Beginner's Blockchain Investment: Tips & Best Practices

Published on 27 July 2023 10 min read

What is blockchain investment?
How to choose a blockchain platform
How to analyze a blockchain investment
Tips to avoid scams
How to track your investment
How to manage risk
How to diversify your portfolio
How and when to buy and sell
How to secure your investments
Why continuous learning matters in blockchain investment

Welcome to the world of blockchain technology. You're not just stepping into a new trend, you're venturing into an entirely new financial landscape. It can be a bit of a maze for beginners, but don't worry—you're in the right place. This beginner's guide will shed light on the ins and outs of investing in blockchain technology and provide you with useful tips and best practices to kickstart your blockchain journey.

What is blockchain investment?

When you hear "blockchain", you probably think "Bitcoin". But blockchain technology is much more than just cryptocurrencies. It is a decentralized digital ledger that records and verifies transactions across multiple computers. Investing in blockchain technology does not necessarily mean buying Bitcoin or other cryptocurrencies. It can also mean investing in companies that use or build blockchain technology, or in tokens representing projects built on blockchain platforms.

Here's a simple breakdown:

Investing in cryptocurrencies: This is the most common form of blockchain investment. It means buying digital currencies like Bitcoin, Ethereum, and many others. You can hold onto these currencies in the hope that their value will go up, or use them to buy goods and services.
Investing in blockchain companies: Some companies are making big strides in using blockchain technology to create new ways of doing things. Investing in these companies is another way to get involved in blockchain technology.
Investing in tokens: Many blockchain projects issue their own tokens, which often give holders certain rights or benefits. Investing in these tokens is another way to invest in blockchain technology.

So, as you see, investing in blockchain technology: a beginner's guide is not just about buying Bitcoin. It's about understanding the technology and using it to your advantage in various ways. But before you jump in headfirst, it's essential to learn how to choose the right blockchain platform, how to analyze a blockchain investment, and how to avoid scams. Stay tuned as we dive deeper into these topics in the following sections.

How to choose a blockchain platform

Now that you've got an idea about what investing in blockchain technology entails, let's talk about how you can pick the right platform for your investment. The platform you choose can make a significant impact on your investment journey, so it's crucial to make the right choice.

Here are a few things to consider:

Type of Blockchain: Not all blockchains are created equal. Some are public and open to everyone (like Ethereum), while others are private and only available to certain users (like Hyperledger Fabric). Your choice should align with your investment goals.
Scalability: The ability of a blockchain to handle a large number of transactions per second is crucial. No one likes waiting, right? So, choose a platform that can keep up with your needs.
Security: The last thing you want is to lose your investment to a hacker. Make sure the platform you choose has top-notch security features.
Community: A strong and active community can be a good sign of a healthy blockchain platform. It's also a great place to learn and get support.
Development Potential: A platform with a lot of ongoing development and innovation can be a good bet for the future. Remember, in this fast-paced world of blockchain, stagnation is not an option.

With these considerations in hand, you are one step closer to making a smart choice when investing in blockchain technology. This beginner's guide is not just about knowing the ropes; it's about making informed decisions that will help you make the most out of your investments.

How to analyze a blockchain investment

Once you have selected a blockchain platform, the next step in investing in blockchain technology: a beginner's guide is to analyze your potential investment. It's similar to doing your homework before buying a new gadget or car—you want to know exactly what you're getting into.

Here's what to pay attention to:

Understand the Project: Start by understanding what the project is all about. What problem does it aim to solve? How does it plan to achieve its goals? A project that doesn't have a clear purpose or solution might not be a great investment.
Check the Team: Look at who's behind the project. Do they have relevant experience? Do they have a track record of successful projects? A strong team can often lead to a successful blockchain project.
Consider the Market Cap: Market cap refers to the total value of all tokens in circulation. It can give you an idea of how much the market values the project. But remember, big isn't always better—sometimes smaller projects can offer bigger growth potential.
Read the Whitepaper: The whitepaper is the project's blueprint. It should explain everything from the project's goals to its technology. If you can't find one or if it's poorly written, that's a red flag.
Assess the Token's Utility: How is the token used within the project? Is it necessary for the platform to function, or does it just exist to raise money? A token with real utility can be a good sign.

