‘How to invest in cryptocurrency?’ This is the first question that beginners in cryptocurrency ask and by the end of this post, you will have a step by step guide to buying and selling cryptocurrencies safely.
Investing in cryptocurrency is one of the most financially rewarding, and nerve-wracking, experiences to undertake. When the initial steps are taken, it can seem like a foreign land. In this guide, we will provide you with the easy to follow tools for getting started.
This guide will give you answers to questions like:
How to invest in cryptocurrency?
How to buy cryptocurrencies?
What’s the best cryptocurrency to buy?
Where can I trade cryptocurrencies?
How do I keep my investments safe?
So strap in and enjoy this guide.
***As a disclaimer, if you decide to sign up to some of the services recommended here (which we use), we may get a small commission.***
Introduction: investing in cryptocurrencies
Today, there over 6000 altcoins on the market to buy. If it’s not Bitcoin, then it’s called an altcoin. Blockchain is the underlying technology that powers these cryptocurrencies and they can have a wide variety of uses.
For example, Ethereum is based on smart contracts and aims to create a global computer whereas Quant Network is a platform that focuses on interoperability between blockchains.
Investing in cryptocurrency can be both lucrative and risky, in equal measure. Markets can be bearish or bullish. The below chart demonstrates the 2017 bull run which helped many people become wealthy.
Since its inception, Bitcoin rallied from $0.01 to a peak of over 24,000 dollars. During this meteoric rise, Bitcoin has gone through several corrections such as the 2014 bear market and more recently 2018/2019.
While Bitcoin’s direction has been skyrocketing upwards, many altcoins have burst on the scene and subsequently crashed and burned.
At coinesper.com, we’d recommend buying and holding a small basket of well-researched projects that have solid fundamentals and teams. This is one of the safest ways to manage risk.
I want to invest in cryptocurrency: is it a good idea?
The most cited reason why people want to get into cryptocurrency investing is the well-documented examples of where people have made crazy sums of money. People often get a sense of Fear of Missing Out (FOMO).
Cryptocurrencies and blockchains have the potential to change the way we interact with the world as we know it. But consider the fact that only a fraction of people is currently involved in the space. Mass adoption has yet to occur.
There are potentially billions of consumers, investors and users coming into the space and that means it’s a great time to get involved.
Another reason why people get involved in Bitcoin is that it serves as a hedge against traditional currencies (otherwise known as fiat currency). The best investors never keep their eggs in one basket. Cryptocurrencies are now becoming increasingly attractive as an option to diversify and give excellent returns.
How do I buy cryptocurrencies?
Buying cryptocurrencies has never been simpler. What used to strike fear into the heart of every new investor in the space can now be achieved with ease.
Let’s dig down into how we can get started buying our first cryptocurrency.
We’d always recommend buying actual bitcoin rather than a certificate of bitcoin. You want to be able to own a part of the tech and to be able to send and spend at your leisure.
Buying your first bitcoin on CoinMetro
Buying bitcoin on the right exchange is simple. We’d recommend starting on CoinMetro. Sign up, verify your identity, submit as a selfie, provide proof of address. You’re now good to go!
This exchange is fully regulated and is super easy for beginners. It has 24/7 online support in case help is needed. Such help is a blessing when you’re starting your crypto investing journey.
This exchange allows you to deposit via SEPA, IBAN, crypto or Visa credit/debit card. You can on-ramp and off-ramp GBP, USD, AUD and EUR.
One thing we like is there’s a demo version of the exchange to try to see if it’s the one for you – try it here.
We have covered CoinMetro previously in a full beginner’s guide and it’s well worth a look CoinMetro Review 2021: Crypto Exchange Guide.
Additionally, these two guides on buying some quality projects we have deep-dived on coinesper.com, provide a step by step guide to buying:
CoinMetro is the best exchange to choose if safety and usability are a priority and you don’t mind submitting ID documents .
What are the risks of investing in cryptocurrencies?
Although there is a lot of scope for making great returns from cryptocurrency investment, the other side of the coin is that the risks are real. You can lose your initial investment.
