Crypto has a market cap of $972 billion dollars. Moreover, the market is expected to grow in the future too😎😎.
Owing to this, it’s understandable why most people want to learn how to invest in cryptocurrency. The concept is quite overwhelming for first-timers, considering the volatile nature of digital assets📉📈💹.
In this guide, we explain how to invest in cryptocurrency to help you get started.
What is cryptocurrency?💸💰
A cryptocurrency is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, control the creation of additional units, and verify the transfer of assets.
Cryptocurrencies are decentralized. Thus, they are not subject to government or financial institution control.🔓
Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Since then, more than 5,000 altcoins (alternative coins) have been created.
Our crypto investment guide: things to know💬
When you invest in cryptocurrency, you need to be aware of the following things.
A crypto exchange is an online platform where you can buy, sell, or trade cryptocurrencies. Some of the well-known exchanges are Binance, Coinbase, and Kraken.
You need to create an account on the exchange and verify your identity. Once that’s done, you can start trading📉📊.
A crypto exchange provides you with a digital wallet to store your cryptocurrencies. Coinbase, for instance, has an insurance policy that protects your account against external threats🚩🚩.
A cryptocurrency wallet is a digital wallet used to store, send, and receive digital assets. There are different types of wallets, including software, hardware, and paper wallets.
Software wallets are further classified into desktop, mobile, and web-based wallets💻.
The most popular software wallets are Exodus, Trust Wallet, and Coinomi.
On the other hand, hardware wallets are physical devices that store your private keys offline. They are considered to be the most secure type of wallet.🔐
Some popular hardware wallets are Ledger Nano S and Trezor Model T.
Paper wallets are printouts of your public and private keys. They are considered to be the most convenient type of wallet.
It’s important to know that some cryptocurrencies are more popular than others. Here are some legit cryptocurrencies:
- Bitcoin Cash🤑🤑
For instance, Bitcoin has a market cap of $373.14 billion. That means it’s the most popular cryptocurrency with the highest market value.
Ethereum, on the other hand, has a market cap of $162,640,985,677.💸
Besides cryptocurrencies, you should also be familiar with altcoins. An altcoin is any cryptocurrency that isn’t Bitcoin. As of now, there are more than 5,000 altcoins in existence.
Another type of coin you need to know about is meme coins. These are cryptocurrencies with a unique purpose or feature. For instance, Dogecoin started as a joke but eventually became popular.🤑🤑
Cryptocurrency mining is the process of verifying transactions on a blockchain and adding them to the public ledger. In return for their service, miners are given rewards in the form of cryptocurrency.💰💰
Mining is a resource-intensive process. Thus, it’s not profitable for everyone. Also, if you want to invest in crypto, you can do that without learning about mining.
How to invest in cryptocurrency💸💸
By now, you know the basic terms of crypto investments. Next, let’s look at the step-by-step guide to investing in crypto.
Step 1: Choose an exchange
First off, you need to choose a crypto exchange. You can decide this by looking at various factors like the user interface, fees, payment methods, and security💸🔐.
Binance is one of the most popular exchanges currently. It is known for its low trading fees and advanced features.
Coinbase is another popular exchange that is known for its ease of use. However, it charges higher fees than Binance.
Step 2: Create an account and verify it✅✅
After you’ve chosen an exchange, you need to create an account and verify it.
To do this, you will need to provide your personal details and documents like your ID and proof of address.
Step 3: Deposit funds💸💸
Once your account is verified, you can deposit funds into it.
Most exchanges accept bank transfers and credit/debit card payments. Some even accept PayPal.
The funds you deposit will be used to buy cryptocurrencies. Since you’re a beginner, it’s best to start small.
Step 4: Buy a cryptocurrency💰💰💰
You can now decide which cryptocurrency you want to buy.
If you’re buying Bitcoin, look for the BTC/USDT pair. This is the most common pair used for buying Bitcoin.
If you’re buying Ethereum, look for the ETH/USDT pair.💸💸
Once you’ve found the pair, enter the amount of cryptocurrency you want to buy.
