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How to Invest In IOTA In 2021

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IOTA has proved to be a hugely popular cryptocurrency token since it was launched a few years ago. Based on an open-source distributed ledger, IOTA is particularly designed for compatibility with the Internet of things.

Unlike many other cryptocurrencies, IOTA does not rely on nodes to validate transactions, instead of requiring users to have approved previous transactions and conducted Proof of Work to qualify. This means that fees are eliminated from the process, facilitating more flexible and affordable micro-transactions.

The IOTA ledger was created in 2015 by David Sønstebø, Dominik Schiener, Sergey Ivancheglo, and Serguei Popov, with the developers raising $500,000 USD via an ICO. The IOTA network went live in 2016. This guide will discuss how to invest in Iota in detail. 

4 Ways to Invest in IOTA

1. Buy IOTA Through an Exchange

It is firstly possible to purchase IOTA through an exchange. While exchanges typically feature their storage mediums, it is certainly advisable to opt for a hardware wallet when storing IOTA. Some of the options in this area include:

There are other software wallets also available. The type of wallet you require will be determined by your goal. Short term traders need quick access to their assets and a hot wallet will be useful for them. For long term storage, a cold hardware wallet is usually the best and the most secure option. Paper wallets were considered the most secure option but their popularity has declined after the invention of hardware wallets. 

In order to purchase IOTA via an exchange, it is necessary to join one of the many platforms available. This involves a registration process, which is usually short and straightforward, while it will also be necessary to confirm your identity. This occurs under the Know Your Customer (KYC) regulations, which refers to the process of verifying the identity of customers; a regulated banking identification process.

Our recommended exchange

With many exchanges available, some guidance is always appreciated, so here is our recommended exchange for IOTA.

1
Min. Deposit
$50
Exclusive promotion
Our score
10
Accepts customers from the USA
Offers 15 crypto coins to buy&sell including BTC, LTC, ETC, NEO and more
Trade on the world's leading social trading and investing platform
Start Trading
Payment Methods:
Wire Transfer, Bank Transfer
Full Regulations:
CySEC, FCA

2. Buy Fractions of IOTA Through an Exchange

Another option when purchasing IOTA is to buy fractions of a single token. Because of the success of IOTA in the market, this is possible with this particular cryptocurrency. Fractional transactions of IOTAs can be completed through exchanges, with the denomination possible varying from one exchange to another.

Typically, though, it is possible to purchase IOTA in fractions as small as 0.1 unit. This flexibility has been offered as the cryptocurrency niche has developed, due to the relatively large amount of capital required to buy a single token. This doesn't necessarily apply to IOTA, but fractional purchasing is still possible.

3. Trade IOTA Through a Broker

Another option for those wishing to purchase and trade IOTA is to do so via a specialised broker. A cryptocurrency broker is simply a firm or individual that acts as an intermediary between the person wishing to complete the transaction, and those selling the currency. 

Brokers bring a huge amount of specialised knowledge and experience to the table and therefore can be an excellent option for beginners. The popularity of trading online has also made brokers far more accessible, meaning that they are a valid option even for those beginning their trading journey.

There are many options available with brokers, regardless of whether you're looking to purchase IOTA, with cryptocurrencies such as Bitcoin, Litecoin, Ethereum or Ripple all traded. Most brokers accept a variety of payment methods for their services and will buy and sell currencies at a price that is set by individuals.

Brokers may also hold, and effectively store, cryptocurrencies for customers. It’s therefore important to choose a reliable broker when embarking on this process. Ensuring that the broker has state-of-the-art security systems in place, and operates in compliance with national current regulatory measures for financial services providers is essential. 

Our recommended broker

There are a wide variety of brokers available, but here is our recommendation in this field.

1
Min. Deposit
$50
Exclusive promotion
Our score
10
Accepts customers from the USA
Offers 15 crypto coins to buy&sell including BTC, LTC, ETC, NEO and more
Trade on the world's leading social trading and investing platform
Start Trading
Description:
eToro offers a wide range of cryptos, such as Bitcoin, XRP and others, alongside crypto/fiat and crypto/crypto pairs. eToro users can connect with, learn from, and copy or get copied by other users.
Payment Methods
Wire Transfer, Bank Transfer
Full regulations list:
CySEC, FCA

4. Invest in an IOTA ETF

Another possibility for IOTA investors is to use an ETF (Exchange Traded Fund). This approach can be used to trade IOTA, and other currencies, within the traditional stock market. Another advantage of ETF contracts is that they can be used to combine a diverse set of cryptocurrencies into a singular tradable asset, which would otherwise be impossible.

