As the old saying goes, if you can’t beat them, join them. If you’re looking to get into the booming world of cryptocurrency but feel overwhelmed by the myriad of options available, then this guide is for you.
Cryptocurrencies are becoming more and more mainstream. Depending on the day, you can find news articles, videos, and podcasts dedicated to informing the public about this new asset class.
If you want to invest in cryptocurrencies but don’t know where to start, this is an article for you. In this guide, we’ll discuss some of the most accessible and simplest ways to invest in cryptocurrencies, including the most popular coins, investing strategies, and the safest and most secure ways to buy your first coins.
What is a Cryptocurrency?
A cryptocurrency is a digital asset designed to work as a medium of exchange that is secure and unregulated. Simple enough, right? Well, not exactly. As the name suggests, a cryptocurrency exists as data that is stored and managed by the blockchain technology.
There are a variety of cryptocurrencies, with more being developed all the time. The most common types of cryptocurrencies are:
- Tokens: These are cryptocurrencies designed to be used as a utility. Think of things like mobile phone minutes, gift cards, or airline miles. You’ll usually find these tokens backed by a specific company or organization.
- Digital Scraps: These are cryptocurrencies designed for use as a medium of exchange. They’re usually best suited for larger purchases.
How to Buy Your First Cryptocurrency
Unfortunately, there isn’t a “do-it-yourself” option to buy your first cryptocurrencies. Like most financial markets, buying cryptocurrencies requires you to go through a broker or an exchange. A broker is someone who buys and sells cryptocurrencies on your behalf.
Exchanges are digital markets where you can buy and sell cryptocurrencies for local currency. It’s easy to find an exchange in any country, as long as there are trading pairs available for the currency you’re interested in.
The most popular types of exchanges are:
- Broker exchanges: Broker exchanges let you buy and sell cryptocurrencies for a fee. Most broker exchanges let you only buy cryptocurrency, not sell. If you’re interested in trading cryptocurrencies, you’ll need to use a broker.
- Cryptocurrency exchanges: Cryptocurrency exchanges are digital markets where you can buy and sell cryptocurrencies for free. Most cryptocurrency exchanges let you trade cryptocurrencies for other cryptocurrencies or for fiat money (government-issued currency) such as USD, GBP, or EUR. They usually don’t let you trade cryptocurrencies for other financial assets.
How to Trade Cryptocurrencies
If you want to trade cryptocurrencies, you’ll need to find an exchange that offers trading pairs for the currencies you’re interested in.
Note that you’ll need to check the security and liquidity of any exchange you use. This is usually done by looking at the volume and reputation of the exchange in online forums such as Reddit. The better the reputation, the more likely the exchange is to be trustworthy.
Once you’ve found an exchange that you like, you’ll need to open an account and fund it with either funds from a bank account or a credit or debit card. After that, you can start trading cryptocurrencies for whatever financial assets you want, including assets not offered by the exchange.
How to Safely Store Your Cryptocurrency
Like many new and exciting investment opportunities, cryptocurrencies have attracted a lot of people who don’t have the necessary expertise to make informed investing decisions. Because of this, it’s easy to see how people could make mistakes when storing their cryptocurrency. Here are a few things to keep in mind:
- Always keep your cryptocurrency stored in a separate wallet from your main money. This will minimize the risk of losing your money if your computer gets hacked.
- Make sure you have a backup of your wallet.dat file. This is the equivalent of a backup password for your Bitcoin wallet.
- Don’t leave your cryptocurrency in an online exchange account. Rather, move it to a separate wallet as soon as you’re done trading.
- Don’t share your wallet address with anyone. An address is like a bank account number, and sharing it means that someone could access your funds that way.
As with almost any investment, it’s important to do your research before buying any cryptocurrency. One of the most common questions we get here at CoinCentral is “What are the top cryptocurrencies to buy?” The short answer is that it depends.
For example, right now most analysts would say that the top cryptocurrency to buy is Bitcoin. Bitcoin is by far the most liquid and widely-accepted cryptocoin, and is the base unit of measurement for many other cryptocurrencies. If you want to buy other coins in the future, then it makes sense to buy Bitcoin now.
As seen in the table above, there are a variety of ways to get started with cryptocurrencies. Some are more accessible than others, and some are more suitable for certain investors.
The most important thing is to do your research and find an option that fits your investment goals and risk tolerance. Once you’ve found an option that works for you, don’t be afraid to give it a shot!