Step 5: Store the cryptocurrency🔒🔒
After purchase, you can store the cryptocurrency in the exchange’s wallet.
However, this is not recommended. Exchanges are often hacked, and your funds could be stolen.
Instead, you can store your cryptocurrency in a wallet on your computer or mobile device📱📱.
To do this, you will need to download a wallet like Exodus or Coinomi.
Once you’ve downloaded the wallet, create a new account and store your cryptocurrency in it.
4 other ways to invest in cryptocurrency
Buying and selling crypto is not the only way to invest in cryptocurrency. Here are four other ways to get involved:👀👀
1. Investing in crypto companies
Nowadays, there are plenty of well-established companies involved in the cryptocurrency industry, such as Coinbase, Ripple, and BlockFi. These companies offer products and services related to digital currencies, such as exchanges, wallets, and lending.
If you’re looking to invest in the cryptocurrency space but don’t want to deal with the volatility of digital currencies, investing in crypto companies may be the way to go.
2. Investing in crypto ETFs
An exchange-traded fund is a type of investment fund that trades on a stock exchange. ETFs are similar to mutual funds, but they trade like a stock📈📊.
Crypto-focused ETFs invest in a variety of digital assets, such as Bitcoin, Ethereum, Litecoin, and Ripple. This type of investment may be a good option for those who want to diversify their portfolio with a crypto-related investment📉📈.
In the crypto world, staking means holding onto your digital currency in order to help verify transactions on a blockchain. When you stake your coins, you’re essentially lending them out to be used in the transaction-processing process💰💰💰.
In return for staking your coins, you may earn a reward, which is typically paid out in the form of the digital currency you’ve staked💸💸💸. The reward is given to stakers as an incentive to help maintain the network.
4. Crypto Roth IRA
Gone are the days of only being able to invest in stocks, bonds, and mutual funds in your IRA. Now, you can also add digital currencies to your retirement account💰💰.
A crypto Roth IRA is a retirement account that allows you to invest in digital currencies, such as Bitcoin and Ethereum.
Crypto IRAs are a good way to invest in digital currencies for long-term growth, as you’ll be able to take advantage of the tax benefits associated with traditional IRAs.
Tips for cryptocurrency investing👀
Here are some tips to get started with crypto investing:
1. Do your due diligence 📄📄
Before investing in any asset, it’s important to do your homework and understand the risks involved. With cryptocurrency, there are additional risks since the market is still relatively new and volatile.
Make sure you understand these risks before investing.
2. Diversify your portfolio💵💲
Don’t put all your eggs in one basket. When it comes to cryptocurrency, it’s important to diversify your portfolio.
You can do this by investing in different types of cryptocurrency, such as Bitcoin, Ethereum, Litecoin, and others.
You can also invest in different types of blockchain technology, such as platforms, applications, and even protocols.
3. Avoid FOMO🚩
The fear of missing out (FOMO) is a real phenomenon in the world of cryptocurrency.
With new assets being created all the time, it’s easy to get caught up in the hype and invest in something just because everyone else is.
But this is often a recipe for disaster🚩🚩.
So, avoid FOMO and invest only in assets that you understand and believe in.
The acronym HODL stands for “hold on for dear life.”
This is a popular strategy amongst crypto investors, and it simply means holding on to your assets for the long term. If you believe in the asset and its potential, then holding it for the long term is a smart move.
5. Follow the news📄📺📺
Stay up-to-date on all the latest news and developments in the world of cryptocurrency. You can get updates on websites like CoinDesk, CryptoCoins News, and others.
You can also follow cryptocurrency influencers on social media to get their take on the latest news📱.
As evident, investing in crypto isn’t as simple as just buying and selling bitcoin or altcoins. There are a lot of factors to consider before you can even think about earning any sort of profit.
However, if you’re willing to do your research and put in the time and effort, there’s definitely potential to make money in cryptocurrency😎💲.
Make sure to keep up with the news and always be aware of the risks involved. And never invest more than you can afford to lose📈📉.
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