Investing in cryptocurrency is on everyone’s lips nowadays. Many have managed to accumulate a small fortune by investing in cryptocurrencies. As a result, people are intrigued about this practice and want to take their chance at investing, perhaps for the first time in their life.
The truth is, learning how to invest in cryptocurrencies may help secure your financial future and make you more knowledgeable about cryptocurrencies in general. To start you need to know a few basic things, to have some determination, a desire to invest your money and a bit of patience to see some results.
What is Cryptocurrency?
Cryptocurrency is a digital asset people use to invest or buy online products or services. You exchange real money (e.g. dollars) to buy online bitcoins, for example.
Cryptocurrency is, in a way like buying money in a new country. For example, if you live in USA and travel to the UK, you’ll need to buy pounds. You can’t use dollars to buy services or products in the UK. (Although, you can use an American bank card to make purchases).
Same with cryptocurrencies. Instead of using dollars to pay for goods, you’ll be using bitcoins, or dogecoins to make a transaction.
Why do we call them cryptocurrencies?
That’s because every digital coin is a unique code designed by web developers which makes it easy to track down and identify the trade wherever it is in the world.
Unfortunately, investing in cryptocurrency is not handled by banks the way it happens with stocks, for example.
Investing in cryptocurrencies is a dysregulated practice, meaning, no banks or financial institutions are involved in it. Imagine it like this.
You ask the TV guy to come and fix your TV problem. At the end of the job, you’ll not be paying them with a card but in cash. He won’t be writing you a receipt and, if the problem with your TV persists, you may not be getting your money back (or even get the guy to come back and finish the problem). That’s how cryptocurrencies work.
However, even though investing in cryptocurrencies is risky, you shouldn’t disregard it altogether. Learning the best ways to invest in cryptocurrency and having a good mindset will help you mentally prepare yourself for potential successes (or failures) in the crypto market.
How do you start investing in cryptocurrency?
Here are some ways to get you started with investing in cryptocurrencies in 2022. Don’t worry if you’re new to it. You can follow the steps below to grow your understanding of cryptocurrency and hopefully, become successful at investing in it.
Start your cryptocurrency investment by doing your research
Think of the type of cryptocurrency you’d like to work with. There are thousands of cryptocurrencies out there. However, according to Forbes, these are the most popular as of July 2022: Bitcoin, Ethereum, Tether, U.S. Dollar Coin, Binance Coin, Binance USD, XRP, Cardano, Solana and Dogecoin.
The most successful cryptocurrency in the world is bitcoin, with a value of $370 billion.
The other cryptocurrencies bring a lot of value as well, (especially Ethereum) so you need to check them out. Remember to consider how much money has already flowed into this cryptocurrency. Have people benefited from investing in it? If there are major success stories of investing in this cryptocurrency it may mean it will be good for you to invest in it as well.
Bitcoin has turned many unknown cryptocurrency enthusiasts into celebrities. For example, Coin Central talks about how a few youngsters choose to invest in bitcoins which led to them becoming millionaires in a few years.
Use a cryptocurrency exchange
After you’ve decided which type of cryptocurrency to invest in, open an account with a cryptocurrency exchange. In USA you can opt for Coinbase, Etoro, Wunderbit, Gemini, Robinhood or SoFi accounts. If you’re in the EU or other countries, you can choose Binance or Paxful.
Connect your bank account
Say you want to invest in bitcoins. Now you’re going to connect your bank account to the virtual wallet that you have opened in your exchange account. You can now start depositing money there.
Make an order
Start buying your bitcoins. When you order a bitcoin, it’s like ordering stocks on a stock market. The exchange will match your order with someone making an offer at the same price. Then, the exchange will make the trade. Once the trade is finished, the exchange will hold your cryptocurrency in the digital wallet for the long term.
Tip: Remember to start ordering small amounts of bitcoins. The saying in stock and crypto markets is ‘Buying small and selling high’. You don’t want to risk losing your savings in one
go, so, start small.
Prepare for fluctuations
Like stock markets, cryptocurrency markets pose a lot of risks. You need to be emotionally prepared for fluctuations in the crypto market. Bitcoin’s value may increase and decrease unexpectedly, at a time when you most need it to grow.
Whatever happens, remember that at least you took action to create passive income for yourself and your family. Not many people are brave enough to risk investing their hard-earned money into something that doesn’t bring them value right away.
Be patient with your cryptocurrency investment
Like with any other type of investment, investing in crypto is a long game. Just because the bitcoin value increased yesterday, it doesn’t mean the price will stay the same tomorrow. Or in two weeks. Or in two months. It is a well-known fact that bitcoins are very temperamental, thus, prepare for fluctuations in the cryptocurrency market, have a lot of patience and hope for the best.
Investing in cryptocurrencies in 2022 is a good idea, especially if you’re concerned about your financial future or you’d like to expand your investment portfolio. Choose a cryptocurrency you’ll be more comfortable with and start investing. In life as well as in business, Mark Zuckerberg’s saying applies: ‘The biggest risk is not taking any risk.’
Marlena Bontas is a content writer, tea drinker, a free spirit who likes walking in nature, traveling, and living in foreign countries. She advocates for mental health on her Medium Blog.