Cryptocurrency investing is the new financial trend that promises a lot, but will it actually deliver? Well, to find out we have to dig a bit deeper and find out more about the concept of investing in crypto.
What are Cryptocurrencies?
Cryptocurrency is a new technology built on the blockchain. Even though they are addressed as crypto-currencies, they are considered digital assets that have some kind of value. They work independently of the banks as a record of digital transactions.
The main thing you should know is that cryptocurrencies allow us to transact business directly with each other as buyers or sellers, without the need of a middleman, such as a bank. Without the middleman, you can eliminate the transaction fees.
Things to Consider before Investing in Crypto
The number one cryptocurrency is Bitcoin. Bitcoin first came out in the market in 2009. Since then a lot more cryptocurrencies have flooded the market. Some see cryptocurrencies as a new worldwide global currency that will replace fiat money.
If you are not familiar with cryptocurrencies and you have just started to learn about them the first thing you should have in mind is that crypto investing can be pretty hard. Although, if you play smart and make thorough research before investing it can be really rewarding.
Here are something you must consider before getting into action:
- Don’t put money that you can afford to lose
- Establish thorough research of the crypto market before you start investing
- Know the reason why you are investing
- Always double-check everything, because there are a lot of scammers in this business
- There is no need to buy a whole coin – you can buy only small pieces of the coins
Bonus tip: Make sure to check out the best ways to invest in yourself.
How does crypto go up in value?
These are the most important factors that influence the value of cryptocurrencies.
- Supply and demand – The value of cryptocurrencies comes from the people. People who buy a cryptocurrency for a certain amount of money. The larger the amount of transactions is, the higher will be the value of the cryptocurrencies. There must be high demand for people who want to buy them in order to increase the value.
- Cost of production and power usage – Mining and developing cryptocurrencies is not easy. It requires a lot of money and a lot of power consumption.
- Usability – For crypto to go up in value people must trade with them every day. It is not enough just to buy them.
- Investors – Investors have a key role in the value of cryptocurrencies. They spend a lot of money and buy a large number of cryptocurrencies. Automatically the value goes up.
- Community – Cryptocurrencies must be attractive and interesting for people to buy them. They should support the cryptocurrency and promote them on regular basis.
Steps-by-Step Investing in Crypto
If you want to go to a local bank or some kind of financial institution, or brokerage firm to buy cryptocurrencies the answer is – you can’t. Because the process of buying crypto is doesn’t have any regulations and is not understood in financial institutions they choose to not work with them.
Find an Exchange
You should choose wisely before choosing a platform for buying cryptocurrencies. Because you can’t go to your local bank to buy them the choice for buying them is limited. These are the best places where you can buy and exchange cryptocurrencies.
eToro – Probably the most advanced and sophisticated platform of all. It is safe and offers one-of-a-kind investment options (Copy Trader technology).
Coinbase – It started almost ten years ago as a platform where you can trade with Bitcoin. Since then you can use Coinbase to safely trade with multiple cryptocurrencies.
Gemini – With Gemini, you can trade with cryptocurrencies but also can store them in your own digital wallet.
Unifimoney – Unifimoney is a great app to use. You can trade and store more than 30 cryptocurrencies. They also provide you with banking services.
Binance US – This is the parent company of Biance. It has the cheapest trading fees from all of the other exchange platforms. The only disadvantage is that there aren’t many trading pairs between different cryptocurrencies.
Robinhood: A broker to consider – Robinhood doesn’t charge you any commissions. With Robinhood, you can buy cryptocurrencies (Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, and Dogecoin) with no commission.
Wealthfront – With wealthfront you can expose (with Grayscale Bitcoin Trust and Grayscale Ethereum Trust) cryptocurrencies without actually buying them.
Create an account
To create an account for cryptocurrencies is fairly easy. To set up your account you just need to have time and patience. These are the required information you need to set up your account on the crypto platforms:
- Your full, legal name
- Your date of birth
- Your email address
- Your phone number
- Your home address
- At least one copy of some utility bill to the address you will write
- Your social security number
- Your ID, passport, or your driver license
- A picture of you together with your ID
- To write down why do you want to invest in crypto
Before start investing in crypto, you must first decide how much money you want to spend. Have in mind a couple of things before you deposit money:
- Investing in cryptocurrencies is different than investing in stocks
- Investing in cryptocurrencies doesn’t pay you interest rate or dividends
- They are meant to be an alternative currency and not investments
Bear in mind that some crypto exchanges have fees for depositing and withdrawing money, so make sure you read the Terms and Conditions before investing.
- Choose a crypto storage
There are several types of crypto storage wallets that you can choose from. The choice is yours.
- Desktop wallets – They are installed on your personal computer and because of that they are safer than online wallets because. The best one for desktop users is Exodus.
- Online wallets – They are easier to use but less safe than desktop wallets. The information is saved on the cloud and can be opened from any computer. The best one for online users is Trezor Model T.
- Mobile wallets – This type of wallet is an app that you can install on your smart device. The best one for mobile users is Mycelium.
- Hardware wallets – With hardware wallets, you can keep your private key in a hardware device, like a USB drive for example. They are safer than online wallets because the key is not stored online and only you have access to it. The best one for hardware users is Ledger Nano X.
We hope that by reading this article you will have more insight into cryptocurrencies and how do they work.
So, don’t waste any more time and go out and make your first purchase, but before you do make sure that you made enough research and remember that patience is the key in these kinds of investments.