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Can Eco-Friendly Businesses Diversify with Crypto Investing?

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There are many trials and tribulations when you are trying to run an eco-friendly business. Some people believe that green businesses are more likely to succeed than their less eco-friendly counterparts. Unfortunately, that doesn’t seem to be the case.

One recent study found that 98% of eco-friendly initiatives fail. This means that eco-friendly business owners that succeed need to make the most of their investments to compensate for the risk that they took.

One of the questions that you should ask is whether or not you should invest your earnings in cryptocurrencies. You have to decide whether cryptocurrencies can offer the right level of profitability and whether they align with your philosophy of sustainability.

Here are some things that eco-friendly entrepreneurs must know before investing in crypto.

Is Crypto a Good Investment for Green Entrepreneurs?

The cryptocurrency market is a world unto itself. There are hundreds if not thousands of different cryptocurrencies available for purchase today. The most popular ones include Bitcoin, Litecoin, Ethereum, Ripple, Monero, Golem, NEM, Zcash, and Dash. As the price of these currencies fluctuates wildly, it can be difficult for an investor to determine which one(s) will perform best. You must take some time to learn about the various cryptos available and their performance compared with each other. If you want to invest in just one or two coins, then focus on those. However, if you’re interested in investing more broadly across multiple crypto coins, creating a portfolio of them might make sense.

You might be wondering whether it is a good idea to invest in cryptocurrencies if you care about the environment. As we have pointed out in the past, bitcoin has a terrible carbon footprint. However, there are some eco-friendly alternatives to bitcoin that might be worth investing in.

What Are Some of the Biggest Cryptocurrency Trends Today?

Today, more than 1,500 cryptocurrencies are in circulation—one of the biggest trends in ICOs (Initial Coin Offerings). An ICO allows an individual or group to raise money in exchange for a new crypto coin distributed to backers. The initial coin offering is similar to an IPO but without regulatory oversight. Many groups are using ICOs to fund their projects and companies. There have been many successful ICOs, including Ethereum, Litecoin, and Gnosis. There’s also been a lot of controversy surrounding ICOs. The SEC recently made headlines after fining a company called PlexCorps $300,000 for raising funds through an ICO that didn’t exist.

Another trend is that some eco-friendly cryptocurrencies are reaching the market. Leafscoe has a list of the top eco-friendly cryptocurrencies on the market. SolarCoin, Powerledger and Cardano top the list. However, Ethereum is also becoming eco-friendlier. Fortune reported that Ethereum took a huge risk by shifting towards a more sustainable business model, which is starting to pay off.

How to Get Started With Crypto Currencies?

To start buying cryptocurrency, you’ll need to open an account at one or more online exchanges. These are platforms where you can buy and sell these digital assets. You’ll need to provide a government-issued ID and proof of address to do this. It can typically be done by submitting copies of a passport or driver’s license along with utility bills or bank statements. Websites like Currency offer great user experiences and security features, which is why they’ve become so popular for crypto trading. Another thing to remember is that you should always use a secure wallet when storing your coins. You could lose everything if you don’t!

How to Start Investing In Crypto Currency

Once you become familiar with the basics and start researching various cryptocurrencies, you’re ready to begin investing. Here’s how you can get started:

1.      Research

Before you invest, make sure you understand everything about the space. Look at all the available coins, study their histories, and read through online reviews. Look for red flags, such as bad marketing practices or shady business dealings. Only invest in coins that you understand completely.

As an eco-friendly investor, you probably also care about the sustainability of the coins that you invest in. You want to find out what the carbon footprint is of different cryptocurrencies.

2.      Choose Your Coin(s)

After you’ve researched the space, choose your coins. It will depend on what type of investor you are and whether you want to follow a specific strategy. Once you’ve decided how much you’re willing to risk, set a budget for each coin and stick to it. Also, don’t forget to keep an eye on the overall market and make sure you diversify your portfolio.

3.      Buy and Hold

Many investors prefer to buy and hold their coins instead of trading frequently. It is especially true for those who believe the market is in a long-term bull run and that the current prices are just a temporary dip. It is a safer approach but is less exciting than trying to time the market.

4.      Trade

For those who like to take a more active role in their investments, trading is a good option. Using a broker, you can execute trades immediately and respond to sudden changes in the market. When buying and selling, it’s important to remember that you won’t always come out ahead. Even though cryptocurrencies are volatile compared to traditional assets, they can also be very profitable.

5.      Diversify

Now that you know what you’re doing, it’s time to diversify your crypto portfolio. It is crucial because cryptocurrencies are so volatile and unpredictable. If you only own one coin, you could lose all your money if something goes wrong. Instead, try to invest in multiple currencies so that you can reduce the impact of a single mistake.

