How to start investing in cryptocurrencies

You believe that cryptocurrencies are the way of the future and could eventually replace traditional money. You want to invest in them, but you’re unsure how it works and how to get started.

First, you should know that cryptocurrencies are digital currencies that the government does not back. Instead of being issued by a central bank, they are overseen by a decentralized network of users. For example, when a Bitcoin user conducts a transaction, a network of computers using blockchain software checks and validates it by recording it in a secure database.

Now that you have a better idea of how it works, it’s time to learn how to invest in cryptocurrencies.

Learn about different types of cryptocurrencies

You’ve heard of Bitcoin, the first cryptocurrency introduced worldwide in 2009. But there are now plenty of other types of cryptocurrencies you could invest in. These are often called alternative currencies or altcoins. Take a moment to learn more about popular altcoins such as Ethereum, Solana, Tether, and Binance Coin.

Determine your goals and your risk profile

Before investing in cryptocurrencies, you must determine your goals and risk profile. Consider crypto’s place in your investment portfolio. Remember that cryptocurrencies are volatile assets, and it’s best not to rely on them.

Diversifying your portfolio is always a good idea. Since investing in cryptocurrencies can be risky, you should avoid investing more than you can afford to lose.

Choose the cryptocurrency you want to invest in

To make your choice, you must educate yourself about the price, availability, demand, transaction speed and fees, and potential growth of the cryptocurrencies you are interested in.

Decide how you want to invest

Let’s say you want to invest in Bitcoin and are ready to buy your first one. How can you do that? You have different options, including doing business with a cryptocurrency broker, using a crypto exchange, using a crypto ATM, or downloading an app.

A cryptocurrency broker simplifies cryptocurrency transactions like a traditional broker. Of course, you would have to pay your broker a fee to benefit from their services and advice. You could also use a crypto app to buy and sell cryptocurrencies. Look for an easy-to-use application and download it to get started.

Cryptocurrency exchanges & ATMs

A cryptocurrency exchange is a platform to buy and sell cryptocurrencies. However, consider waiting until you have more experience as a crypto investor to start using crypto exchanges. They share similarities with stock exchanges and can feel overwhelming when unsure what you’re doing.

A crypto ATM is another convenient way to buy crypto. To conduct the transaction, feed cash notes into the ATM and decide which type of crypto you want to purchase.

Set up your account

You must set up an account no matter how you acquired your first Bitcoin. Sign up and provide the personal information requested, which will be used to verify your identity.

Add some funds to your account

You will then have to add funds to your account. This money will be used to purchase your cryptocurrencies. You can add funds to your account through a bank transfer, debit, or credit card. Cash on hand is needed for crypto ATMs.

Purchase your cryptocurrencies

Once the funds reach your account, you can purchase the cryptocurrencies of your choice. Remember that if you don’t have enough money to buy a whole coin, you could buy a fraction of a coin. You don’t need a fortune to invest in cryptocurrencies. To begin with, you decide how much you want to invest, and you can purchase more later.

Decide how you want to store your cryptocurrencies

Of course, since cryptocurrencies are digital currencies, you can’t store them in your wallet. So how can you keep them safe? If you purchase your crypto through a broker, it will be held in a crypto wallet linked to the exchange.

Alternatively, you can use a hot, cold, or paper wallet. A hot wallet is kept on a device connected to the internet, such as a phone, tablet, or computer. It’s convenient for those who plan on using crypto for purchases, but it’s not the best option for protecting an investment over the long term.

A cold wallet is a device such as a USB drive. It’s a better option for storing your crypto over the long term, although it still has risks. A paper wallet involves printing out keys on paper and keeping them secure.