Cryptocurrencies are digital assets that can be used for a variety of purposes. These digital assets are decentralized and aren’t controlled by any government or central bank. As a result, cryptocurrencies have the potential to become an important part of the global financial system in the future, and they’re often referred to as “digital gold.”
When you invest in cryptocurrencies, you’re investing in an entire cryptocurrency ecosystem. Its means there’s more than just buying and selling coins; there are many other factors involved with cryptocurrency investment that we’ll cover throughout this guide:
- Where do you buy cryptocurrency?
- Which cryptocurrencies should you invest in?
- How do I use them after I purchase cryptocurrency?
- How to convert cryptocurrency from an exchange?
- Can I buy crypto with a credit card or via bank transfer?
Do Your Homework
As with any investment, it’s important to do your homework. Researching the market and the risks are one of the most important steps before investing in anything. You should know what you’re getting into to make an educated decision about how best to proceed. It also includes understanding:
- The terms of the investment (i.e., how much return and risk are involved)
- The risks involved (i.e., how likely it is that this investment will pan out for me)
- The technology behind cryptocurrencies, if applicable (i.e., blockchain)
Understand the Risks
The risks of investing in cryptocurrencies are many, and they’re not all financial. Cryptocurrencies are volatile—they can rise or fall in value quickly—and there’s no way to predict how much their value will change over time. If you buy a cryptocurrency and the price starts dropping, you could lose money on your investment before you can cash out.
The risk of theft is also very real for digital currencies: hackers have stolen millions upon millions of dollars worth of Bitcoin over the years, so it’s always possible that your account could be hacked. It might seem like no big deal if someone steals $10 from your wallet—until they try doing the same thing 50 times over with different accounts belonging to other people! You never know when someone will take advantage of a security flaw to gain access to multiple accounts at once and then cash out every single one at once.
Use Two-Factor Authentication (2FA)
It is a way to prove that you are who you say you are. It’s a security feature that adds an additional security to your account by requiring something only you have—like a password, phone number, or fingerprint—to log in from an unrecognized device.
You can set up 2FA through your cryptocurrency exchange’s website or app and use it every time the site asks for authorization. If someone tries to access your account without permission, they won’t be able to get past the 2FA requirement because they don’t have access to the second factor required for login.
There are two types of 2FA: something that only works on one device (like SMS), which doesn’t require any special hardware, and something that works across devices like Google Authenticator or Authy and other apps (such as Facebook Messenger). The latter is more secure because if someone steals one device with this type of 2FA enabled, they won’t be able to get into any other accounts protected by the same method unless they steal this second device too!
Start Small, Not Big
- Investing in cryptocurrencies is a risk. Therefore, you should only invest money that you can afford to lose.
- The best thing to do is start small and grow your knowledge and experience over time by investing more money, increasing the time invested, and taking on more risk.
- It will allow you to learn from mistakes and make good investments along the way with minimal losses (if any).
Buy During Dip and Sell During Peak
There are two main ways to make money in the cryptocurrency world: buy low and sell high or sell low and buy high. It is a simple process that requires discipline and patience. To invest in cryptocurrencies, you need these two skills.
Secure Your Keys
One of the most important things to remember when investing in cryptocurrencies is that you need to keep your keys secure. As an investor, your money and assets are only as safe as the security measures you take to protect them.
If you don’t want hackers stealing or hijacking your cryptocurrency accounts, you need to store those keys offline—preferably on a hardware wallet (more on this below).
- Hardware Wallet: A hardware wallet is like a physical USB stick that stores all of your private keys. It can be plugged into any computer, which allows you to interact with cryptocurrency applications, but never exposes those private keys directly through its software interface.
- Online Wallet: The problem with using an online wallet is that it’s not just accessible via one computer; anyone who has access to the internet can potentially steal whatever funds are stored there.
- Mobile Wallet: Mobile wallets are easy and convenient because they’re available on mobile devices like smartphones or tablets—but they also present another opportunity for hackers because they’re often less secure than other storage methods
Don’t Fall for Pump-and-Dump Schemes.
One of the most common scams in the cryptocurrency world is known as a pump-and-dump scheme. These schemes work by artificially inflating the price of a cryptocurrency – often through false statements about that cryptocurrency and its founders. Then spreading misinformation to create an artificial demand for it before selling off their holdings once the price has risen.
These scams are illegal in the United States and can lead to criminal penalties if you participate. So if you see someone promoting an investment or coin via social media or email, do some research on your own before responding or sending them any money—you’ll be glad you did!
Track Your Progress
- Check the price of your cryptocurrency daily.
- Review the market cap of your cryptocurrency.
- Check the price of your cryptocurrency against USD.
- Check the price of your cryptocurrency against Bitcoin.
- Check the price of your cryptocurrency against other cryptocurrencies.
As More People Invest in Cryptocurrencies, They Will Have to Learn New Skills.
First, know that investing in cryptocurrencies is highly risky, and you can lose money. Therefore, you should only invest with money that you are willing to lose.
Next, do your homework on potential investments before choosing them. You will want to look at the team behind the project, its white paper, social media presence, and industry trends. The more information on a project or coin you can find out ahead of time, the better off you will be when it comes time to buy-in.
While researching these coins/tokens/projects/etc., be sure to use two-factor authentication (2FA) whenever possible. Especially if you plan on keeping large amounts of coins stored in an exchange wallet like Binance or Bitmex where they could be compromised by hackers who gain access through social engineering attacks.