How to start investing in cryptocurrency: A guide for beginners

If you’re new to the world of crypto, figuring out how to buy Bitcoin, Dogecoin, Ethereum, and other cryptocurrencies can be confusing. You would be second-guessing every step, and that can be a bit of a problem.

First and foremost, you need to understand that to make money, you need to lose at some point in time, and fear can be a major obstacle while booming into a bigger stage.

The fear of failure can make you give up just as the thought of it can make you quit. Before investing your money in digital currency, you need to know that you won’t start making money immediately, and fear can make you withdraw the very moment things are about to make sense.

You should know the prices of cryptocurrencies are about as volatile as an asset can get. They could drop quickly in seconds on nothing more than a rumor that ends up proving baseless.

Volatility is a game for high-powered Wall Street traders, each of whom is trying to outgun other deep-pocketed investors. A new investor can easily get crushed by the volatility. Due to the very fact that they are scared.

So, before investing, get rid of your fears.

Then you need to be patient; remember, a patient dog eats the fattest bone. You need to invest knowing that it might take years before it clicks. If you’re looking for quick money, please check for another way to make money because investment isn’t for people who want immediate benefit.

You need to wear armor and step into the battlefield like an expert, and this little information I will provide below will act as a shield so you won’t make unnecessary mistakes down the line.

Thankfully, it’s pretty simple to learn the ropes. You can start investing in cryptocurrency by following these five easy steps.

Before you begin, I know the majority of my audience will have done further research on what cryptocurrency means, but for the minority, I will take a few paragraphs to explain it.

CRYPTOCURRENCY

Cryptocurrency is a digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority. Decentralized cryptocurrencies such as bitcoin now provide an outlet for personal wealth that is beyond restriction and confiscation.

Cryptocurrency is a digital currency that is designed to work as a medium of exchange through a computer network that is not reliant on any central authority (e.g., the government, banks, etc.) to uphold or maintain it. It simply states that cryptocurrency can’t be confiscated by the government or the banks and it is the best way to save your money

Let me give you a scenario of various ideas to think about before putting your money in the banks.

Example A

Peter has two hundred thousand dollars that he has no use for at the moment, so he decides, instead of lavishing it on unnecessary items or partying it away, to invest the money in a bank.

Peter becomes an investor (who has money to invest), and John, who is a businessman and is in need of two hundred thousand dollars, becomes the corporation (who requires capital to grow and run his businesses). Ten years later Peter goes to the bank to collect his money, and it still remains two hundred thousand dollars, if not lower.

Example B

Peter has two hundred thousand dollars that he isn’t making use of at the moment; he decides to invest in cryptocurrency.

Let’s say Peter invested in the year 2010, and he bought bitcoins for as low as $1 for 200 bitcoins; he had about 300 million bitcoins in his account.

Later in the year 2020, bitcoin increased to $100 per bitcoin; Peter sells $100 worth of bitcoin, and by the end of the year, he has 1 billion dollars in his account and buys more bitcoin and some cheaper coins that have a possibility to boom.

In the year 2021 those cheaper coins boom, and he sells again and buys more…

If we are comparing the two examples from above, I’m very sure you wouldn’t want to be the Peter in example A.

So to make sure you are not making mistakes like Peter in example A and also making sure you’re making positive decisions so you can be Peter in example B, the steps are as follows:

Choose a Broker or Crypto Exchange

To buy cryptocurrency, first you need to pick a broker or a crypto exchange.

What Is a Cryptocurrency Exchange?

A cryptocurrency exchange, or a digital currency exchange (DCE), is a platform where buyers and sellers meet to trade cryptocurrencies.

It is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies.

Exchanges often have relatively low fees, but they tend to have more complex interfaces with multiple trade types and advanced performance charts, all of which can make them intimidating for new crypto investors.

Exchanges may accept credit card payments, wire transfers, or other forms of payment in exchange for digital currencies or cryptocurrencies.

Some of the most well-known cryptocurrency exchanges are Coinbase, Binance, Huobi, and Okex.

An important note: As a new investor in crypto, you’ll want to make sure your exchange or brokerage of choice allows fiat currency transfers and purchases made with US dollars or your currency. It entails that some exchanges only allow you to buy crypto using another crypto, which will be difficult.