By analyzing these aspects, you are setting yourself up for success in investing in blockchain technology. Remember, the goal of this beginner's guide is to help you make smart, informed decisions—not just follow the crowd. So take your time and don't be afraid to ask questions.

Tips to avoid scams

Stepping into the world of blockchain investment can feel like navigating a maze. One wrong turn and you might stumble upon a scam. But fear not, for this beginner's guide to investing in blockchain technology is here to help you steer clear of traps.

Here are some tips to help you avoid scams:

Do Your Own Research: Don't just rely on what others say—do your own digging. Find out as much as you can about the project and the team behind it. If something doesn't add up, it's okay to walk away.
Be Wary of "Too Good to Be True" Promises: If a blockchain investment promises sky-high returns with no risk, be cautious. Remember the golden rule of investing: higher potential returns come with higher risk.
Secure Your Wallet: Your digital wallet is where you store your tokens. Make sure it's secure. Use complex passwords and consider using a hardware wallet for added security.
Avoid Sending Money Directly: Scammers may ask you to send money directly to them. Always use a reputable exchange or platform for transactions.
Trust, but Verify: Just because a project has a slick website or a familiar face endorsing it, doesn't mean it's legit. Always verify the information you see.

Remember, the goal of investing in blockchain technology: a beginner's guide isn't just about making money—it's about making smart, safe decisions. So, stay vigilant and trust your gut.

How to track your investment

Okay, so you've started investing in blockchain technology. That's a major step in your beginner's guide journey. But how do you keep an eye on your investments? How do you know if they're doing well or if there's trouble brewing? Here are some pointers:

Use a Portfolio Tracker: There are many apps that let you track your blockchain investments in one place. They give you real-time updates on how your investments are performing.
Stay Updated: The world of blockchain is ever-changing. News can impact the value of your investments. So, make it a habit to follow blockchain news from trusted sources.
Check Regularly, But Not Obsessively: It's good to keep tabs on your investments, but checking every few minutes can lead to stress and impulsive decisions. Give your investments some room to breathe.
Review Your Strategy: Once in a while, take a step back and review your investment strategy. Are your investments aligning with your goals? If not, it might be time to make some changes.

Tracking your investment is a vital part of investing in blockchain technology. This beginner's guide encourages you to make informed decisions and to always stay in the know. Remember, knowledge is power—especially when it comes to investments.

How to manage risk

Investing in blockchain technology can be a thrilling ride, but it's not without its ups and downs. Just like any other investment, it carries its own set of risks. So how do you, as a beginner, manage these risks? Let's break it down:

Never Invest More Than You Can Lose: That's the golden rule of any investment. If losing that money would make a big dent in your life, it's better not to risk it.
Do Your Homework: Blockchain technology might seem complex at first, but a little bit of research can go a long way. Understand what you're investing in. The more you know, the better your decisions will be.
Don't Put All Your Eggs in One Basket: It's not wise to invest all your money in one place. Spread your investments across different blockchain platforms and assets.
Have a Plan: Know your investment goals and set clear, achievable targets. Also, have a plan for when things go south. It's always better to be prepared.

Managing risks might seem tricky, but with these tips from our beginner's guide to investing in blockchain technology, you'll be better equipped to navigate the blockchain investment landscape. Remember, every investor faces risks. The trick is to manage them effectively.

How to diversify your portfolio

There's a saying in investing circles that goes, "Don't put all your eggs in one basket". Now, this isn't about eggs or baskets, of course. It's about spreading your investments, or in other words—diversifying your portfolio. But how do you do that in the context of investing in blockchain technology? Let's dive in.

Invest in Different Blockchain Assets: Did you know there are thousands of different blockchain assets you can invest in? From cryptocurrencies like Bitcoin and Ethereum to non-fungible tokens (NFTs), the options are plentiful. This diversity can help insulate your portfolio from market volatility.
Consider Stablecoins: Stablecoins are a type of cryptocurrency that are designed to maintain a stable value, as they are pegged to a reserve of assets. These can be a safer bet in a volatile market.
Look Beyond Cryptocurrencies: Blockchain technology isn't just about cryptocurrencies. There are also blockchain companies you can invest in. These include startups working on innovative products, as well as established tech companies that are integrating blockchain technology into their operations.
Keep an Eye on Emerging Trends: The world of blockchain is ever-evolving. New opportunities are always popping up, from DeFi (decentralized finance) to DApps (decentralized applications). By staying informed, you can diversify your portfolio with these emerging trends.

