Learning to invest in digital currency and teaching all its principles

Table of Contents

24 Minutes Read

English فارسی (Persian) Türkçe (Turkish)

Learning to invest in digital currency and identifying the best cryptocurrency and investment methods is very necessary and vital due to the wide spread of popularity of digital currencies and the cryptocurrency market. In fact, the first step to start investing in digital currency with daily and long-term profit is to gain knowledge and awareness in this field and to understand the basic concepts of cryptocurrencies and market analysis.

Every day, many people enter the digital currency market with the aim of earning large amounts of their capital and assets; But it should not be forgotten that only people in this market have a chance of success who are familiar with zero to one hundred investment training in digital currency and its investment methods and tools.

In learning to invest in digital currency, the important thing is that;

People should never put their hard-earned capital into the cryptocurrency market, losing it would hurt their lives. Entering the cryptocurrency market requires a capitalist spirit and acceptance of financial risk, and risk-averse people cannot have a chance to succeed in this market.

In the rest of this article, I am going to explain the advantages and disadvantages and very important points in investing in digital currency and provide zero to hundred training on investing in digital currency.

What is investing in digital currency?

There are different markets for investment, one of which is the digital currency market. The digital currency market has become very popular in recent years due to the creation of many opportunities for profit. Although, in general, investing in digital currency can be considered similar to investing in other markets such as the forex market or stocks;

But they also have differences. For example, in the stock market, daily price fluctuations have a certain range and never exceed five or ten percent. But in digital currencies, price fluctuations are very fast and variable.

Another important difference between investing in digital currency and other markets is that the investor can make digital currency transactions without any restrictions during the day and night. This is while there are specific trading hours in other markets and you cannot trade whenever you want.

But in terms of similarities with other financial markets, we can point out the need for knowledge of market analysis. In fact, without having the knowledge of market analysis, people will face heavy financial losses and failures in any financial market. In every financial market you need to improve your trading skills and get to know the strategies of that market.

Digital currencies are one of the best assets available that bring good profits. With the increasing number of these assets, users will have the opportunity to choose the best digital currencies for investment. Investing in digital currencies is actually an ideal and hassle-free way to earn money from the crypto world.

Advantages of investing in digital currency

In this part of the digital currency investment training, I will examine the advantages of the cryptocurrency market:

High liquidity

Some valid cryptocurrencies have a high reserve of value and liquidity. Of course, in the meantime, some digital currencies cannot be liquidated at all, and profit-seeking people deceive investors by abusing this situation and pumping and dumping. Therefore, you should acquire complete knowledge and awareness by learning to invest in digital currency so that you do not suffer from these problems.

Low fees

Since most investment methods have high fees, investing in digital currency is a more suitable option due to its low fees. Of course, some people suffer a lot of fees by choosing wrong paths due to lack of knowledge about the market and without digital currency training.

high security

Due to the fact that digital currency transactions are encrypted by cryptographic functions, they have acceptable security and if the trader does not fail in security matters, digital currency transactions are safe.

High diversity for investment

Another advantage of investing in digital currency is diversity in investment. Due to the existence of more than thousands of cryptocurrencies in the market, you can choose valid cryptocurrencies and have a profitable investment by diversifying your digital currency portfolio .

No restrictions on transactions

There are no restrictions on transactions to invest in digital currency and you can invest any amount you want to buy digital currency.

Constantly rising market

The digital currency market has an upward trend every year. At some times, this market may face a decline, but after a while, it will again find an upward trend.

Disadvantages of investing in the digital currency market

Investing in digital currencies, despite the mentioned advantages, also has disadvantages, which I will discuss in this part of the zero to one hundred digital currency investment training:

The possibility of losing assets from the wallet

One of the most important challenges in financial markets is the protection of wallet keys and passwords. If someone else accesses your digital currency wallet information, it is possible to lose all assets.

Bitcoins

One of the other challenges that investors face in the digital currency market are hetcoins. Several thousand percent growth in the price of some digital currencies encourages investors to buy them, in which case they bear a high risk.

