Cryptocurrency is a powerful asset class that promises substantial returns for your investments. Its lack of central authority and a user-powered ledger system is the driving force behind its massive success. Many investors have their eyes on cryptocurrency due to its meteoric growth potential despite the frequent ups and downs in value. And even though it’s a high-volatility asset class, its popularity shows no signs of waning.
Investing in crypto for beginners
Investing in crypto can seem like a get-rich-quick scheme to an untrained eye. However, it cannot be farther from the truth. Any investment takes time to show promising results, and crypto is still a high-stakes investment compared to others. Plus, looking at its complexity, it’s a no-brainer that it may take some time for you to wrap your head around it. Even experienced traders have difficulty mastering the currency trends and can stumble upon rough patches – not to mention new traders looking to get a piece of the pie.
The volatility of crypto assets
Cryptocurrency is a volatile asset class, as the crypto market can go haywire without any warning. However, opting for cryptocurrencies with successful track records and significant market capitalizations can offset the risk to some extent. In this regard, Bitcoin is the best bet for crypto investments. It’s considered a wise investment choice because its substantial market capitalization makes it an excellent gauge for the crypto market. Currently, the price trend is rising as the bitcoin live price rose more than 8% in the last week. However, there’s still a potential for fluctuation due to the volatility of the asset.
If you are looking to invest in crypto, you need to understand the risks and the opportunities to make informed investment decisions. The first step is to have all your finances under control, which entails having backup funds and manageable debt.
Start investing in crypto in five easy steps.
Understandably, smooth sailing across the crypto wave requires a strategic approach, a great deal of planning, and a lot of effort. The market can be difficult to navigate as a beginner, but we are here to help you make your way through the rough waters of the crypto market. These five simple steps will help you get started investing in cryptocurrencies.
- Choose the right crypto exchange or broker
To get into crypto, it’s essential to pick a broker or a cryptocurrency exchange. However, before making your decision, you should be aware of a few significant differences between the two.
First and foremost, a crypto exchange provides a platform where you can trade at a reasonable cost and with ease. New crypto traders can feel overwhelmed by their more extensive and elaborate user interfaces, including various transaction types and comprehensive performance charts. But still, there are platforms like currency.com which provide the best of both worlds to newbie investors.
On the other hand, crypto brokers simplify the process of obtaining crypto by providing simple user interfaces that communicate directly with exchanges on your behalf. Some levy fees that are far greater than those charged by exchanges. They can also market themselves as “free” with hidden motives, such as selling their user trading insights to huge brokerages or funds. You should carefully consider your options before choosing either one.
- Setup a trading account
To trade crypto on your desired crypto exchange or broker, you need to sign up on the platform. Your trading account is identical to your bank account, so platforms can ask you to verify your identity according to their rules and the amount you wish to invest. This is a necessary step to avoid fraud and comply with federal regulations.
You won’t be able to trade cryptocurrencies until you have completed the verification procedure. You may be requested to provide a photo of yourself to show that you are the person seen on your ID or passport before you can use the platform.
- Transfer funds to your account
After signing up for an account, the first thing you need to do after signing up is transfer some trading funds into your account. You can do this by linking your bank, an authorized wire transfer, or using your debit or credit card to transfer funds into your trading account. Your trading platform can take a few days to authorize your payment, so you may have to face a waiting period of a couple of days before trading using your funds.
While you may deposit money with a credit card at certain exchanges or brokers, doing so is not only costly but also risky. Buying crypto using a credit card is treated as a cash advance by credit card companies. If you use a credit or debit card to purchase crypto, you’ll likely have to pay a higher interest rate and extra cash advance costs.
- Choose the coins you want to trade
Once you’ve set up an account and transferred funds, you’ll need to determine which coins to buy. If you’re looking for an alternative to Bitcoin or Ethereum, there are a slew of other cryptocurrencies to pick from.
When you choose which cryptocurrency to buy, you may type its ticker symbol (Bitcoin, for example, is BTC) and the number of coins you want to buy. With most cryptocurrency exchanges and brokers, you can make a fractional purchase of high-priced tokens like Bitcoin or Ethereum, which normally need thousands of dollars to purchase.
- Protect your crypto exchanges
After making your selections, storage is the most critical consideration. When it comes to cryptocurrency exchanges, there is no institutional entity that backs them, and they are most certainly not insured. In addition, you also have to worry about crypto theft and account hacking. That’s why having a safe location to store your cryptocurrency is so crucial. It’s generally a smart move to keep your purchased crypto in a crypto wallet for their security and your peace of mind.
Final thoughts.
Cryptocurrency is a high-risk trading instrument. But for those who want to get started with crypto trading, the best move would be to stick to the basics and start out small with money you can bear to lose. Consider the five steps mentioned above when starting in crypto. However, before investing in cryptocurrencies or any company with a vested interest in them, consider your present financial status and future goals.
A single tweet from influential figures like Elon Musk holds the potential to cause the price of the cryptocurrency to plunge, making it a very risky investment. As a result, investing should be approached with prudence and caution.