The cryptocurrency ETF is just one form of this type of contract. There are many ETF trades that deal with other commodities or collected baskets of assets. Digital token ETFs trade like a common stock on an exchange, and are subjected to changes in price on an ongoing basis, as investors buy and sell into them.

ETFs can help new investors enter the cryptocurrency market by offering a range of options that would otherwise be unavailable. In order for a cryptocurrency ETF to work properly, the organisation managing the fund must own the underlying assets that it is trading and tracking. 

5 IOTA Investment Strategies

There are a variety of investment strategies available for IOTAs, and in this section of the article, we will discuss some of the most common and credible strategies.

1. Buy and ‘Hold’ 

What is it?

Buying and holding will always be a popular strategy. It is proving to be a regularly implemented strategy across the entire financial system, and not just cryptocurrency. However, it can be particularly useful in the cryptocurrency market place, as this is notoriously volatile.

Buying and holding simply involves purchasing a commodity, such as IOTA and then holding it over a period of time to benefit from price discovery. Buying and holding is an investment strategy implemented when an investor believes that the long-term fundamentals of a particular investment are sound.

What is the benefit of using this strategy?

The major benefit of using a buying and holding strategy is that it is implemented over a long period of time, and thus does not require a lot of technical trading knowledge. Buyers simply purchase an asset and then wait for it to realise its value, which doesn't require particularly active involvement in the crypto market and trading mechanisms.

2. Day Trading

What is it?

Day trading is another form of investing that has been used in the stock market for many years. This term refers to the practice of purchasing and selling a particular asset, security, commodity, or equity within a single trading day; effectively attempting to predict price direction over a period of fewer than 24 hours.

This form of trading is most common in the foreign exchange and stock market, but it is also possible with cryptocurrencies such as IOTA. Day traders are typically trading experts, who will use high amounts of leverage and short-term trading strategies to capitalise on relatively trivial price movements.

Scheduled announcements, such as economic statistics, corporate earnings, or interest rates are of particular interest to day traders, as these can rapidly impact the market one way or another, leaving the potential for investors to capitalise.

What is the benefit of using this strategy?

The major benefit of day trading is that it is a hugely flexible strategy, which enables investors to make a profit as quickly as possible. Unlike a buy and hold strategy, day trading takes place over a very short time period and is thus the best way to make returns from cryptocurrency in an immediate process.

Conversely, day trading requires a significant amount of technical knowledge and exposes investors to significantly more risk than other forms of trading. It is also a high maintenance form of trading, as day trading does require close monitoring of the markets.

3. Shorting

What is it?

Shorting is another form of cryptocurrency trading that is particularly popular, and it is a technique that occupies a traditional place in the market. Shorting is another way of describing the strategy of short selling, which effectively represents a bet that a particular commodity, equity, or asset class will decline in the near future.

It is possible to short cryptocurrencies, such as IOTA, when you believe that they will decline in value. If you are correct, the more that they decline in value, the more money that you make. Conversely, if you are incorrect, you will obviously lose some of your investment. 

What is the benefit of using this strategy?

The major benefit of shorting is that it makes it possible to profit from cryptocurrencies such as IOTA, even in what are unfavourable market conditions. Suddenly, it is possible to profit in a bear market, which is not possible in a buy and hold strategy. As with all investment strategies, shorting carries risks, and if investors misread the market, it is certainly possible to lose money. However, short selling can also be used as a hedging strategy, enabling investors to protect themselves against the market taking an undesirable direction.

4. Using a Trading Bot for trading

What is it?

Trading bots have also become increasingly popular, even though they are a recent innovation. Automated trading software will make trades on the behalf of users, ensuring that they can participate in the cryptocurrency market without any manual input.

Robot traders take advantage of sophisticated algorithms, which assess the market and make decisions based on mathematical calculations. Trading bots are a form of artificial intelligence, which utilise machine learning techniques, in order to improve decision-making over a period of time.

What is the benefit of using this strategy?

