Kiana Danial - Cryptocurrency Investing For Dummies

Cryptocurrency Investing For Dummies

Published by: John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, www.wiley.com

Copyright 2019 by John Wiley & Sons, Inc., Hoboken, New Jersey

Published simultaneously in Canada

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the Publisher. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions .

Trademarks: Wiley, For Dummies, the Dummies Man logo, Dummies.com, Making Everything Easier, and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc., and may not be used without written permission. All other trademarks are the property of their respective owners. John Wiley & Sons, Inc., is not associated with any product or vendor mentioned in this book.

LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: WHILE THE PUBLISHER AND AUTHOR HAVE USED THEIR BEST EFFORTS IN PREPARING THIS BOOK, THEY MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CONTENTS OF THIS BOOK AND SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES REPRESENTATIVES OR WRITTEN SALES MATERIALS. THE ADVISE AND STRATEGIES CONTAINED HEREIN MAY NOT BE SUITABLE FOR YOUR SITUATION. YOU SHOULD CONSULT WITH A PROFESSIONAL WHERE APPROPRIATE. NEITHER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLE FOR DAMAGES ARISING HEREFROM.

For general information on our other products and services, please contact our Customer Care Department within the U.S. at 877-762-2974, outside the U.S. at 317-572-3993, or fax 317-572-4002. For technical support, please visit https://hub.wiley.com/community/support/dummies .

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com . For more information about Wiley products, visit www.wiley.com .

Library of Congress Control Number: 2019930733

ISBN 978-1-119-53303-0 (pbk); ISBN 978-1-119-53305-4 (ebk); ISBN 978-1-119-53307-8 (ebk)

1. Chapter 8

1. Chapter 2
2. Chapter 3
3. Chapter 4
4. Chapter 5
5. Chapter 7
6. Chapter 9
7. Chapter 10
8. Chapter 12
9. Chapter 13
10. Chapter 15
11. Chapter 16
12. Chapter 17
13. Chapter 19
14. Chapter 20

More than 2,000 cryptocurrencies currently exist at the time of writing. Cryptos gained a lot of mainstream hype in 2017, when Bitcoins value increased 1,318 percent. This surge was nothing compared to the gains of some other digital assets, such as Ripple, which went up (hold your breath) a whopping 36,018 percent. These returns are more than what a stock investor could normally make in a lifetime, and they generated enough interest to create a true frenzy.

However, the bubble burst at the beginning of 2018, leaving many late investors, who bought cryptocurrencies at a very high price, at a loss. That was enough for some newbie investors to label the whole industry a scam and either give up on investing altogether or go back to traditional financial assets like stocks. Regardless, the cryptocurrency market continued evolving, became more stable, and caught the attention and support of many major financial institutions globally and in the United States. As more people get their hands on cryptocurrencies, more sellers feel comfortable accepting them as a payment method, and thats how the whole industry can flourish.

The foundation of cryptocurrencies such as Bitcoin lies in a new technology called the blockchain; its the infrastructure that cryptocurrencies are built on. Blockchain is a disruptive technology that many argue is bigger than the advent of the Internet. The applications of blockchain dont end with cryptocurrencies, though, just like the applications of the Internet dont end with email.

The unique thing about cryptocurrency investing and trading is that a crypto is a cross between an asset (like stocks) and a currency (like the U.S. dollar.) Analyzing the fundamentals behind a cryptocurrency is very different from analyzing any other financial asset. The traditional ways of measuring value dont work in the crypto industry, mainly because in many cases the crypto data isnt stored in a central hub somewhere. In fact, most cryptocurrencies and their underlying blockchain are decentralized, which means no central authority is in charge. Instead, the power is distributed among the members of any given blockchain or crypto community.

You may have heard of some of the famous cryptocurrencies, like Bitcoin, but the industry doesnt end there far from it. And although the crypto market has a ton of volatility, it also has potential for you to make real money by investing wisely and developing strategies that suit your personal risk tolerance. In this book, I tap into the risks involved in cryptocurrency investing and show you the different methods you can use to get involved.

The topic of cryptocurrencies and their underlying blockchain technology can be a bit confusing. Thats why I try my best to keep Cryptocurrency Investing For Dummies easily accessible and relatable and free of intimidating terminology. But it does contain some serious information about strategy development, risk management, and the whole industry in general.

As you dip into and out of this book, feel free to skip the sidebars (shaded boxes) and the paragraphs marked with the Technical Stuff icon. They contain interesting information but arent essential to becoming a crypto investor.

This book contains a lot of web addresses to get you additional information about certain topics. Some of the web addresses are affiliate links, meaning that if you click them and start using a companys services through that specific web address, I may earn an affiliate payment for making the introduction. You also may note that some web addresses break across two lines of text. If youre reading this book in print and want to visit one of these web pages, simply key in the web address exactly as its noted in the text, pretending as though the line break doesnt exist. If youre reading this work as an e-book, youve got it easy just click the web address to be taken directly to the web page.

Ive made some assumptions about you and your basic knowledge of investing and the cryptocurrency market: