Crypto For Beginners: How To Get Started
So, you want to get into cryptocurrency?
Whether you have a finance background or not, intelligent investing is a crucial skill that everyone needs. Asset management and growth is fundamental to increasing your wealth, and regardless of how much experience you may have, it’s never too late (or early) to start learning. As cryptocurrency continues to solidify its role as the potential future of finance, here’s what you need to know to get started.
Do Your Homework
Before you do anything, set aside time to wrap your head around what cryptocurrency is. Start with the basics; you’ll need to have a foundation before you jump into investing. Understand how blockchain technology works and that it’s responsible for decentralizing the transfer of value through digital currency. Learn the difference between this and how the current centralized financial system works. Be aware of the distinctions between cryptocurrency and traditional investment options. Unlike the stock exchange, cryptocurrency is traded all around the world at all times, making it extremely volatile.
Additionally, with thousands of cryptocurrencies to invest in, you must understand which one is right for you. For example, are you trying to invest for the long-term gain or quick return? Are you willing to spend thousands of dollars or just a small portion of your savings? The answers to these questions will shape your investment plan and everyone should be aware of this before dipping your toes in. Parse through the cryptocurrencies available, ranging from pennies to thousands of dollars per coin, and find the ones that are right for you.
Learn Market Trends
Instead of diving directly into the market and setting up crypto wallets, monitor prices of coins you want to invest in. Resources such as coinmarketcap.com are great places to start. Many web resources offer all the information you need to monitor the performance of the coins you’re interested in. Keep a journal or a portfolio and record any decision you are thinking and keep track of the current prices. Check the historical charts and analyze how the price has changed, taking note of any patterns between those that have seen substantial returns versus those that have depreciated.
At the end of the day, the goal is to grow your investments by introducing cash positions for coins that are expected to appreciate over time. As such, buying the dip is one of the best strategies to pursue when trying to grow your investments — but how do you know when prices are about to increase again? The answer lies in analyzing the charts and remaining informed about the performance of the cryptocurrency market.
News regarding the performance of specific cryptocurrencies and the market as a whole is readily available online, and it is typically the most accurate prediction of how it will do in the future. If prices are relatively high, you can likely expect a subsequent drop and vice versa, demonstrating a negative feedback loop in prices which is also present in the stock market. Once you look into the cryptocurrency market, you’re ready to start investing.
With every investment opportunity, the golden rule must be followed: do not put in more money than you are willing to lose. This adage applies to the world of crypto more than any other industry, given how quickly a cash position can depreciate. Play around with a strict amount of money and test some of the strategies you’ve deemed successful in the past. Websites like Coinbase and Bitfinex are great places to start exchanging cryptocurrencies, but be aware of the fees you incur with each transaction.
Once you feel comfortable enough, create a crypto wallet to transfer and exchange Bitcoin and other cryptocurrencies directly. Abra is an easy-to-use and safe app that will allow you to do just that. Create multiple wallets and accounts to keep your assets diversified and record your passwords for each on paper. As you continue to progress and grow more comfortable, you can start to invest more.
Tap Into Resources & Formulate a Plan
The internet is filled with free resources that can help support your decisions and improve portfolio value. Amongst the many news outlets and information providers, be sure to only rely on the sources that you trust and are credible. Subscribe to daily crypto news pages and always read up on market trends and performances to stay knowledgeable on your own standing cash positions. Regardless, you should still make a plan of when to part ways with a coin and when to not invest. Choosing not to invest is just as valuable as buying the dip. As long as you continue to read and monitor the market utilizing the resources online, you will ultimately become knowledgeable and successful at investing in the crypto market.
Cryptocurrency is still in the early stages of development, so don’t feel pressured to enter the space quickly. As industry disruptions and creations continue to result from the emergence of cryptocurrency, it makes sense to involve yourself now before it becomes the next financial breakthrough. Ultimately, if you grow an appreciation for the innovation and technology which underlies these assets, you should have no trouble continuing to learn and monitor the world of cryptocurrency. Be patient, have faith, and invest wisely.