This is an article explaining how to invest in crypto – cryptocurrencies written in a beginner friendly way. You will also learn why you should invest in crypto, which cryptocurrencies should you research, where can you buy them and how to store them. Those are the questions that we are getting asked most frequently, so this article will hopefully help you out.
Disclaimer: we are not a financial institution, we only provide education and knowledge material, do not take this information as an investment advice.
Introduction to investing in cryptocurrencies
If you are reading our blog and landed on this article, you are probably already interested in cryptocurrencies. Virtual currencies like Bitcoin, Ethereum and Litecoin are by far the hottest investment assets right now. Many people see a future where Bitcoin and other cryptocurrencies will replace Euro, Dollar and other fiat currencies.
Investing in Bitcoin and holding it means you are a part of this venture. If Bitcoin or any other cryptocurrency was to ever replace any of the current fiat currencies, the value of that cryptocurrency will shoot up sky high. Buying and investing in cryptocurrencies is supporting and believing in such or similar visions.
People who invested in Bitcoin early saw a massive return, some even a stunning 25,000% increase of their initial investment. There are other coins that provided massive gains too, for example Since may 2016, Ethereum coin saw an increase of 2,700%.
Some of you might be thinking its too late to invest or something as the value of crypto coins is much higher as it was a few years ago. Of course, it would be much better to invest a few years ago, but if you believe and understand the potential that crypto holds then today is probably the best day to invest and be the part of the journey.
With all that said, you need to keep in mind that cryptocurrencies are not like a regular investment. The volatility is huge and some parts of crypto are still unregulated. Ther are also other risks, for example, an exchange getting hacked, losing your private key and so on. So it goes the same as investing in anything else, don’t invest more then you can afford to lose.
Why invest in cryptocurrency
If what you have read before doesn’t peek your interest, here are 3 more good reasons to invest in crypto.
1. You will protect your net worth against the fall of the Dollar, which many people believe will happen soon.
2. You will support the vision of cryptocurrencies, that is a decentralized monetary system not controlled by a central entity.
3. Because of its ground-breaking technology that can solve many of the current problems.
Of course, there are also bad sides to investing in crypto, like FOMO “investing”, which translates to Fear Of Missing Out investing. That is when people buy a specific coin when it has risen a lot in hopes to make some quick money and this is usually a really bad idea so try to avoid this. You need to take the more cautious approach, research different coins and only then invest.
Which cryptocurrencies to invest in
Until the late of 2016, there were pretty much no other cryptocurrencies beside Bitcoin. So if you wanted to invest in cryptocurrencies you would pretty much buy Bitcoin and that would be it. The times for altcoins were pretty shady back then, mostly used to fuel pump and dump schemes.
This has changed a lot until today, Bitcoin dominance is now “only” at 39% at the time of writing this article. This happened because many people noticed the problems in Bitcoin like scalability, speed, transaction costs and so on. There are many coins solving the problems Bitcoin is facing today and in the future. We can see a comparison of 4 different crypto coins in the picture below and its a clear representation of how other coins are outrunning Bitcoin.
So when investing in cryptocurrencies, Bitcoin still tends to be the standard but it shouldn’t be the only digital coin in one’s portfolio. So when investing in other than Bitcoin coins, so-called altcoins you need to do some research and use common sense. Many crypto projects will promise everything and more but will fail at realizing the basic things and that’s where you need to be careful. One great place to check out coins is Bitcointalk forum located here: https://bitcointalk.org
There is a sub-forum called Alternate cryptocurrencies, where you can find more information about a coin that you are interested in. You will be able to see other people’s thoughts on a particular coin, developers participating in discussions and much more. Always do good research before you pick your coins to invest in.
Different coins aim for different things. We have coins that are focused on privacy like Monero, Dash, zcash and others, there are coins that are focusing on speed, some are focusing on smart contracts, and so on.
Currently, there are over 5000 cryptocurrencies, and every day new ones come and some die off. So it is very important to warn you again to do research and don’t just throw your money in random coins.
Where to buy cryptocurrency
A few years ago it was a complicated process to buy cryptocurrencies and today they are pretty much everywhere.
So let’s begin with the Bitcoin. The easiest and most straightforward way to buy Bitcoins is through so-called exchanges. There are many spread throughout the world, here is a list of few.
Buying Bitcoins is not a problem, it’s a very straightforward process. You register on an exchange, fund your account with fiat currency and then buy Bitcoin with that. It is a good idea to use an exchange that is closest to you, but it’s not a requirement.
Unlike Bitcoin, altcoins are a bit harder to acquire. The major exchanges usually only sell Bitcoin, but there are thousands of other coins out there. Some of the major exchanges are starting to realize the power of altcoins and are listing those also, but many are still not there. So to buy altcoins you will usually have to register on so-called altcoin exchange. Here is a list of the more popular ones:
One way to find an exchange where the coin you are interested in is to hop on coinmarketcap, located at https://coinmarketcap.com/
Find a coin that you are interested in, click on it and then you will see a menu “Markets”. This will show you where that particular coin is being traded.
How to store cryptocurrency
Once you acquired your desired cryptocurrencies, the next thing to do is to store them somewhere.
It is usually a bad idea of storing your coins on the exchange you bought them from. That is because exchanges can get hacked or closed down, and you don’t want any of that to happen especially when you have coins stored there.
The point of cryptocurrencies is decentralization, so there is no different when it comes to storing them. You don’t need anyone to store them for you, you don’t need any institution or anything. All you need to do is to download a “wallet”. There are different options for different coins. Some coins have desktop wallets, mobile wallets, online wallets, etc. while some coins only have desktop wallets. When storing your coins this way, it is important to realize that only you are responsible for those coins. If your phone gets damaged you might lose your coins, if you get malware on your computer your coins could be gone. You must be very careful when choosing where to store your coins. Some people like to have a separate phone or a computer where they only have their wallet installed so they do not risk getting their phone or computer infected with viruses. But there are other, safer methods of storing your coins, so keep reading.
The next way you can store your coins is on a USB stick. Yes, you can have your virtual coins stored on your USB key. You can do that by copying your wallet file to your USB. It might be a good idea to have 2 or 3 such USB sticks as a backup.
The next thing you can do is to print your private key. You simply print your private key on a piece of paper. The only thing you need to access coins on a specific address is a private key, so that is one good way of storing. And if anyone knows your private key, they can steal all your coins on that address. It is very important to understand how all this works, check out the following article: https://bitzuma.com/posts/six-things-bitcoin-users-should-know-about-private-keys/
Some wallets also support seeds, which is a sequence of 12 to 24 random words. With those, you can rescue every address that was made with this wallet. You can also print those or write them somewhere safe.
But the safest options to store your coins is a hardware wallet. The most popular are Ledger and Trezor. This is a small machine, sometimes shaped like a USB stick, which can create keys and sign transactions without a computer or a mobile phone. That means that most valuable part of your coins ( private keys ) won’t have to touch the internet at all. When buying hardware wallets such as Ledger and Trezor, it is very advised to purchase them from the makers and not 3rd party resellers like eBay sellers or people on forums. You never know if someone took them apart and put in some backdoor that will transfer all your coins to their address or something similar.
So that is it. Now you know how to invest in cryptocurrencies, why it is a good idea to invest in them, how to research, where to buy and how to store your coins. Remember as always, research coins before you buy and don’t blindly follow advice you find on the internet.