure you evaluate investment options and select those with the highest potential for good returns, putting in only an amount you can bear to lose. Pick the best coins and the most suitable trading platforms for your crypto portfolio and ensure you keep your assets secure.

There are more ways to invest in crypto. If holding cryptocurrencies on exchanges is a hassle, you can opt for crypto-based exchange-traded funds (ETFs). These are investment funds that track the price of Bitcoin or other cryptocurrencies and allow traditional investors to gain exposure to the coins without holding them.

How to grow crypto portfolio?

Prior knowledge is essential before you think of investing in any market, especially the cryptocurrency market. The relatively nascent investment opportunity involves risks like any other. High volatility in crypto prices means that investors could earn huge returns or lose massively within short periods. However, a calculated and well-researched investment in crypto will generally turn profits for crypto investors. Here are some of the ways you can grow your crypto assets:

1. Investing

This is the strategy of buying and holding crypto assets for a given period. Crypto assets are well suited for a buy-and-hold strategy. They are highly volatile in the short term but have tremendous long-term potential for growth.

2. Trading 

While investing is long term, trading, on the other hand, is a short-term method of growing your crypto assets and needs to exploit the opportunities in the shortest time possible. Therefore, traders need to understand the risks of crypto and have the proper analytical and technical skills. Crypto volatility means that the prices of assets can soar and drop drastically over a short time, say hours or in one day.

3. Mining

You are rewarded with coins when you mine cryptocurrency – that is, by participating in validating transactions and adding new blocks to a chain. To mine, you need technical expertise and upfront investment in specialized hardware for validating the transactions in proof-of-work (PoW) consensus blockchains.

4. Crypto Content Creation

Curating, creating, and promoting crypto content for many blockchain media platforms earns significant rewards, either in crypto or fiat currency.

5. Buy and HODL

One of the common ways to invest in crypto market is to Buy and Hodl. Making interest from crypto by buying and hodling is seen as the easiest method of making returns through cryptocurrency. To implement this strategy, you will have to identify more stable and volatile assets that can swap rapidly, resulting in regular profits. To “buy” simply means you are purchasing a coin or token, while “Hodl” is the crypto term for “hold,” meaning stalking a particular coin till its value rises. Investors buy coins such as Bitcoin, Hi, Litecoin, Ethereum, Ripple, and more and wait until their value rises so that they can sell them when the value appreciates.

6. Earning from cryptocurrency dividends

Many individuals are unaware that coins can be purchased and held for a dividend. You can earn money by purchasing and holding digital assets of certain coins. The intriguing part is that you don’t have to keep these coins in your wallet in order to receive dividends. HI, COSS, CEFF, NEO, KUCOIN, and other coins that pay dividends are examples.

7. Staking Cryptos

Making interest in cryptocurrency is considered as a risk mitigated way of making money on the blockchain. Staking cryptocurrency is a second approach to profit from cryptocurrencies. This method provides a double earning potential through price increase and dividend payouts from specific coins in exchange for staking their digital assets. Staking requires you to keep your coins in a live wallet, allowing you to earn more coins in exchange for securing that currency. If there are coins, for example, NAV Coin, PIVX, Neblio, Decred, and so on.

8. Day Trading

Being a day trader necessitates more than just holding an asset until its value rises; it also necessitates effective analytical and technical skills. You’ll need to monitor market charts to see how particular assets are performing; this approach of making money on crypto is the most time-consuming, but it’s also the most rewarding.

9. Crypto Arbitrage

Because the cryptocurrency market is unregulated, there are many variances or differences in terms of asset valuation, product pricing, and so on, depending on the buyer and seller’s agreement. The majority of exchanges set their own pricing for their assets, resulting in disparities in asset volatility and liquidity. 

However, you can profit from these price fluctuations by purchasing from lower-cost sources and selling on pricier exchanges. Arbitrage is the term used to describe this process.

Risks Associated with Cryptocurrencies

With a boom in cryptocurrency interest over the past years, scammers have taken notice of new opportunities for illicit activity. The high-tech nature of crypto attracts sophisticated scammers and threat actors aiming to defraud crypto holders. The framework that supports the entire crypto industry operates online. Therefore, crypto assets are constantly exposed to these threats than ever before, as more threat actors look to exploit vulnerabilities in online environments.

Deploying cybersecurity best practices help alleviate much of the threats posed to securing crypto assets. However, cyber threats always evolve, demanding a proactive response in protecting digital frameworks against attacks. 

There are multiple layers of security for a crypto wallet, and all these layers are susceptible to vulnerabilities and exposures. Here are some common ways that hackers execute attacks:

1. Cryptocurrency Exchange Hacking 

Cryptocurrency exchange platforms are consistently targeted by cyber attackers. Most of the exchanges targeted are centralized. These centralized exchanges are desirable for such attacks as hackers have a single point to find and exploit exposures and vulnerabilities. Exchanges and customers often suffer huge losses. In one recent case, Singapore-based exchange, Crypto.com, announced that there were unauthorized activities in some users’ accounts leading to a loss of nearly $35 million.

2. Online Scams 

From social media scams, initial coin offering (ICO) frauds, and even other social engineering scams, the crypto industry is full of them! Social media platforms are especially favorite for threat actors, who deploy bots to make comments and replies to posts on YouTube, Twitter, and other media. These hackers spam comment sections on posts from verified accounts, posting fake giveaways, promoting fake ICOs, or too-good-to-be-true deals like promising to double their crypto when they deposit to the hackers’ wallets.

3. Phishing

Another method deployed by threat actors is through phishing. In this type of fraud, the attacker lures the victim using manipulation or deceit to offer sensitive personal information and login credentials. Such phishing attempts can be random or targeted. Successful phishing attempts could let attackers access your crypto wallet and steal your funds.

How to Reduce Risk in Crypto Trading?

No matter how good you think, your trade setup is, no investment is ever guaranteed to be void of risks. So, managing potential risks to your crypto trading is one of the most important elements of successful investment.

Here are some of the ways you can reduce your risk exposure when trading:

1. Trade Quality over Quantity

The key to effective trading is to choose quality over quantity. Traders who overtrade the markets often waste time and money. Not every type of market condition will be conducive to your strategy. Ensure you deploy a dynamic trading strategy by finding quality trades through a trading style that works best for each situation, as well as identifying the right market conditions.

2. Have an Exit Strategy

Determine the risk to reward ratio and set your targets for taking profits. Traders can either add to their position during strong trends or lock in profits by scaling out all the way. Identify key support and resistance levels on the charts and map out your trades ahead of time.

3. Do Not Use Excessive Leverage

Traders often utilize margin because it increases the order size and allows the flexibility of going long or short. As such, if you deploy excess leverage, your trades will not have enough time to recover, and you can lose your entire principal amount in case of a forced liquidation.

4. Avoid Hype

Fear of loss and of missing out may lure a trader into entering potentially bad trades. If you do not research the trade properly or become too greedy, you may miss the dips and buy when the prices are high. A panic sell or cash-out on your position during the dip could also lead to massive losses. So, you must learn to avoid the hype and manage your emotions.

Earning Crypto at Hi.com

Before investing in crypto, you should consider getting a crypto wallet for your earning, trading and storing needs. hi wallet supports all major cryptocurrencies, including Bitcoin, Litecoin, Ethereum, Dogecoin. Transferring crypto to friends from your hi wallet is free, fast, and secure. This way, you can make faster trades and optimize your profit-making investments.

hi also features a crypto exchange where you can swap tokens directly from your wallet. It is easy to buy and trade HI, which allows you to earn crypto passive income by holding HI on the Hi Wallet.