How to Start Investing in Cryptocurrency
What is Crypto?
A basic answer to this question is that cryptocurrency is a medium of exchange between two individuals through the digital universe that is protected by cryptography. Put more simply, its online currency. I am no computer genius so I cannot give you the great details of crypto however, I can teach you how to take the basic steps and get started in investing in this innovative space.
So you've heard all the Bitcoin rave and you're not really sure what it is, but you know a lot of people are making money off of it and you want to give it a try. If this is your first step in starting your crypto investment journey, you’re starting on the right foot. Too many people dive into investments without understanding what it is they are investing in, and because cryptocurrency is a new area of investing this is a huge beginner problem. I won't be going too in-depth on what cryptocurrency is because it is a vastly complicated technology, however, I do recommend you research and gain a basic knowledge of the technology prior to investing. A great place to start is by listening to the different crypto podcasts and hearing what each has to say. Many of them are experts or will bring in experts to speak on the technology. Because the technology is so new, new developments are made at an extremely fast rate, so it is important to keep updated.
Reading A Crypto Whitepaper
Trying to find a coin to invest in can be overwhelming at times because there are SO many coins, and each will claim to be "groundbreaking". A few big things to pay attention to when trying to find a coin to invest in is the development team, use of funds, and whitepaper (of course their are many factors outside of these to consider as well). The whitepaper is a basic "roadmap" that the developers create explaining what they plan to accomplish in a timeline, how their crypto works, and what makes it special. Each crypto you consider should have a website with a whitepaper, if it does not have one it is the first tell of a scam. By reading the whitepaper there are a few things you should take away:
- Does the goal sound possible? If the coin is claiming to cure cancer, solve global warming, and create world peace, it's probably a scam.
- Does the coin have its own blockchain? if the coin does not have its own blockchain, then it is just a figment of someone's imagination at the moment, and by investing you technically do not own anything.
- Is the coin's roadmap detailed? A good whitepaper will list the developer's goals and a step-by-step guide on how they plan to achieve those goals. If you have read the whitepaper and are satisfied with the coin's vision and with the team, its time to start investing.
Finding The Right Crypto Exchange
When you have found a coin to invest in, you have to find an exchange that has the coin listed. You will most likely have to start by creating a Coinbase account because it is, in my opinion, one of the simplest exchanges to exchange fiat currency for crypto. Once you have set up an account with Coinbase and an account with the exchange that lists your coin, you must transfer the coin needed to purchase the coin you want to the second exchange. Once you have purchased the coin it is time to set up a wallet.
When you have purchased crypto, you almost never want to leave it stored on the exchange because this is where it is most vulnerable. Because exchanges are constantly connected to the internet, they are stored in a public server that can be accessed at any time which is why they are referred to as "hot wallets". This leaves your crypto vulnerable to hackers who could possibly hack the exchange. A better way to store your crypto is in a paper wallet, which is simply a printed copy of your wallet address, a cold wallet (a wallet stored offline), or the most convenient option is to store the crypto in a wallet created by the developer. If developer wallets are an option, it will provide you with convenient access to your coin without compromising the safety of your coin. The only way a hacker could access your coins would be if they hacked your computer first. If your coin offers a developer wallet you should be able to find it on the coin's website and it should include a download link.
Crypto Investing Essentials
A couple things you will want to utilize are Blockfolio which is an app that will help you keep track of your different crypto investments and give you details on how your portfolio is performing. Make sure to check into CoinMarketCap which is a website that will give you the market-cap of the whole crypto market as well as individual coins and display where they rank overall. Many crypto communities have a Telegram group chat so by downloading the Telegram app and joining these chats it will help you to stay updated on the coin.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2018 Nate Robbins