Currencies that exist digitally or virtually and transact through cryptography are known as cryptocurrencies. Cryptocurrencies are growing in popularity and ascending in the digital market. As a result, investors are on the rise, looking to profit from it while it’s hot.
Experienced investors across the world have speculated on its advantages and abilities as a futuristic currency. So, let’s read along to understand the basics and tricks of investing in cryptocurrency in 2022 for beginners.
Understanding Cryptocurrency: What is Cryptocurrency?
Cryptocurrencies are digital forms of money that are more secure in exchange and transactions. Digital money, like cryptocurrencies, is growing in demand as it protects digital finances. It is also primarily unhackable as cryptocurrencies are highly secured and encrypted by modern asymmetric encryption methods like the Rivest Shamir Adleman (RSA) methods.
The most striking word that comes up when cryptocurrencies are discussed is the term “Bitcoin”. It was the first cryptocurrency founded in 2009. Other popular terms include Dogecoin, Litecoin, XRP or Ethereum. Investing in bitcoin has been all the rage in the past few years and is a trend that is growing globally.
Top Six Cryptocurrencies to Invest In:
Before we move on to understanding how cryptocurrencies work, let’s take a look at some of the most popular cryptocurrencies and their estimated market caps.
| Cryptocurrencies | Market cap |
| Bitcoin (BTC) | $565 billion |
| Ethereum (ETH) | $219 billion |
| Tether (USDT) | $72 billion |
| U.S. Dollar Coin (USDC) | $54 billion |
| XRP (XRP) | $19 billion |
| Binance USD (BUSD) | $18 billion |
| Solana (SOL) | $14 billion |
| Dogecoin (DOGE) | $11 billion |
Note: Market capitalization (or market cap) in the case of Bitcoin or another cryptocurrency is the market value of all the coins that have been mined
Now that we have a primary understanding of cryptocurrencies let’s move on to the next step of understanding how cryptocurrencies work.
You have to note that the government does not handle cryptocurrencies. Instead, it runs outside the banking system on a distributed public ledger called a blockchain.
Using blockchain technology, companies track your Cryptocurrency records of all transactions updated and held by currency holders. The information on blockchains cannot be altered, deleted or destroyed.
Generating cryptocurrencies involves a process called mining. The mining process involves massive amounts of computer hardware, software and programs that allow people to buy, sell, store and decrypt to transact. Cryptocurrencies are worth whatever the buyer or sellers are bidding on. A fixed price is never decided on the value of cryptocurrencies. The process of mining for one bitcoin usually takes 30 days.
If cryptocurrency investment is on your cards, the next section will guide you on where you can get them.
Cryptocurrency: Where to Buy Cryptocurrency?
Cryptocurrency brokers are essential in the buying and selling of cryptocurrencies. They act as an intermediary and facilitate the process between traders and miners. Therefore, choosing a trusted cryptocurrency broker will make your investment process less complicated. Robinhood and SoFi are two of the most well-known crypto brokers. Once you decide on your broker, you proceed to open and verify your account on the platform of your choice.
We have listed below some of the best platforms on which you can sign up and start your crypto journey.
- Coinbase
- Voyager
- BlockFi
- Uphold
- Kraken
- eToro
- Bitcoin IRA
- Crypto.com
- Binance
- Hodlnaut
- Gemini
- Bisq
Cryptocurrencies for Beginners: How to Start Investing?
We have established earlier that cryptocurrency investment runs on blockchains. Therefore, the process starts with selecting a crypto broker and then opening an account of your choice on any of the listed platforms.
While opening an account, you have to provide information on three things:
- Personal identification documents
- Bank account information
- Secure internet connection
The journey to cryptocurrency investment is long, tedious and complex. But the end result is often satisfactory and a rewarding experience.
Moving on to the key part, that is investing as a beginner in cryptocurrency. The end result for all cryptocurrency miners and investors is the profit. Experienced investors often opt for a short-term investment in cryptocurrency, considering the volatile market.
