Buying your first cryptocurrency is exciting, terrifying, inspiring, invigorating — in other words, you can experience full scale of all emotions and feelings without even leaving your house. If you are afraid to begin this journey and hesitate where to start from, here is a full guide for beginner to buying cryptocurrency. What crypto to choose? Where to store your money? What yacht to buy for your first million? Answers to these and many others questions you’ll find here.
First thing you should learn is the golden rule of investing in cryptocurrency — don’t invest money you can’t afford to lose. Even if the forecasts are promising, and “experts” from the Internet assure you that you have to mortgage your car and wife and buy crypto, never (you hear me: NEVER) invest in digital currency more than you are ready to lose. Repeat it twice and continue reading.
So, if you want to invest in cryptocurrency, you should decide:
What to buy
What cryptocurrency to choose? Bitcoin, with no doubt, is the most popular cryptocurrency (and the most valuable) in the world. Its price is growing every day, and you may have heard amazing stories about people becoming rich because of investing in bitcoin (that famous Norwegian student, who bought some bitcoins in 2009 for 27$, forgot about them, and few years later, when they equaled almost a million dollars, cashed fifth of his capital and bought gorgeous apartment in the fashionable area of Oslo). But many financial experts think that such incredible growth of bitcoin price is abnormal and may fall drastically in one night. So don’t place all your hopes on bitcoin, pay attention to other cryptocurrencies as well. Ether, supported by Ethereum platform, has quickly displaced all other altcoins, taking second place in the chart of top-crypto. Some analysts predict that Ethereum will be the world’s top crypto in the closest future. Try invest not in one, but in few currencies — it would be a good back-up. You can choose from a wide range of existing cryptocurrencies — Dash, Ripple, Monero and many others, and also try follow the trends and invest in the newest ones, that are born almost every day and may be profitable in future.
- Where to buy
Next problem: where to buy crypto and where to store it? Bitcoin was designed to be mined and direct traded between people. But to free users from inconveniences they experienced buying and selling digital currency peer-to-peer and finding safe way to keep their private keys, bitcoin exchanges were created.
Huge amount of exchanges and payment services allow to buy and store bitcoin, ethereum or whatever. Exchange allow you to buy/sell/convert cryptocurrency as well as withdraw it. Most exchanges provide virtual or plastic cards, that convert essential amount of money from crypto to fiat when you make purchases. In order not to be used for money laundering, such services ask users to verify their account by sending documents proving their identity and personal information (driver’s license, national ID card or others). Verified accounts have higher limits for funds loading and withdrawal.
Learn the differences between exchanges, look through users’ comments and decide which service is trustworthy enough and most convenient for you. It’s better to choose an exchange geographically close to you. If it is located in the same jurisdiction with you, it will be easier to solve any problems that may appear.
Pay attention not only to exchanges that have more or less long history and famous in the cryptocurrency world faces in the board, but also look through new services and startups — they sometimes may offer more than exchanges created at the dawn of bitcoin’s story. You must be unbiased and impartially appraise the outlook — ability to discern the perspective is the key factor to success in cryptocurrency world.
- When to buy
Cryptocurrency is totally unpredictable and its rate depends on various factors. You can’t apply general rules of stock trading here. Many people didn’t buy bitcoin at $1,000 because it seemed that price wouldn’t go higher than that. At the time of writing this article 1 bitcoin equals $7,500. Many potential investors don’t buy now, because it seems that price won’t go higher than that. But actually nobody knows what the price of bitcoin will be tomorrow.
Don’t hurry, learn as much as you can about latest shifts in price and future tendencies. You have to doubt and analyze every information you receive — remember that nowadays everyone have access to Internet and information flow is full of unreliable sources. Believe facts, not promises.
Experts say that the best time to buy is when price is stable for some time at a relatively low level. Don’t buy big amount of any cryptocurrency when its price has fallen drastically hoping that it would grow again — it may happen, of course, but the risk is too high. Never catch a falling knife.
Trading cryptocurrencies is an art. While it is easy to analyze and find explanations to rate changes in retrospective, it is difficult to predict its behaviour in future. So always be ready for unexpected turn of events.
- What tactics to choose
Price swings are typical for cryptocurrency, so you have to be flexible enough to adapt to peculiarities and challenges of this sphere. Of course, you can just invest and wait for several years in hope that until then price grow and you will increase your funds tenfold (so called “buy and hold” strategy) — it is the most passive income you can get but there always is a chance that price may suddenly fall and your long-term investment won’t bring you any profit. Another way is to “play the game” — monitor changes in rate, buy when coin is low, sell when it’s high — but in that case you have to keep abreast and follow the slightest fluctuations in the market.
Cryptoworld is full of opportunities and you just have to catch them. As in traditional trading, you must not panic, but you have to be sensitive to the situation and make decisions quickly. But also you must remember that it is totally new and unexplored sphere, where anything is possible.
Disclaimer: Not financial advice, provided for educational purposes only.