In the digital age, cryptocurrencies are proving themself as a new currency that brings promising income for investors. Yet, they are still a volatile and risky choice. Therefore, in order to have a steady investment with a high rate of return, we need to prepare carefully before entering the field. Thankfully, it’s pretty simple to learn the ropes just by following simple steps in this topic.
Prepare before buying
– Researching before buying: ‘Who sees through life and death will meet most success,’ it’s important to get up to speed with how the market is driven. Doing extensive research is an important step before investing in a cryptocurrency. This entails reading reviews and market news in regards to how other cryptocurrencies are fairing. And make sure you look into long terms trends of cryptocurrency to know if it is on hype or not. Moreover, each cryptocurrency has different target markets, so remember to settle on what purpose you want.
– Manage risks: As mentioned, cryptocurrencies are highly volatile and extremely risky, even the more established ones. If you can’t afford to lose, so stay away from the field.
– Strategize your crypto trading: “How many users does it have? What solutions does it offer? Is it insured?” are what you need to consider to make sure that the cryptocurrency you pretend to invest in is vetted and not to be tricked by the hype.
– Diversify your crypto portfolio: Like the age-old adage ‘don’t put all your eggs in one basket,’ it is wise to spread your money out among different digital currencies.
– Get a compatible wallet for your coins: After deciding on a particular cryptocurrency, you will need a suitable digital wallet to store your cryptocurrency.
– Start buying: Is your wallet ready? If so, now you can start buying any digital coins from different crypto exchanges. For easing of search and selection, it is best to choose an exchange that supports all the currencies you want.
Steps to Buy
1. Choose Between Crypto Exchanges and Cryptocurrency Brokers
To buy cryptocurrency, at first, you need to pick a broker or a crypto exchange. While either let you buy crypto, there are a few differences between them to keep in mind.
– Crypto Exchanges: Platforms where cryptocurrencies are traded by buyers and sellers. Exchanges free are often affordable. However, the convenience comes at a cost, in contrast to having low fees, they also have complex interfaces with multiple trade types and advanced performance charts, all of which can be big challenges for new crypto investors. The most well-known cryptocurrency exchanges are Coinbase, Gemini and Binance.US
– Cryptocurrency Brokers take the hassle out of buying cryptocurrencies, providing easy-to-use and interactive interfaces. However, the service fee will be higher than that of exchanges. Robinhood and SoFi are two of the most famous crypto brokers.
2. Create and Verify an Account
Depending on the platform and the amount you plan to purchase, you may have to verify your identity. This is a necessary step to prevent fraud and meet federal regulatory requirements.
You can’t buy or sell cryptocurrencies until the verification process is complete. The platform you choose may demand you to submit a copy of your driver’s license or passport and even your selfie to prove that your appearance matches all the documents you submitted.
3. Deposit Money to Invest
After opening an account, you’ll need to make sure you have funds in that account. To do so, you need to link your bank account to your account or you can make a payment through your debit or credit card. Another way is authorizing a wire transfer. Depending on your funding method, you may have to wait a few days before your money is usable to buy cryptocurrency.
However, we won’t recommend you use a credit card, this is an extremely risky—and expensive way to deposit money. Credit card companies process cryptocurrency purchases with these cards as cash advances. This means they’re subject to higher interest rates than regular purchases, and you’ll also have to pay additional cash advance fees.
4. Purchase Your Cryptocurrency
Now, you’re ready to place your first cryptocurrency order. There are hundreds of cryptocurrencies to choose from, ranging from well-known names like Bitcoin and Ethereum to more obscure cryptos like Theta Fuel or Holo.
5. Select a Storage Method
When you buy cryptocurrency, it’s typically stored in a so-called crypto wallet attached to the exchange. You can choose to store your assets on the exchange or leave them on a digital wallet.
Digital wallets are generally divided into two forms:
– Cold Wallet: a physical, hardware wallet for storing cryptocurrency that doesn’t require an internet connection. This type of wallet adds a tier of protection so it is more difficult to hack than an internet-connected wallet.
– Hot Wallet: a software-based digital wallet that requires an internet connection and often comes in the form of an application.
Alternative Ways to Buy
1. Crypto Exchange-Traded Funds (ETFs)
ETFs are extremely popular investment tools that allow you to buy hundreds of individual investments in one go. This helps diversify your investment and carries less risk than investing in individual investments.
2. Invest in Companies Connected to Cryptocurrency
For companies that have tangible products or services and are subject to regulatory scrutiny, to invest, you can buy shares of those companies or own the cryptocurrency and blockchain that powers them. You will need an online brokerage account to buy those shares. Here are some suggestions for you:
– Nvidia (NVDA): This technology company designs and sells graphics processing units, which are at the heart of the systems used to mine cryptocurrency.
– PayPal (PYPL): This popular payments platform recently allow customers to buy and sell select cryptocurrencies with their PayPal and Venmo accounts.
– Square (SQ): This payment service has purchased over $220 million in Bitcoin since October 2020. In February 2021, the firm announced that Bitcoin made up around 5% of the cash on its balance sheet. Square’s Cash App currently allows people to buy, sell and store cryptocurrency.
Closing thought
Cryptocurrencies can be good investments if you want to stay ahead of the curve and capitalize on the potential of the new digital economy. Still, make sure you consider your investment goals and current financial situation before investing.
In our next post, we will share with you the easiest way to sell a cryptocurrency. Make sure you bookmarked our site to catch up with the news.