When investing in cryptocurrency, you will have to decide on whether you will invest directly or indirectly – for instance, through stock. After deciding to invest directly, you will need to remain in full control of the cryptocurrency exchange or use custodial services such as Coinbase. To invest directly in cryptocurrency, you will require a cryptocurrency wallet. The choice of a wallet will affect your control on the cryptocurrency.
After getting the cryptocurrency wallet, you will need the method of obtaining the cryptocoins. Typically, you will require the services of a broker or cryptocurrency exchange to sell you the currency and to facilitate your trading. However, you can also opt to mining the cryptocurrency or encouraging your customers to use cryptocoins when paying for your services or goods.
Part your investment involves being able to cash out. To cash out, you have to convert the cryptocurrency back to the top coins such as Ethereum, Bitcoin, or Ripple. You will also need the access of platforms that allow trading of dollars such as Coinbase and Kraken.
If indirect cryptocurrency trading sounds good to you – such as trading through stocks – you will have to consider several options. They are:
– The GBTC trust, which is traded in the stock market.
– Bitcoin futures.
– Stocks related to cryptocurrencies such as NVIDA, AMD, RIOT or SQ.
– Private funds – this option requires you to be one of the accredited investors. You also need to meet several capital requirements.
Each of the two investment methods comes with its considerations, benefits and problems. Remember that trading of cryptocurrencies is taxable, unless your work will only involve buying and holding of the coins.
How to get the coins
To invest in cryptocoins directly, you have to start by obtaining them. To get them easily, you will have to opt for exchange-broker-wallet hybrids such as Coinbase/GDAX, which allows the customers to sell, buy and store the cryptocoins. It will help you create a form of a cryptocoin shop. Coinbase is a form of custodial wallet service that offers you direct access to the cryptocoins and you can move it to the non-custodial wallets if a need arises. GDAX is the trading platform of Coinbase and you can use it to avoid the fees Coinbase charges.
To access various altcoins, or coins that are not Bitcoin, you will have to sign up for the exchanges that facilitate cryptocurrency-to-crytocurrency trading such as Bittrex. The platforms allow users to dollars to buy Ethereum or Bitcoin on Coinbase/GDAX and then trade it for the other cryptocurrencies on some exchange platforms like Bittrex.
Some exchanges such as Kraken provide a wide range of cryptocoins and allow the use of dollars to buy the coins – you just need to register for the coin exchange. Every exchange comes with its benefits and problems. Therefore, you should go for several exchanges because none of the choices is right or wrong.
How to sell them
To benefit from cryptocoins trade, you should not just buy and store them – you should be able to sell them too. Only a few exchanges allow trading of crytpocoins for dollars. Moreover, the number of coin choices that trade for real world money are also few.
For that reason, you will have to setup Kraken, Coinbase and other exchanges that facilitate the trading of cryptocoins for dollars and to invest your gains in to coins that trade to real money. They include Ripple, Bitcoin, Litecoin and Bitcoin Cash.
Choosing the cryptocoin wallet
In your trading, you will need a good wallet to hold the cryptocoins. Bittrex, Coinbase/GDAX and Kraken provide their version of online wallets. You can choose to store your coins in the wallets if they are operational. However, you should not use a single wallet for a time. You will have to look for alternatives.
An offline wallet is a better choice for long-term internet money storage. As you expect with the methods of obtaining online money, each wallet comes with its benefits and problems. Online wallets provide simple storage solutions, but offline wallets allow you to control the safety of your coins. The wallet allows storage of encrypted passwords, which represent your cons.
Investing in cryptocoins trading is a personal choice. Every trading method will require some wisdom. Most people prefer direct investment but a few go for the indirect investment. Before investing, do some more research and think about the method you have selected. Remember that you can go for several investment methods.
Author: Autour Bart Bregman