5 Simple Steps On How to Start Investing in Cryptocurrency

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One of the most fascinating inventions in modern digital history is cryptocurrency. Managing money online has always been a challenge, but crypto has become so popular in recent years. Headlines have been made about how much money people made, ranging from the hundreds to the thousands of dollars in trade. With platforms like Bitcoin and Ethereum growing in use, cryptocurrency could be a gateway to the future.

That said, learning how to start investing in cryptocurrency is a big challenge. These online tokens are incredibly volatile in nature; their value could rise to six digits, only to fall to pennies the next week. This chaotic shift from worthwhile to costly can scare a lot of potential investors away. If you want to start investing in cryptocurrency, here’s what you need to know!

What is cryptocurrency?

First, let’s explain exactly what cryptocurrency is. Cryptocurrencies are digital assets made through cryptographic systems, which help keep these tokens safe and secure. Compared to cash or bills, crypto can circulate to anyone and any place without a third party. In other words, whereas a bank would supervise and handle your deposits and transfers, crypto lets you send them directly. Furthermore, digital tokens aren’t controlled by any government or entity, making it easier to transfer your assets wherever you want.

The main reason that both financial analysts and tech gurus love crypto is its blockchain technology. It is a network of individual blocks or pieces that verify every single transaction. Because of this decentralized network, it’s virtually impossible to forge or scam a transaction history for tokens like Bitcoin. This kind of safety makes a lot of investors both amazed and intrigued by crypto as an option.

Lastly, cryptocurrency can have a supply cap. For example, there are only 21 million Bitcoins in the world. Each one is monitored by all blocks of a network, which keeps it tracked in multiple computers and accounts. Many experts see this limited amount as a good protection against inflation. Whereas banks have to print more money to fight rising costs, digital currency stays the same. This gives cryptocurrency a chance to grow in value, assuming that all goes well.

What are the benefits of investing in cryptocurrency?

Now that you know what exactly cryptocurrency is, you might be wondering why it’s a lucrative choice. There are many experts who think of these tokens as the future of finance. If you want to know how to start investing in cryptocurrency, here are a few benefits you can expect.

Freedom in transactions

Usually, making any transaction in a bank will carry some fees. You might need to spend quite a few dollars to transfer or withdraw your money. In addition, banks tend to lower the value of money to compensate for inflation costs. With cryptocurrency, these problems are usually gone. It can only cost a few pennies, sometimes none at all, to trade and transfer your cryptocurrency wherever you want.

Unique security and safety measures

The blockchain technology that these online tokens use is what keeps the platform secure. With so many blocks to verify and check on each transaction and detail, there’s no chance of a fake transaction or forgery hurting you. While banks typically work hard on their safety measures, cryptocurrency is ahead of the game.

High-value payoffs

The main reason why people want to know how to start investing in cryptocurrency is the payoff. You’ve probably seen dozens of headlines or posts about how Bitcoin, Gemini, or Ethereum helped turn investors into millionaires. Plus, there are even notable celebrities who’ve popularized cryptocurrencies and NFTs as part of their investment plans. It’s no secret that many people have turned to tokens because of how it seems to pay off. That said, always remember that its worth is volatile and can change at an instant.

24/7 access

Whereas stock exchanges and banks operate under certain hours and conditions, cryptocurrency can be accessed at any time of the day. Whether you’re a morning person or a night owl, you can easily open your apps to view and trade your tokens as you see fit. Plus, compared to other institutions, transactions can happen fairly quickly.

Inflation protection

Lastly, one of the reasons why cryptocurrency can help is its power against inflation. As said before, many tokens are limited in supply and trade. Whereas money can be printed to meet with demands and usage, you won’t find more Bitcoin as the years go by. You’ll only have a share of the 21 million in existence, which can make each coin more valuable as the value grows over time.

How do I start investing in cryptocurrency?

Now that you see how cryptocurrency can help, you’re now ready to jump into your first cryptocurrency plan. To know how to start investing in cryptocurrency, here are five steps you should consider!

1. Understand what you’re getting into.

In any investment, especially one as new as cryptocurrency, you need to do your research. The more you understand how it works or how transactions happen, the easier it’ll be to get started. Take your time exploring the different types of cryptocurrency and how their value in the market. Check the rates they have for trade, conversion, and weekly returns. By doing this, you’ll eventually a token that fits your needs and your spending habits.

2. Look at the present and future, not the past.

A lot of people spend time reminiscing about news headlines of Bitcoin millionaires. They like to hope and imagine that they’ll get the same amount of money and success as these stories of the past. However, because they’re stuck on what they remember, they risk investing in tokens that may have less value right now.

To understand how to start investing in cryptocurrency, you have to look at the present news. Focus your mind on the forecasts and values of each token today. Take your time in seeing where experts see the price hike and why. Don’t live in the past, especially when it’s based on other people’s memories or opinions. What matters is how you invest your money now and how you see cryptocurrency in your future.

3. Be careful of its volatile value

There are investors, both tenured and new, who think that cryptocurrency will grow in price. They think its value will only hike higher over time, even when it’s going through a slump. The simple truth is that all things that go up must go down at some point, and that’s especially true for money.

If you’re just learning how to start investing in cryptocurrency, always remember that there is a risk for the reward. Never assume that any investment you make is a safe and simple bet. There’s always the chance that you’ll lose it. It’s the name of the game, and as long as you understand, you’ll be ready for when things don’t go how you planned.

4. Manage your risk tolerance and preparedness.

A rule of thumb for all investors is to operate according to your risk tolerance. In other words, you should only be spending based on how much you want to risk. Investment can be a dangerous gamble, and not everyone can sink loads of cash into a venture. If you’re young, you might be more willing to put some eggs in a basket to see how it goes. However, if you have a family or you’re providing for your kids, you might not want to risk your entire savings.

To make it easier, you should manage your tolerance by examining your cash flow. See how much money you earn, spend, and have left over. After you remove the necessary bills and expenses, you’ll find a certain amount of cash you can use for your investments. This can help you see how much money you can put into cryptocurrency without hurting your wallet.

5. Invest what you’re willing to lose.

If you’re wondering how to start investing in cryptocurrency, you should always wonder how much money you’re willing to lose. Beyond the volatility of these online coins, no investment is a complete guarantee. There are chances that it could cost you more than you expected.

So, to balance this out, always remember to spend as much as you’re willing to lose. If you’re a beginner or a part-time investor, your budget might not be as big as that of a CEO or stockbroker. That’s okay, though! You shouldn’t expect to use up all your money on investments when you have a job, a house, and other needs to cover.

Rather than trying to win the golden ticket, focus on earning as much as you can through cryptocurrency. Find how much money you can let go if things go south. If it fails, then you learn something and you don’t go broke. If it works, then you’ll have more money than you planned. With this win-win situation, you’ll find it easier and safer to get started on investing in anything, especially cryptocurrency.

Article Sources

Ali, M. (2022, March 16). 5 Steps To Start Investing in Cryptocurrency (Real Tips). YouTube.
Frankenfield, J. (2022, September 26). Cryptocurrency Explained With Pros and Cons for Investment. Investopedia.
Movsesyan, M. (2022, November 23). Pros and Cons of Cryptocurrencies. IFC Markets.
Rosen, A. (2023, January 4). Cryptocurrency Basics: Definition and How to Learn More. NerdWallet.