6 things to consider before investing in cryptocurrency

Starting out as a cryptocurrency newbie can be rather daunting. If you don't know your DAO from your DeFi, your no-coiners from your whole-coiners, you’re not alone. 

The crypto world is full of jargon, acronyms and assumed knowledge that it can feel exclusionary and exclusive. But in reality, cryptocurrency is for everyone and buying it doesn’t need to be complicated.

Many people believe they are too late to the cryptocurrency game. Jon Ovadia, the CEO of leading SA cryptocurrency exchange Ovex, says this is simply not true.

“Cryptocurrency is in its infancy, albeit considered a mainstream asset class. This is because the building of an entirely new financial system has only just begun,” says Ovadia. 

Ovex is on a mission to make cryptocurrency approachable to not only the most seasoned investors, but novice ones as well.

The exchange’s simple and intuitive instant buy-and-sell trading tool is saving crypto newbies and veterans millions in trading fees because Ovex charges zero fees.

Before you start buying cryptocurrency, take a look at this guide for first-timers.

Six key things to consider before investing in cryptocurrency:

1. The exchange

The first step in your crypto journey is choosing the right exchange. It is important you DYOR, which is crypto speech for “do your own research”, and ensure your chosen exchange aligns with your investing needs, has a sound reputation, proven track record and is a secure custodian. 

Nowadays, successful crypto exchanges have extremely sophisticated security measures. Ovex is well known for its exhaustive approach to security. The exchange employs 100% cold storage. This means users’ funds are not available on the “cloud”, but remain secure on offline hardware.

• Liquidity:

Liquidity affects everything on an exchange from the bid-offer spread to trade execution. Liquidity describes the extent to which an asset can be bought and sold quickly, and at stable prices.

Ovex users have peace of mind knowing their orders will be filled immediately and at a single price, which is zero slippage. If you look to trade volume, use Ovex.

• Fees:

Most centralised exchanges wage something called maker and taker fees. The maker and taker model is a way to differentiate fees between trade orders that provide liquidity, maker orders, and those that take away liquidity, known as taker orders.

Be sure to investigate your chosen exchange’s fee structure. The fees can start adding up, especially if you are trading often. Ovex does not wage any maker or taker fees. 

• History:

Does your chosen exchange have a proven track record and thriving community?

• Markets:

How many trading pairs are available on your chosen exchange? You want a healthy selection if you are going to diversify your crypto portfolio. Ovex has more than 60 different trading pairs to choose from.

• User experience:

How easy is it for you to buy and sell cryptocurrency on your chosen exchange?

2. The team

The cryptocurrency project you are investing in should have an official website. If it doesn’t, that’s a red flag. You should find information on their project’s white paper and project team.

Crypto Twitter is also a place to do a bit more research on a project’s stakeholders.

3. The product

Many projects have generated a large amount of hype only to fail. Make sure you investigate whether there is a live product on the blockchain. Is it possible to experience the product, play with it and explore its features? 

To identify how many iterations the project has undergone, it’s  crucial to determine how active the repository is on GitHub. 

4. The community

If the project’s leadership and development team look good, it’s time to start looking at others’ opinions to bring project strengths and weaknesses to the fore.

There are various platforms that crypto enthusiasts communicate through, including Reddit, Discord and Telegram. Ovex has a Telegram channel where Ovexians, a term coined by Ovex for their community members, engage with one another. Join in the fun here.

5. Token economics

Tokenomics refers to the science of the token economy behind a crypto project. It covers all aspects involving a coin’s creation, management and removal from a network. Be sure you understand the token economics behind your chosen crypto venture.

6. Approach to investing

Traditional buy-and-hold investors are concerned with the long-term performance of a crypto project. Day traders, on the other hand, seek to take advantage of more immediate profitmaking opportunities.

The markets will fluctuate from day to day, hour to hour, and even minute to minute. But any crypto worth its weight in gold, is a long-term bet. If you want a dopamine hit, go for a run or watch an action movie. Leave the day trading to the professionals.

The best way to invest and not obsess? The answer is dollar cost averaging (DCA). Buy a set dollar, or rand, amount of whatever crypto you back at regular intervals — then wait. If you have a long-term view, you’re not going to be pressured to panic sell-out of your position based on short-term movements.

Today you can even earn a passive income on your cypto holdings. Ovex offers crypto interest accounts where you can earn up to 20% a year on your idle cryptocurrency.

This article was paid for by Ovex.