How to Invest in Cryptocurrency for Beginners: Guide

The question of how to start investing in crypto interests a growing number of people. There is no denying that this is an attractive investment option that allows individuals to gain profit in relatively short terms. Despite the obvious advantages of decentralization and high returns, crypto investing for beginners is also associated with numerous challenges.

Keep reading our guide to learn about investing in cryptocurrency for beginners, the tools you need, and the pitfalls and advantages of this investment option.

Knowing the Type of Crypto to Invest In

Before you delve into figuring out how to invest in cryptocurrency, it's important to conduct thorough research on the various options available. This way, you will be able to navigate the complexities of the market, mitigate risks, and identify opportunities for growth.

With over 26,000 types of virtual currencies around today, just about a dozen stand out as the most popular, including Bitcoin, Ethereum, Tether, Solana, Cardano, and Dogecoin. With such an abundance of options, selecting the right type is quite a challenge. Yet, there are a few aspects you should consider to better understand how to get into cryptocurrency:

• Technology: Evaluate the technology behind the cryptocurrency you want to invest in. Is it built on a secure and scalable blockchain? Does it have unique features or applications that set it apart from competitors?
• Use: Consider the cryptocurrency’s use case. Does it serve a specific purpose or address a particular industry or problem? Some types of e-money are designed for peer-to-peer payments, while others focus on smart contracts, decentralized finance (DeFi), or non-fungible tokens (NFTs).
• Market adoption: Check the level of support for the currency within the crypto community. A strong and engaged response indicates the virtual currency’s growth and sustainability. Look for active forums and social media channels associated with the coin.
• Market capitalization: High market capitalization and liquidity are the marks of an established and widely recognized asset. Smaller market cap coins typically offer higher growth potential but also come with increased risks.

Selecting a Cryptocurrency Exchange Platform and Wallet

The next step in how to invest in crypto is choosing an exchange platform to get virtual money and a wallet to store it.

Exchange Platform

An exchange or investment platform is a digital marketplace where users can communicate to buy, sell, and trade different virtual cash types. On such platforms, you can exchange cryptocurrencies for other digital assets or traditional fiat currencies.

When considering a platform to start your investment journey, take into account the level of security, fees, trading volume, types of virtual money maintained, and any minimum deposit limits.

For example, Binance is one of the biggest global exchange platforms, offering its users a wide range of trading pairs and advanced features for experienced traders. It also has its native cryptocurrency, Binance Coin (BNB), which can be used to pay trading fees on the platform at a discounted rate.

If you wonder how to start investing in cryptocurrency, consider Coinbase. Despite being easy to learn, the platform nonetheless supports a wide range of cryptocurrencies for trading and provides a secure wallet for storing digital assets. It charges fees based on a percentage of the transaction amount, with additional fees for certain payment methods.

Wallet

A crypto wallet is a program or a device that allows you to store, send, and receive e-cash while also keeping your funds secure. While exchanges provide a wallet for trading purposes, it's recommended to use a separate wallet for long-term storage and added protection. The common types of wallets are:

• Hot wallets are available in a web, mobile, and desktop format and connected to the internet, which makes them convenient for quick access and transactions.
• Cold wallets, also known as hardware wallets, are technological tools designed to store cryptocurrency on offline devices. They are highly protected from online threats like hacking and keep your money readily available.
• Paper wallets involve creating a material representation for your public and private keys, like printing them on physical paper (hence the name). This method is entirely offline, providing high security but being less convenient for regular transactions.

What To Consider Before Investing in Сrypto for Beginners

The first thing to remember about cryptocurrency investing for beginners is that it can be volatile. If you are new to investing, you should understand the risks and have a sufficiently diversified portfolio.

Another thing to keep in mind is that cryptocurrency investing is suitable for those who have realistic expectations and are ready to play a long game. Because cryptocurrencies tend to go up and down in value in the short term, novice investors can act unreasonably and miss out on the best-selling and buying opportunities.

Now that we have discussed the potential pitfalls of cryptocurrency investing, here are some of the main advantages to consider:

• Transparency. When you invest in cryptocurrencies, you can easily look up any money transactions online.
• Easy accessibility. All you need to begin investing is a computer or even a smartphone.
• Cryptocurrency network integrity. Because of transparency and decentralization, the network is well-protected.
• Durability and fungibility. Similarly to gold, a cryptocurrency such as Bitcoin has a finite supply, is difficult to destroy, and is controlled by no one authority.

Buying and Selling Crypto For Beginners

When you think about how to invest in crypto for beginners, you should understand how to buy and sell digital money. Once you’ve made up your mind on the investment platform and set up an account there, it’s time to top it up.

You should pay special attention to the choice of a funding method. You’ll likely have to choose between bank transfers and credit/debit cards. Bank transfers are a reliable and safe option, but they are relatively slow, taking up to several business days to complete. Credit/debit card payments are quicker and more convenient, yet exchanges might have higher fees for these transactions.

When the account is funded, proceed to the “Trade” or “Marketplace” section. Select the currency type and the type of order. A market order will be executed immediately at the current market price, and a limit order will be closed at a specific price you set.

Selling crypto is similar to the buying process, and to withdraw funds, you should navigate to the “Withdrawal” or “Funds” section, pick the desired payment method, enter the required details, and confirm the transaction.

All processes are quick and straightforward. Just remember to double-check the currency amount, account details, and personal information before confirming the transaction.

Final Thought

In our guide on investing in crypto for beginners, we’ve covered basic info novice investors need to know. With the proper knowledge and a balanced approach, you can harness the benefits of investing in virtual money to build a diversified portfolio that will yield a high financial return.