Trust me, you are not the only one presently searching for how to start investing in cryptocurrency. After the recent Bull Run that happened earlier this year where many cryptocurrencies incredibly rose in price, more and more people have been considering investing in some digital tokens.
Over the years, cryptocurrency has increased so much in popularity that is now accepted as a payment method in most parts of the world. In fact, some people call it the money of the future.
Cryptocurrency has served as both short-term and long-term investments for many smart investors. If you are also considering how to join the crypto craze and make some money from your investment, here is how to get started.
Step-By-Step Guide on How to Start Investing in Cryptocurrency
#1: Take your time to understand cryptocurrency
Only a few people will invest in what they know nothing about. And this is one of the factors contributing to the failure of many people in the crypto world.
If you want to invest in either stocks or bonds, you will carefully read the prospectus and analyze the companies before going ahead with your investment. You should do the same with cryptocurrency too.
Cryptocurrency is a decentralized form of digital currency. It is not backed by any authority or government, and that’s what makes it decentralized. Since the creation of Bitcoin, which is the first cryptocurrency, many more cryptos have been created. Presently, there are thousands of cryptocurrencies in circulation, with each of them having its own unique features and uses.
If you are investing, you should know which particular cryptocurrency you are going for. Once you decide on that, take your time to understand the token. Know how it works and what its use case is like.
Some common cryptocurrencies out there are Bitcoin, Ethereum, Ripple, Dogecoin, Cardano, etc.
#2: Choose a crypto exchange and begin your investment journey
To begin investing in cryptocurrency, you will need a cryptocurrency exchange. Exchanges are platforms where people can buy cryptocurrencies using fiat money or other cryptocurrencies. When investing, it is important that you choose a reputable and reliable exchange. The exchange you choose for your investment journey can either make or break you.
When selecting the best crypto exchange, prioritize a platform with a clean and easy-to-navigate interface. It should charge low fees on transactions and have a trusted support team to help whenever you are stuck.
Some of the most common cryptocurrency exchanges out there include, Coinbase, Coinmama, Gemini, Binance.US, eToro, etc. make sure you diligently conduct your own research before choosing any exchange platform.
#3: Create an Account with the Exchange
Once you know which exchange you are going with, the next thing is to create an account with them. Creating an account on cryptocurrency exchanges is pretty simple. However, some of them will require that you verify your account before you will be able to use the platform to buy or trade cryptocurrency.
To verify, you may be required to submit a copy of your passport or driver’s license. You may also need to upload a selfie of yourself to confirm that you are actually the real owner of the documents you submitted for verification.
Once you are done with verification and your account is now active, you can now begin to use the account and enjoy all the benefits your chosen exchange offers.
#4: Deposit Cash into Your Account
Depending on the crypto exchange you choose, you can deposit cash into your account, you can do this through wire transfer, credit or debit card, PayPal, etc. Once you have deposited money into your account, you can now use it to buy any cryptocurrency of your choice.
But which payment method is better for depositing cash into your account? It depends on your needs and how much convenience you need. However, it is not recommended to buy cryptocurrency using your credit card. It can be very expensive doing so.
If you buy cryptocurrency with your credit card, your card issuer will process the payment as cash advances, and that can attract high interest which could be far more than what you will be charged for regular purchases. If possible, avoid using credit cards for cryptocurrency purchases.
#5: Buy Your Preferred Cryptocurrency
Once you know which crypto token you are buying and already have some cash deposited into your account, you can then go ahead to place an order for your purchase. Choose the currency you want to buy and how much of it you are willing to buy.
Remember, you don’t have to buy these cryptos as a whole – that may be too expensive for you. However, you can buy a fraction of it. For instance, one BTC costs more than $50,000. That is a whole lot of money for one person to buy. Instead, you can buy a fraction of it – even up to 0.01 BTC.
#6: Select Where You Want Your Cryptocurrency to Be Sent
Although you can choose to buy and leave your cryptocurrency on the exchange platform, that is not a recommended practice at all. If anything happens to the exchange platform, probably they got hacked, that means you will be losing all your cryptos.
So it is always better to have your coins stored safely away in crypto wallets instead of on the exchange platform.
Some options you can use are either cold wallets or hot wallets. Hot crypto wallets are online wallets and so require an internet connection to use them. They are convenient but also have a higher risk of theft since they are connected to the internet.
Cold wallets, on the other hand, are more secure because they need internet connections to run. They take the form of external devices like a hard drive or USB drive. However, cold wallets are more expensive and once you lose the code associated with your wallet, you may not be able to gain access to your cryptocurrencies again.
So at the point of completing your order on the exchange platform, you will be asked to input where you want your cryptocurrency to be sent. There is always a kind of code number that comes with every wallet. They are called your public key.
When prompted to enter where you would like to receive the cryptocurrency you purchased, enter the public key on your wallet so it can be sent straight into the wallet.
#7: Trade with Your Cryptocurrency
Now that you have your crypto in your wallet or on your account on the exchange platform, you can now use it to trade on the platform. Check to see which cryptocurrency has the potential to increase in price in the nearest future and buy it. Buy and keep and watch the price shoot up. Once the price is high enough, you can sell to make a huge profit on your investment.
Nevertheless, good crypto education is required to make the most from your trading. So go all out to seek the knowledge that you need to succeed.
What Are The Things You Should Know When Investing In Cryptocurrency?
Understand that cryptocurrency is very volatile
This is one reason many people are still drawing away from cryptocurrency today. It is just too volatile. The price can rise and drop at any time. Understanding this will help you stay focused and relaxed even when you see the price of your cryptocurrency go down.
Don’t invest more than you can afford to lose
You definitely would have come across this in your crypto journey. Since cryptocurrency is very volatile, you can lose the money invested into it just the same way you can earn huge profits from it. So if you can’t afford to lose the money, don’t invest it in cryptocurrency.
Manage your risk
Whether you are trading cryptocurrency on a short- or long-term basis, you need to understand how to manage risk. For a short-term investment, that may mean never selling your coins unless it drops by 10% in price. That way, you won’t be tempted to want to sell even when the price seems to be going steep down.
