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The cryptocurrency universe has never been as tempting as it is now. The constant growth of the market, in addition to the involvement of many celebrities, mainly in the purchase of NFT’s, all eyes are on the crypto market.
However, you have to be aware, investing in cryptocurrencies can be quite risky. Here are three steps you can take to invest responsibly in cryptocurrencies.
1 – Make sure you have a solid financial foundation
As we have already mentioned, the world of cryptocurrencies is constantly evolving, moving quickly, but it is important to remember that we are talking about high risk and extremely volatile investments.
Before investing in cryptocurrencies, you need to evaluate your savings, having a solid financial base capable of withstanding the risks and uncertainties that accompany these investments is paramount.
Only after that is it possible to decide what kind of risk you are willing to take.
2 – Find the right crypto platform for you
For those new to cryptocurrency investing, there are several ways to get started. It is possible to purchase cryptocurrencies through traditional finance apps or through an exchange.
However, it must be understood that these applications as a rule support trading within a limited selection of cryptocurrencies, in addition to not allowing you to send your tokens to any cryptographic wallet you have.
The limitation of applications ends up making the purchase of cryptocurrencies on centralized exchanges very attractive for many investors.
Centralized exchanges are licensed companies, which help protect your assets, which gives investors some insurance against cybersecurity breaches as well as regulatory clarity.
However, in these cases there is an intermediary between you and your assets. If your desire is to have more ownership over your investments, it is possible to buy cryptocurrencies behind an exchange and then transfer them to a cryptocurrency wallet, in which you have direct ownership.
However, those who wish to use a more traditional brokerage account should consider a Cryptographic Trust.
3 – Investment diversification of your portfolio in cryptocurrencies responsibly
Some experts say that you should not invest more than 10% of your portfolio in cryptocurrencies responsibly, in addition to using long-term passive investment strategies for the rest of your financial assets.
Good diversification will ensure that your risk is spread effectively, so when the cryptocurrency market experiences some kind of volatility, you will have a chance to make money elsewhere in your portfolio.
Also read How to avoid cryptocurrency frauds?