Errors in transactions by you or the exchange

If you make wrong transactions, you will have to pay high fees. You may even transfer your assets to another wallet.

Exchange credit risk

One of the problems that investors face in financial markets is the risk related to exchanges. Some exchanges are not valid and are built only to deceive investors.

Common scams

There are many scams in cryptocurrency markets. Profit-seeking people take advantage of the ignorance of some investors and easily deceive them and seize their assets. Due to the impossibility of judicial follow-up in this type of fraud, investors should increase their information and use logical methods to conduct transactions.

Unrealistically high volatility

The cryptocurrency market experiences a lot of volatility in a short period of time. This is both an advantage and a drawback for investors. When these fluctuations happen against your purchase, your capital will drop. This problem has the possibility of jeopardizing your property and you may not be able to recover it easily.

The risk of making a mistake in choosing a currency

A mistake in choosing a digital currency can be one of the disadvantages that investors may face. To prevent this from happening, the investor can increase his knowledge by learning zero to one hundred investments in digital currency and enter the market with complete and comprehensive information.

Lack of proper understanding of cryptocurrencies

Understanding the basic concepts of cryptocurrencies and blockchain is not easy for all traders. Considering that investing in digital currency requires basic knowledge about cryptocurrencies, finding the right understanding of cryptocurrencies and blockchain technology and generally learning how to invest in digital currency to make profitable transactions may be a bit time-consuming and difficult.

What is the education of investing in digital currency?

Cryptocurrencies are implemented on the basis of a distributed ledger called blockchain, which is a storage of all updated transactions. Digital currencies such as Bitcoin are created by a process called mining. Of course, mining Bitcoin and other cryptocurrencies is not the only way to obtain currencies, and users can also receive digital currencies from exchanges.

In fact, you can learn to invest in digital currency, get the best cryptocurrencies for investment through the process of mining or buying from exchanges and store them in your digital currency wallet. Having a digital currency means having a key that helps you transfer a record or a unit to another person without the supervision of a third party.

To learn how to invest in digital currency, you must first select a valid digital currency exchange. International exchanges such as Binance , Coinbase and Kraken are suitable options;

But the provision of services in these exchanges is limited for Iranian users. Therefore, my advice to you to invest in digital currency with daily and long-term profit is to use reliable Iranian exchanges. For this purpose, you must open an account in the desired exchange and complete the registration process.

Choosing the best digital currency to invest in may be a big challenge for many people. You have to follow successful traders and market analysis and learn how to invest in digital currency. In the rest of this article, I will introduce you to other methods of investing in digital currency and choosing the best cryptocurrency.

Important points in investing in digital currency

The first step to learn how to invest in digital currency is to learn about the points that investors must be aware of. In fact, regardless of these points, investing in financial markets such as digital currency increases the percentage of people’s failure and financial losses. Therefore, I have mentioned the most important features and important points of investment prerequisites.

Understanding the nature and performance of the project

The biggest mistake in investing in crypto projects is buying something without knowing how it works and the roadmap of the project. The fact that some people have made a profit by buying a currency does not mean that it will necessarily be profitable for us to buy this currency in the future. In fact, survivorship bias is one of the issues that often fails investors.

Entering a small amount of capital in the market

Before anything else, you need to decide how much you want to invest in the digital currency market. Despite the recent developments in the crypto market, especially the increase in the price of Bitcoin, it has become more difficult to make a decision in this regard.

Also, all investments involve a little fear and greed. But it is possible to enter the market with a small amount of your stagnant capital (usually 5-10%) by learning zero to one hundred investments in digital currency and learning and controlling greed. It should be noted that investing in digital currency, like other markets such as the gold market and other precious metals, does not pay interest to the investment.

Variety in shopping cart

One of the important principles in learning to invest in digital currency is to never allocate all of your capital to a specific asset or share. In fact, you should diversify your portfolio by choosing several different assets. In the past, only Bitcoin was important in the crypto market and dominated the market.