The obvious benefit of using a trading robot is that it requires absolutely no input from the human user, once the initial parameters have been outlined. This makes it a very convenient form of trading, and one that is available to those with even no real understanding of the cryptocurrency market. This means that even those that are completely new to IOTA can also trade via bots.

5. Hedging IOTA

What is it?

Another possibility with IOTA is to use the cryptocurrency for hedging purposes. This would mean making other trades to reduce the price risk to which an investor is exposed. Although IOTA can be used as a hedge, it is far more likely that other investments would be made alongside IOTA, to hedge against fluctuations in the price of the cryptocurrency.

What is the benefit of using this strategy?

Hedging is intended to reduce the market risk for an investor, and thus is a critical part of any cryptocurrency trading strategy. It is certainly advisable for anyone intending to trade IOTAs to hedge their investment with other parallel investments.

Buy IOTA Today!

What to Consider Before Investing in IOTA

Before investing in IOTA, it is important to ensure that you have considered all of the factors involved. The cryptocurrency market place has become a safe and regulated environment, but it is still important to consider aspects of this niche, to ensure that your trading is successful.

Fees

According to bitinfocharts.com, the average transaction fee for IOTA is between 20 and 30 cents, which compares very favourably with many competing coins. For example, this figure is in the range of $2—$5 for Bitcoin. This means that it is much cheaper to transact using IOTA than many other cryptocurrencies.

Exchanges will also charge commission in some cases. For example, there is a 0.1% commission charged on IOTA at Binance.

Risks

There are risks associated with trading cryptocurrencies, and it is important to understand these before entering into the market. 

The first and most obvious risk is that the cryptocurrency marketplace is widely acknowledged to be particularly volatile. Unexpected changes in market sentiment can lead to sharp and sudden changes in the price in IOTA, and other crypto tokens as well. It is not uncommon for the value of cryptocurrencies to fluctuate rapidly. However, this is what attracts people to the niche in the first place, as investors can also make massive profits on cryptocurrencies in a relatively short timeframe.

Cryptocurrencies remain relatively unregulated compared to many other investment mechanisms, although both governments and central banks have moved to introduce regulations in recent years. Nonetheless, there are still question marks regarding the classification of cryptocurrencies, with differences of opinion rife on whether they should be considered commodities or virtual currencies.

It is also reasonable to point out that cryptocurrencies are susceptible to errors and hacking, and that there is no perfect way to prevent technical or human glitches. Nonetheless, this hasn't been a particularly prominent issue for cryptocurrency in recent years, and it should also be noted that all investments are subject to potential theft.

Finally, some cryptocurrencies are discontinued due to a lack of support or forking. It is important to familiarise yourself with all of these risks before investing in IOTA, or indeed any other cryptocurrency.

Payment methods

There are a variety of payment methods available for IOTA, with all major credit and debit card supported by both exchanges and brokerages. Skrill, PayPal, and Neteller are all often supported as well, while Bitcoin can usually be exchanged for IOTA at most exchanges. Some may also accept other major cryptocurrencies, such as Bitcoin, Ripple and Ethereum.

Why Invest in IOTA?

IOTA offers some unique features that are not present in any other cryptocurrency products. For example, its masternodes improve the security of the network and have been considered a major technological innovation in the niche. 

IOTA also offers a service called PrivateSend which adds privacy to transactions. This means that IOTA transactions can never be traced back to its users; considered a major positive in the cryptocurrency world.

IOTA transactions are also particularly affordable and compete favourably with many other of the other tokens available on the market. IOTA is also super-fast, and this adds to the convenience of the token.

Finally, IOTA has traded effectively in 2021, with its price currently around $200. It has been as high as $350 during 2021 but is still up four-fold over the calendar year as a whole.

Summary of Investing in IOTA

IOTA has undoubtedly established itself as one of the top cryptocurrency products. The token offers outstanding functionality and some real advantages over other available tokens. It is also compliant with the privacy ethos that was considered so important with cryptocurrency from its birth as a concept.

The low fees associated with this token is another massive plus point, while investors will be highly encouraged by the market performance of IOTA in recent months.

There are a variety of trading strategies available for IOTA, it is certainly advisable to investigate all of them before deciding on your own approach. CFD accounts are widely available for IOTA, and these are certainly useful as well. Pricing is competitive, and overall IOTA is a cryptocurrency that is expected to grow as per veteran traders, and attract more investors, in the future.

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