How To Invest In IOTA - Step-by-Step Guide
IOTA is a peer-to-peer decentralised network called 'Tangle' that can quickly validate and process a transaction in a secure manner. Technically, it is not a blockchain but has all the properties of one including immutability and decentralisation. IOTA's native token is denoted by MIOTA. The main goal of the IOTA blockchain is to turn the unique network into a global platform for affordable, quick, and secure payments.
If you’re wondering how to invest in IOTA, then this guide will help you by listing some of the essential steps and some risk management strategies.
Table of Contents
Invest in IOTA in 3 Steps
Get an IOTA Wallet
When you want to invest in IOTA, the first thing you need to get is an IOTA wallet. There are numerous wallets available for holding or storing IOTA including software and hardware wallets. When it comes to features, for example, security, reliability, price and quality, these wallets may be quite different from one another. You need to identify a crypto wallet that offers the combination of features you are looking for.
Join an IOTA Exchange
Once you have a wallet, you need to join a digital cryptocurrency exchange that lets you buy IOTA. There are various exchanges, for example, Binance, Poloniex, Coinbase and many more where you can purchase MIOTA coins. You will initially have to buy bitcoins relying on traditional fiat cash. Once you have BTC in your account, you can trade it for IOTA coins. It may appear to be a bit complex process but is usually quite simple.
Invest in IOTA
After you have picked your cryptocurrency exchange, you need to sign up and create your account. The platform will request your personal data and confirm your identity before you can start to invest in IOTA. At that point, you should deposit the initial capital in your trade account. When the deposit appears in your exchange account, you can buy the quantity of MIOTA coins by entering the sum you desire to spend.
Investing in IOTA Explained
Before you invest in IOTA or any other cryptocurrency for that matter, the main thing you need to do is get an IOTA wallet. You should consider various factors before you choose a crypto wallet that accommodates your needs and investment strategy. A few of the essential factors that you should consider are usability, security, client care, anonymity, backup and accessibility to your MIOTA coins.
If you want to store your IOTA tokens for a long-term investment strategy, getting a cold wallet is the best approach. They offer the best security as they remain disconnected. On the other hand, when you need immediate access to your MIOTA, hot wallets are a superior alternative. They come in the form of apps and you can install them on your iOS or Android phone.
You can also depend on desktop wallets which are installable software programmes. They are accessible for macOS, Linux and Windows operating systems. If you need the best combination of robust accessibility and security to your IOTA coins, web or hot wallets present an alternative too. Since they are constantly connected with the web, you can get to your coins readily. They are frequently included in the exchange or broker platforms.
One more trading or investment option that has gotten progressively popular over the last couple of years is P2P cryptocurrency exchanges that connect sellers with buyers. Here, you can discover cryptocurrency sellers who will sell you IOTA and other digital assets and you also have the option to negotiate your terms.
On digital exchanges and brokerage websites, you will need to register first by providing your name, address and Email ID. You will also need to complete individual identity confirmation or the verification process as these platforms are required to ensure adherence to Know Your Customer (KYC) and Anti-Money Laundering (AML) laws. This may be a bit inconvenient for you but ensures that you have a safe and healthy investment platform.
Where Can You Invest In IOTA?
We carried out a thorough assessment of probably the most well-known exchanges and brokers and have shortlisted some platforms that we think convey the ideal balance of essential features including ease of use, fees and charges, payment methods, client support, and regulatory compliance.
Cryptocurrency exchanges and different brokers offer various payment modes to investors which you can depend on for IOTA investment. The availability of methods depends on the platform you choose and your country of residence. The simplest and speediest payment method for beginners is credit or debit cards which are offered by almost all of the top crypto platforms. All you need to do is simply go to the exchange or broker and use the card option for deposits. At that point move the money into your exchange account and as soon as it appears in your dashboard, you can begin investing in IOTA.
A digital currency broker or exchange will also allow you to move money right away from your bank. From the wallet balance, you can choose the preferred deposit option and your favoured fiat currency. At that point, pick your bank where you will be required to add your account as you will be diverted to complete the confirmation process before you can set aside any capital and start to invest in MIOTA.
IOTA Investment Strategies
There are various techniques to put your capital into IOTA that can guarantee you don't miss out on several investment opportunities. The following segment features all the successful IOTA trading and investment strategies and how and when to rely on them.
Buy and 'Hodl'
What is it?
'Hodl' is an insider joke of the digital currency sphere that just means that you should 'hold' your positions. This method suggests that financial traders are better off when they 'hodl' their cryptocurrencies for the long haul as they can receive significant gains in the long run. Hodl is a passive method of ignoring short term price variations and requires investing for a longer period of time. Traders who wish to use the short term volatility of crypto will not benefit from the Hodl strategy. It is a good strategy for new investors as it doesn’t require monitoring price fluctuations on a daily basis.
How to Use this Strategy
The 'hodl' procedure is very direct. You will register on a cryptocurrency exchange and purchase IOTA as explained before and afterwards hold your coins. Since it is a drawn-out venture, you should show restraint and not get affected by short term price movements. However, most investors find it difficult and get disheartened when the price falls and the funds reflect a negative return.
When to Use this Strategy
The most ideal approach to use the 'hodl' technique is to get in when the IOTA cost is low and afterwards store it in a cold wallet. Don’t forget that the digital money market is exceptionally unpredictable and throughout your investment, the cost of IOTA will rise and fall not once but on many occasions. Hodl strategy works best when the investor can ignore short term price movements and store the coins for the long term.
Buy IOTA Fractions
What is it?