But with the passage of time and the development of blockchain technology, other projects were also introduced in the market, which added to the market’s attractiveness. Of course, with hundreds of new currencies created, choosing other options besides Bitcoin is difficult and requires more experience and study. However, we are witnessing an increase in attention to the altcoins market, which account for 30-40% of the volume of crypto transactions.

Therefore, profitability can be achieved by identifying several promising altcoin projects; At the same time, such profits from Bitcoin will seem very unlikely in the near future considering the current price.

An important point in the diversification of the shopping basket is to avoid excessive diversification in the digital currency portfolio. Because most of the time when bitcoin falls, most of the altcoins also fall, but when the market rises, not all of them necessarily rise. One of the most popular diversification models in the shopping basket is allocating half of the total capital to one main currency and dividing the rest of the assets into several projects.

Identifying the best time to enter the market

Due to the extreme fluctuation of digital currencies and price changes in a short period of time, before any action to enter the market, the status of the considered currencies should be checked.

The best time to enter the market can be identified by recognizing specific patterns in the digital currency price chart. For example, with a sharp increase in the price of Bitcoin, the price of altcoins will decrease a little at first and then start to increase after a short period of time.

This is despite the fact that when the price of Bitcoin falls, this time interval will not exist, and if Bitcoin falls one day, all altcoins will also be pulled down.

Dominance index is used to determine the dominance of each currency in the market. On the other hand, according to technical and fundamental analysis together, another strategy can be achieved to determine the time to enter the market.

Attention: Technical analysis without fundamental analysis will be an incomplete analysis. Therefore, it is suggested not to rely on the results of this analysis alone for investment.

Choosing the best digital currency for investment

One of the main challenges of entering the market is choosing the right digital currency for investment. Undoubtedly, many of you have heard the name of Bitcoin many times. But you should know that the cryptocurrency market consists of thousands of different cryptocurrencies with different values and characteristics. Currently, it can be said that the following currencies are of interest in buying and investing;

BITCOIN

ETHEREUM

RIPPLE

DASH

Zcash

It can be said that Bitcoin is one of the most reliable cryptocurrencies for investment. However, recently other digital currencies have been able to show better performance than Bitcoin.

It should be noted that many cryptocurrencies that have entered the market in the last few years will completely disappear and be destroyed after a period of time. Therefore, the possibility of the destruction of the cryptocurrency and the loss of capital is also one of the possibilities that you should consider. On the other hand, due to the fluctuations in the market, entering the market without studying, learning and training to invest in digital currency increases the possibility of losing capital.

Attention to FOMO in the market

FOMO is an abbreviation of Fear Of Missing Out, a phenomenon in the market that affects all novice and professional investors. Fumo is a feeling that occurs during extreme fluctuations in people. In this feeling, people think that others are profiting and I am left behind or losing.

As a result of this feeling, people will make emotional decisions without proper strategy. For example, if you are in a strong or bull market, buy Bitcoin at the peak of the price. You are likely to lose money for a long time; In this case, you can either exit the market at a loss or wait for a long time until the market reaches your purchase limit again.

In extreme market fluctuations, a professional trader analyzes and reviews the news without accepting hearsay. In such a situation, if a person suffers from FOMO, he tries to enter the market with high risk. This is while the right thing is to determine the amount of risk to reward and act based on one’s own strategy. Emotional performance will cause positions to be closed at a loss and new positions to be opened to compensate for the loss, which will repeat itself. By using certain profit and loss limits, these events are avoided.

Having an investment strategy

To succeed in the digital currency market, you need a specific strategy for yourself. In fact, for this purpose, you should predict and check the investment result before entering it. The cryptocurrency market has well-known strategies that many investors use.

To create a special strategy for yourself, in the first step, you should describe it as a process on paper to get to know its strengths and weaknesses. The next step is to stick to your strategy and believe in it. If you try to change your method at any time in the volatile cryptocurrency market, you will get nowhere.

