Cryptocurrencies have taken the world by a storm. Some see it as a replacement for fiat currency, others as investment opportunities and some even as tools for tax evasion or other illegal goals.
Whatever your reason be, this guide will teach you how to start investing in Cryptocurrencies!
Do note that this isn’t a “technical” guide. Rather, a beginners guide so you know what you should look for and what should be avoided.
Disclaimer (MUST READ): Nothing in this article is financial advice. It’s all personal opinion of the author. The creators of this article can not be held liable for any of your losses. Do your own research before investing.
Table of Contents
Step 1-> Pick a good Cryptocurrency (avoid shitcoins)
This is arguably the most important point. If you go wrong here, none of your other actions will matter.
So, what makes a “good” coin? Well, there are a few metrics you need to look for:
- The “Why”: A cryptocurrency should aim to “solve” some problem. It shouldn’t exist for the sake of existing.
- Real world adoption: Some coins (e.g. Bitcoin/Litecoin/Doge) now let you buy houses, supercars or even just burgers. Any coin with real world adoption is a better option than those that are more obscure.
- The team: Who developed the coin? What’s their experience/credibility in the market?
- Supply & demand: There are more technical terms for this, market cap & liquidity. But, I’m keeping this guide “beginner friendly”. You need a coin with a high market cap (total current value), and high liquidity so you can sell your coin when you want to!
- Legalities and legal issues: Monero (XMR), the most anonymous and one of the oldest coins just tanked massively as it was going through some legal issues. This is just one example why you need to research the legalities surrounding a coin before jumping into it.
There are a dozen other metrics but the ones listed above should help you start.
If you’d like to skip the entire research stage, I’d advise going with Bitcoin, Litecoin, Ripple as these are some of the oldest, and most stable projects currently.
Step 2-> Pick a wallet or an exchange.
By now, you should’ve picked a Cryptocurrency you’d like to invest in. Once that’s done, you need to pick a wallet where you’d store the Cryptocurrency.
Now you need to pick either an exchange, or a wallet. They’re different from one another in one major way. Exchanges let you trade/exchange your coin instantly for other coins. E.g. BTC to XMR exchange lets you trade your Bitcoins for Monero or vice-versa.
However, on most exchanges, you do not get the keys to your coins. In other words, the exchange remains in control of your coins. The plus side being you can ride uptrends or get off coins being dumped instantly. Also, not having your keys isn’t an issue as that’s just how exchanges function globally.
You may go with “Cryptocurrency wallets” if you aren’t going to “trade” frequently and would just buy once and forget about your coins for a few years. Do note that wallets give you your keys but you can’t change your Cryptocurrency as fast or cheap as you can on exchanges.
This article gives you a detailed guide on choosing Cryptocurrencies.
How to finally buy Cryptocurrencies
There are a number of ways you can buy Cryptocurrencies. You can:
- Buy it directly off exchanges using credit cards or other payment modes. (Safest, but generally more expensive as taxes and processing charges get involved).
- Buy it off another person using P2P (cheaper but riskier as you’re dealing with other humans and not an automated platform).
Do note that when buying using P2P, always choose an exchange that can act as an escrow for your transaction. This ensures the other party can’t scam you. Also, pick sellers who have a good number of previous trades, reviews and a very high completion ratio.
Final words on How to Start Investing in Cryptocurrency: Beginners Guide
I’m confident you now have a better understanding of the Crypto world than you did when you arrived on this article, don’t you?
Do note that Cryptocurrencies are extremely volatile hence invest at your own risk. Also, always be sure to use reputed wallets/exchanges for your purchases and withdrawals.
The entire process basically revolves around “picking a coin > paying an exchange or a person in exchange for crypto > storing that crypto either on an exchange or wallet”.
