What is investing in cryptocurrencies all about?

Like all currencies, cryptocurrencies are a means of payment. They can be used to buy goods and services but you can also invest in them in the hopes of making a return from their growing use among businesses and the general public. They do have some fundamental differences from traditional currencies. First, they are entirely digital, and secondly, they are completely devoid of any central authority, such as a central bank.

To be specific, cryptos are non-physical assets that are uncorrelated to fiat currencies or gold and which can be exchanged peer-to-peer without the need for an intermediary bank. Blockchain technology, which is transparent and secure, is used to permanently record transactions and investments and the transfers of ownership from one person to another.

Why invest in cryptocurrency?

Besides the fact that an increasing number of e-commerce websites are accepting crypto as payment, these assets are also used as an investment for yielding profits over the short, medium and long term.

In fact, year after year, digital currencies strike new market cap records, pushed higher notably by Bitcoin and Ethereum, which have the effect of a rising tide on all other (lesser-known) cryptocurrencies. Nowadays, the total market cap of all cryptocurrencies is close to €2 trillion. Because of the explosion in interest, many investors who were tentative are now entering the market, hoping to ride this wave.

The attraction is the opportunity to make huge profits within a short timeframe (a few months can be enough for some), when there is little chance of gaining something even remotely similar in other asset classes. Nonetheless, cryptos are highly volatile and the risk of losing money is substantial if the market goes against you. This is why you need to be fully informed before betting your money and establish some defensive techniques, like the Coinhouse Savings product.

There are other reasons to invest in cryptocurrencies, such as using your investments to gain a new income stream through staking. This technique allows you to obtain rewards, in the form of free tokens or coins, in exchange for locking away some of your holdings which are used to confirm transactions on the blockchain. Coinhouse offers this opportunity through its savings account.

The second way to obtain revenue from your crypto investments is lending – you loan your digital assets to a third party and receive interest on that loan. While this method is more targeted at individuals with large holdings or businesses, it is still open to all investors.

Lastly, there is borrowing where you put a portion of your holdings into stablecoins as collateral for borrowing a certain amount that you can use to buy more cryptocurrencies that present strong possibilities of appreciation. This is a far riskier technique but one that can pay off handsomely if you bet on the right currency.

How to buy cryptocurrencies

It is fairly straightforward to invest in cryptocurrencies. You just have to choose a reliable platform like Coinhouse – the first platform certified by the French Financial Markets Regulator – then create an online account and transfer the amount you want to invest into the account. You can also buy digital assets using a credit or debit card if you prefer.

Before you make any initial purchase, Coinhouse will verify your identity to authorise the opening of the account. This is one way we protect you from theft and hacks. This only has to be done once.

Which cryptocurrency should you invest in?

For newcomers to the crypto market, the best thing to do at first is to focus on those digital assets that are well-established, such as Bitcoin, Ethereum, Litecoin or Ripple. By investing in those that have already shown their resilience to market shocks, this strategy will reduce your risk to the volatility inherent in new cryptocurrencies.

Nevertheless, this is a defensive technique that limits your chances of making larger profits that are possible from newer entrants. Check out our article on the most promising cryptos for 2022 to find some of the hottest cryptocurrencies you could invest in!

Learn how to invest in cryptocurrencies better

Depending on your needs or wants, Coinhouse offers several training levels. These tutorials have been designed for individuals but employees of your company are more than welcome. Premium account holders receive special prices.

Coinhouse Savings: how it works

On the Coinhouse platform, you can drip-feed your investments over time in order to reduce risk. Our Coinhouse Savings product gives you the option on scheduling regular investments – just choose a specific amount and the one or more cryptocurrencies you want to invest in. This investment strategy is by far the safest way to invest because it greatly reduces your exposure to market volatility.

If you want to use this strategy, you can follow the steps below on our secure platform:

1. Open a Coinhouse account.
You need to have validated account before you use this service.
Still not got one? Open your free account now.

Link: Open an account

2. Set up a recurring transfer.
You then need to generate a transaction reference by clicking on the button below.
Don’t forget to state this reference in your transfer.

Link: Generate my reference

3. Track how your portfolio performs.
Log in to your Coinhouse to see how your portfolio grows over the weeks.

Link: Log in