The third step is to have a flexible strategy. This means that you measure the efficiency of your strategy in different market cycles and make changes based on more compatibility with different types of assets. At the last stage of creating your own strategy, you must evaluate it.

If the strategy is not evaluated, its effectiveness will not be determined. For this purpose, you can compare your output with some benchmarks. All strategies examine parameters such as future applications, supply and demand, and price changes of a project.

Choose a valid exchange

To start investing in digital currency, you must choose a reliable exchange with high liquidity and transactions. Security level, number of trading currency pairs and user feedback are factors that can help you choose a reliable exchange.

For this purpose, before doing anything, you should be familiar with various types of markets such as spot, etc., as well as the concept of decentralized exchanges. Since the provision of international exchange services has been banned for some countries such as Iran, entering capital into these exchanges is associated with the risk of account blocking and loss of capital. Therefore, the best choice is to create a user account in a valid domestic exchange.

Daily price comparison of digital currency exchanges

Knowing the types of digital currency wallets

Digital currencies should be kept in special wallets for investment. There are different types of crypto wallets that you can choose the best type based on your type of investment.

In terms of accessibility and ease of use, digital currency wallets for Android and iOS are a good option for investing in digital currency with daily profits and daily transactions. Various types of desktop and hardware wallets also provide acceptable security for long-term investments and large assets offline.

Protection of private keys

The private key of the digital currency wallet is your asset that must be protected. If the private key is missing, you will not be able to access your digital assets; Therefore, it is recommended not to keep your assets in exchanges for a long time.

Because exchanges store users’ assets in their Hot Wallets, and in addition to the risk of hackers, following the laws that may be passed, users’ assets will be blocked in the exchange for an indefinite period. Therefore, it is recommended not to share your private keys with anyone.

Beware of scammers

You may come across noisy projects on social networks that represent an obscure digital currency. People should pay attention to the fact that the crypto market, like any other market, is prone to fraud, and from time to time there may be frauds in the form of Ponzi schemes.

In addition to the Ponzi scheme, there are many other techniques to deceive investors, such as fake websites with the purpose of phishing, various personal messages from famous people, fake emails, social network accounts of famous people, etc.

Digital currency investment tools

To learn how to invest in digital currency, you need a variety of tools. For example, fundamental and technical analysis tools help users to identify the best time to enter and exit the market.

It is important to note that technical and fundamental analysis tools must be considered together to detect the market trend, and relying on one of them without considering the other is not recommended in any way. Below I mention some digital currency investment tools for your conscious movement in this direction:

Investment methods in digital currency

What is important in learning to invest in digital currency is choosing the right and appropriate investment method. Below are some of the profitable investment methods of making money from digital currency:

Buying and selling or trading
Hodel or holding digital currency
Arbitrage (price difference between exchanges)
Futures transactions
Participate in valid airdrops
Digital currency mining
Staking and digital currency deposit interest
Using artificial intelligence and trading robots
Digital currency lending
Get paid with digital currency
Participation in ICO, IEO, IDOs
Income from blockchain games
Make, buy and sell NFT

The best ways to invest in digital currency

One of the best ways to invest in digital currency is to buy cryptocurrency from an exchange and hold or hoard it. This method has a lower investment risk, and the time required for yield and yield is also high. Users need initial capital to hold assets. Another suitable way to invest in digital currency is mining. Of course, in this method, you should note that the currency you are considering must be able to be mined;

Because some cryptocurrencies cannot be extracted and mined. It should be noted that mining is highly profitable at times when the cryptocurrency price is higher than the gas required for mining.

Trading is a suitable way for traders to invest in digital currency. In trading, the yield and the amount of risk are high, and at the same time, the duration of yield is low. Trading requires initial capital. Finally, choosing the best way to invest in digital currency depends to a large extent on your risk-taking and capitalistic spirit and other characteristics and your budget.

