Lately, there's been growing interest in the digital asset space. With recent developments in the crypto market — from
PayPal
allowing users to purchase crypto on Venmo to
Tesla
accepting Bitcoin as payment for cars, and the
dramatic surge
of Dogecoin — the cryptocurrency craze is in full swing and is rapidly becoming mainstream.
Wild fluctuations in the price of cryptocurrencies, such as Dogecoin's record-breaking rise, present an opportunity for significant gains if you have the stomach for the risk. It doesn't cost much to start owning or investing in cryptocurrency, but it can be a little intimidating. In this article, we'll cover everything you need to know to start investing in cryptos such as Ethereum, Bitcoin, or Ripple.
Before you start investing, you need a good understanding of cryptocurrency — and the underlying Blockchain technology. If you are not fully conversant with the subject or feel a little bit rusty, here's a
short course
to bring you up to speed.
Where to Invest in Cryptocurrency
The first step to investing in crypto is choosing an exchange. A digital exchange is a platform that facilitates buying, selling, and holding digital assets. Opening an account allows you to trade cryptocurrencies. It's akin to opening a traditional investment account, but instead of stocks, bonds, ETFs, Mutual Funds, etc., it's cryptocurrencies and other digital assets.
There are many crypto exchanges to choose from, but Coinbase and Binance are the most popular among beginners. Currency services offered by platforms vary. For instance, Coinbase allows traders to purchase crypto using fiat currencies. Fiat currency is government-issued money that is not backed by a commodity such as gold or silver, but by the government of issuance.
The U.S. dollar and Euro are examples of Fiat currency, thus allowing you to get started right away on fiat accepting platforms. Coinbase provides
everything you need
to get started and is the first choice of many.
Binance, on the other hand, will only allow users to fund their accounts and trade with digital currencies. This platform does not offer any fiat trading at all. This currency service is known as cryptocurrency trading. However, Binance offers a more extensive selection of cryptocurrencies to trade with. While Coinbase is widely regarded as being more beginner-friendly, Binance is more suited for more advanced users.
How to Create an Account to Invest
Once you've chosen a cryptocurrency exchange, you need to create an account to start trading. Many crypto exchanges, including Coinbase, Binance, Crypto.com, Gemini, etc., offer a simple user interface and various cryptocurrencies to choose from. To create an account with a crypto exchange platform, fill out the information form, wait for approval, connect a method of payment, and you're all set.
ID verification is almost instantaneous; however, sometimes it takes days for the crypto exchange to clear and approve your account for use. For instance, Coinbase's accelerated ID verification only takes a couple of minutes, but it could take about five business days to grant full access to the platform.
Investing
You need to have a sound investment strategy to make money trading crypto. If you are new to trading cryptocurrencies, start by researching the cryptos listed in the
trading section
at Coinbase. Due diligence is imperative when investing in crypto. Before you invest in a digital asset, look at the website of the company behind it to ensure that the development is competent, reputable, and transparent.
For instance, the official Ethereum website is
https://ethereum.org/en/foundation/. Another critical factor to look into when investing in crypto is the use case. Make sure that a coin has a unique, logical purpose before you invest in it. The whitepaper can also shed some light on the project - so make sure you read it. When you are finally ready to make your purchase, don't put all your eggs in one basket. Pick several coins that you believe to be good investments.
Put the bulk of your money in established coins such as Ethereum, Bitcoin, and Litecoin. You can invest the rest in riskier investments to diversify your portfolio. You don't need to commit thousands of dollars to invest in crypto. If the price of the crypto you wish to purchase is too high, you can always invest a total sum of money in small increments over time. This investment strategy is known as Dollar-cost averaging (DCA).
Investing in cryptocurrency can be an intriguing prospect for your portfolio. However, getting started can be intimidating if you don't have the necessary information.
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