Cryptocurrency investment is slowly becoming more and more popular as time passes. A cryptocurrency is a form of currency that does not exist in the physical form, a digital asset. It exists in digital format and has many digital currencies within it.
Cryptocurrency does not have any regulating authority that makes rules regarding it, controls it, or issues it. It is fully independent and uses computerized systems to record and store transactions.
Knowing how to invest in cryptocurrency for beginners is undoubtedly very useful.
What exactly is cryptocurrency?
Cryptocurrency is just like any other form of currency, but the only catch is that it is fully digital and computerized. Crypto exchanges do not rely on banks or any other financial institutions. It has no central authority governing it.
This digital currency is a peer-to-peer lending system that has made it possible for people anywhere in the world to carry out transactions. People can look at these like digital assets and go ahead with their cryptocurrency exchanges.
The term cryptocurrency came into existence as this technology uses encryption to keep track of all the transactions. Encryption is a very safe method to store users’ cryptocurrency data and essential information as it uses high-level coding.
One must be aware of how to invest in cryptocurrency to make a profit. Bitcoin was the first crypto asset to be found and is the best to date. It was founded in 2009.
How does it work?
Cryptocurrency works on an advanced technology called blockchain technology. The main aim of crypto investors is to generate digital coins processed through mining.
Mining is the process where interested people generate coins with the help of electronic devices such as their computers or mobile phones.
These devices solve complicated and high-level math problems and algorithms and generate digital assets in the form of coins. As a result, this is called cryptocurrency mining.
People can also purchase crypto assets from a few online brokers, and then these can be stored in something known as a crypto wallet.
Cryptocurrency investing is exciting, and knowledge on investing in cryptocurrency for beginners is essential.
More about Blockchain technology
Blockchain is a wide-open and shared ledger that helps us to record, store and track cryptocurrency exchanges in a network.
There are many asset classes present in the market. Physical assets such as land, car, property are called tangible assets, and others such as patents branding are called intangible assets.
Blockchain technology can handle all of these asset classes efficiently, which also results in good risk management, reducing risk.
Thanks to immutable records, it makes investing in cryptocurrency easier than ever before. No person on the cryptocurrency market can tamper with or make changes after cryptocurrency exchanges have taken place.
Cryptocurrency investing and cryptocurrency exchange is made at very high speeds owing to the system of smart contracts.
This system can help decide corporate bond transfers, travel insurances, and much more.
Blockchain networks and their types
1) Public blockchain networks
This type of blockchain network is one in which anyone in the world can participate. Beginner investors generally start investing from this kind of network.
Bitcoin is an example of this public network.
2) Private blockchain networks
This is not very different from the public blockchain network, just that here, an authority has the power to make decisions regarding who can participate and who cannot.
The private key used here is known to have an increased sense of security among users and crypto traders.
3) Consortium blockchain networks
This is a network where two entities or companies run a blockchain network.
This type of network is an ideal one to run a business.
4) Permissioned blockchain networks
The companies involved in the private blockchain network usually set out a permissioned blockchain network.
Here, people need to have an invitation to participate.
New investors who are just starting study all these aspects carefully before making their choices.
Other cryptocurrency examples
Some of the most widely known and used other cryptocurrencies are as follows :
It was the first cryptocurrency to be introduced in 2009 and is the most famous out of all of them. Satoshi Nakamoto founded Bitcoin.
People are still not clear if this was a group or an individual. This remains a mystery.
Bitcoin ETFs are instruments that track its performance and help people start investing. These allow the investors to hold a great variety of investments without actually owning assets.
Developed in 2015, Ethereum is the second most popular digital asset after Bitcoin.
It has its cryptocurrency called Ether.
Ripple is another ledger that came into existence in 2012. Ripple is used even on other asset classes and other transactions, not only in trading crypto assets.
Everything you need to know about how to invest in cryptocurrency for beginners
Many investors nowadays are shifting to the crypto market, and hence having knowledge about the same is of immense importance.
This is such a market wherein one can make a fortune or be on the receiving end very quickly. Hence, an investor has to be aware of what they are doing and take steps accordingly.
A good investment can only be achieved by smartness and thorough research. Market capitalization is one of the important things that beginner investors need to understand.
Without further delay, let us get right into it and see the basic things that answer the question of how to invest in cryptocurrency for beginners are?
Before that, take a look at this article as well.
Having knowledge about what is it that you’re doing:
This is one of the most important things to keep in mind before investing in cryptocurrency. The investment decision and investment strategy of a person tend to increase and improve as they keep on learning.
This is very similar to buying stocks in the stock market. Before going out there are purchasing any stock in the stock market, one looks into it and studies it thoroughly. One must do the same thing in crypto trading.
Unlike stocks, every cryptocurrency functions differently compared to the other, and hence it can also get quite risky. Risk tolerance is an important factor that comes in here.
Buying crypto does not always mean that it will yield profits for a person; crypto is not backed by anything, unlike stocks. It depends majorly on how the market is behaving and does not have anything to increase on its own.
Stock trading is still seen as a safer option for investors, and financial decisions are easier, but then again, what is life without a little bit of risk.
2. Past performance and its correct analysis
Many investors feel demotivated before even beginning to invest when they look at how much Bitcoin was worth in the beginning. Yes, it was cheap, and purchasing it back then would have made you a millionaire by now, but that is no reason never to start investing in cryptocurrency.