Types of investments in digital currency

Compared to the traditional stock market, digital currencies do not have enough stability, and therefore investors should consider different scenarios. Therefore, by choosing the correct strategy, you should choose one of the digital currency investment methods with daily or short-term and long-term profit.

Investing in digital currency with daily or short-term and long-term profits each has its own characteristics, which we will discuss below:

Short-term digital currency investment

This type of investment has three common frameworks. Short-term trading is also known as aggressive trading and this is because in this method more risk is done in the hope of higher profit. In general, any investment method requires a constant balance between risk and return.

In this way, in order to achieve more returns, more risk is needed. Even when you decide to invest in the short term, you must be prepared for the risk of losing your capital; Especially this risk is more in the market of instability such as digital currencies. Short-term transactions are divided into several categories according to the speed of realization, hours, days or weeks of investment.

The shorter the trading period, the higher the corresponding risk.

Digital currency investment with daily profit

One of the types of short-term trading are daily equations. In this way, you buy and sell the digital currency you want during the day and get your profit before going to sleep. In other trading markets, a trading day will end at 4.30 pm;

But in the digital currency market, it is possible to make transactions 24 hours a day and seven days a week. Therefore, each person can determine the trading hours based on his personal schedule.

Before choosing this method, you should first ask yourself the following questions:

Day trading is high risk. Therefore, try to start with small amounts until you gain more experience. According to Investopedia, most successful day traders generally invest only 2% of their account capital into each trade. One of the major problems in this method of investing in digital currency is the security of your crypto wallet.

Online wallets are less secure because they are connected to the internet. Considering that the digital currency investment method with daily profit requires constant access to capital, there is no other option but to keep the asset in the online wallet of the exchange. Therefore, one's property is always at risk of hackers.

Weekly short term trades

Although these types of trades are short-term, they are longer than short-term daily trades, and on the contrary, they are shorter than a long-term investment strategy and have less risk. In these transactions you must:

Long-term digital currency investment

Swing trading is one of the most common long-term investment strategies. One of the most common swing trading strategies is interval trading.

In this type of trading, instead of following the market trend, you should choose a digital currency whose value is fluctuating between two prices. In fact, in range trading, the main idea is to buy the desired currency at the lowest range of the market and sell it at the highest range.

The best cryptocurrency for long-term investment

Most investors go for more valuable cryptocurrencies such as the following currencies to invest in digital currency in the long term;

ETHEREUM

RIPPLE

BITCOIN

Because many cryptocurrencies are likely to disappear just as quickly as they rise to the top of the crypto market.

Therefore, as it seems tempting to invest large amounts in these types of assets, they are equally risky and high-risk. In general, it can be said that the risk level of long-term investment will be lower compared to short-term investment.

Personality types in investing in the digital currency market

In the above part of the digital currency investment training, it was said that some analysts use fundamental analysis to check the price trend in the long term, and some of them use technical analysis to fluctuate and increase profits in the short term.

The first group of traders and the second group are known as traders. In general, investors have specific personalities. The personality type of investors has a significant impact on their transactions. Investors are divided into categories based on their behavior at the beginning and when investing in digital currency during extreme market fluctuations, which I mention below:

Idealistic investor

Investors are idealistic and rely on their business acumen. These people have high self-confidence and are optimistic about the market.

Idealist investors only pay attention to positive analysis and do not consider complete research to carry out their transactions. In fact, these people also ignore negative reviews.

Pragmatic investor

Pragmatic investors are the opposite of idealistic investors. These people, with 100% uncertainty about the capital market, also consider other possibilities and fluctuations. Pragmatic investors do their own research to complete their analysis and do not rely on a limited source to evaluate the market.

Framer investor

Another personality type of investors are framers or formalists. Framers pay more attention to details than the overall path of investment due to their obsession and accuracy in evaluating investment platforms.

Formists do not have any flexibility in analyzing path problems or market fluctuations and do not consider external factors to be very effective on the market. These people generally keep a lot of cash in banks and do not diversify their investment portfolio.