What Is a Cryptocurrency Broker?

Cryptocurrency brokers take the complexity out of purchasing crypto. It is a firm or an individual that acts as an intermediary between the cryptocurrency markets to facilitate the buying and selling of cryptocurrencies. It offers easy-to-use interfaces that interact with exchanges for you.

Our top 5 picks for the best crypto brokers in 2022:

1. eToro is the winner.

2. TradeStation takes second place.

3. EightCap rounds out the top three.

4. Swissquote came in fourth.

5. Capital.com just made it to the list in fifth place.

An Important Note: While they’re undeniably convenient, you have to be careful with brokers because you may face restrictions on moving your cryptocurrency holdings off the platform. For instance, you cannot transfer your crypto holdings out of your account.

Create and Verify Your Account

After deciding whether it is a cryptocurrency broker or exchange you want to venture into, you can sign up and open an account; it all depends on the platform you choose and also the amount of money you have to invest.

The main issue isn’t to create an account but to verify your identity. This is to help you protect your money, to prevent fraud, and to meet federal regulatory requirements.

The platform may ask you to submit a driver’s license, passport, BVN, and national identity card. Which will be processed by also submitting a selfie to prove your appearance matches the document presented.

If you don’t have such a document, make sure to get one to have your identity processed and completed rather than asking a friend or a family member to lend you their driver license or passport to complete the verification.

Such people have the right to your money, and by the end of the day, if anything happens and you need to clear it out, such a person will be needed and not you.

Also if you’re the family member or a friend who lends out your driver license or passport, remember that

• You won’t be allowed to open an account for yourself on such a site because you’re already there. So be careful of the choices you make and who you make them for.

• Also, for any crime that is committed on such a site, you’re the one who will be punished and your identity tarnished.

Deposit Cash to Invest:

To buy crypto, you’ll need to make sure you have funds in your account. When I say "funds," I mean money that can yield a bigger result; You might deposit money into your crypto account by

Linking your bank account, authorizing a wire transfer, or even making a payment with a debit or credit card—it all depends on your funding methods and your exchange or broker.

Just so you know, you may have to wait a few days before you can use the money you deposit to buy cryptocurrency.

An Important Note:

Using a credit card to deposit money.

Some exchanges or brokers may allow you to deposit money from a credit card; doing so is extremely risky—and expensive.

(Credit card companies process cryptocurrency purchases with credit cards as cash advances. This means they’re subject to higher interest rates than regular purchases, and you’ll also have to pay additional cash advance fees.)

For example, you may have to pay 5% of the transaction amount when you make a cash advance. This is on top of any fees that your crypto exchange or brokerage may charge; these can run up to 5% themselves, meaning you might lose 10% of your crypto purchase to fees.

Placing Small Deposits:

I am not saying you should invest all the money in your account; a lot of people make the mistake of depositing a small amount of money hoping it will turn into a million next year.

Before depositing, know how much is in your account and also how much you would like to invest. If you have a lot to invest, then invest a lot, but keep investing if you have.

But if you don’t have it, then invest at a small rate, but remember to keep investing; if not, you won’t get a bigger result.

For instance, Peter invested $2,000 and bought bitcoin at the rate of $1 per 200 coins, and next year he sells it at the rate of $200 per 1 coin and gains $700,000. While Kelly invested $200,000 and bought bitcoin at the rate of $1 per 200 coins, next year he sold it at the rate of $200 per 1 coin and gained $1.7 billion.

This simply means that the bigger you invest, the bigger the gain.

Place Your Cryptocurrency Order:

After depositing money into your account, the most important step is to place a cryptocurrency order; there are a lot of digital currencies to choose from, and due to the variety of orders, it becomes confusing to choose the right one.

First and foremost, there is no right coin; there are hundreds of currencies ranging from the well-known coins like Bitcoin and Ethereum to obscure coins like IOTA, Vertcoin, Cardano etc.

Before purchasing any coin of choice, you need to do further research, calculating the analysis and possibilities. But it will be safer to invest in the well-known coins, and before investing, probably wait till it falls a little.