6.      Track Your Results

By now, you should have several investments going at once. Make sure you track these and watch the performance closely. If things aren’t working out, you can adjust your strategy accordingly. You should also consider setting up alerts to notify you if the market shifts in a certain direction.

7.      Prepare For Market Shifts

Remember that cryptocurrencies are still relatively new. While this makes them exciting, it also means that their value can change rapidly. The market is highly volatile, but this shouldn’t discourage you from investing. Set aside enough money you’re comfortable losing, and then focus on making a profit.

8.      Keep Learning

As cryptocurrencies become more popular, the number of options will grow. As an investor, you must be aware of this and keep up with the latest news.

What Should I Watch Out For When Buying Cryptocurrencies?

There are numerous risks associated with buying and selling cryptocurrencies. Let’s take a look at some of them:

1.      Security

Security is key to protecting your investment, so ensure you have good practices. Hackers are constantly looking for ways to steal people’s private keys and wallets. Make sure you keep your passwords protected and store all your tokens offline. It’s also important to only use trusted websites when making purchases. Furthermore, never send any money to anyone unless you know who they are and trust them 100%.

2.      Transaction Fees

When purchasing cryptocurrency, you may get charged transaction fees when sending or receiving coins. These fees can vary widely, ranging from less than a dollar to over ten dollars, depending on how large the transaction is and what payment method you use. Withdrawals can also incur additional charges based on the provider. It’s essential to understand all the fees involved before you buy crypto.

3.      Price Fluctuation

Just like stocks, cryptocurrencies can go up and down in value. Over the past year, we’ve seen values fluctuate wildly. While some coins have seen massive value increases, others have experienced sharp drops. Just because one coin performs poorly doesn’t mean another will perform poorly. Always do your research to see which currencies are performing well and which are underperforming. Don’t simply follow the crowd because they might be wrong!

4.      Tax Implications

As with all investments, it’s important to understand any tax implications involved with cryptocurrency. If you’re working with a financial advisor, make sure they’re aware of these issues and have a plan to help you navigate them.

5.      Regulation

Regulatory bodies are currently examining the benefits and risks of cryptocurrencies. It has led to some countries’ restrictions on using and selling certain coins while allowing others to thrive. The U.S., for example, has allowed both Bitcoin and Ether to flourish. However, China and Korea have banned all forms of crypto trading.

6.      Lack of Liquidity

Since cryptocurrency is such a new asset class, it can be difficult to liquidate your holdings quickly. Unlike traditional stock markets, there aren’t many options for exchanging your crypto for cash. In addition, since these transactions are irreversible, you could potentially lose your entire investment if you send it to the wrong place. It makes it extremely risky to trade in smaller denominations, which can lead to high volatility.

7.      Volatility

Like any other investment, cryptocurrencies are subject to wild swings in value. One day, particular crypto might be worth $100; the next, it’s worth $50. There’s no way to predict when this will happen. It means that investors must be prepared for significant price fluctuations. If you’re not comfortable with this risk, avoiding investing in cryptocurrency is best.

8.      Government Control

While most governments have yet to adopt cryptocurrencies, some have already started regulating them. Countries that have taken steps toward this include Japan, which requires digital currency exchanges to register with the government. Other countries, like Russia, have chosen to ban cryptocurrency altogether.

9.      Hedging Risks

If you hold your cryptos long-term, hedging risks can be high. For instance, if you owned a $10,000 portfolio and then had the value of your entire portfolio drop to $9,000, you would still be left with a loss of 10% even though your original amount was reduced by 15%. To hedge against this, invest in several different cryptocurrencies.

10.  Legal Adverse Situations

In the United States, there have been several cases where people have lost substantial amounts of their investment due to fraudulent activities. Before investing, thoroughly check out the company and its leadership. You should also consider filing a complaint with the SEC. It is illegal for anyone to promise returns that exceed a reasonable level of return.

Eco-Friendly Business Owners Can Still Invest in Cryptocurrencies

Cryptocurrencies are here to stay. As an eco-friendly investor, you can invest in them without compromising your pledge to be eco-friendly. However, you have to invest in the right ones.

As the industry grows, we’ll continue to see more regulation, better security measures, lower carbon footprints and greater liquidity. Keep an eye on the market, and always remember that investing in cryptocurrencies is risky.

Following nature’s example, Baufritz has been planning and constructing ecologically sustainable buildings for over 120 years. High-quality, pollutant-tested building and insulation materials are used to create individual architect’s houses that protect people and the environment.

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