Diversifying your portfolio is a crucial part of investing in blockchain technology. Not only does it spread the risk, but it also opens up opportunities for greater returns. So, remember: don't put all your eggs in one basket!

How and when to buy and sell

It's one thing to know what to invest in, but knowing when to buy and sell is a whole other ball game. The world of blockchain technology is fast-paced, with prices fluctuating from one moment to the next. So, how do you navigate this rollercoaster ride? Let's break it down.

Understanding Market Conditions: First off, it's important to keep an eye on the overall market conditions. Is the market bullish (rising) or bearish (falling)? This could influence your decision to buy or sell.
Set Your Investment Goals: Are you in it for the long haul, or are you looking for short-term gains? Your investment goals will dictate when you buy and sell. Long-term investors tend to ride out market fluctuations, while short-term traders might buy and sell multiple times a day.
Use Technical Analysis: This is a strategy used to predict future price movements based on historical data. It involves charts, trend lines, and other tools. While it may seem a bit complex at first, there are many resources available to help you learn.
Follow the News: News events can have a significant impact on the price of blockchain assets. Whether it's a new regulation, a major hack, or a big company announcing they're investing in blockchain technology, staying informed can help you make timely buying and selling decisions.

Navigating the buy and sell process while investing in blockchain technology can seem daunting, but with a little practice and a lot of patience, you'll start to get the hang of it. Remember, investing isn't about getting rich quick—it's about making informed decisions and learning as you go along.

How to secure your investments

Now that you've got the hang of investing in blockchain technology, you're probably wondering how to keep your investments safe. In the digital world, security is paramount. Let's look at a few tips to ensure your blockchain investments remain secure.

Use a Secure Wallet: When it comes to storing your blockchain assets, a secure wallet is your best friend. Wallets can be hardware-based or software-based, but the important thing is that they have strong security features. And remember, just like a real wallet, don't lose it!
Protect Your Private Keys: In the blockchain world, your private keys are like the keys to your house. If someone gets hold of them, they can access your investments. So, keep your private keys private!
Be Wary of Phishing Scams: Scammers often send emails or messages that look like they're from a legitimate source, but they're not. They're fishing (or phishing) for your information. Always double-check before clicking on links or providing personal info.
Update Regularly: Just like you'd update your phone or computer, it's important to keep your blockchain software up-to-date. Updates often contain security fixes, which can protect you from the latest threats.

Remember, securing your investments in blockchain technology is an ongoing process, not a one-time thing. Stay vigilant, stay informed, and you'll be well on your way to a secure blockchain journey.

Why continuous learning matters in blockchain investment

So, you've taken your first steps into the world of investing in blockchain technology. Congratulations! But don't rest on your laurels just yet. Investing, especially in something as dynamic and innovative as blockchain, isn't a one-and-done type of deal. It's a journey, and to navigate it successfully, you need to keep learning.

Why, you ask? Well, for starters, blockchain technology isn't static. It's an evolving field, with new developments, trends, and innovations cropping up all the time. What worked yesterday might not work tomorrow. To stay ahead, you need to stay informed.

Understanding Market Trends: The value of blockchain investments can rise and fall based on market trends. By keeping up with the latest news and updates, you can make informed decisions about when to buy, sell, or hold.
Staying Aware of New Opportunities: New blockchain platforms and currencies are constantly being launched. Continuous learning can help you spot these opportunities early, potentially leading to big returns on your investment.
Minimizing Risks: Knowledge is power, especially when it comes to investing. The more you know about blockchain technology and its market, the better equipped you'll be to manage risks and avoid scams.

So, how can you keep learning? Read articles, follow experts on social media, join online communities, attend webinars — in short, soak up as much information as you can. Remember, in the world of blockchain investment, your education never stops. And that's a good thing! It keeps things exciting, keeps you on your toes, and most importantly, it can help make your blockchain journey a successful one.

If you're eager to learn more about blockchain investments and want to build a strong foundation, check out Sara's workshop, 'Unboxing Blockchain.' This workshop will provide you with essential tips and best practices to help you make informed decisions in the world of blockchain investments.