Investing in cryptocurrencies is risky as prices have been extremely volatile and there are no regulations governing them at the moment. Further, experts are sceptical about such investments primarily because there is nothing for them to analyse. However, if you still want to experiment with cryptocurrencies, below are a few points you should keep in mind before investing:
Invest in bits
People who want to experiment with cryptocurrencies should keep their initial investments very low, say around 2-3% of the investment corpus. Rishi Arya follows this strategy, having invested Rs 15,000 in May, 2017. “I don’t plan to invest a huge amount, because the market is so volatile. Investors in bitcoins may earn good returns or will incur heavy losses,” he says.
Withdraw your principal
Try to withdraw capital investment from bitcoins as soon as possible and keep only the profits in your wallet. Anshula Agnihotri, a Chandigarh resident, accomplished this by investing Rs 1.08 lakh to buy in 2 bitcoins In June 2016, A year later she sold 1 bitcoin at Rs 1.5 lakh, booking partial profit. Now, she is holding the remaining bitcoin and letting it grow.
Keep your key locked up
Cryptocurrency companies give you private keys to access to the wallet. Be careful with the key, since if someone else lays their hands on it, they can easily access your holdings.
Handle with care
Digital currencies are stored on your device, which can lead to issues. “If your laptop or mobile is stolen or misplaced, or if your operating system crashes, you can lose access to your funds permanently” says Sathvik Vishwanath, Founder and CEO, Unocoin. The simple solution is to keep a backup.
Use an offline wallet
Don’t keep your cryptocurrencies on an exchange wallet. Instead, store them in an offline wallet. “An USB key or an SD card can serve a secure an offline wallet,” says Amit Jaju, Partner, Fraud Investigation & Dispute Services, EY India.