If you’re looking for an alternative way to grow your investment portfolio, or if you’re just getting started with investing, here are five simple steps to get you started on the road to becoming a cryptocurrency investor.
First, it’s important to understand the basics of cryptocurrency investing so you can be sure it’s right for you. Next, we’ll walk through the five steps that will make your investment as secure and profitable as possible.
1) Do Your Research
The first step is to do your research. Before investing, it’s important that you understand what you’re getting into and make sure it aligns with your goals. There are a number of different cryptocurrencies available on the market, so you’ll want to choose one that best suits your needs.
One thing to keep in mind is that cryptocurrency prices can fluctuate wildly, so be sure not to invest more than you can afford to lose. Once you’ve done your research and found a coin or two that interests you, the next steps involve finding out how to get started buying coins and then deciding where to store them. The process will seem pretty straightforward if you have any experience investing in traditional stocks or bonds.
2) Choose the Right Exchange
Choosing the right cryptocurrency exchange can be a daunting task, but it’s worth doing your research before you commit. There are three major factors to take into account when deciding which platform is right for you: fees, trading volume, and security.
Fees vary considerably from one exchange to the next. Trading volume refers to the number of coins traded over a 24-hour period on an exchange. The higher the trading volume, the more liquid (easier) it will be for you to sell or buy cryptocurrencies at your desired price. Security also varies from one cryptocurrency exchange to another.
Once you’ve chosen the right cryptocurrency exchange for you, it’s time to choose a wallet where you’ll store your digital assets securely. Unlike traditional currencies like US dollars that exist only as physical paper or digital entries inside banks’ computers, cryptocurrency exists either on individual computers or other people’s computers across the globe – in short, distributed ledgers known as blockchains. Because any central authority does not control them, and there’s no place for transactions between people to get lost along the way.
3) Create a Wallet
A cryptocurrency wallet is a software program or hardware device used to store private and public keys that are used for transactions. It also stores the address of the blockchains where your currency resides. They come in many different forms, with varying security levels and features.
A cryptocurrency wallet can be a software application, a hardware device like a USB drive, or even just an encrypted piece of paper. It is important to ensure you protect it well because if someone steals it, they can take all your money.
With each transaction, the coins will need to change hands, so they will be exchanged from one wallet (public key) to another. Think of it as somebody giving you money. You would hand them cash, and then you would receive cash from somebody else at some other time.
The same goes for cryptocurrency wallets: one person pays by sending coins from their wallet into yours; another person pays by receiving coins from you and transferring them into their own wallet. One thing you’ll notice when looking at cryptocurrencies on a site like Coinbase is that there are two sets of numbers separated by a slash.
One set starts with BTC, and the other starts with ETH. These represent Bitcoin and Ethereum, respectively, which I’ll explain more about later. There’s no right answer when deciding which type to purchase- either option could turn out to be profitable in the long run.
Suppose you’re not sure how much investment capital you have available but want to start investing now. In that case, it’s best to buy a small amount of both BTC and ETH until you’re ready for bigger purchases- this way, you won’t risk too much if one turns out less profitable than the other.
4) Choose Your Coins
Bitcoin is the most well-known cryptocurrency. It’s been around since 2009 and has over $408.57 billion in market capitalization. It’s also currently the most valuable digital currency at about $20,000 per coin.
Ethereum is one of the more popular cryptocurrencies after Bitcoin, with a market cap of over $199.76 billion. Ethereum offers an innovative design that makes it possible for developers to build more complicated applications, such as smart contracts and decentralized apps.
On top of its blockchain network, making it easier for investors who are new to cryptocurrency investing to get involved without having to worry about how they’ll store their coins or what sort of wallet they should buy first.
In contrast, many people choose not to invest in Bitcoin because it isn’t backed by anything but itself; if you have Bitcoins, there is nothing backing them other than another person being willing to pay you for them. There’s no asset value in a bitcoin; if nobody wants them anymore, then their value would be zero.
Litecoin (with a market cap of over $5.03 billion) is often seen as the silver to Bitcoin’s gold. Litecoin was launched in 2011 and has historically traded at 10% of the price of Bitcoin. While Litecoin isn’t likely to replace Bitcoin anytime soon, this coin can still make for a good investment due to its low cost, fast transaction times (2.5 minutes), ample supply (84 million coins), and greater scalability than BTC, meaning lower fees).
Zcash: Zcash is an open source privacy-focused cryptocurrency founded in 2016 that provides additional security features like shielded transactions, which conceal details from everyone except the sender and receiver on both ends.
Also, there are many more coins. To select, visit Coinmarketcap, the world’s most-referenced price-tracking website for cryptoassets in the rapidly growing crypto space.
5) Stay Informed And Keep Track Of The Markets
The first step is a no-brainer: Stay informed about what’s happening in the market at all times. It can be tricky if you don’t know where to look, so start by checking out sources such as CryptoOnus for news and updates on how your investments are performing.
You should also consider signing up for notifications from BitcoinCharts, which provides real-time information on every major exchange so you’ll always know when there’s a new opportunity.
The second tip is to check prices every day, even if it’s just a quick glance at Bitcoin or Ethereum prices (or any other coins), while watching TV in the evening. That way, you’ll have an idea of what prices look like when they rise and fall—a much better indicator than waiting until morning when everything has already changed.
Moreover, take time to learn about cryptocurrency trading before diving into it head first with money that could go towards more conventional assets like stocks. For example, check out YouTube channels like Josh Olszewicz and OnChainFx for videos about fundamental analysis or swing trading strategies.
While you’re learning the ropes, trade paper cryptocurrencies instead of buying actual tokens; this will give you a chance to practice without risking any real money.