Astute investor

Integrator investors are the opposite of framer investors. The integrative investor considers all the external factors of the market in his investment. These people have a complete understanding of the correlation of the performance of different parts of the market and their capital portfolio is adjusted based on the correlation of financial markets.

Projective investor

Reflector investor is the next personality type in digital currency investment. Investors hardly admit their mistakes. Even after admitting their mistakes that have led to losses, these people are slow to think of correcting their ways. Sometimes they don’t even make any corrections in their methods. Projectors avoid admitting mistakes and blame internal and external factors for their losses.

Realist investor

The last personality type of digital currency investors is the realist personality. Realists have the opposite function of projectionists. Realistic people accept the consequences of their wrong decisions. These people move quickly to solve the created problems and do not look for the culprit in this way. In fact, real investors accept the responsibility of their mistake and compensate their loss in favorable conditions.

You can find out which type is right for you by checking investment personality types. The goal of traders is to make profits in the short term and sell cryptocurrencies frequently. On the other hand, investors save their assets for a long period of time in order to achieve long-term profit. You can use both of these methods of investing in digital currency with a smart combination to be profitable both in the short term and in the long term.

Effective factors in converting a digital currency into a cryptocurrency suitable for investment

Investing in digital currency and any other market requires analysis. In the zero-to-hundred long-term digital currency investment training, investors use three basic methods to check the upside and risk of investing in a specific asset.

Fundamental analysis examines the inherent value of a digital currency or project in the current market situation and its future prospects.

Important factors when investing in a cryptocurrency

In recent years, some digital currencies have shown good potential for investment. When choosing the best digital currency for investment, you should pay attention to the following:

Cryptocurrency project developer group

Crypto projects are like startups or other businesses. Good businesses solve problems and fulfill needs. This is also seen in cryptocurrency startups. When you decide to invest in a cryptocurrency for the long term, evaluating the project’s backing group is extremely important.

Determining their plan, goal and mission is very important; Therefore, projects that have a real vision and the names of the support group are considered a better option for investing in digital currency.

Total resources and circulating resources

The total resource actually represents the maximum amount of cryptocurrency that can be mined. This is while the source in circulation means the current amount of the considered cryptocurrency in the market. Considering that most digital currencies are mined and a high percentage of them are stored by the founders, there is generally a numerical difference between the total source and the circulating source.

These numbers actually become important when evaluating the value of a cryptocurrency project. Based on the basic principle of supply and demand, the supply of digital currency has a great impact on its price. For example, if we consider the Ripple digital currency value criteria based on the following values:

Price: $46
Market cap : 46 billion dollars
Total source: 100 billion coins

Many experts believe that the large supply of this digital currency has prevented its value from increasing. In case, the total source of Bitcoin digital currency is 21 million coins, and this has increased the price of Bitcoin and its value. In fact, less supply will equate to more demand and an increase in the value of the coin.

Liquidity level

The higher the level of liquidity, the faster the cryptocurrency can be sold to the market. Famous digital currencies such as Bitcoin, Ripple and Ethereum have a high level of liquidity. In exchanges, trading activity shows the number of transactions made with a specific digital currency in a specific time period. These indicators represent the actual level of demand for a particular cryptocurrency among traders.

What are the best ways to invest in digital currency?

One of the best ways to invest in digital currency is buying cryptocurrency from an exchange and holding, trading and mining.

Why is it important to invest in digital currency?

Investing in the digital currency market has attracted many people due to benefits such as benefit from a decentralized economy, lack of sanctions, cost and time reduction, and security.

Is investing in digital currency suitable for beginners?

Entering the cryptocurrency market and investing in it without sufficient knowledge and training from zero to one hundred investment in digital currency may result in heavy financial losses for these people. In this case, the best option for these people is to learn how to invest in digital currency and then enter the market.

Is investing in digital currency legal?

In general, buying and selling digital currency and cryptocurrency trading in Iran is not officially legal. But in fact, there is no explicit law based on their illegality and their being considered a crime.