Hi there, I’m a crypto enthusiast with over 8 years of experience trading on exchanges. I started cryptocurrency trading for the first time in 2014. In the first few months the profits, dynamics, and around the clock access to exchanges really stunned me. It was at that point that I understood that I didn’t want to go back to trading on the stale stock market.
I want to share my experience with others. I can see that a lot of people see the astronomical growth of cryptocurrencies and simply start investing without any experience or an understanding of the specifics of the cryptosphere. Ultimately, most of them lose their savings. That's why I made the my first guide pertaining to where and in which proportions investments should be made, in order to minimize risks and earn income on a long distance.
Guide: How to start investing in cryptocurrencies?Investments in cryptoassets allow individuals to protect their assets from inflation, and to increase their capital by ten, or even a hundred times over in a short amount of time. The advantages of the cryptosphere lays in the fact that it’s still young but growing at an alarming tempo. This means that tokens or project currencies can still be bought at an early stage and for a low price. These projects might just become the next Google, Apple, or Facebook.
According to Infosys Finacle, about 50% of global banks are already investing or planning to invest in the development of the crypto industry. According to data from Coinmarketcap, in early 2017, the cryptocurrency market capitalization amounted to 17 billion dollars, and at the time of this post, it grew to 256 billion. This means that over 11 incomplete months, the capitalization of the crypto industry grew by 1200%.
What attracts such a fantastic inflow of investments?
One of the growth drivers is the great ICO boom, which allows for investments and to attract investments much more comfortably and faster than through the use of traditional financial instruments.
Large hedge funds, investors, and traders are starting to use crypto assets in their investment portfolios. Some of them create these portfolios for the sole purpose of investing only in crypto assets.
Cryptocurrency liquidity is rising. Coins are starting to be used for transfers, and are beginning to be accepted in online and offline businesses.
In this post, I will tell you about which assets you should invest in and how, to not only save your assets but to make some profits and help the industry develop.
How to form a portfolio and start investing? The cryptocurrency market differs from others due to its volatility. This means that certain crypto assets can rise in price dramatically and collapse in the span of a day. Professional traders make their money on short-term price jumps. A beginner investor will find it challenging to save his assets day trading.
It’s best to invest in prospective projects for the long time. Therefore, you need to have the ability to “freeze” an asset for some time, in order to make a profit on it.
Cryptocurrency investments are built upon the following general principles: don’t make a bet on one thing, don’t succumb to panic, and analyze information. Invest only those funds that you won’t need to use to cover your primary financial needs.
Roughly speaking, you need to have a main cash flow source to pay your rent, utility bills, food, medicine, etc. Because if you start to pull out funds from your investment portfolio constantly, then you will most likely lose more than you will win.
Different portfolio creation strategies exist. Experienced traders have their own tactics, some analysts sell their strategies. But the most secure and basic way of distributing assets in your portfolio is as follows:
1. Blue chips: 50% of your investments
2. Second echelon crypto assets: 30% of your investments
3. ICO projects: 20% of your investments
1. Blue chips.Crypto assets are assumed to be blue chips with the most optimal market capitalization, profitability, reliability, and liquidity. Unlike highly volatile assets, which can show great short-term growth or failure, blue chips are already entrenched in the market. Therefore, they are a part of the industry, draw out confidence, and their volatility isn’t as high. These investments should provide for a comparatively slow, yet confident long-term growth.
Bitcoin (BTC) The first decentralized p2p payment network, and the most famous and integral cryptocurrency. Even people who are alien to the industry know about it. In 2010, 1,000 bitcoins cost 3 cents, in November 2017, the market rate of one bitcoin got to $9,000 with a capitalization of $162,000,000,000
The bitcoin acts as a locomotive for the development of the crypto industry and is leaking into the lives of people. It’s used not only online, but in offline companies too (restaurants, hotels, stores, etc.), the daily transaction volume in bitcoins totals in the millions of dollars. Bitcoins need to take the number one spot in a long-term investment portfolio.
Ethereum (ETH)Is one of the most highly demanded cryptocurrencies today. Coming in after the bitcoin in second place. The market capitalization is $46,000,000,000. The Ethereum project pretty much integrated smart contracts with the cryptoindustry, and made ICO’s possible in their current form.
