How to Invest in Cryptocurrencies
So, you’ve stumbled upon the “crypto rabbit hole” and are now thinking about jumping straight into the wonderful world of crypto investing. Well, congrats: you’re about to take on a life-changing adventure that, if done properly, may very well improve your financial situation or further strengthen your investment portfolio.
That’s why, in this article, we’ve prepared for you tips on investing in cryptocurrencies, the various means and approaches to making money from cryptocurrencies and some investment insights that should prove to be useful as you kickstart your crypto journey in 2022.
- Why (or Why Not) Should You Invest in Cryptocurrencies?
- How Do You Make Money from Cryptocurrencies?
- What is Crypto Trading?
- What is Crypto Lending?
- What is Crypto Staking?
- What is Liquidity Mining?
- Conclusion: Are Cryptocurrencies Worth Investing In?
Why (or Why Not) Should You Invest in Cryptocurrencies?
People invest in cryptocurrencies for various reasons. For some, what would initially spark their interest is the technology behind cryptocurrencies: how it can potentially revolutionize the global financial system and change the world as we know it. If you’re not one of those people, well, then you’re probably like the rest of us: you’re in it for the money – which is also fine (we don’t judge here).
In any case, it’s always good to first understand the pros and cons of an investment opportunity before deciding to commit your time, effort and hard-earned money into it – whether it’s crypto or otherwise.
So, what are the benefits of investing in cryptocurrencies? Well, if you ask long-time crypto investors on what really compelled them to fully invest in cryptocurrencies, you’ll probably get a unanimous reply: democratization of finance.
Indeed, the allure of having full authority on your finances and an opportunity to generate wealth regardless of your personal background or profile is a promise that is difficult for anyone to dismiss. In fact, it is for these same reasons why Cake DeFi assures users with an easy step-by-step signup process, as well as easy access to numerous cryptocurrencies and Decentralized Finance (DeFi) services through its products and services.
Other major benefits of investing in cryptocurrencies are the quick returns and high yields that they generate, as well as the fact that you only need a relatively small amount of money to put in and kickstart your crypto investment.
Investors, especially beginners, should be wary of the fact that cryptocurrency exchanges, wallets and other such platforms are constantly being targeted by hackers. Also, many perceive that looming regulations may potentially change the dynamics of the whole crypto space as well.
As such, Cake DeFi ensures to always put security and transparency among its top priorities. It is also Singapore-based and operates under the governance and guidance of the Singapore Government.
How Do You Make Money With Cryptocurrencies?
Alright, moving on to – arguably – the most important section of this article: how to make money with cryptocurrencies.
In the crypto space, it is widely known that there are four major options that investors may opt for to make money with cryptocurrencies: Trading, Lending, Staking and Liquidity Mining.
What is Trading?
Out of these four options, you’re probably most familiar with Trading as it is an age-old practice that is also prevalent in both the stock market and foreign exchange market. What is it? It is exactly what the word implies: it is the act of buying and selling assets (in this case, cryptocurrencies) with the aim of making profit on daily market price changes.
Generally, short-term investors prefer Trading. However, if you are a long-term crypto investor and are committed to making profit for the long-haul, then you must definitely should consider Lending, Staking or Liquidity Mining.
What is Crypto Lending?
Simply put, Lending is the act of…well…lending your cryptocurrencies to another party in exchange for a guaranteed return of your assets (i.e., the cryptocurrencies that you lent) plus interest.
If you own Bitcoin (BTC), Ethereum (ETH), USD Coin (USDC) or Tether (USDT), then we encourage you to check out Cake DeFi’s Lending service. As a technical intermediary, not only are we able to offer a lending rate of up to 7% per annum (one of the highest in the industry) plus other potential bonuses, but are also able to provide transparency and insurance through our partnership with Singapore-based options trading platform Sparrow.
What is Staking?
Another option to make money with cryptocurrencies is Staking. What is it? Very simply put, Staking is the act of committing or locking in a specific number of cryptocurrencies to secure the network and receive rewards in return.
Where do you commit or lock in your cryptocurrencies?
In most cases, you’ll be able to “stake” your cryptocurrencies directly from a crypto wallet or cryptocurrency exchange. However, in reality, staking is a process that takes place on a blockchain. Moreover, those cryptocurrencies that you staked are actually utilized to validate transactions on that same blockchain.
How do you earn “Staking rewards”?
When a transaction is validated, a “block” representing that same transaction is created. Participants then receive incentives, typically in the form of cryptocurrencies plus a certain percentage of the validated transaction. Incentives are also based on the amount of cryptocurrencies that participants stake.
If you own DASH or DFI tokens, we encourage you to check out Cake DeFi’s Staking service. We operate fully transparent masternode pools that allow users to earn staking yields of up to 38.4% in real-time and without any complexities involved.
What is Liquidity Mining?
Finally, if you’re a “high risk, high rewards” kind-of-a-person, then you might want to consider Liquidity Mining. What is it? Basically, it is the process of providing liquidity to a liquidity pool on a Decentralized Exchange (DEX) in order to facilitate trading and receive rewards in return.
Why does a DEX need liquidity?
Unlike a Centralized Exchange, a DEX does not have an order book. That’s why it needs liquidity to enable trades between two different token pairs, and which is also why participants must always provide a pair of cryptocurrencies in order to reap Liquidity Mining rewards.
There are slightly more risks involved in Liquidity Mining as compared to Lending and Staking. It demands a certain level of technical know-how as well. For these reasons, Cake DeFi not only simplifies this process for even beginners to understand but also provides safe access to a wide selection of cryptocurrency pairs.
Conclusion: Are Cryptocurrencies Worth Investing In?
As we reach the final section of this article, you are – perhaps – expecting a more definitive conclusion as to whether you should invest in cryptocurrencies. As much as we consider ourselves the best crypto and DeFi apps gateway on the planet, we are - unfortunately - not financial advisors.
As such, we deem it highly appropriate for that conclusion to come from you.
As the famous saying goes, “A wise man makes his own decisions.” And by reading this article, we are confident that you are now much wiser of an investor than you were before you started. Should you need more information about crypto investing, you may click here to visit our blog section and read other useful references.
Once you’re ready, you may click here to register an account and kickstart your crypto journey with us. You will get US$30 worth of DFI tokens when you register successfully and make a deposit of US$50 or more.
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So, that’s it for now. Thank you for reading this article and we look forward to seeing you “bake” your first crypto rewards very soon!