Let’s explore some of the risk factors.
The swings in cryptocurrency prices are more pronounced when compared to traditional markets. This is why margin trading cryptocurrencies can be extra risky. Try to learn and understand the pattern of altcoins before you invest.
The crypto-verse has been a place where scam projects were rife. When learning how to invest in cryptocurrency, then a good grounding in this area is vital.
For example, dig into the experience of OneCoin. It promised big returns and minimal risk. The business was a pyramid scheme based on smoke and mirrors. Investors were victimised while the others got rich
As regulation and accountability creep in, things are improving. But you still need to exercise caution. We’d always recommend investing in well-known projects and reduce your risk accordingly.
Here’s some further reading on Bitcoin/cryptocurrency scams.
What cryptocurrencies should I buy for my portfolio?
The following coins are a good starting point to invest in as they are either long-established or high-quality projects. Having a good chunk of your portfolio wrapped up in these will help manage risk.
Bitcoin — the biggest and the best with a first-mover advantage and a solid history
Ethereum — smart contracts and excellent developer base
Quant Network — interoperability
PARSIQ – Blockchain monitoring and workflow automation (check out our full PARSIQ review here)
A smaller proportion of your portfolio should be reserved for more risky altcoin choices where arguably gains and losses can be greater.
Part of the fun and challenge, however, is finding GEM coins before the crowd. This is where due diligence in the form of research comes into play. In any investment space, Do Your Own Research (DYOR) always wins out.
Different types of cryptocurrencies
When you conduct your research into which cryptocurrencies to buy, you’ll come across different types of coins.
- Payment Currencies — coins used for payments Bitcoin (BTC), Litecoin (LTC)
- Blockchain Economies — platforms that take functionality further than payments. Some Blockchain Economies you may have heard of include Ethereum (ETH), EOS (EOS), NEO (NEO), and Tron (TRX)
- Privacy Coins — Some digital assets are created with a focus on privacy. Crypto assets like ZCash (ZEC), Monero (XMR), PIVX (PIVX), and so on are examples of Privacy Coins.
- Utility Tokens — Utility tokens are digital tokens that are used for a blockchain-based product or service. Examples include Basic Attention Token (BAT), OmiseGo (OMG) and 0x (ZRX)
- Stablecoins — coins that hold their value USD Coin (USDC), Paxos (PAX) and Gemini (GUSD)
How to store cryptocurrencies safely?
Buying and selling cryptocurrencies is very easy. Storing cryptocurrencies can be equally easy, but you always must practice good safety behaviours to minimise risk.
There are bad actors just waiting for people to slip up. If you take precautions, then you should minimise the chance of this happening.
Don’t keep all your coins on an exchange
An exchange is an example of a hot wallet. These are the riskiest ways of storing your coins. Don’t keep all your savings on an exchange. Keep drawing them off and store either on a desktop wallet or a hardware wallet.
How to keep track of cryptocurrency prices?
To keep track of cryptocurrency prices your best friend is CoinMarketCap CMC).
CMC is by far the most popular website to check cryptocurrency prices.
CMC enables you to check the prices and market capitalisations of thousands of coins. It also enables you to see on which exchanges the coins are traded and it also provides you with some relevant links about each coin.
Simply go to Coinmarketcap and click on the coin you want to buy.
Next, click on the Markets tab for that coin. Here’s where you can get OmiseGO (OMG). The Source column will show you the exchanges where this coin is being traded.
You will notice how many of them are traded against Bitcoin or Ether.
All you have to do now is find the best exchange on the list and create an account. If you can buy BTC or ETH directly on there, then great.
If not, find the BTC receiving address. Copy it. Log back into Coinbase and send the BTC from here into the exchanges BTC receiving address. Simple!
How to invest in cryptocurrency – wrapped up
Hopefully, you now know how to invest in cryptocurrency like a boss. You are ahead of the vast majority of people out there!
If you still have any unanswered questions, We’d love to read them in the comments below and feel free to share the page on your favourite social media channels.