If you’d been investing in cryptocurrencies such as Bitcoin and Ethereum over the last 5 years, you most likely would be handsomely in profit by now.
It’s never too late to get started. It’s never to late to begin your cryptocurrency investment journey.
The people who you see on Twitter today, who bought Bitcoin at 10 dollars, are not geniuses. They are not possessed with the gift of amazing financial foresight. What they did have was an understanding of the cryptocurrency space and they moved decisively at the right time.
That’s what this guide will provide you with. The knowledge to get started in investing in cryptocurrency so maybe, in a few years, you can be in a great financial position too.
This guide will give you answers to questions like:
How to buy cryptocurrencies?
What’s the best cryptocurrency to buy?
Where can I trade cryptocurrencies?
How do I keep my investments safe?
So strap in and enjoy this guide.
***As a disclaimer, if you decide to sign up to some of the services recommended here (which I personally use), I may get a small commission.***
Introduction: investing in cryptocurrencies
Today, there are 1000s of cryptocurrencies out there. If it’s not Bitcoin, then it’s called an altcoin. Blockchain is the underlying technology that powers these cryptocurrencies and they can have a wide variety of uses.
For example, Ethereum is based on Smart Contracts and aims to create a global computer whereas Nano is attempting to solve the scalability issue and be used for payments (something Bitcoin is not designed for).
Investing in crypto has historically been a very lucrative affair with huge boom and bust cycles. If you were riding the wave upwards, then huge profits were made. Take a look at the below chart with demonstrates the 2017 bull run in all its glory.
Since its inception, Bitcoin rallied from $0.01 to a peak of $20,000 dollars. During this meteoric rise, Bitcoin has gone through a number of corrections such as the 2014 bear market and more recently 2018/2019.
While Bitcoin’s direction has been skyrocketing upwards, many alts have burst on the scene and subsequently crashed and burned.
Taking a measured approach to investing in crypto is always the best plan so let’s take a look at why you may want to invest.
I want to invest in cryptocurrency: is it a good idea?
The most cited reason why people want to get into cryptocurrency investing are the well documented examples of where people have made crazy sums of money. People often get a sense of Fear of Missing Out (FOMO).
Cryptocurrencies and blockchains have the potential to change the way we interact with the world as we know it. But consider the fact that only a fraction of people are currently involved in the space. Mass adoption has yet to occur.
There are potentially billions of consumers, investors and users coming into the space and that means it’s a great time to get involved. Get there before the masses!
Another reason why people get involved in Bitcoin is that it serves as a hedge against traditional currencies (otherwise know as fiat currency). The best investors never keep their eggs in one basket. Cryptocurrencies are now becoming increasingly attractive as an option to diversify and give excellent returns.
How do I buy cryptocurrencies?
Buying crypto has never been more easy. What used to strike fear into the heart of ever new investor in the space can now be achieved as easy as 1-2-3.
Let’s dig down into how we can get started buying our first cryptocurrency.
I’d always recommend buying actual Bitcoin rather than a certificate of Bitcoin. You want to be able to own a part of the tech and to be able to send and spend at your leisure.
Buying Bitcoin on exchanges is simple. I’d recommend starting on Coinbase. Sign up, verify your identity, register a credit/debit card and submit as selfie. You’re now good to go!
How to buy cryptocurrency (altcoins) on exchanges
Maybe you don’t just want to buy Bitcoin. You’ve identified a largely unknown GEM coin with huge potential. This is a little bit more challenging, but not too challenging.
One of the best altcoin exchanges is Binance. It has a huge range of coins and deep order books.
Another plus for Binance is you can trade upto a certain amount without having to verify your identity. Some may see this as a negative, however, and be looking for different experience such as a regulated exchange. More on this later!
Buying your first altcoin on Binance
- Buy Bitcoin (BTC) or Ether (ETH) on Coinbase
- Create an account on Binance
- Send your BTC or ETH to Binance
- Use it to trade for an altcoin
- It’s really that easy!
Binance is therefore a great exchange to use, but you have to remember it’s an unregulated exchange. If you want to increase your peace of mind and use one that is protected by regulatory compliance (while still easy for beginners), then you may need to look for another option.
The One I use is CoinMetro. This exchange is fully regulated, is super easy for beginners and has 24/7 online support in case you need some guidance.
This exchange allows you to to deposit via SEPA, IBAN, crypto or Visa credit/debit card.
I have covered this one previously in a full beginners guide and it’s well worth a look The Complete Beginner’s Guide to CoinMetro Review 2019 – Is it Safe
An exchange to choose if safety and usability are a priority and you don’t mind submitting ID documents – try out CoinMetro today.
