That said, before you make your first move, you need to understand that buying cryptocurrency is not for the faint of heart. It is volatile and often ruthless. The bass can be heartbreaking, but the highs can be stratospheric. It’s a roller coaster ride and one you could just enjoy.
The first lesson you need to know? Trading or buying cryptocurrency is a bit different from what you see in the stock market or dealing with your local bank.
It can be a complex process. And to get it right, you’ll have to do your homework. Trust us. You don’t want to learn lessons the hard way. You’ll end up losing funds, getting frustrated, and ending up with a bad taste in your mouth about crypto assets.
So, to
help you perform at your best, we’ve identified five tips to get started with cryptocurrency.
Table of Contents:
1. Determine your investor profile
Your investor profile is a snapshot of who you are as an investor. Do you like to take risks or are you more conservative? Do you want quick returns or are you looking for long-term stability? Are you a beginner or an experienced expert? These are all things you should determine before you start so you can create a strategy accordingly.
There are many ways to get some clarity on your investor profile. A quick Google search will point you to any number of short quizzes like this that will help you determine where you are on the spectrum of things like risk and aggression. Keep in mind that your investor profile may very well change over time, especially if you’re a new investor. It’s not uncommon to start rather passive as you learn the strings, and then take a more active approach as you become more sophisticated and confident in your knowledge.
2. Understanding the Terms
If cryptocurrency is new to you, you need to familiarize yourself with the language if you plan to be an experienced investor. Here are some words and phrases you’ll probably see a lot:
- Blockchain. Blockchain is a system for recording cryptocurrency transactions. It is essentially a public and continuously updated ledger that eliminates the need for a third-party intermediary. It is very similar to a Google document where all changes are recorded in real time and the changes are completely transparent to everyone who views it.
- Peer-to-peer purchases. P2P buying is a cornerstone of the crypto movement, allowing the buyer and seller to connect directly without the need for intermediaries such as banks or governments.
- Crypto wallets. Crypto wallets allow you to send and receive digital currency and monitor their balance. Wallets can be hardware or software, although hardware wallets are considered more secure.
- Exchanges. Cryptocurrency exchanges are websites where you can buy, sell, or exchange cryptocurrencies for other digital currencies or traditional currency.
3. Find a reliable exchange
As a beginner, it is especially important to buy your cryptocurrency from one of the reliable and reliable trading platforms. Coinbase, Binance, and Kraken are some of the largest crypto exchanges and can trade more than $100 million (equivalent) per day. An exchange offers you the ability to convert cryptocurrencies into major government-backed currencies and convert cryptocurrencies into other cryptocurrencies.
Avoid the temptation to choose the best
offer and instead choose the one that has the best reputation. Worth the tranquility. Scammers are plentiful. There are no chargebacks, no customer service center to call, and absolutely no way to get refunded. So, get started and stick to a trusted source.
4. Find a wallet
Since you’re investing within a digital space, cybersecurity is paramount. Cybercriminals are always looking for ways to hack exchanges, so protect yourself. Once you buy crypto currencies on an exchange, move your coins into your wallets immediately. Holding your assets on exchanges exposes you to risks that you simply don’t have to take. Cold (offline) wallets are recommended for optimal security, but there are also plenty of online wallets to choose from.
5. Go beyond Bitcoin
Every good investment strategy involves diversification. The crypto space is no different. Bitcoin and Ethereum are two of the biggest players, but consider other challengers such as Ripple (XRP), Bitcoin Cash (BCH) or Litecoin (LTC). By investing in multiple currencies, you can spread the risk and create a more balanced portfolio.
The cryptocurrency space is always full of surprises, and prices can fluctuate wildly. As a new investor looking to buy and sell Bitcoin or other cryptocurrencies, you need strategies that help you navigate those price fluctuations in both the short and long term.
When it comes to investing, making informed decisions is critical. Now that you’re armed with some practical tips to start your journey, the rest is up to you. Enjoy the ride.
