If You’ve Decided to Buy Ethereum, Here Are A Few Ways to Invest Safely
The best investments are the ones that grow over the long term, generally five years or more; they give you time to maximize growth opportunities while also giving you time to recover from negative periods. Many people treat cryptocurrency as a long-term investment option, as tempting as it may be to chase quick returns. Holding onto a cryptocurrency for longer periods can survive a market drop if the underlying asset is valuable and can withstand the bear market. Investing in Ethereum can be lucrative, as it runs on superior technology, has real-world utility, and is a deflationary asset. You can buy Ethereum online from almost any cryptocurrency platform.
If you’ve decided to buy Ethereum, there’s no guaranteed way to eliminate risk, but there are several steps you can take to invest safely.
Figure Out How Much Ethereum You Want to Buy the First Time
To buy Ethereum, you’ll need a wallet that comes with private keys allowing you to access your crypto holdings. Setting up a wallet isn’t just for putting aside any Ethereum you buy. It lets you make cryptocurrency transactions. Different types of wallets are available, including mobile apps and USB sticks. Although the price can be steep, a hardware wallet is the best choice if you plan to buy a large quantity of Ethereum tokens. As alluring as it may be to invest every cent you can get your hands on, keep in mind that Ethereum is inherently volatile, so its value can increase or decrease dramatically. Only invest money that you can afford to lose.
According to experts, investing more than 1% or 5% of your net worth is not a good idea. Doing so will prevent you from making costly mistakes and save you money; you can always reevaluate your decision in the future. In the cryptocurrency world, you’re on your own, meaning that investment protection is minimal – you’re your best defense. The amount of Ethereum tokens should be small enough to enjoy contentment during periods of high volatility and have an impact on your portfolio if prices should rise. Ethereum has better utility for global commerce, so it should continue to gain prominence.
Use A Safe and Secure Device to Buy Ethereum
You don’t need an expensive or powerful computer to buy Ethereum online; you need a device that provides protection. When you purchase Ethereum, you’ll go through a Know Your Customer verification process, so you’ll need to provide personally identifiable information to prove your legitimacy and credibility. If you were to use a public computer and a free Wi-Fi network, you would become the victim of identity theft. This is precisely why you must use your PC and set up a VPN to create a secure connection between you and the Internet. The cryptocurrency space continues to evolve, and so too are hacking methods.
Find A Reliable Cryptocurrency Exchange
A cryptocurrency exchange allows you to buy Ethereum. Once the purchase is complete, you can deposit the coins directly into your wallet. As you can imagine, not all cryptocurrency exchanges are created equally. Some of the factors you’ll want to take into account when selecting a cryptocurrency exchange are the supported assets, fees, payment methods, and security. Most importantly, check the security credentials of the online platform. See where it keeps its assets, whether it has insurance, and so on. Your best bet is a reputable exchange with a vast selection of cryptocurrencies. Place an order for Ethereum and follow the steps outlined by the exchange.
You’ll need to pay taxes on your cryptocurrency activities, so keeping a record of your purchases is recommended. For federal tax purposes, Ethereum is treated as property. You don’t have to pay taxes when you buy tokens, but selling the coins for cash is a taxable event, as is trading Ethereum for another digital asset, say Bitcoin. Use a spreadsheet to subtract the sale price from the buy price – the difference in value is the capital gains or loss. If you hold Ethereum for more than a year, you’re entitled to tax-preferred treatment, which means you’re taxed at a more favorable rate.
Don’t Share Your Private Key or Seed Phrase with Anyone
The private key is used to authorize cryptocurrency transactions, computing a digital signature that can be verified using the corresponding public key. On the other hand, the seed phrase helps you recover access to a broken or stolen wallet. It’s a cluster of random words. If someone asks you for your private key or seed phrase, they’re scamming you, so make sure they’re secure. Suppose the private key and the seed phrase fall into the wrong hands. In that case, a malicious actor could impersonate you and gain access to your crypto holdings. Unfortunately, there’s no way to recover Ethereum that’s lost.
Even if various security measures are available, you must remain cautious and develop a healthy sense of judgment. Never leave your computer unattended for too long, and remove your Ethereum tokens from your wallet before having it serviced. Not only should you have a backup but also several backups (e.g., different USB sticks). Don’t trust any device that is constantly connected to the Internet because there are certain types of malware that can bypass security systems. If you get into the habit of practicing security measures, you’ll be A-okay.
If you’re thinking about investing in Ethereum, you’re in good company. There are many licensed, regulated cryptocurrency exchanges to choose from that enforce strong security practices, limiting your exposure to danger. Once you’ve set up an account, you’ll find it easy to buy Ethereum (and many other digital assets). If you’re a buy-and-hold investor that transacts every now and then, fees aren’t that important to you. The best computer for your trading needs supports one or two monitors and is safe – viruses, malware, and other threats are present in the digital environment. Treat your private key and seed phrase with the same care, protecting them from online and offline vectors. Blockchain can be a tricky space to master, but with a little bit of practice, you’ll do just fine.