Many people have been investing in stocks, bonds, bank products, and real estate in the past decades. These investment options are well-known and easy to get started with. However, a new type of investment has been gaining popularity in recent years: cryptocurrency.
Cryptocurrency is a digital or virtual asset that uses cryptography for security. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. Bitcoin, the first and most popular cryptocurrency, was created in 2009.
Since then, thousands of other cryptocurrencies have been created. Some of the more popular ones include Ethereum, Litecoin, and Ripple. Cryptocurrencies are often bought and sold on exchanges and can also be used to purchase goods and services.
Investing in cryptocurrency can be a risky proposition, but it can also be a very lucrative one. If you’re thinking about investing in cryptocurrency, here are a few things you should know.
Table of Contents
- Why Should You Choose Cryptocurrency?
- The Pros and Cons of Investing in Cryptocurrency
- How to Start Investing in Cryptocurrency: A Beginner’s Guide
- Wrapping Up
- Related topics
Why Should You Choose Cryptocurrency?
Although many investment options are available and have been proven to secure your financial future, cryptocurrency has several advantages that make it a very attractive investment choice.
First off, cryptocurrency is still in its infancy, which means there is a lot of potential for growth. The market capitalization of all cryptocurrencies is currently less than a trillion, but some experts believe it could reach $1-3 trillion or more within the next few years. This growth potential is one of the main reasons why people invest in cryptocurrency.
Another advantage of cryptocurrency is that it’s decentralized, meaning it’s not subject to government or financial institution control. This allows you to avoid many of the fees and regulations that come with traditional investments.
Cryptocurrency is also very secure. Cryptocurrencies are digital and use cryptography for security. This makes them very difficult to counterfeit or hack.
Finally, cryptocurrency is becoming more and more mainstream. Many large businesses, including Microsoft, Overstock, and Expedia, now accept cryptocurrency as payment. This trend is expected to continue as more businesses begin to adopt cryptocurrency.
The Pros and Cons of Investing in Cryptocurrency
Cryptocurrency is a very potential investment option in the future. Its popularity and safety are enough to attract investors to begin their investment journey. However, as it may offer you a big return, it comes with high risk.
Before proceeding to buy your first cryptocurrency, find the plus and minus of this investment option.
The Pros:
- A potential high return: Unlike other investment models, cryptocurrency can make you a millionaire almost overnight. So, if you are okay with the high risk, this could be the investment for you.
- 24/7 trading: As cryptocurrency is traded online, you can buy or sell it anytime and anywhere as long as there is an internet connection. This flexibility might attract some people who want to invest but have full-time jobs or other commitments.
- Low entry barriers: To invest in cryptocurrency, you only need an internet connection and a crypto wallet. You don’t need thousands of dollars like when you want to trade stocks. This could attract first-time investors like you.
The Cons
- High risk, high return: as mentioned above, cryptocurrency is a high-risk investment. The price of digital currency is very volatile and can go up or down a lot in a short space of time. You could lose all your money if you’re not careful.
- No regulation: as cryptocurrencies are decentralized, there is no government regulation. This could make them more susceptible to fraud or hacking.
How to Start Investing in Cryptocurrency: A Beginner’s Guide
If you’ve decided that you want to invest in cryptocurrency, here is a simple guide on how to start.
1. Choose a digital wallet
The first step is to choose a crypto wallet to store your cryptocurrencies. A digital wallet is like a bank account where you can buy, sell, or trade cryptocurrencies.
There are different types of digital wallets, so choose one that suits your needs. For example, if you want to trade cryptocurrency, you’ll need a different type of wallet than if you just want to store it.
When choosing a crypto wallet, make sure to know the difference between a cold and a hot wallet.
A hot wallet is a crypto wallet that’s connected to the internet. This type of wallet makes it easier for you if you’re a heavy internet user that depends on the connection whenever you want to make transactions. With the hot wallet, you can access your crypto investment right at your fingertips. However, its ease of use comes with a potential drawback, which is its high susceptibility to hacking.
