Investing, Storage and Monitoring Cryptocurrency

Active Investing

Buying via exchanges. The most popular way to trade cryptocurrencies is via cryptocurrency exchanges, websites where individuals can buy, sell, or exchange cryptocurrencies for other digital currency or traditional currency. Some of the largest exchanges include Poloniex and Kraken, which trade over $100 million (equivalent) per day.

Buying via cryptocurrency ATMs. There are now cryptocurrency ATMs for cryptocurrencies like BTC, Litecoin, Ether, Dash, and more. Currently, these ATMs are most abundant in the US (1,188), Canada (314), and the UK (104), as set up by around 20 manufacturers.

Buying directly via a private bank. As of August 2017, Falcon Private Bank, in collaboration with broker Bitcoin Suisse AG, will enable customers to trade Ether, Litecoin, BTC, and Bitcoin Cash. Online bank Swissquote released an exchange-traded, actively managed BTC certificate. This certificate was built to manage price volatility by switching investor holdings between BTC via an algorithm.

Buying via outsourcing to a fund. Funds range from hedge funds like as Metastable Capital and Q2Q Capital to BTC mining funds like Logos Fund. In 2017, the number of cryptocurrency funds reached 175 with an estimated $3 to 4 billion in assets under management.

Selling. To sell cryptocurrencies, the same avenues you used for purchasing are available. That is, you can sell on an exchange, directly to another person, or even at an ATM.

Passive Investing

Vehicles tracking one currency. Since Bitcoin has long dominated the space, the few passive products in existence today track BTC. These include Grayscale Investment's Bitcoin Investment Trust, which launched in May 2015, has $2.6 billion in total assets and is the largest and most actively traded fund in the crypto space, and whose value has increased 4300% since inception.

Vehicles tracking multiple currencies. Various products are being developed for tracking multiple currencies, likely the top 5-20 cryptocurrencies measured by liquidity and/or market cap. I expect that a few will be launched in 2018, such as the Crypto Market Index Fund by Crypto Finance AG. The fund is aiming to raise $113 million of AUM in the first year, with the eventual goal of $3.4 billion within three years. Fees are expected to be 1-2% per annum.

Bitcoin futures. Bitcoin futures are meant to help manage price volatility and allow investors to speculate on the price of BTC without having to directly own it. BTC future trading started on CBOE and CME in December 2017 and will start on NASDAQ in 2018. Margin requirements are relatively high, at over 40% on the long side and over 100% on the short side!

Cryptocurrency Storage and Monitoring

Storage. Security is of utmost importance with cryptocurrencies, especially considering the Mt. Gox theft, when $4 billion of BTC was laundered. There's a trade-off between liquidity and security because you may need hours to get your coins out of storage, which can be an eternity in crypto trading time.

Monitoring. Social media like Twitter, Reddit, and Medium are indispensable for staying up to date in a rapidly evolving industry. On Reddit, you should join the appropriate boards, while on Twitter, you can search for the appropriate hashtags and follow frequent, knowledgeable commentators on the subject. There are also other sites that provide more technical data.

CoinShark is not responsible for any content, accuracy, quality, advertising, products, or other content posted on the site. The review is for informational purposes, reflects the author's opinion only, and is not a proposal for action. The financial market is dangerous and full of risks, investments in cryptocurrencies can lead to losses. Users should do their own research before taking any action.

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