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How to Invest in Cryptocurrency? Beginners Guide + Video
Find out how to invest in crypto with a simple and step-by-step process explained in the present article. Read on!
Key Takeaways
- Investing in crypto is a simple process and holds high potential to make profits in future.
- All you need to do is choose a crypto exchange, create an account, add funds, and choose your preferred crypto to invest in cryptocurrencies.
Starting with the advent of Bitcoin to today’s world of meme coins, cryptocurrencies completely changed the face of financial investments. While the early investors of Bitcoin grew up to be a new class of rich people, many meme coin traders also made substantial profits.
For beginners, that begs the question, “how to invest in cryptocurrency?” You can invest in cryptocurrencies on a variety of platforms like centralized and decentralized crypto exchanges, and brokerage platforms.
Beginners feel confused and intimidated to invest in crypto, not knowing that it is a simple process. In the present article, we help you invest in crypto with a step-by-step process.
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- Cryptocurrencies are virtual currencies that work on blockchain technology.
- Investing in crypto with proper research and analysis can yield profits.
- You can buy cryptocurrencies on different platforms – centralized exchanges, decentralized exchanges, brokerage platforms, etc.
- Cryptocurrencies are volatile and investing in crypto is a risky process. You must do your own research and invest only what you can afford to lose.
Methods of Cryptocurrency Investing
The novelty of cryptocurrencies made it possible to invest in them in a variety of ways. From crypto exchange platforms to traditional retirement accounts like IRAs, there are multiple ways to invest in crypto.
Buy Crypto Directly: You can directly buy cryptocurrencies from crypto exchanges as they are convenient and easily accessible platforms. They offer various features and benefits to encourage beginners to participate in crypto investment.
Invest in Crypto Funds: Investors, who are hesitant to invest directly in cryptocurrencies, can enter the market through crypto ETFs (Exchange Traded Funds). They are the best ways to leverage the price appreciation of crypto without directly investing in them.
Invest in Crypto Companies: You can also invest in cryptocurrencies by investing in crypto-related companies. Companies such as Coinbase Global, Tesla, MicroStrategy offer crypto stocks, in which you can invest and indirectly benefit from crypto.
Invest in Crypto Roth IRA: Traditional retirement accounts like Roth IRAs also allow you to purchase cryptocurrencies. Even though there is a rule that you cannot contribute crypto directly into your IRA account, you can purchase and add crypto to your IRA.
Become a Crypto Miner: Mining cryptocurrencies is another way to invest in cryptocurrencies. However, you must have a set of technical skills and knowledge to start mining cryptocurrencies and make profits from it.
How to Invest in Cryptocurrency in 2023
Step 1: Choose a Crypto to Invest In
You must consider a wide range of factors before choosing a cryptocurrency to invest in. There are possibilities to come across crypto scams, pump and dump schemes, rug pulls in crypto. To avoid all these, you must evaluate a crypto based on factors such as the purpose of the project, long-term potential, team behind the project, whitepaper, website and social media, and others.
There are different types of cryptocurrencies such as blue-chip cryptos, meme coins, utility tokens, and others. Bitcoin and Ethereum are examples of blue-chip cryptocurrencies, which are good options for long-term investment. Meme coins are the best option if you are looking to capitalize on short-term hype and exit.
Step 2: Decide the Method of Investment
Next, you must decide on which type of investment method you are going to use. Refer to the list of investment methods we have explained in the previous section and consider one based on your convenience and preferences.
We recommend using crypto exchange platforms to buy cryptocurrencies because they have easy-to-navigate and user-friendly interfaces, compared to other methods. Crypto exchanges act as an interface between the complex crypto world and novice investors.
Step 3: Select a Cryptocurrency Exchange
The next step in investing in cryptocurrencies is to select a crypto exchange platform. Coinbase, Binance, Kraken are some of the best crypto exchange platforms that you can consider for buying cryptocurrencies.
Each platform has its own pros and cons when it comes to investing in crypto. So, before choosing a crypto exchange platform, you need to consider various factors such as platform’s security, fees, minimum investment limits, supported payment methods, available cryptocurrencies and fiat currencies.
Step 4: Decide How Much to Invest
The same volatility which makes the crypto market risky, also provides an opportunity to make profits when used the right way. Keeping the crypto market performance and its volatility aside, decide how much to invest in crypto based on your requirements.
Understanding your risk tolerance, which is how much risk you can handle in unfavorable situations, is the most important and best crypto trading strategy, among others. Instead of giving into the FOMO and investing a major chunk of your savings, start small when you begin and only invest what you can afford to lose.
Step 5: Closely Monitor Performance and Trends
The next step is to pay attention to the crypto market performance and trends to stay up-to-date. Crypto industry moves fast and it is essential to keep up with the trending news and latest happenings of it to make wise investment decisions. So, closely monitor the crypto market prices and learn fundamentals involved in it before proceeding to buy your preferred cryptocurrency.
How to Buy Cryptocurrency from an Exchange?
After following the previous steps and deciding how much to invest, where to invest, and in which crypto to invest in, consider the following steps to buy cryptocurrency from an exchange.
- Create an account on the crypto exchange platform by entering necessary details like user name, email address, mobile number, password, etc.
- Verify your crypto exchange account using an email address or mobile number. And, also verify your identity by uploading government-issued identity cards, address proofs, etc.
- Deposit funds into your account using the supported payment method by the exchange platform. Most of these platforms support credit/debit card payments, wire transfers, and online payments.
- Search for your preferred cryptocurrency on the exchange platform. Enter all the details and cross-verify and then confirm the transaction to finally receive crypto into your account.
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Conclusion
Investing in crypto sounds confusing to many beginner investors, making them wonder how to invest in crypto and make profits. However, the process is simple. As a beginner, you must do your own research and understand the pros and cons of investing in cryptocurrencies. And, invest small amounts and use demo trading features to get an idea of how the industry works. Once you gain experience, you can invest more in crypto, opening doors to financial freedom by making profits!
Frequently Asked Questions (FAQs)
1. Is crypto a good investment?
Crypto is a good investment with high growth potential but it also involves risks. You must understand how the market works, do a thorough research and understand the risks, and learn the basics of crypto before making an investment.
2. Does crypto have a future?
The crypto market is extremely volatile. So much so that many times people believed that the industry was dead in previous bear markets. But, it is still up and running, which means crypto does have a future. However, we can expect some changes in regulation and development of the industry in future.
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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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