Cryptocurrencies have become quite popular this past year. It is gaining more acceptance as a currency, with more companies accepting various cryptocurrencies as payment. More importantly, banks, corporations, and individual investors have added cryptocurrencies to their investment portfolios.
Cryptocurrency Investing for Beginners
There are thousands of different cryptocurrencies today, but you should only focus on the popular tokens. Bitcoin (BTC) is the most popular right now, followed by Ethereum (ETH), Solano (SOL), Cardano (ADA) and several others.
The best advice for cryptocurrency investing for beginners is to understand the risk. According to the experts at Money Morning, “Of course, like all investments, investing in cryptocurrency comes with its share of risks. The cryptocurrency market has been highly volatile over the past few years so investors should be aware of the risks they are taking when investing in crypto.”
Because they are volatile and risky, do not risk too much money when you begin investing. Some of the risks include:
- It has minimal intrinsic value
- Lack of regulation
- High market volatility
Pick Your Cryptocurrency
Before investing in a cryptocurrency, you should learn about all the popular cryptos. They each have advantages and disadvantages. It might be best if you invest a little money in several cryptos to spread the risk.
Some of these cryptocurrencies are very expensive. Bitcoin, for example, costs around $40,000 for one Bitcoin. Ethereum is approximately $3,200 for one ETH. The major cryptocurrencies are broken down into smaller tokens. So you don’t have to spend thousands of dollars to begin investing in them.
Opening an Account
You will need to find a platform to buy and eventually sell your cryptocurrencies. Some brokerage firms are now allowing cryptocurrency trading. Most people begin with a cryptocurrency platform. There are some well-known platforms where you can buy, sell and trade cryptocurrencies.
Not all of these crypto platforms allow customers from all countries. You will have to make sure they allow customers from your country, and if from the United States, they might not allow customers from all states. It is important to see if they are regulated by any regulatory agencies, especially tier 1 or tier 2 regulatory agencies.
Get a Digital Wallet
As a beginning crypto investor, you will need a place to store your cryptocurrency like a digital wallet. Some platforms allow you to store it with them, and some even have insurance in case of theft. Here are the types of digital wallets:
- A custodial wallet is when the platform stores your crypto.
- A cold wallet stores your crypto offline, making it the safest.
- A hot wallet is online. This is where you might store your crypto when you’re ready to sell or trade it or make a purchase with the cryptocurrency.
So, if you haven’t already, you should fund your investment account and start buying the cryptocurrency of your choice. It is wise to continue to learn trading strategies as you become a more experienced investor.
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