What are the risks of investing in cryptocurrencies?
Although there is a lot of scope for making great returns from cryptocurrency investment, the other side of the coin is that the risks are real. You can lose your initial investment.
Let’s explore some of the risk factors.
The swings in cryptocurrency prices are be more pronounced when compared to traditional markets. This is why margin trading cryptocurrencies can be extra risky. Try to learn and understand the pattern of altcoins before you invest.
The crypto-verse has been a place where scam projects were rife.
For example, dig into the experience of OneCoin. It promised big returns and minimal risk. The business was a pyramid scheme based on smoke and mirrors. Investors were victimised while the others got rich
As regulation and accountability creeps in, things are getting better. But you still need to exercise caution. I’d always recommend investing in well known projects and reduce your risk accordingly.
What cryptcurrencies should I buy for my portfolio?
In this part of the post, I’ll discuss some simple investment strategies for beginners.
The following coins are a good starting point to invest in as they are some of the best known. Having a good chunk of your portfolio wrapped up in these will help manage risk.
Bitcoin – the biggest and the best with first mover advantage and a solid history
Ethereum – Smart Contracts and excellent developer base
Ripple – remittance for real world businesses
A smaller proportion of your portfolio should be reserved for more risky altcoin choices where arguably gains and losses can be greater. In this post, 5 most promising altcoins for 2020, I cover some coins that I’ve taken a punt on.
Part of the fun and challenge, however, is finding your own GEM coins. This is where due diligence in the form of research comes into play. In any investment space, Do Your Own Research (DYOR) always wins out.
Different types of cryptocurrencies
When you conduct your research into which cryptocurrencies to buy, you’ll come cross different types of coins.
- Payment Currencies – coins used for payments
- Blockchain Economies – platforms that take functionality further than payments. Some Blockchain Economies you may have heard of include Ethereum (ETH), Ethereum Classic (ETC), EOS (EOS), NEO (NEO), and Tron (TRX)
- Privacy Coins – Some digital assets are created with a focus on privacy. Crypto assets like ZCash (ZEC), Monero (XMR), PIVX (PIVX), and so on are examples of Privacy Coins.
- Utility Tokens – Utility tokens are digital tokens that are used for a blockchain-based product or service. Examples include BAT and OMG
- Stablecoins – coins that hold their value. For an examination of stable coins, check our stable coin guide
How to store cryptocurrencies safely?
Buying and selling cryptocurrencies is very easy. Storing cryptocurrencies can be equally easy, but you always must practice good safety behaviours to minimise risk.
There’re bad actors just waiting for people to slip up. If you take precautions, then you should minimise the chance of this happening.
Don’t keep all your coins on an exchange
An exchange is an example of a hot wallet. These are the most risky ways of storing your coins. Don’t keep all your savings on a exchange. Keep drawing them off and store either on a desk top wallet or better buy a Ledger Nano. A ledger Nano is an example of a cold storage device and offers excellent security and peace of mind.
If you don’t want to invest in a Ledger Nano X just yet, we have covered a range of wallet options for storing coins, check out The Best Crypto Wallets.
Watch out for scams
As the crypto-sphere is largely unregulated, scams can be plentiful.
There are several ways in which crypto scammers target their victims, but one of the most common ways are phishing attacks.
In a phishing attack, the scammer pretends to be someone else (like a cryptocurrency exchange), in order to steal your coins.
Phishing scams can be performed via email, social media or even creating spoof websites.
The best advice for staying safe is to treat everyone with caution and if something sounds to good to be true it probably is!
How to keep track of cryptocurrency prices
To keep track of cryptocurrency prices your best friend is CoinMarketCap CMC).
CMC is by far the most popular website to check cryptocurrency prices.
CMC enables you to check the prices and market capitalisations of thousands of coins. It also enables you to see on which exchanges the coins are traded and it also provides you with some relevant links about each coin.
Simply go to Coinmarketcap and click on the coin you want to buy.
Next, click on the Markets tab for that coin. Here’s where you can get OmiseGO (OMG). The Source column will show you the exchanges where this coin is being traded.
You will notice how many of them are traded against Bitcoin or Ether.
All you have to do now is find the best exchange on the list and create an account. If you can buy BTC or ETH directly on there, then great.
If not, find the BTC receiving address. Copy it. Log back into Coinbase and send the BTC from here into the exchanges BTC receiveing address. Simple!
How to invest in cryptocurrency: an easy beginners guide – wrapped up
And that’s it! If you read the full guide, then you now know how to invest in cryptocurrency like a boss. You are ahead of the vast majority of people out there!
If you still have any unanswered questions, I’d love to read them in the comments below and feel free to share the page on your favourite social media channels.