Money Making Beginners Guide to Cryptocurrency - Ajeet Kumar (best english books to read for beginners .TXT) 📗

knowing how much you can comfortably lose, you will be able to decide whether to invest in a specific financial asset, such as cryptocurrencies. And if you decide that you want to invest in a specific financial asset despite the risk, knowing your risk appetite or tolerance can help you determine how much money to invest.

When figuring out how much to pay for a cryptocurrency, there are two ways you can estimate your risk appetite. One way is to think about how much money you can easily lose. This approach has two advantages. The first is this: If a bad situation happens, your finances will not be seriously affected.

Investing your entire savings in cryptocurrencies is a foolish idea because if the price goes below a significant amount, you will not have enough money.

Your personal needs are when something unexpected happens like hospitalization or if you accidentally break your car. But if you invest more than you really need to live a comfortable life, you can invest in the worst case scenario or equip scenarios.

Another advantage of this approach is that you will not be pressured when the prices of your cryptocurrencies go down or fluctuate wildly. When that happens, your feelings will not be better than yours and when it comes to holding your cryptocurrency you can be more objective, your chances of successfully running a temporary investment "storm" are much higher.

The other way you can estimate your risk appetite is that you strongly believe that you will not need to use it within the next 1 or 2 years or so. How is this a good basis for deciding how much to invest in cryptocurrencies or other financial assets? Hoodling is a long-term endeavor. As such, you need to be able to keep your investments intact so that they can temporarily reduce prices if any. To be able to do this, you need to make sure that the money you are going to invest is an amount that is more likely to not be needed in the near future.

Read the White Papers

Especially if you are offering an initial coin or an ICO. If you are thinking of investing in cryptocurrencies which are similar to the initial public offerings or the IPO of stocks and bonds, then you need to read the white papers of cryptocurrencies that you are interested in. But what are the White Papers?

Before we got there, the first ICO. Need to talk about. ICOs are a way for cryptocurrency creators to raise enough funds to start anew. These are fundraising activities Given the autonomous and decentralized nature of cryptocurrencies. Compared to the general fundraising activities of mainstream investment banks and other financial institutions, ICOs are less rigid and regulatory, which makes them easier to do.

The ICO of their salt value will always provide white papers, which are equivalent to the ICO of the IPO prospectus. A white paper is a document that expands on the details of the fundraising activity, i.e., the ICO. These details include the purpose of the fundraising activity among others. As a potential investor, it is crucial that the ICO you invest in You know as much as you can about what you plan to do in, so you can have a very solid idea of whether you are legal and have a good chance of investing in it. White Papers are written by people from a variety of backgrounds who are familiar with the issue of coins or coins, as well as providing financial support to others such as lawyers, PR

practitioners, experienced business men and information technology experts.

White papers are created and distributed to investors to give them a clear idea of what the ICO really is and what is in the process, promoting a good level of confidence from them. The White Papers -

just like the Prospectus - can help establish the legitimacy of the next ICO and, therefore, are crucial to its success. And for you, as an investor, the white paper is the primary medium through which you can learn everything you need to know about cryptocurrencies that will be issued soon. Through the White Papers, you can make the most informed decision about whether or not to invest in an ICO. So when you see that without white paper already ICO. When sold, it should be a red flag regarding its legitimacy or if not, the quality of that ICO.

So, what should a good white paper contain? These include:

- Vision of ICO;

- Underlying technology for tokens;

- Unique sales proposal (USP) of the token or project, i.e., what current problems or challenges it can effectively address, why it is important to be able to effectively overcome such challenges, and the unique characteristics of the token;

- How the token will be distributed to its ICO subscribers as well as to the team behind it;

- Timeline of activities that need to be completed for the ICO;

- White paper language and attention; And

- The development of tokens and the people behind their credentials.

Details like these are crucial to your odd success as these are the things that can affect the long-term viability of the token in question.

Reading the White Papers is very crucial to detect potential scams. Of all the details contained in the white papers, there are three that support you as to whether the icons they are endorsing are legitimate. This is the vision, the people behind the ICO and the language and attention of the paper.