Cryptocurrency exchange aims to get people involved and make huge profits from it. Financial freedom is also something that is generated.
Investors need to focus more on tomorrow than yesterday because yesterday is gone and cannot be brought back after all. Having long-term goals is something that one should have in mind while buying cryptocurrency.
In the end, it’s all about keeping an open mind and not letting the small setbacks which are sure to come now and then affect you too much.
3. Selecting the appropriate crypto exchange
A crypto exchange is like a marketplace where you will carry out all your activities related to your crypto assets. Personal finance can also be included in a few aspects.
A user must be fully aware of how their exchange works because all the assets are stored and even where profits are gained. These days various exchanges have come up worldwide and are also very user-friendly.
An exchange can be compared to a payment method, and cryptocurrency investing has to be safe for the user; that is the bottom line of cryptocurrency.
Some of the most sought after cryptocurrency exchanges are :
Coinbase is the best place for beginner investors to start. With various investment vehicles, coinbase provides a world-class user interface for people to work on.
It also has a provision called Coinbase learn from where investors can learn more about the field and mine and earn crypto assets.
This is undoubtedly one of the most good crypto platforms. Although, some users have termed it a little too overpriced at times.
Popularly known as the alternative to Robinhood, WeBull offers the users a space to purchase stocks, exchange ETFs and buy crypto all in one place.
This gained more popularity in opposition to competitor Robinhood when the news came out, Robinhood depriving its users of a great amount of money.
According to various sources, this money was estimated to be about $34.1 million.
WeBull also has a wider variety of choices to choose from when it comes to crypto; hence one can decide on their own which one to go with.
Binance.US is an open competitor of Coinbase as it also provides lower costs and great features.
This exchange might not be up there with one of the best, but it is certainly to be kept in mind while deciding upon an exchange to operate from.
If one does not explore, he will never answer the prolonging question, how to invest in cryptocurrency for beginners?
4. Opening a trading account
The next step involves the user opening a trading account in the crypto they have chosen. This account is not different from a regular bank account.
Before successful registration and creating the account, the site will ask you for credentials for security purposes. This is the case seen in creating any account for any site nowadays.
The user is supposed to feed in which kind of an account they want, how much initial money they want to put in, and the choice of trading.
Just like setting up any central bank account, the site will ask things such as the KYC, and the user will have to provide legal documents such as PAN card, identity, and address proof for account creation.
After this, the user can easily use the crypto exchange, which takes place all over the year.
5. Choose which cryptos to buy
This step has to be taken with utmost seriousness by beginner investors. This is so because only the choice made by an investor can decide how it is all going to pan out for them in the future.
Proper study and fully understanding the various options present is the key. There are more than 75,000 cryptocurrencies to date, which makes it even more complicated.
Let me also remind you that crypto is not all about Bitcoin. Many other currencies out there have great potential to compete with it.
Taking help from experienced investors to decide where and how to invest is not a bad idea and is certainly nothing to be ashamed of.
We are answering how to invest in cryptocurrency for beginners—the question we have on the agenda.
After selecting the crypto to buy, the next question that comes to our minds is, how much of it should we buy? This is a very valid question. If this question does not strike you, you have something to think about.
The future value of crypto is merely based on speculation, and therefore you must invest only that much you can afford.
Experts suggest that having anywhere around 10% to 15% of crypto assets with you should be a good investment, provided you regularly take care of it and keep it in check.
They also say that having around $100,000 in safe investments at the beginning is a good way to go about your investing journey. The idea behind this number is made with the assumption that the investor keeps on investing in it for many years.
According to this calculation, the person will be a millionaire by retirement.
To sum it up, it is mostly about your gut feeling regarding the crypto you are investing in and also, of course, your awareness and smartness.
6. Proper and safe storage of private keys
A private key is an online key that uses algorithms and encrypted data to store and access investors’ resources. This is usually a series of bits and is very difficult to hack.
After buying and putting money into your cryptos, one has to think about storing them. There are two kinds of wallets, hot wallets, and cold wallets.
Hot wallets are the more traditional ones, but recently users are shifting to cold wallets because of the scare of hackers. This can be saved in a USB or a hard drive that they keep safely at home.
However, if a person is new to the game, a hot wallet would do just fine for them. Pretty sure all the large and big-time investors have something different about this.
7. Investment maintaining
This is the penultimate step in crypto investing. Anything we start to do in our lives must be checked upon and taken care of time and time again by us to see its proper functioning.
The biggest mistake that beginner investors make is that they do everything, put money into crypto, and then completely forget about it and do not care to follow it up.
The crypto in which a person has invested should be in front of his eyes every time he opens up his crypto exchange.
This way, one never forgets about it and keeps looking into it. A way to make this possible is by adding the crypto invested to the main dashboard that is visible each time.
Continuously reading about the ongoing trends in the market through various trusted sources and acting accordingly.
Staying connected with other people interested in this field also helps new investors as they keep on gaining valuable tips and tricks from experienced ones.
Here it was, the 101 guide on investing in cryptocurrency for beginners. Following the things and points mentioned in this article will help any new investor trying to make it big in the crypto market.
It is never too late to start, so do your research and get at it. After all, the rewards of investing are humongous.
I hope this article helps you in every possible way to begin your journey into stock marketing and cryptocurrency.
If you think we have missed out on anything, please feel free to ping. You can connect with us in the comment section.
Until then, Think Smart, Think Investments!!