Also, it is very important to know its ticker symbol—Bitcoin, for instance, is BTC—and how many coins you’d like to purchase. With most exchanges and brokers, you can purchase fractional shares of cryptocurrency, allowing you to buy a sliver of high-priced tokens like Bitcoin or Ethereum that otherwise take thousands to own.

The symbols for the 10 biggest cryptocurrencies based on market capitalization* are as follows: Rankings

BTC - Bitcoin

ETH - Ethereum USDT - Tether USDC - USD Coin BNB - BNB XRP XRP - XRP

BUSD - Binance USD ADA - Cardano

SOL - Solana DOGE - Dogecoin

Select a Storage Method

Cryptocurrency exchanges are not backed by protections like the Federal Deposit Insurance Corp. (FDIC), and they’re at risk of theft or hacking. You could even lose your investment if you forget or lose the codes to access your account, as millions of dollars of Bitcoin already have been. That’s why it’s so important to have a secure storage place for your cryptocurrencies.

As noted above, if you’re buying cryptocurrency via a broker, you may have little to no choice in how your cryptocurrency is stored. If you purchase cryptocurrency through an exchange, you have more options:

Leave the crypto on the exchange: When you buy cryptocurrency, it’s typically stored in a so-called crypto wallet attached to the exchange. If you don’t like the provider your exchange partners with or you want to move it to a more secure location, you might transfer it off of the exchange to a separate hot or cold wallet. Depending on the exchange and the size of your transfer, you may have to pay a small fee to do this.

Hot wallets: These are crypto wallets that are stored online and run on internet-connected devices, such as tablets, computers, or phones. Hot wallets are convenient, but there’s a higher risk of theft since they’re still connected to the internet.

Cold wallets: Cold crypto wallets aren’t connected to the internet, making them your most secure option for holding cryptocurrency. They take the form of external devices, like a USB drive or a hard drive. You have to be careful with cold wallets, though—if you lose the keycode associated with them or the device breaks or fails, you may never be able to get your cryptocurrency back. While the same could happen with certain hot wallets, some are run by custodians who can help you get back into your account if you get locked out.

These five steps should get you started in making good choices while investing in cryptocurrency, but there are also other means of investing in cryptocurrency.

They are:

1. Cryptocurrency futures:

What Are Cryptocurrency Futures? Cryptocurrency futures are contracts between two investors that bet on a cryptocurrency's future price. They allow investors to gain exposure to select cryptocurrencies without purchasing them.

Cryptocurrency Funds:

These funds are exclusively contained in cryptocurrencies or manage a mix between cryptocurrencies and other assets.

Such as the Grayscale Bitcoin Trust, which also exists and allows you to wager on the price swings in Bitcoin and Ethereum as well as a few other altcoins. So they can be an easy way to buy crypto through a fund-like product.

Crypto exchange or broker stocks:

A cryptocurrency exchange is a place where buyers meet sellers of both cryptocurrencies and fiat money.

An exchange, then, acts as an intermediary who enables the trade and charges a fee for this service.

There are two classic examples of using cryptocurrency exchanges.

Purchasing cryptocurrencies for fiat money and trading various cryptocurrencies between each other, for example, when you want to exchange your Bitcoin for Ethereum.

A broker is a mediator in the relationship between traders and the market.

Simply said, a person who is using a broker for trading deposits money (or crypto) into the broker’s account and then has the chance to use various products that the broker offers.

A trader doesn’t need to trade his own deposited crypto or fiat currency, but he can use a different trading pair. The broker will find a counterparty for the transaction; in some cases, the broker can serve as one and execute the trade.

Blockchain ETFs:

Blockchain is a fairly new technology that generates a ledger, which then stores all information regarding a transaction (date, time, dollar amount, etc.).

This ledger is decentralized, meaning it is not kept in one location but distributed across a network that can be viewed by the public. The information in the ledger is also incorruptible.

Bottom line

Cryptocurrency is a highly speculative area of the market, which means it is highly risky, and many smart investors have decided to put their money in digital currency. It is very simple: if you want to be rich, you must be a smart risk-taker. For beginners who want to get started in trading crypto, the best advice is to start at a small rate and only use the money that you can afford to lose