The fraction investment strategy allows you to invest in smaller units of IOTA so you don't have to buy the entire token. Fortunately, most of the cryptocurrency exchanges, as well as brokers, deal in MIOTA which is offered as the smallest unit of IOTA. 1 MIOTA equals 1 million IOTAs and is currently valued at around $1.30. It is a great way of investing for those who are just at a beginning stage and don't want to put up a lot of funds into cryptocurrency investment. Since it is not mandatory to buy an entire IOTA token for trading or investment, any individual who is looking to get into the crypto-investment market can start their journey from IOTA. It also reduces the risk for the user as he/she can decide to invest smaller amounts rather than committing a huge amount of capital in one go.
How to use this strategy
The best way to use the fraction investment strategy is to make it a habit to save some portion of your income on a weekly or monthly basis and then purchase MIOTA coins with those savings. This will not put a lot of pressure on you to invest a huge amount of capital right away and will allow you to build your investment portfolio slowly and gradually at your own pace. This is a good strategy for investors who do not wish to deploy huge amounts and wish to take advantage of cost averaging.
When to use this strategy
This particular strategy is ideal for those traders and investors who don't either have a considerable amount of disposable income to invest or don't want to invest a lot of money into cryptocurrency due to volatility. Fraction investment allows such individuals to build their confidence in the digital asset and the market gradually while they have the option to exit anytime. It is a good risk management strategy.
Long Position on IOTA
What is it?
Long position trading involves betting on the positive price movement of MIOTA. This is usually done by experienced investors using leveraged trading. This type of investing is not recommended for beginners as it requires developing a deep understanding of cryptocurrencies and the financial trading market. Another way to open a position on MIOTA tokens is through CFDs which are contracts for difference. They allow you to claim a trading position on the token without actually buying the asset. If the price moves in the direction you have predicted, you make a profit. On the other hand, if price doesn’t go in your predicted direction, you have to bear a loss.
How to use this strategy
If you are looking to go long on MIOTA through CFDs, you will need to do this through a broker. Sign up on your preferred platform and verify your identity. Once you have gone through the registration and verification phases, you will be required to provide the extent of leverage while selecting the MIOTA price at which you want to start your order. In the event MIOTA price hits the intended target, your trade position will be opened. Now, if the price continues its rally, you can close your position and take your profits. It’s ideal to close it when you believe that the price won’t go up anymore.
When to Use this Strategy
This method should be used in a market that is demonstrating a bullish pattern. At the point when IOTA price is experiencing a positive rise in price because of various factors, you can exploit the market trend to your advantage. That is the reason it is critical to zero in on market developments as they can help you to identify the critical entry and exit points.
Benefits of Investing in IOTA
- Improved Network – Despite not being a blockchain technology, the IOTA network offers all the benefits of a blockchain and does it in a better way.
- Quick & Secure – The underlying mechanism of Tangle, IOTA’s network, ensures quick and secure exchange of information including financial data.
- Versatile Applications – Since IOTA can transfer data at a great speed while ensuring security, it can be used for the Internet of Things (IoT).
- Accessibility to Funds – IOTA is stored as a code on your device, the funds remain accessible to you if you have your device with you along with an internet connection.
- Autonomy – As the Tangle network is decentralised, there is no central authority that can exercise influence over the project like a board of directors. You have complete power over your MIOTA coins.
- Anonymity – Holding IOTA tokens and trading on the Tangle network makes it very hard for cybercriminals or some other individual to identify you personally.
- Unmatched Scalability – Since the network speed relies on users attempting to verify their transactions, the more users there are, the quicker the network speed. This also solves the problem of scalability which plagues many popular blockchains including Bitcoin.
Disadvantages of Investing in IOTA
- High unpredictability – Just like other currencies, IOTA experiences an unstable market. Traders and financial brokers can lose their capital rapidly, especially if they are not managing their financial risks.
- Beware of Scams – As the digital money market is in its early stages, many individuals don't know about the innovation behind it. This has given birth to numerous frauds and scams that are plentiful in the crypto space.
Other Ways of Investing in IOTA
Aside from the strategies referenced above, there are different techniques to invest in IOTA. You can either go for a face to face exchanges where you meet the person selling IOTA. You have to make sure that you are meeting the person at a secure location. One more alternative you could select is buying IOTA through PayPal. In any case, remember that this feature isn't available worldwide.
Trade IOTA on Leverage
Leveraged trading is a way to invest more capital than you have in your account. A user is required to deposit a part of the capital required for investment, this portion is known as margin while the remaining is provided by the platform as a loan. Leverage allows a user to increase the seed capital by a specific rate and the user can trade more quantity of the assets. However, you must be very wary as the greater your leverage, the more prominent the risk of liquidation, even with minute price movements.
Leverage must only be used by experienced users as the risk of loss is also bigger in case the price goes in the opposite direction, different from what the user had predicted. This trading method can be used through a crypto broker, for example, eToro, Plus500, Skilling, and more.
Frequently Asked Questions
No. IOTA is generally traded on platforms in its smallest unit called MIOTA which is one million units/part of IOTA.
This will need to be decided by the investor considering his capital amount and investment duration.
It relies upon the locale or country you live in. Technically, they will be classified as capital gains but you need to consult with a tax attorney just to be sure.
Avoid unregulated exchanges and broker platforms and always trade on regulated platforms to reduce the risk of fraud.
IOTA trading and investing platforms follow KYC and AML guidelines to guarantee there is no tax evasion and different kinds of misrepresentation on their website. This way you have a safe and healthy investment environment where you don’t have to deal with criminals.