You can start your investment journey by following the simple steps below:
Choosing a cryptocurrency exchange:
- Where do you buy groceries from, or where do you shop for the trendiest outfits of the season? You typically go to a mall or store or on online shopping applications. Likewise, cryptocurrency investors choose an exchange platform to buy and sell from. You select the platform that suits you best and starts investing after making an account on the said platform.
- The platforms include- Coinbase, Voyager, eToro, Gemini, Bisq etc.
2. Start purchasing cryptocurrency:
- Once you decide on purchasing the cryptocurrency, you can choose from a wide range of options. They include- Bitcoin, Ethereum, Tether, etc. The exchange platforms allow you to buy currencies with your debit card.
- For first-time investors, buying fractions of a coin valued at thousands of dollars is advisable as it is more affordable and low in risks.
- Note that the exchange platforms will charge fees for every transaction you make.
3. Storing cryptocurrency in a ‘Wallet’:
- Your account has a feature called ‘wallet’, where your purchases will be added. This virtual wallet holds your purchased unit of cryptocurrency and the codes for all your cryptocurrency transactions.
- Your cryptocurrency wallet is divided into two types: a software wallet and a hardware wallet.
- A software wallet is a program for holding your crypto and for active trading that comes when you open an account.
- A hardware wallet is a physical device like a USB drive that holds your crypto. This is used by experienced traders who buy huge portions of cryptocurrencies. It is more secure.
4. Maintaining your cryptocurrency investment:
- The last step is to maintain your investment in cryptocurrency. It is a process that requires patience and dedication. You have to be sharp about your decisions.
- Remember to keep track of your investments and monitor your dashboard and performance.
5. Stay updated:
Remember to keep yourself updated with news and topics concerning cryptocurrencies and the related markets. After all, self-education and practice is the key to successful cryptocurrency investment.
Factors to Keep in Mind for Beginners in Cryptocurrency Investment:
We now know that cryptocurrency is the futuristic gold that rewards investors with profits. But not all investors are experienced or lucky to be as successful as one might assume. They have had their fair share of losses and downs in the market. So, jumping to conclusions and assumptions should be avoided at all costs. Instead, a well-charted strategy should be made to examine the market.
Here are some factors to keep in mind as a beginner investing in cryptocurrency:
- Understand the mechanism of buying, selling and exchanging cryptocurrencies before investing.
- Cryptocurrency is a volatile, high-risk investment.
- Cryptocurrency is taxable by the IRS.
- Don’t invest more than you can afford to lose.
- Beginners can take part in pool mining for a safer and rewarding end result.
- Price swings and cryptocurrency rates are subject to change.
- Safety and security of your investments are your priority. Always read the policies of exchange platforms before signing up.
- Finally, the right timing is the key to a successful investment program.
Cryptocurrency investment is a digitally complex process involving many technical skills. Therefore, to be successful in the field of crypto investment, studying the market and carrying out your own research is of the utmost importance.
The market is often unpredictable; hence it is advised that you invest in small steps and take your gains often.
Another important factor to consider in starting your cryptocurrency investment journey is to be aware of all the technical and resources needed, such as land, electricity, atmosphere, hardware, software, etc.
With the ever-expanding growth of digital transactions, expenditure, and cashless experiences, the scope of cryptocurrency as the future of money is wide and large. Despite its challenges and risks, payment platforms like Paypal have already added a cryptocurrency feature to its app. Indian home décor company Rug Republic has also added cryptocurrency payment as an option
Nonetheless, the world as a whole is still experiencing cryptocurrency in its early stages.
Cryptocurrencies and other financial technologies are continuously transforming our concepts of money and investment.
The journey comes with a bucketload of risks, but with the right knowledge and guidance, you can make it as an investor with profits.
You can start your investment journey by signing up on trusted, secure exchange platforms. However, it is a long journey; hence keep in mind that your strategy and patience determine your success
