Invest WISELY in crypto currencies
By: Rohas Nagpal
Tags: Crypto, Cryptocurrency, Ethereum, Bitcoin, Investing

Don’t rush to invest in crypto currencies. Learn to do it WISELY.

A lot of people have become cryptocurrency investors. This is primarily because of the massive boom in bitcoin prices. This post outlines how you can invest WISELY in crypto currencies.

WISELY is an acronym for:

Wisdom Intricacies Security Exchanges Law Yield

Wisdom

Crypto-currencies are not for everyone. They are very very very volatile. Need proof? Check the bitcoin price graph over the last few years:

Another point to remember is that there are thousands of crypto-currencies, most of which have very low liquidity. This means that you may not find a buyer when you decide to book profits or sell.

So be wise. First, understand your risk appetite. Then consider if you should invest in cryptocurrencies. Please DO NOT put your retirement fund into crypto assets. Only invest money that you can afford to lose.

Intricacies

Conventional investments (mutual funds, gold, real estate, bank deposits) are relatively easy to understand. Crypto investments require a lot of technical knowledge.

Make sure you have a strong understanding of addresses, blocks, confirmation, cryptography hash functions, hash rate, mining, multi-sig, nodes, pools, private keys, proof of work (and other algorithms), wallets, etc.

Security

If your online banking or share trading account is hacked, you do have some legal recourse. But if your crypto account/wallet gets hacked, you have almost no legal options. So you must know how to secure your crypto assets using hot, warm, and cold wallets.

While phishing, malware, and scams are usually targeted towards end-users and exchanges, there are many attacks on the crypto networks — 51% attack, cannibalizing pools, DDoS attacks, double-spend attacks, Р+Epsilon attacks, Sybil attacks, etc.

Exchanges

Stock exchanges are highly regulated entities. Crypto exchanges in most countries are not regulated. This means they can shut down anytime or even steal your money and there’s not much you would be able to do. So make sure you only use highly respected and credible exchanges.

Law

Cryptocurrencies are outright illegal in some countries. Plus the legal and taxation issues are not clear in most jurisdictions. You must understand the money laundering and taxation laws of your country before you trade in crypto.

Yield

There are all sorts of crypto assets today -

Utility tokens such as Ethereum, BAT, CRO, KNC, LINK, MKR, OMG, REQ, ZIL, ZRX.

Transactional tokens, such as XRP, IOTA.

Electronic cash / decentralized money such as Bitcoin, LTC.

Privacy coins such as XMR and DASH.

Tokenized version of assets such as land, gold.

Mining contracts.

Crypto derivatives.

Financial models for predicting yields in such assets are very primitive as of today. You need to learn how to calculate yields.

Legal Disclaimer

The information in my social media networks, websites, and videos is for general information only and should not be taken as constituting professional advice from me. I am not a financial adviser. You should consider seeking independent legal, financial, taxation, or other advice to check how the information relates to your unique circumstances. I am not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly. I link to external resources for your convenience. I am selective about them but I don’t endorse them.

This post was originally published by me on LinkedIn.