Cryptocurrency is a new asset class. As such, it has many different types of cryptocurrencies that can vary in function and utility.
In order to invest in cryptocurrency, you need to understand its use cases. There are currently over 2,000 cryptocurrencies available for purchase on various exchanges. Most people are familiar with Bitcoin, but there are many other types of cryptocurrency that have different applications and use cases.
Cryptocurrency is decentralized, which means no one entity controls it; instead, the entire network collectively agrees upon who owns what amount at any given time through cryptography (hence the name).
Get Your Crypto Wallet
If you want to buy and trade cryptocurrency, the chances are that you’ll need to have a place to store it. And that place is called a wallet. There are many different types of wallets available for use, but the most common kind of wallet for beginners is one that lives on your computer or phone.
There are also other kinds of wallets available (such as hardware wallets) that offer greater security but require more technical knowledge and may cost money to set up and use. A wallet is essentially just a public/private key pair (or just “address”). These keys allow you to access your funds when signed by the correct private key. Think of it as an ATM card with a pin number protecting it (but instead, every person has their own unique card).
Learn What Triggers Price Fluctuations in Cryptocurrency
To get a better understanding of the crypto market and how it works, it’s a good idea to familiarize yourself with some of the key triggers that cause prices to fluctuate. For cryptocurrencies, there are many different news items that can trigger price fluctuations. These include:
- News about regulatory actions regarding cryptocurrencies or exchanges (examples: China banning ICOs and shutting down cryptocurrency exchanges in 2017; South Korea considering a ban on anonymous trading accounts)
- News about new partnerships or products being developed by blockchain companies (example: Ripple announcing the news in 2018 that they have partnered with several banks globally)
- News of new cryptocurrency listings on major exchanges like Coinbase or Binance (examples: Stellar Lumens [XLM] was listed on Coinbase in 2018; Cardano has been announced as an upcoming listing by Binance)
- Acceptance of crypto by large companies like Amazon or Starbucks (which have both announced they will not be accepting Bitcoin as payment but may begin accepting other coins over time)
- New technical developments such as upgrades to existing protocols or applications being tested out
Buy Small Amounts of Cryptocurrency
The first thing you should do when getting started in cryptocurrency investing is to buy a small amount of cryptocurrency. It makes sense not to invest everything you’ve got into something that’s so volatile, especially if you’re just starting out as an investor.
The best way to do this is with a starter investment package from Coinbase or another exchange that offers similar services. You can also purchase cryptocurrencies directly from other parties on sites like LocalBitcoins, which allow peer-to-peer transactions where individuals can sell off their crypto holdings for cash in person or online through Escrow accounts (a service provided by LocalBitcoins).
Start Trading Bitcoin and Ethereum
The first step to investing in cryptocurrency is to pick up some Bitcoin or Ethereum. If you already own these currencies, great! You can move on to the next section that focuses on trading. If not, you’ll need to buy them from an exchange like Coinbase or Gemini—a process that’s much easier than it used to be but still requires some effort and research.
This is where things get complicated: there are no set-in-stone rules for how much of your portfolio should be invested in crypto assets versus traditional stocks, bonds, etc., but a general rule of thumb is 10-20% at the beginning and increasing over time as more people begin accepting cryptocurrencies as payment methods (which will likely increase its value). There’s no way around it—cryptocurrencies are volatile and risky investments, so proceed with caution!
The main thing about trading cryptocurrencies is that if you’re interested enough in doing it long term then don’t worry too much if your trades go south once or twice; just keep learning from each mistake until, eventually, something pays off big time!
Make sure you understand this volatile market before investing time or money. Start with small amounts. You’re going to be making a lot of mistakes when you first start out—most people do. The best way to get over the learning curve and avoid getting discouraged is by starting with a small amount. If you lose it, it’s not going to break your bank account by any means.
Be prepared for volatility. While cryptocurrency has been creating huge waves in financial markets around the world, it remains an extremely volatile market—and one that can be very profitable if done properly (see below).
However, even if you’ve done all your homework and have chosen what appears to be an excellent long-term investment strategy, there’s no guarantee that won’t change overnight because of some kind of announcement or unforeseen event affecting cryptocurrency as a whole—or even just one particular coin or token within the market (like Litecoin).
So while this should definitely be considered part of your overall plan when deciding whether or not cryptocurrency is right for you as an investment vehicle; don’t let it control how much risk tolerance you feel comfortable taking on at any given time!
Make sure you understand what you’re doing before jumping into investments! Cryptocurrency may seem easy enough—buy low, sell high, right? Well, that depends on how much research each individual investor has put into researching their own strategy beforehand.
Even though many experts believe now is an excellent time for beginners who want to invest money into Bitcoin after seeing its meteoric rise over recent years; others caution against jumping straight into this type of financial tool without having first learned more about them beforehand.