Are you ready to get ahead of the curve and invest in cryptocurrencies? Here’s what you need to know to learn how to invest in cryptocurrency.
Investing is important, as discussed in my previous post, and if you’re new and looking for a high-growth type of investment, cryptocurrency may be a good option.
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How to Invest in Cryptocurrency
Cryptocurrencies are all the rage these days, but if you’re not careful, they can be risky investments. Here’s a guide to help you start investing in cryptocurrency the right way.
1. Create your account
Create an account with a cryptocurrency exchange platform. There’s a wide array of digital wallets or cryptocurrency exchanges wherever you are in the world including Coinbase, Robinhood, and Binance.
Choose a crypto exchange to buy from and make sure you consider the essential things that you should look for in a cryptocurrency exchange platform.
Note: Some crypto exchanges are only available to specific countries. Visit their website to know more.
2. Fund your account
The next step is to fund your account. Most crypto exchanges/wallets support crypto deposits, mobile wallets, debit cards, and credit cards.
You can do this either with a local or international currency that is supported by the platform. But beware, some credit card companies don’t allow crypto transactions so it’s best to verify it from them first.
3. Select a crypto to buy
Now, this is the fun part. There are nearly 10,000 cryptocurrencies. I strongly recommend you do some research by analyzing market capitalizations, historical price charts, monthly active users, and the track record of the crypto founders.
Crypto research requires so much work so I recommend the following tools to simplify your portfolio research.
- CoinMarketCap – market caps, historical price, crypto details
- Messari – for crypto investors and backers
4. Place a “Buy” order
This is the easy part. Once you have selected your winning cryptos, you can now purchase cryptocurrency by creating a buy order and converting the local currency that you deposited earlier.
There are countless ways to buy crypto, this is just one option.
5. Sell your crypto
To reap the profits of your cryptocurrency investments, you can sell your crypto like Bitcoin or Ethereum, when it reaches a value higher than what you acquired it for: buy low and sell high.
For example, if you bought 0.1 Bitcoin for $2,000 (1 Bitcoin = $20,000), you can sell it for a profit if 1 Bitcoin is more than $20,000.
What to Look for in a Good Crypto Investment
If you choose to invest in certain crypto just because it is overhyped, you’re just gambling. To improve your chances in crypto investing, here’s what you should look for in your next crypto investment.
1. Strong team
A good crypto investment should have a strong team behind it. The team should have a proven track record in the industry and be able to answer any questions you have about the project.
2. Clear roadmap and timeline
The project should have a clear roadmap and timeline. The roadmap should outline the milestones that need to be achieved and when they need to be achieved.
3. Working product
The project should have a working product. This is one of the most important things to look for in good crypto investment. If the team behind the project doesn’t have a working product, it’s likely that they won’t be able to deliver on their promises.
4. Solid marketing strategy
The project should have a solid marketing strategy. A good marketing strategy will help create awareness for the project and attract many investors.
5. Scalable
The project should be scalable. If the project is scalable, it will be much easier to implement on a large scale and make a lot of money from it.
What to Look For in a Cryptocurrency Exchange Platform
In selecting a cryptocurrency exchange platform, first, you should consider these essential aspects:
1. Solid track record
Choose a trusted platform that already exists for years with millions (or billions) of users. Never invest in companies, exchanges, or brokers with a few hundred users that were opened two months ago.
2. Minimum deposit
This is the minimum amount that you need to deposit in order to open an account. Some platforms require $1,000 while other exchanges allow $100. You choose, but ideally, the lower the better.
3. Commissions, fees and charges
Crypto exchanges are similar to stock market exchanges. They have commissions and transaction fees when you buy and sell cryptocurrency. Choose the one with the lowest fees without compromising security.
4. Cryptocurrencies supported
There are nearly 10,000 cryptocurrencies! Choose a platform that supports a wide number of cryptocurrencies, especially your favorite altcoins.
Is Cryptocurrency a Good Investment?
Since then, the market for cryptocurrency has exploded, with hundreds of different coins and tokens available for trade on various exchanges. The total value of all cryptocurrencies in circulation is now over $200 billion.
Crypto is one of the best investments when it comes to profit potential. It’s considered to be a good investment however, its performance solely lies on the owner.
The cryptocurrency market is also notoriously volatile, with prices swinging wildly up and down on a regular basis. This makes investing in cryptocurrency a risky proposition for those who are not prepared to lose all of their investment.
Risks of Investing in Cryptocurrency
Investors in cryptocurrency should be aware of the risks associated with this type of investment.
- Cryptocurrencies are volatile and can lose value quickly
- May not be backed by any government or central bank
- Prone to rug-pulling. Rug-pulling takes place when crypto developers acquire seed investments by attracting early investors to a project and then quickly abandon it.
- Can be easily manipulated. There are key persons whose influence affects the value of crypto. For example, Elon Musk mentioned DogeCoin on Twitter. Even though it’s considered to be a useless (meme) coin, its value increased by a hundredfold just because of Musk’s tweets.
Frequently Asked Questions
How Can I Invest in Bitcoin?
You can invest by buying Bitcoin. You can buy Bitcoin with cash, or with another cryptocurrency. When you buy Bitcoin, you’re buying a piece of digital currency that you can use to pay for goods and services or hold as an investment.
How Much Money Do I Need to Buy Cryptocurrency?
It depends on the mobile wallet or cryptocurrency exchange. Some will allow you to buy crypto for as low as $2, while some cryptocurrency exchanges require a $100 minimum deposit to trade crypto.
What Do You Need To Invest In Cryptocurrency?
Cryptocurrency wallet account and cash. A crypto wallet is where cryptocurrency is stored. You need to create a crypto wallet account and crypto funds to invest in crypto.
How are cryptocurrencies created?
Cryptocurrencies are made through a process called “mining.” When someone wants to buy a cryptocurrency, they go to a website or exchange and use real money to purchase the currency. Read my other post about the introduction to crypto.
Are NFTs cryptocurrencies?
Non-fungible tokens or NFTs are a type of cryptocurrency. They are digital tokens that can be used to represent real or virtual items. NFTs are stored on a blockchain, which is a digital ledger that keeps track of all transactions and cryptocurrency data. Blockchain powers cryptocurrency.
Should You Invest in Cryptocurrency?
If you have extra money that you don’t need right away, investing in cryptocurrency could be a good way to make more money. However, it can be volatile, so the value of your investment could go up or down. But if you’re careful and you do your own research, investing in cryptocurrency could be a great way to make your money grow!
What are some of the Cryptocurrencies?
Bitcoin and Ethereum are the most popular cryptocurrencies. Bitcoin is the largest cryptocurrency while other popular cryptocurrencies are Ripple, Cardano, and Solana. Cardano, similar to Bitcoin, has a fixed supply of the total number of tokens.
Is it Safe to Invest in Cryptocurrency?
Yes, it is safe! Just like any other type of investment, there is always a risk involved. However, if you do your research and invest wisely, you can make a lot of money from cryptocurrency.
Final Thoughts
Investing in cryptocurrency can be a great way to make money and achieve financial independence if you’re willing to take a risk in making an investment decision.