The vision part of the White Papers gives you an idea if the people behind the ICO believe they will only last for a long distance or for a short period. Legal ICO They are for long distances, so if their vision is either short-term or unclear about the timeline, think twice better.

The people behind the ICO should give you a very good idea about the quality of their quality and the possibility of being able to successfully complete their vision. The people identified in the White Papers are known as part of the core team, especially their achievements, credentials, and where available, check the background of any scams or issues in them. Because they are the people who are responsible for creating and managing tokens for sale in ICO. They should be the only major factors to consider when considering the possibility of success. Or whether it is legal.

Finally, the way the White Papers are written is another indicator of whether they are legal or not. In particular, pay close attention to the paper and the language. What is the focus on the paper? Is he focusing on the benefits with very little or no discussion on the risks? If this is the case, chances are it's either a very low quality ICO or worse, it could be a scam. Scams focus on potential benefits, making them feel almost certain or guaranteed, so you feel good enough to break up about it. Legal ICO Reveals relevant investment risks so that their potential investors make the most informed decision possible.

What about language? White papers that are very poorly written, i.e., suggest a scam using inappropriate language or terms. For example, try watching a TV show designated Survivor and one thing you will probably notice is how real the show looks, which makes it a legitimate high quality program. And one of the reasons you might think that way is because they use words that are used in the White House or in politics. Likewise, legitimate white papers will use words and phrases that you know are relevant to the industry. The white paper is a red flag written by amateurs.

However, white papers that meet these three criteria are not a guarantee of legitimacy and high quality, as it is possible for scammers to hire professionals to write very good white papers for them.

But what it does tell you is that there's a very high probability that ICOs back up such white papers are legal and of good quality. That is why it is important to research information outside the White Papers. This way, you can validate the information you get from them.

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Chapter 6: Cryptocurrency Hodling Strategies

Chapter 6: Cryptocurrency Hodling Strategies

Now that you've done your pre-hodling homework, it's time to discuss hodling strategies that can help you achieve your investment goals.

Use the Minimum Expected Return to Choose Your Cryptocurrencies After determining your minimum required rate of return, it's time to do a bit more research for hodling cryptocurrencies that have the highest chances for success. In particular, you must research on the average rates of return on your prospective cryptocurrencies, particularly if you plan to buy those that are already being publicly traded. Why? It's because tokens being sold through ICOs don't have past prices to compute average returns with.

For illustrative purposes, let's say that after doing your research, you find that the average annual returns on Bitcoin, Ethereum, and Litecoin were 30%, 20% and 25%, respectively. If your minimum required rate of return is 18%, which of the three would you choose? Chances are, you'd go for Bitcoin without batting an eyelash because it has the highest average annual return at 30%. I wouldn't say it's wrong but what I can say is that it's incomplete. Why?

When comparing actual returns to average returns, they're rarely the same. Actual returns aren't equal to the average, but they tend to be within the range of the computed average in most cases. This means that actual returns can be higher or lower than the computed average by up to a certain amount.

To optimize your chances of being able to achieve your minimum required rate of return, you'll need to choose investments whose most conservative estimated or forecasted future returns equal or exceed your minimum. And for this, you'll need to compute for the standard deviation, which measures the volatility of returns or how far can you reasonably expect returns for a specific investment to be from the mean or average return computed. Allow me to illustrate this in a way that you can easily understand.

Let's say that the computed standard deviation for Bitcoin, Ethereum, and Litecoin were 15%, 3%, and 7%, respectively. What do these figures mean? It means that you can reasonably (not perfectly) expect the return for Bitcoin this year to range from 15% (30% -15%) to 45% (30% + 15%), where 15% is the lowest expected return for Bitcoin for next year. For Ethereum, the annual return for this year to range from 17% (20% - 3%) to 23% (20% + 3%) and for Litecoin from 18% (25% - 7%) to 32% (25% + 7%).

Now, compare the lowest expected returns for each of the three cryptocurrencies. Bitcoin's is 15%, Ethereum's is 17%, and Litecoin's is 18%. Given your minimum required rate of return, the wise choice would be Litecoin because its lowest expected annual return for this year is the only one that satisfies your 18% minimum requirement.