A cold wallet is the complete opposite of a hot wallet as it is not connected to the internet. This makes it more difficult for you if you want to make transactions frequently. The only way you can access your cold wallet is by physically connecting it to a computer. Even though it is more difficult to use, a cold wallet is one of the safest ways to store your cryptocurrencies because it minimizes the risk of hacking.
2. Research the best cryptocurrency exchange platform
After you’ve chosen your digital wallet, the next step is to find the best cryptocurrency exchange platform. This is where you will buy and sell your cryptocurrencies.
There are many cryptocurrency exchange platforms to choose from. When choosing one, make sure to consider the fees, the payment methods, the security measures, and the user-friendliness of the platform.
3. Know how much you want to buy
Before purchasing your first crypto, you need to know how much you want to invest. This is important because you need to set a budget for your investment.
The amount of money you want to spend on cryptocurrency will also determine the type of digital wallet you need. For example, if you’re only going to invest a small amount of money, then a hot wallet would be enough. But if you’re planning to invest a large amount of money, then you need a cold wallet to store your cryptocurrencies.
4. Buy your first cryptocurrency
Once you’ve found a good cryptocurrency exchange platform, it’s time to buy your first cryptocurrency. There are a few well-known cryptocurrencies in the market, such as:
- Bitcoin
- Ethereum
- Dogecoin
- Binance coin
- Bitrise coin
These cryptos are the top-traded coin in the market today. Still, if you’re confused about which one to buy first, you need to analyze each coin that suits you the most. For example, if you want to buy crypto with a low price but a high chance of ROI, then Ethereum would be the best choice.
5. Monitor your investment
After you’ve bought your first cryptocurrency, it’s time to monitor your investment. The value of cryptocurrency is very volatile, so it’s important to keep an eye on the market.
You can do this by checking the prices of the cryptocurrency you’re holding on a regular basis. Some people check the prices every day, while others do it once a week or even once a month.
It’s also important to diversify your investments. This means you need to place your money in different types of cryptocurrency to minimize the risk. Remember, never put too many eggs in one basket because you might end up losing everything if the market crashes.
6. HODL
This next step is probably the most important one: HODL. This term became popular in the crypto community, and it simply means “hold on for dear life.”
The idea behind this term is that you need to be patient and hold on to your investment even when the market is crashing. Many people sell their cryptocurrencies when the prices are down, but this is actually the best time to buy more.
After you’ve bought your first cryptocurrency, holding onto your cryptocurrency is the very next step as you wait for the price to go up. This could take days, weeks, months, or even years.
The key is to have faith in the future of cryptocurrency and believe that it will eventually rebound. After all, patience is crucial when it comes to investing in cryptocurrency. If you do this, you’ll be rewarded in the long run.
7. Sell your cryptocurrency
Lastly, if you’ve made a profit from your investment, then it’s time to sell your cryptocurrency. Cryptocurrency exchanges usually have a buy/sell option where you can exchange your crypto for fiat currency (like USD or EUR) or other cryptocurrencies.
When selling your cryptocurrency, make sure to cash out when the prices are high. This way, you’ll maximize your profits. Cryptocurrency is a volatile market, so it’s important to monitor the prices carefully before making any decisions.
You can check the prices of the top traded cryptocurrencies on CoinMarketCap(dot)com. Or, if you don’t know how to read the graph, you may need the help of a cryptocurrency trading bot like Royal Q. This will help you automate your sell orders so you can cash out your profits automatically when the prices are high.
Wrapping Up
This is a basic guide on how to start investing in cryptocurrency. If you’re serious about making money from crypto, you need to do more research and learn about the different strategies that you can use to make profits. But if you’re just starting out, then this guide should be a good starting point. So go ahead and start investing in cryptocurrency today.
Make sure to follow these steps, and then you can start investing in cryptocurrency the right way. Just remember to do your own research, be patient, and HODL!
