Investing in cryptocurrency for beginners: mining or buying in 2022
Despite the high risks, investments in cryptocurrency attract many capital holders. Cryptomonets can be produced (mined) at the expense of technical capacities, or bought on cryptocurrency exchanges and exchangers.
For beginners in 2022, it is difficult to choose how best to invest in cryptocurrency: to mine coins using technical means or it is more profitable to buy and wait for the value of the selected coins to increase. To understand what is better to invest in, it is worth considering the pros and cons of these two methods.
Is it worth investing in cryptocurrency: advantages and disadvantages
The advantages of investing in cryptocurrency include, first of all, the opportunity to get a high profit, more than 1000%.
Of the disadvantages , the following can be noted:
- high volatility due to high risks;
- inability to use crypto as a means of payment: only some online stores accept cryptocurrency as payment;
- the circulation of cryptocurrencies is not regulated by law, there are countries in which it is prohibited.
Вопрос, стоит ли рисковать и инвестировать в криптовалюту в 2022 году, каждый инвестор решает самостоятельно, в зависимости от личной склонности к риску. Сейчас криптовалюта есть в инвестиционных портфелях многих опытных инвесторов, но ее доля обычно не превышает 10%. Лучше не вкладывать в крипту больше средств, чем можно себе позволить потерять.
Investing in cryptocurrency mining
Until recently, mining within your own apartment or a specially allocated room was profitable. Now it is quite difficult to make a profit in this way because of its high cost: you need to buy the most modern equipment and pay huge electricity bills.
Most often it is more profitable to use the services of data centers, which are called mining hotels.
In the mining hotel, you can pay for the necessary equipment. The specialists of the center are responsible for the safety of the equipment, repairing it as soon as possible if necessary. The mining process is tied to the crypto wallet of the equipment owner, providing the miner with passive income. The initial investment consists of the cost of the equipment and payment under its lease agreement.
The cost of electricity in mining hotels is much lower than with independent mining. As a result, investments in mining cryptocurrencies can bring about 70% per annum on average.
Investing in the purchase of cryptocurrencies
For those who are well acquainted with the peculiarities of the stock market, investing through the purchase of cryptocurrencies on the stock exchange may be more suitable. For a long time, the most profitable option was to buy bitcoin or Ethereum. The cost of one bitcoin has reached tens of thousands of dollars, so large investments are needed for such investments.
In addition to the most well-known cryptocurrencies, there are many others, investments in the purchase of which can be quite profitable. But it should be borne in mind that this type of investment always has an increased risk, although the profit, if successful, is incomparable with the profitability of classic bank deposits.
What to choose: mining or buying
Statistics show that investing in mining through mining hotels is usually more profitable than buying crypts. If there is a sufficient amount of free money, it is better to choose this method.
To diversify, it is better to invest part of the funds in the purchase by analyzing and choosing the most promising cryptocurrencies for investment. This will allow you to compare the profitability of the considered methods on experience and draw your own conclusions.
How to get started for beginners
In order for the investment to be successful, it is better to first complete at least a short-term training.
In order to reduce risks and diversify them, it is necessary to create an investment portfolio in which crypto assets will amount to no more than 10%. Those who are prone to risk can increase the share of the crypt, but it is not recommended to do it above 30%.
The cryptocurrency part of the investment can be made in various ways. Here are examples of some attachments:
- 50% bitcoin and 50% ethereum;
- 50% of bitcoin and Ethereum, the rest are verified coins (Litecoin, Cardano, Ripple and others);
- portfolio diversification due to new coins that have recently appeared on the cryptocurrency market.
It is recommended to study the strategies and portfolios of successful investors and apply their tactics taking into account personal preferences.
After compiling the portfolio, you can start buying cryptocurrencies. The largest selection of coins can be found on cryptocurrency exchanges. Among the most popular exchanges, the following platforms can be found: Binance, OKX (OKEx), KuCoin, EXMO, CREX24. Alternative ways of buying crypts include the purchase through online cryptocurrency exchangers, p2p platforms and some others.
It should be borne in mind that the cryptosphere attracts a large number of scammers, so only reliable and proven resources should be used.
Accounting for the profitability of an investment portfolio can be carried out independently (for example, in spreadsheets) or using special services.
Advice! Novice investors (both in the cryptocurrency and stock markets) are advised by experienced experts not to withdraw profits, but to reinvest it. This is the most profitable strategy for long-term investment.
Risks of investing in cryptocurrency
In addition to the high volatility and uncertain legal status of cryptocurrencies, there are other risks of crypto investments. One of them is related to the scalability problem – large transaction fees.
Cryptocurrency can be easily lost by simply forgetting the password from your crypto wallet. There is no usual mechanism for recovering lost passwords by mobile phone number or email address in cryptocurrency transactions.
The cryptocurrency market is not regulated by law, so it attracts a large number of scammers. You need to carefully monitor the status of your account and cryptocurrency wallet and not tell anyone the keys, passwords and passphrase. The builders of financial pyramids often disguise themselves as cryptocurrency projects, so you need to carefully study the resources before investing digital or fiat money in cryptocurrency.
Published: 15 February, 2022