The uniqueness of smart-contracts is that they self-execute themselves when predetermined conditions are met. There are no risks of ambiguous interpretations or sketchy court decisions, which exist in conventional contracts, based off of ordinary laws. As a result, the demand for Ether should grow steadily.
Litecoin (LTC) This coin is definitely worth mentioning as it's one of the veterans of the cryptoindustry. It formed as a result of one of Bitcoins earliest forks. Market capitalization is $4,000,000,000. From the period of September 2016 to September 2017, this coin showed a 1300% price increase. Then, a predictable recovery started, however, investors are confident that Litecoin has some pretty good potential.
Litecoin doesn’t suffer from scalability issues and can provide for practically instantaneous transactions with almost no transaction fees. During its time in existence, the payment network has provided high liquidity for Litecoins.
2. Second echelon cryptocurrencies.These are crypto assets that have shown themselves to be solid projects, but, have less liquidity, reliability, and capitalization than do blue chips.
There's a higher chance that the price of these assets might fall, but there is also a possibility that they can make give a profit that will be higher than in blue chips. Because of investment risks, second echelon cryptocurrencies cannot be the foundation of a cryptocurrency portfolio, but investing about 30% of your portfolio assets in them is good practice.
In order to determine if you should invest in a cryptocurrency or not, you need to conduct some research and pick one out of over a thousand coins in the market. You need to be sure that the coins in which you invest, solve real problems and have a future. You must make a choice by yourself, but I want to draw your attention to 3 of them below:
Bitcoin Cash (BTH) A prospective bitcoin fork. Broke off on August 1st, 2017, but in November 2017 it took the third place for market capitalization among cryptocurrencies ($27,000,000). In its early stage, it has high volatility, and analysts disagree radically regarding the perspectives of the project.
The purpose of Bitcoin Cash is to solve the issue of bitcoin's scalability, which leads to payments taking up to a few days, or users having to pay higher commissions. The developer team behind Bitcoin Cash raised the block size by 8 times, which should lead to faster transaction speeds and reduced fees.
There is a possibility that this will lead to BTH being accepted for payment by medium sized retailers and small businesses, which will lead to increased currency liquidity, and demand price growth.
Ripple (XRP) Ripple is a global and decentralized system for real-time calculations, currency exchanging, and fund transfers. The goal of the Ripple developers is to provide counterparties in any part of with world with secure, instantaneous, and practically free global financial operations of any size and currency, goods, or single units.
In other words, Ripple allows transfers to occur in a currency that is convenient for the sender, and for the receiver to get paid in an equally suitable currency. Based off of going rates, and almost instantaneously, in any part of the planet. For example, if Bob can only accept bitcoins, and Jane doesn’t use cryptocurrencies, she can simply pay with Ripple, using dollars, and Bob will receive his payment in Bitcoins.
The project has its own cryptocurrency (XRP). It acts as a bridge for providing exchange possibilities between rare currency pairs. Ripple currently comes in at 4th place in terms of market capitalization amongst cryptocurrencies ($9,000,000,000) and has a lot of potential for growth. The system is already being used by major financial organizations (UniCredit, UBS, Santander's) for transfer realizations and cryptocurrency liquidity.
DASHAn open, decentralized, payment system with the goal of making it possible for a wide audience to use cryptocurrencies just like regular money. As an advantage over competitors, the system offers four solutions: The InstantSend service, which allows for practically instant transaction speeds; Masternodes, which support Blockchain synchronization and guarantee security; Privatesend, for guaranteeing anonymous payments; DASH evolution, for simplifying payment system operations.
The Dash market capitalization is $4,000,000,000. Throughout 2017, it has demonstrated consistent growth and is a serious contender for investments. An added bonus is the decentralized system, which has no governing body, and all decisions are taken via the Decentralized Governance mechanism that is supported by all of the network’s users.
3. Investments in ICO projectsICO projects are a huge discovery of 2016-2017. With the help of smart-contracts, individuals can now invest and receive investments quickly, without intermediaries, and without bureaucratic boundaries. The rapid growth of the cryptocurrency industry allows ICO investors to receive incredible profits: Tokens of the Stratis project demonstrated growth rates of 150,000%, the market rate of Spectrocoin tokens gave 18,000% profits.
