Cryptocurrencies have been around long enough that by now everyone knows a thing or two about Bitcoin. Many people believe that you can’t make big waves with the most popular digital currencies. How about with new ones? Of course, a gold mine may lie in one of the latest cryptos. The only issue is that we have so many popping out almost daily.
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Because of this many digital currencies fail in their early days. Those that don’t are a great opportunity for early investors to cash in. While earning big is always a possibility, so are substantial losses. All digital currencies are marred with volatility, and this is something you need to look for with new cryptocurrencies. So, when it comes to new digital currencies, there are both rewards and risks in play. Let’s talk about two sides of the same coin – a digital coin.
What Are New Digital Currencies?
When we speak of new digital currencies we are talking about the latest crypto that has just entered the market. The established currencies in the digital world are Bitcoin and Ethereum. New ones are nothing alike – they’re unknown and untested. In recent times new crypto often comes to market with a single, unique purpose, paired with some type of innovative technology, intending to stand among the crowd of similar products.
The downside of dealing with new digital currencies is volatility. Unpredictability is present even with Bitcoin itself and it is multiplied with every new coin. The good side of this is the fact that if you buy a new crypto when it’s low and rising, and sell it high, the margin for profit is quite massive. When it comes to new crypto, you can never know which one is going to be a gold mine, and not trying to be a 49er might prove to be a mistake on your part if you’re looking to invest in digital currencies. As you can see it is a combo of risk and reward. Let’s talk about the possible rewards.
What Are the Advantages of Investing in New Cryptocurrencies?
When you’re into investment of any kind, the most important thing is the reward you reap at the end. New cryptocurrencies offer plenty of rewards if you make all the right moves. If you’re a newbie in this field you might not have a clear look at what might be in store for you when getting in touch with a newly launched cryptocurrency. Just some of the rewards are listed below:
Increase in Value
All new digital coins have one thing in common – they’re not worth it. It is important to recognize their potential early on. Before the train leaves the station, with a timely investment you might be in for a cozy ride. New crypto that gets accepted by the community and the investors alike tend to grow in value over short periods. Many success stories from investors who hit crypto in its early days speak of a high volume of income in the first few months of cryptocurrency’s existence.
Being a Part of Innovative Projects
When you invest in new crypto you’re making a financial decision. But, it is also much more. Some crypto has the potential to make big strides in the world of digital currencies and being a part of groundbreaking changes holds a great appeal to many investors. Cryptocurrencies that bring something new to blockchain technology, have unique appliances in the digital world. Or providing users with new levels of financial satisfaction always have an opportunity to go big. Being a part of this type of project early on can make a person feel like Satoshi Nakamoto.
New Cryptocurrency Investments and Their Risks
Risk and crypto go hand in hand. While this is unfortunate, it is as it is. Everyone even remotely involved with digital currencies knows that they carry some risks to them. Dealing with new cryptocurrencies carries more risks than going to the Bitcoin casino and playing blackjack. In gambling terms, new digital currencies have a big house edge over you as an investor/player. The most common risks associated with newly founded cryptocurrencies include but are not limited to:
High Volatility & Price Swings
When buying new crypto you’re betting on it gaining high value early on. While this can happen, it can also lose its value in no time. This is the issue with new crypto. It fluctuates on the market so fast and so much that you can never predict its movement. Stability is too much to ask from a new crypto on the market. So, while a new crypto could make you rich in no time, with no ability to predict its imminent future it could make your investment disappear in its early days. Not to mention that many new cryptos dissolve before they even make their first big stride on the market.
No History
With all types of investments, it is important to learn a tad bit about the history of the market. This is hard to do even with established crypto such as BTC and Ethereum. With new digital currencies, it is impossible to know anything as they hold no history of their own before establishment. This is what makes their future so speculative. We already said it – this situation makes them a great tool for a high and quick reward but at a price of high risk. Investing in new crypto is like trying to navigate the world of One Piece without a Log Pose (fans of manga and Anime will surely understand this type of risk).
High Scam & Fraud Potential
While the Internet is a great place, with a lot of great apps, websites, and people, not everyone wants to be kind. The web is full of scammers and fraudsters. Some projects that include making new digital currency are intended to be scams or frauds from the get-go. So, when you see an offer that’s too good to be true it probably is. Be cautious, and do your homework before you ride the wave of new digital currency. Remember, surfing is great, but that doesn’t mean that there are no sharks in the ocean.
Ways to Manage Risks
No investors should be discouraged from investing in new digital coins. Instead, the route they should take is to introduce themselves to ways to mitigate and manage risks that new digital currencies bring. One of the best ways to do this is to diversify. Diversification of your investment portfolio is always the right move. Don’t put all of your eggs into one basket. When you invest in crypto, spread your funds around to different currencies.
Another great move is to set clear boundaries. The best investment formula out there is to invest only what you can afford to lose. This way you can always play inside the boundaries of acceptable risks. All decisions you make need to be made inside the boundaries of your budget and clear mind. No emotions are allowed.
Last but not least, a risk-averting move should be to always operate on secure platforms. Safety & security on the web is paramount, especially if you’re dealing with crypto. Many platforms are well-established in this domain and have operated for years. Look for those when searching for your crypto partners.
