Investing in crypto is not as simple as it sounds. It requires a lot of strategies, research, and a great deal of continuous learning. But despite that, investing in crypto can be fun and rewarding, so if you want to know how to start investing in crypto, then continue with me.
Today, you will learn everything you need to know as a beginner in cryptocurrency investments. We will discuss the key things you should focus on, proven strategies, and a secret bonus which I will reveal later.
The Act Of Investing
First, let’s take some steps back and look at investing. The word can mean different things to different people, but at the grassroots, it means just one thing.
“Investing is the act of distributing resources into something to generate income or gain profits. The type of investment you choose might likely depend on what you seek to earn and how sensitive you are to risk.”
Investopedia
Now that we have a refreshment of what investing is. It’s time to learn a little more about crypto before we continue.
Understand the Basics of Cryptocurrency and Blockchain
Understanding the basics of cryptocurrency and blockchain technology is crucial for anyone looking to start investing in crypto. Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates independently of a central bank. Bitcoin, the first and most well-known cryptocurrency, was created in 2009 by an anonymous individual or group using the pseudonym Satoshi Nakamoto.
Blockchain technology is the underlying tech that enables the creation and transfer of cryptocurrency. It is a decentralized digital ledger that records all transactions across a network of computers. Each block in the chain contains a record of multiple transactions. And once a block is added to the chain, the information in it cannot be altered or deleted. Creating a block of transactions ensures the integrity and transparency of the transaction records.
It’s also essential to understand the different types of cryptocurrency, as they can have distinct features and use cases. Some popular cryptos include Bitcoin, Ethereum, Litecoin, and Ripple. These currencies have unique characteristics, such as transaction speed and mining process. Understanding these differences can help you make informed decisions about investing in cryptocurrencies.
Furthermore, it’s important to be aware of the regulatory environment surrounding cryptocurrency, as it can vary from country to country and is subject to change. Some countries have banned or restricted the use of cryptocurrency, while others have embraced it and are working to establish a legal framework for its use. This can significantly impact the value and stability of specific cryptocurrencies, so it’s crucial to stay up-to-date on the regulations in your area.
Research Different Cryptocurrencies
Researching different types of cryptocurrencies and their potential value is essential in starting to invest in crypto. There are thousands of cryptocurrencies, each with unique features, use cases, and growth potential. Some of the most popular cryptos include Bitcoin, Ethereum, Cardano, Litecoin, and Ripple.
The first and most well-known cryptocurrency, Bitcoin, is often considered a digital store of value and a hedge against inflation. It has a finite supply of 21 million coins, and the market demand determines its value. Ethereum is the second largest cryptocurrency by market capitalization and is often used for smart contracts and decentralized applications. Litecoin is similar to Bitcoin but with faster transaction speeds and lower fees. Ripple is focused on providing a fast and efficient cross-border payment solution for financial institutions. Cardano is uses smart contracts and dApps for onchain trading.
Do Your Own Research (DYOR)
When researching different types of cryptocurrencies, you should consider factors such as the coin’s market capitalization, trading volume, historical price performance, and the development team behind it. Additionally, consider the use case and potential future adoption of the coin and the regulatory environment surrounding it.
Cryptocurrency prices are highly volatile and subject to market fluctuations. So, buying crypto should be considered a long-term investment, plus you want a diversified portfolio to minimize risk. It’s also important to have a well-defined investment strategy and stick to it rather than making impulsive decisions based on short-term market fluctuations.
It’s important to mention that the crypto market is highly speculative, so it’s always good to consult with financial experts or professionals before making any significant investments.
Set Investment Goals, Create a Plan
Setting investment goals and creating a plan to achieve them is a required step in starting to invest in cryptocurrency. Investment goals can vary depending on an individual’s financial situation, risk tolerance, and investment horizon. Some common investment goals include saving for retirement, building wealth, generating passive income, or hedging against inflation.
When creating a plan to achieve your investment goals, consider factors such as your current financial situation, risk tolerance, and investment horizon. For example, if you have a long-term investment horizon, you may be able to tolerate a higher level of risk. In contrast, you may want to focus on more stable investments if you have a shorter-term investment horizon.
A diversified portfolio means investing in various assets rather than putting all your eggs in one basket. This can help to minimize risk and increase the chances of achieving your investment goals. A diversified portfolio can include a mix of different types of cryptocurrencies and other assets such as stocks, bonds, or real estate.
Create a Reasonable Plan
When creating a plan, it’s essential to set clear, measurable, and achievable investment goals. For example, you might have a goal to achieve a certain return on investment over a particular period or to accumulate a certain amount of wealth.
Have a well-defined investment strategy and stick to it. This can include when to buy or sell, how much to invest, and how to manage risk. It’s also important to review your portfolio regularly and make adjustments based on changes in the market or your financial situation.
Finally, be realistic about your investment goals, and understand that investing in cryptocurrency, like any other investment, involves risk and that there is no guarantee of returns. It’s always important to consult with a financial advisor or professional before making any significant investments.
Bonus
To fulfill my promise, here is a bonus secret on how to start investing in crypto.
Crypto Investment secret: Focus more on blue-chip coins like BTC and ETH.
It’s always tempting to jump on any opportunity and invest in new cryptocurrencies and meme coins, but the sad truth is that 99.9% of these coins are trash. Putting your money into any new crypto is risky, and you should consider it a gamble; hence you should only invest what you can afford to lose.
Lastly, remember that crypto investing is complex. You should consult professionals when needed and constantly seek new knowledge by learning from qualified crypto experts.
Life with Crypto Education
At Life with Crypto our resident expert, Kelly Sunshawl, can put you on the right track to achieving your financial goals with crypto investing. Check out our courses and join our private Facebook group.
Thank you for reading!