ICO investments kind of resemble the gold rush. The excitement attracts a lot of scammers, which create projects with the sole intention of gathering funds and disappearing. Half a hundred ICO’s pop up in the market on a weekly basis and more than 90% of them will not rake in any profits. You need to carefully analyze potential investment candidates in order to filter out projects that really have some promise.
I am convinced that it is most effective to invest in projects that either develop the cryptoindustry directly or indirectly. Examples of useful projects: Bancor, allows ERC20 standard tokens to be exchanged and for the creation of tokens; Aragon, creates a system for managing businesses with the Blockchain; a platform for creating services on the Blockchain, Ark; Decentralized file storage, Storj.
I’m going to give you 5 examples of projects that I personally recommend to invest in within the upcoming months. They have a chance to organically merge into the Blockchain environment and develop alongside with it.
Safinus (SAF)The developers are planning to create a platform, where beginner’s investors will be able to invest amounts starting from 100$ into already functioning investment portfolios held by experienced investors, traders, or funds. In order to do so, users won’t need to research ICO’s or currencies, simply joining a listed portfolio with suitable profitability and conditions will suffice.
It’s difficult for professional traders to find new clients: there’s less confidence here and it's more difficult to prove portfolio profitability. I’m keeping a close eye on this project because the team claims that it will help attract new clients and raise trust among niche participants.
Considering the growing market demand for investor security and tools for professional traders, Safinus has a chance to become one of the central influencers in the cryptoindustry.
Bloom (BLT) Creating a protocol for evaluating risks and carrying credit assessments on Blockchain technology. Bloom should allow traditional and digital creditors to service billions of people, who currently can’t gain access to a bank account or to a fair credit rating.
A global credit rating should allow borrowers to maintain a unified credit rating in any part of the world. The anonymity should allow one to keep their rating regardless of their citizenship, skin color, gender, and other indirect factors, which in today's day and time can affect the chances of receiving a loan and the size of the commission. Additionally, the anonymity should prevent identity theft and personal data use by scammers.
From one side, there's a lot of competition in the credit assessment niche. But from another side, the strong team, advisers, and partners raise a lot of trust towards what these guys are doing. The project can succeed.
UTRUST (UTRUST)Creating a payment system will allow buyers to pay sellers in any currency that they want. Sellers can receive these payments in fiats. The system will utilize consumer protection and conflict resolution in ways similar to PayPal.
Buyers can pay in any currency that they want, and will have their funds protected by the payment system.
Sellers will be able to attract new clients, without the need to work with cryptocurrencies, this should protect them from coin volatility and legal issues when accepting payments.
Bounty0x (BNTY)Not a very big, yet interesting startup, which can fulfill a severe need in its niche. They are creating a decentralized platform, where bounty hunters can receive payment in tokens in exchange for carrying out Blockchain startup tasks. Payments will be guaranteed, and the systems internal mechanisms will resolve disagreements.
Boynty0x isn’t attempting to solve some kind of a global problem, but they want to fill up an empty spot in a niche that barely has any competition. Perhaps this will bring them a lot of success. Thus, I recommend investing a small portion of your portfolio in this project.
Gladius (GLA) By utilizing Blockchain technology, the team is creating a decentralized platform which will help automatically rent unused bandwidth for security against DDoS attacks. In fact, any network users can connect their computer to the Gladius network and use its internet connection as a defense against DDoS attacks and be rewarded for doing so.
Instead of paying monthly fees for protection against brief attacks, businesses can now buy bandwidth for times when security is truly needed. Which is usually for a few hours a month. Site owners can use the platform to speed up content loading times.
The amount of DDoS attacks in 2017 grew by nearly five times in comparison to 2016. According to data from Cybersecurity Ventures Inc., by 2021, there will be a deficit of 3.5 million cybersecurity experts. The market needs a new way to solve this problem. If Gladius is successful, then the project will become the first ever decentralized Blockchain solution and defense from DDoS attacks.