Cryptocurrencies have inspired passionate opinions across the investment spectrum — some believe it’s a transformational technology, while others worry that it could be nothing more than a fad. As with any investment, it’s important to do your homework before investing.
This includes checking how widely a cryptocurrency is being used, as well as its potential long-term value. Reputable projects often publish metrics on their websites, including how much has been traded in a given period, which can give investors an idea of interest levels and market health. It’s also worth considering who is running the project: a clear and identifiable leader may be a positive sign.
As with all investments, cryptocurrencies can be volatile and can lose value rapidly, so it’s vital to know your limits and only invest an amount that you can afford to lose. Remember that unlike securities, cryptocurrencies don’t benefit from the same consumer protections, so you may be exposed to catastrophic financial losses.
The easiest way to trade cryptocurrencies is via a platform that offers CFDs (contracts for difference) — a leveraged product that allows you to speculate on whether a particular cryptocurrency will rise or fall in value. However, it’s essential to understand the differences between a CFD and owning actual cryptocurrency, as there are some key differences in how the products are priced.