Savvy investors are those who watch the market closely for movements and patterns trending upward. They’re also on the lookout for new stocks that could change the market significantly. To this end, many are curious about cryptocurrency, the digital exchange medium that has taken the world by storm since Bitcoin was announced in late 2008.

Hailed by many experts as the way of the future, cryptocurrency is both intriguing and innovative and as such, it stands to reason that investing in it can yield a significant reward if the predictions prove true. Still, as with any new technology investment, it’s important to understand as much about this medium before putting money toward it. This is especially the case with cryptocurrency, which looks and operates vastly differently from traditional fiat money. Before you invest, here are five steps to take.

1. Research, Research, Research

It seems that almost every day, a new form of cryptocurrency hits the market. As such, you may be inundated with the possibilities and unsure which ones to follow. The most solid way to move forward with a confident decision is to do your due diligence research on every asset. At the very least, there should be a solid, reputable team behind the currency. It also helps if the asset has a unique angle, or offers a proposition that sets it apart from the myriad types of competition.

Even after you’ve made your decision, your studying should continue. Stay abreast on the market by reading online news updates, subscribing to applicable newsletters and more. Learn as much as possible about this sphere, as it is always changing and growing.

2. Remember to Diversify

Have you ever partnered with a financial advisor to create an IRA or retirement portfolio account? If so, chances are he or she advised you to diversify the assets in your account among stocks, bonds and mutual funds. The theory behind this practice is sound: Putting all of your eggs in one basket (say, stocks) could mean a dramatic dip if the market turns downward. On the other hand, if you have it balanced across different types, you’ll be more resistant to negative reverb felt by its inevitable ebbs and flows.

The same holds true with cryptocurrency. Resist the urge to put your entire savings into the investment. Instead, allocate around 5-10% of the sum, taking into account how risk-acceptable or risk-averse you are. You’ll also have the advantage of diversifying your cryptocurrency investments even further, dividing your funds up between the myriad asset types available. Not only does this step mitigate your risk of major loss, but it also helps you take advantage of the growth that can occur within high-performing options.

3. Keep Performance Notes

You might trust your financial advisor to monitor your retirement account for the most part, but if you plan to invest in cryptocurrency, it’s in your best interest to track all gains and losses yourself. Why? Tax laws are still being stamped out in this regard. Though most countries won’t require you to pay taxes on your capital gains derived from this form of asset, some do.

As the economy changes and the political environment shifts, these taxation regulations may transition as well. As such, you’ll want detailed notes on precisely how much you made every tax year to ensure your numbers are correct.

4. Let Your Money Grow

The world of stock trading is an exciting one and this is also true within the cryptocurrency realm. Yet, if possible, try to leave at least 70% of your total investment in a long-term holding position rather than trade it every time something new comes into view. That 30% should be more than enough to diversify your holdings in the meantime. When you are ready to trade, there are several online trading platforms to choose from. For instance, you can learn more about two of the biggest ones, GDAX vs CoinBase via online research.

Maintaining a long-term perspective is critical with any investment, as it can take decades for a portfolio to mature and during that time, there will be ups and downs that affect its short-term performance. Still, trading every time the market goes down can leave you with even less than you’d have if you simply rode the changes out and gave it time. Keep in mind that blockchain technology is still developing and evolving and is expected to grow substantially in the near future. If you have the time to wait and don’t require access to your funds immediately, let your money work for you by leaving it where it is for the time being.

5. Understand that Value Could Change

You could have cryptocurrency investments worth more than $500,000 one day, and the value could change the next and leave you with a great deal less. Remember throughout this entire process that cryptocurrency might work in some ways like traditional currency, the two are far from the same. Therefore, as soon as your portfolio starts to look healthy, it’s unwise to go out and start spending the assets like they’re cash. Remember that it’s a digital currency with a notional value, so use precaution when spending the valuation.

Investing in the Future Successfully

If you still have questions about investing in cryptocurrency, don’t hesitate to reach out to your financial advisor. This is an exciting and new investment opportunity, but it’s not without its challenges and concerns. Still, if you approach the practice with patience, a thirst for knowledge and a long-term outlook, you can come out on top.