6 Beginner Steps To Investing In Cryptocurrency

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Last Updated on February 10, 2022 by Eddu Oz

6 Beginner Steps To Investing In Cryptocurrency

Investing in cryptocurrency could spike the adrenalin rush, particularly for new investors exploring the market for the first time.

Nonetheless, the crypto market is known for its massive gains that could make investors millionaires overnight, it’s important to stay cautious as the reverse could spell huge losses if one does not understand the market and trade from a risk perspective.

In this article, I will be sharing vital success tips new investors need to understand when trading crypto short or long-term. It’s also important to understand that in every investment, there are risks that must be identified and measures put in place to mitigate against losses.

Key Takeaways

 📌 Cryptocurrency is a viable and profitable investment option in bullish market situations. Crypto has made overnight millionaires.

 📌 Crypto wallets (especially cold wallets) are ideal for investors holding crypto long-term and a huge amount of it. Cold wallets are not a must-have but are necessary for an investor with a robust crypto portfolio, as these wallets serve as a countermeasure to hacks.

 📌 Currently, there are over 1500 cryptocurrencies in the crypto market which means investors have a lot of variety to choose from which to invest.

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 📌 Understanding the crypto market trends and movements is very vital in mitigating losses and making profits as well from holding crypto.

SEE ALSO: The ABC of Investing in Cryptocurrency this Year

SEE ALSO: Investing in Litecoin and How it works

SEE ALSO: How to Start Investing in Bitcoin with a 100 Dollars

What is Cryptocurrency?

Just like fiat, which represents physical money, a cryptocurrency is a digital token built on a blockchain that was initially meant to serve as a means of exchange but has now evolved to serve as a means of investment from which you can make considerable profits if done right.

The first cryptocurrency, as it is commonly known, is Bitcoin, which came into existence in 2009 by a crypto enthusiast who goes by the pseudonym, Satoshi Nakamoto.

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Since then, several cryptocurrencies, such as Ethereum, have emerged to compete favorably with Bitcoin in the crypto market.

With that being said, let us take a look at the steps you will need to take to invest in cryptocurrencies as a new crypto investor:

Step 1: Analyse Before Buying Crypto

The first step you should take if you want to start investing in cryptocurrencies is to conduct a technical and fundamental analysis of the cryptocurrencies you want to invest in. Be sure that the cryptos are reputable altcoins and not shitcoins. It is also important not to overdo this before you get to a point of information paralysis or overdose.

Also, see if you can find the motive for the existence of such cryptocurrencies. This information can always be found in the crypto’s whitepaper.

All these are important so that you don’t invest in a shitcoin or in a coin that does not have the potential for future price growth. Doing this will save you from regrets when you begin to invest.

Step 2: Spread Your Risks Among Different Cryptos

The second thing you need to do is to understand that cryptocurrencies are risky, and as such, you wouldn’t want to start by putting all your eggs in one basket, as this might backfire in the event of a crypto meltdown.

What you should do instead is to start by selecting more than one cryptocurrency, say Ethereum and Tezos, to invest in.

Diversifying your portfolio cannot be overemphasized, and this would benefit you when the risks are spread between these cryptocurrencies, reducing your losses in the event of a crypto market fall.

Step 3: Build Your Portfolio Gradually

As a beginner, it is not advisable to start crypto investments with a large number of funds, especially when you still do not completely understand the workings of the crypto market.

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Most cryptocurrencies are quite expensive, so starting small will do you a lot of good; after some time, when you must have understood the crypto market trends to some extent, you can then begin to have a larger, more diverse portfolio.

Step 4: Choose a Reputable Crypto Exchange

In the world of crypto today, there are a thousand and one crypto exchanges available to crypto investors.

Due to the ever-evolving nature of crypto and the competitive nature of the market, these exchanges have continued to add new features with innovations to meet the ever-increasing demands of crypto investors.

As such, make sure you choose a crypto exchange with features that suit your needs and one that is globally recognized.

Some of the best crypto exchanges which I would like to recommend include Binance (the largest crypto exchange in the world by trade volume), Coinbase (a major competitor of Binance offering a very large variety of features).

Paxful is an amazing P2P exchange with over 6 million users. You can trade with over 300 payments methods. Paxful is unique for its market depth and liquidity.

If you still want to discover more exchanges apart from the ones listed here, the internet is always there for you to provide you with a comprehensive list of other exchanges.

Step 5: Get a Cryptocurrency Wallet

One other thing you need to keep in mind is the fact that you will need to have a crypto wallet to store your crypto and your private keys as well.

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When it comes to crypto wallets, there are different types, ranging from online wallets to mobile wallets, desktop wallets, and hardware wallets.

These wallets all have their strengths and weaknesses, so you must go through them all before selecting which one to use as a means of storage for your crypto.

Typically, I believe hardware wallets such as the Ledger wallets and Trezor wallets are the best bet for storing crypto and that is the one I would recommend, but it is up to you to decide eventually on which to use.

With the ever-increasing rate of crypto thefts and hacks, storing your crypto in a secure wallet is one of the best things you can do as a crypto investor.

Step 6: Keep Tabs on Your Crypto Portfolio

It is not enough to just invest in crypto and leave it at that. You need to keep tabs on your crypto portfolio from time to time by identifying changes and trends that have taken place with one or two cryptos you have invested in.

Keeping track of when a crypto’s price falls or drops is also a determinant for deciding whether to sell it off and profit or to keep holding onto it.

As such, you must monitor your crypto investments to take note of these differences so that they don’t escape you unawares.

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Crypto communities are also quite important, so you should join one to get the latest information on cryptocurrencies that you may have invested in as well as the crypto market.

So there you have it, 6 steps to take if you want to invest in cryptocurrencies as a new investor.

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Other than these steps, there are also some other ways in which you can invest in cryptocurrencies. Such ways include:

1. Investing in the crypto blockchain.

2. Investing in cryptocurrency stocks and exchange-traded funds (ETFs).

3. Earn crypto through learning and mining.

Investing in the first two listed above may be a bit advanced considering that you are a new crypto investor. This is because to achieve success in the first two, you should have gained some experience in the crypto market.

The third one, however, is quite easy as all you have to do to earn crypto while learning is to visit Coinbase where you will find a section on the homepage stating “Coinbase Earn.”

The platform is willing to pay learners in crypto who have an interest in finding out more about cryptocurrencies.

As for mining, you could simply do that by using any of the mining apps available for mobile devices or mining sites using a computer with a powerful graphics card.

Frequently Asked Questions (FAQs)

Is Cryptocurrency a good investment?

Yes, cryptocurrency is a good investment as a lot of millionaires have been made today as a result of this digital token. As such, you could call it a digital blessing to mankind.

Which cryptocurrency is best to invest in?

There are various good cryptocurrencies out there for investment and it is just difficult to choose a particular one to say this is the best.

As long as the crypto you are investing in has been proven to have potential by verifiable evidence and is not a shitcoin, you should expect to make returns on your investment.

Final Thoughts

Investing in crypto is one of the best decisions you will ever make as an investor just starting and the rewards for doing so are sure to come as long as you follow the steps laid down in this article.

The world of cryptocurrencies is a very exciting one that you will come to find soon enough as you spend more time understanding cryptocurrency trends and the crypto market.

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