Cryptocurrency has been gaining constant traction since the late 2010s as a new form of financial investment next to traditional stocks and bonds. One currency that is rapidly growing is Monero, largely due to its emphasis on privacy and security for investors. Read on for some tips to safely invest in this particular cryptocurrency.
Learn About Monero and How It Works
Monero (XMR), like other digital currencies, operates under a decentralized finance principle. This means that the spending and investing you do in the entire crypto world occurs beyond the scope of any single government or authority. Monero takes security to a higher level through the use of multiple technologies such as ring signatures and stealth addresses. They pride themselves on the fact that transactions can be done under complete anonymity for both senders and receivers. While this may sound appealing to people who believe traditional investments to be too formal or rigid, it is also a cause of concern for others who may find these types of transactions vague or sketchy.
Because it is a distinct type of currency, fiat currency (i.e. US dollar, Euro) cannot be directly invested in Monero. Instead, it is used to buy a certain amount of Monero from trading platforms, which can be kept, used for trading, or exchanged for other cryptocurrencies as applicable.
Know The Important Terms Used
The language of crypto may be confusing to newcomers, and it seems to make no difference if you are a seasoned traditional investor because the terms used are different. Terms such as block, blockchain, HODL, public and private keys are often encountered when dealing with Monero. So what do each of these mean?
Blockchains in crypto are essentially ledgers of digital transactions, recorded in such a way that makes them less susceptible to hacking. Groups of data within these blockchains are thus called blocks. HODL or “Hold On for Dear Life” is a passive investment strategy of buying crypto and holding onto it instead of trading, in the hopes that it will rise in value.
Lastly, public and private keys are two things in crypto that function similar to your bank account number and personal identification number (PIN), respectively. You can share your public keys with trusted persons who can then send you money or take money from you with your authorization. Your private key is something only you should know, as it gives you access to all your cryptocurrency.
Estimate How Much You Can Safely Invest
Because the crypto industry is more volatile than traditional bonds and stocks, many financial advisors still do not support trading in crypto, and they do not recommend placing more than 5% into your cryptocurrency investment. Therefore, crypto is best for those who have excess money to spend after securing finances for mortgages and paying off any high-interest debts. Only invest in crypto with money that does not constitute part of your emergency funds for the next 3 to 12 months. In short, most experts recommend that you “only invest money you are okay with losing” due to the high risks associated with both buying and trading on the available platforms.
Research Where You Can Get Monero
Depending on where you are, you may acquire XMR from Binance or Kraken. Binance is available in over 180 countries and also offers currencies other than Monero. One advantage of Binance is the possibility of conversion of your XMR to other cryptocurrencies like pioneer crypto Bitcoin, Ethereum’s Ether, or Binance’s native asset BNB. Unfortunately, Americans cannot buy Monero on Binance. Kraken is the alternative platform available for all U.S. residents except New York. In any case, these platforms used in the acquisition of crypto either accept fiat currency in exchange for providing XMR or another currency such as Bitcoin which can then be converted to XMR.
Safeguard Your Monero Investment
There are a variety of options when storing your acquired cryptocurrency, especially if you wish to engage in passive rather than active investment. Some investors prefer cold storage or hardware wallets that function similarly to a USB, but several secure web-based services are also available. The best Monero wallet for you would be something that is convenient to access and comes with other features you may need such as support for multiple languages. These sites or hot wallets have the advantage of accessibility, as they do not require you to carry the physical storage devices wherever you go. XMRWallet.com is an example of a hot wallet for storing your Monero. As with anything online though, make sure to pick a service with an excellent security profile since hot wallets are inherently more prone to hacking and theft compared to cold wallets.
With these five tips, you now have the basic knowledge needed for safely investing in Monero. One last thing: once you start investing, remember to keep yourself constantly updated because trends in the crypto industry are fast-paced and opportunities for growing and trading your cryptocurrency are short-lived.
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