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Cryptocurrency is a hot investment topic right now because people have seen how much Bitcoin increased in value over the past decade. In fact, if you invested just $27 in Bitcoin back in 2009, it would now be worth more than $1 million. That’s clearly an exciting investment opportunity. When you consider the possibility of something like that happening again, it’s easy to start looking for “the next Bitcoin” in a frenzy. Realistically, there will probably never be another Bitcoin, but there are plenty of cryptocurrencies and exchanges that are rapidly growing in popularity and value. In this quick guide, we’ll discuss the 5 things you should know about before making your first cryptocurrency investment:

1. Value

Value is a tricky topic when it comes to choosing a cryptocurrency, because it isn’t as straightforward as you’d think it would be. On the one hand, you want to invest in options like Bitcoin that already have an established value because they’re reliable. On the other hand, you also want to invest in the newer and less valuable currencies because one of them could soon balloon in value, giving you a significant return on your investment. You can use the Coins.live crypto tracker to view live prices for all of the top cryptocurrencies.

2. Liquidity

Liquidity is the term used to define how easy to is to liquefy (covert into cash) or spend a specific cryptocurrency. The degree of liquidity is primarily affected by the number of companies that accept the cryptocurrency. For example, Bitcoin has a high liquidity because you can spend it in more places than any other kind of cryptocurrency. This is an important factor to consider because it’s good to have the option of liquidating your crypto into other currencies if a problem arises.

3. Security

Most cryptocurrencies are generally secure, but with more than 1,500 cryptocurrencies in existence, some are definitely more secure than others. Mainly, you want the assurance that your coins are going to stay safe in your account. Some cryptocurrencies use a concept called “cold storage” in which the coins are stored within offline servers to essentially eliminate the possibility of a hacker exploiting the network to gain access. It’s also good to use exchanges and services that make use of 2-factor authentication (2FA). Likewise, ensure that all automated emails and transaction receipts are sent in an encrypted manner.

4. Ease of Use

Some cryptocurrencies are easier to use than others. In a way, this factor also relates to the liquidity, as it will be easier to use a coin that is accepted by more online retailers and services providers. However, user-friendliness is also a trait to look for when choosing an online exchange platform or crypto wallet.

5. Projected Popularity

Finally, try to research the projected popularity of a cryptocurrency before you invest in it. In general, the more popular a coin becomes, the more its value increases. Purchasing fast-growing cryptocurrencies and waiting for their popularity and value to rise is one of the best ways to invest in cryptocurrency because you can invest small amounts and still have the potential to enjoy substantial returns due to the currency’s exponential appreciation.

Investing without Actually Buying Cryptocurrencies 

In closing, another thing you might want to keep in mind as you prepare to invest in cryptocurrency is the option to utilize related or non-direct investments which don’t involve actually owning any coins. Instead, you can speculate on exchange rate fluctuations, create websites that cater to crypto currency users, or find other indirect ways to profit from the exponential growth of this new technology.

This is a collaborative post.