The cryptocurrency market value has gone through a massive surge during the COVID-19 pandemic. In 2017, the total market value was $760 billion, but is now worth $1.297 trillion! It even reached $2.5 trillion in May of 2021!
Success stories of people getting rich overnight have pushed newcomers to join the crypto revolution. Buying and selling cryptocurrency has become a talking point among family, friends, and colleagues.
Investing in cryptocurrency is easy to do, but it’s not without its risks.
We’re going to explore the basics of crypto for beginners, so if you’d like to learn how to invest in cryptocurrency, just keep reading!
What Is Crypto?
A cryptocurrency is a form of digital currency where all transactions are stored on a ledger, encrypted by cryptography, hence the name. Unlike standard currencies, there’s no need for banks with crypto as all transactions are managed via the blockchain – a form of a digital network.
Crypto has gone beyond being a simple currency though. Not only is it an investment, but you can use it to send money internationally faster, cheaper, and more securely than most banks.
Investing in Cryptocurrency
Before you begin, you need to do your research! There are a lot of currencies out there, and some are safer than others.
Are you looking for a short-term or long-term investment? Those looking to make a quick buck may choose a cheaper currency in the hopes that it shoots up. Much like Dogecoin, which was worth $0.05 in March of this year, but shot up to $0.73 in May.
Long-term investments, such as Bitcoin, Ethereum, or XRP tend to be slower moving. Investments can take years to yield worthwhile results, and so patience is key.
Just remember that there is no such thing as a safe cryptocurrency!
Storage Options
You also need to decide which type of wallet you’re going to use to store your crypto. There are a few options available:
- Paper wallet
- Cloud wallet
- Hardware wallet
- Local wallet
For beginners investing in cryptocurrency, especially if you’re not investing a lot of money, the best option may be a cloud wallet. This is when your crypto is stored on the trade website you purchased it from.
Choose an Exchange
The next step is to choose the exchange where you will buy, sell, and trade crypto. You want the option of moving your crypto investments to other wallets (even if you don’t plan to use this feature initially), so pick a website that allows you to transfer your currency.
Some examples include:
- Robinhood
- Tradestation
- Coinbase
- Binance
- Kraken
- EXMO
- eToro
- Gemini
Always do your own research. Some cryptocurrencies won’t be available on each trading website, especially newer, cheaper cryptos. You can learn more here.
Be Aware of the Risks
Investing in cryptocurrency isn’t dissimilar to gambling. You can examine the market, do your research, and plan accordingly, but there’s always going to be an element of luck. Buying cryptocurrency is a risk, and so you should only invest what you can afford to lose.
You should also be patient. Cryptos rise and dip on a daily, weekly, monthly, and yearly basis. If you’re buying cryptocurrency as a long-term investment, don’t panic sell just because the value has dropped.
Ready to Invest?
Hopefully, you found this article about investing in cryptocurrency useful. Buying cryptocurrency as a beginner can seem overwhelming, but take your time, do your research, and be smart about your finances.
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