People worldwide are increasingly recognizing cryptocurrency’s full potential as its popularity is on the rise. Many people have successfully invested in cryptocurrencies or made significant money through mining. Their success stories also encourage other people to make investments in the cryptocurrency market. Some nations are willing to provide a sizable reward to the fortunate person who is able to break the Monero code because the network’s transactions’ privacy is so unquestionable. While many different cryptocurrencies are accessible for investment, you must pick the best one to maximize your returns. One of the greatest possibilities for cryptocurrencies that is worthwhile investing in is Monero.
In this article, we will go over things you should know before investing in Monero.
- What Exactly Is Monero?
Since its April 2014 inception, Monero has become increasingly popular among cryptocurrency enthusiasts who carry out the majority of their online financial transactions in digital currency. Due to Monero’s prominence on the dark web and its emphasis on privacy, it has earned some recognition. Despite this, many people also employ it for perfectly legal purposes.
However, despite of it being the talk of the town on several cryptocurrency discussion platforms, many people, especially the newcomers interested in investing in digital money only have a vague idea of what is Monero. To answer that, Monero is a digital currency that provides a high level of transaction and user privacy.
While Monero and Bitcoin are both decentralized peer-to-peer cryptocurrencies, Monero is distinguished as being more untraceable or privacy-oriented than Bitcoin. Monero uses stealth addresses and ring signatures to mask senders’ and recipients’ identities. Ring signatures make it impossible for third parties to associate a signature with a specific user by combining or, in other words, “mixing” a user’s account keys with the public keys that are collected from the Monero blockchain. Monero mixes all the coins used in exchanges, removing the possibility that they are mixed to hide information that the sender and recipient don’t want outsiders to know.
Monero can be traded just like every other cryptocurrency (XMR). Trading currency is different than investing in it, though. You will hold onto the money you invest for a considerable amount of time.
- Fungibility And Adoption
By offering a superior level of security, Monero enables fungibility, or the ability to exchange a single unit of a currency for another. Another way to say this is that each coin is worth the same.
The blockchain keeps track of each Bitcoin’s transaction history, so businesses and exchanges may avoid accepting funds that have been linked to specific incidents like theft. No two coins can be distinguished from one another in Monero because of their untraceable nature, making them both equal in the eyes of traders. In the absence of this level of fungibility, a cryptocurrency-accepting merchant might reject a unit of one of these assets due to its prior transaction history.
- The Market for Monero
The market for Monero functions similarly to that of several other cryptocurrencies. The cryptocurrency can be bought outright through exchanges like Poloniex, Bitfinex, and Kraken for those who are interested in investing.
One of the very first exchanges to do so was Poloniex, listing eight different pairs of currency in July 2014. In November 2016, Bitfinex, the biggest Bitcoin exchange by BTC/USD, was soon followed by adding the XMR/USD as well as XMR/BTC trading pairs and enabling Monero deposits and withdrawals.
- Fluctuations In Prices
The price of the XMR token for Monero has fluctuated a lot at times, rising over 1,300% since it started trading on CoinMarketCap and about 70% in the previous month. The coin has fluctuated since launch from approximately $0.25 (around January 2015) and up to $60 (in May 2017).
Sharp price changes present possibilities for traders, even if some market observers may interpret this fluctuation as making Monero less reputable. Since traders can purchase Monero using both fiat money and cryptocurrencies, they may opt to purchase and sell it in an effort to increase their profits.
The future price of Monero will depend on supply and demand. The former is constantly growing, whereas the latter is unknowable. Strangely enough, investors may find this uncertainty alluring, offering them the chance to speculatively predict the cryptocurrency’s future value in an effort to achieve high returns.
Trading Monero entails short-term buying and selling, just like trading any other cryptocurrency. The coins can be traded in an exchange or through the use of Contracts for Difference (CFDs). Bitcoin is mostly used for trading via exchanges. I purchased some Bitcoin and sold it for Monero.
You must swap your Monero for Bitcoin and sell it on a Bitcoin exchange if you want to trade it. However, you can sell your XMR coins on any exchange that conducts trades in fiat money. A cheap way to start trading Monero is through CFDs.
- Profit Margins
The popularity of the Monero coin makes it a particularly lucrative currency to trade. The same as with other cryptocurrencies, the secret to profitable cryptocurrency trading is to acquire at a discount and sell at a premium.
You must open and close positions while trading Monero, and the distinction between the two positions will show if you made money or lost money. It will be deemed profitable if the position at which you conclude your transaction is greater than your initial position.
- Closing Your Position
Before trading Monero, one of the things you should learn is how to close your position, also referred to as “Position Squaring.” You open and close positions when you trade in the market. When trading, positions might be closed for a variety of reasons.
If the profit target has been met, you can first close your position to take any profit. In order to reduce or limit your loss, you can also close your position once the stop level has been achieved. Finally, if you need to close your position to meet margin requirements, you can do so.
Trading in Monero is a fantastic cryptocurrency choice. Compared to Bitcoin, it has various benefits, such as more anonymity. All trading involves the same fundamentals: you want to buy at a low price and sell high. This is also true when trading Monero. One crucial element is keeping a close eye on your market. Remember, any investment carries some risk, so be prepared.