How To Invest in Cryptocurrency: A Guide For Beginners

Cryptocurrency is no longer a foreign concept as of 2021, It has been made easy to trade, and some of the things to look out for before making that initial purchase are:

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Type of Cryptocurrency

In every investment, you should never invest more than your budget. Speak to a financial adviser and research through the different coins being traded and narrow down to find a platform that sells the cryptocurrency you want. Most websites don’t sell all the cryptocurrencies.

When buying your coins, know your location, make sure you check your countries regulations, and find how you can buy cryptocurrency.

The most accepted method of purchasing is through wire transfer, cash, and credit card. Every platform has its payment method, so you choose one that fits you.

It would help if you also understood there are fees when making the transactions, and they vary depending on the platform. Figure out which suits your budget.

Now you have found a suitable cryptocurrency, the question is, where do you go next?

Here you find a wallet to store your coins.

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Cryptocurrency Wallet

It is a place where you store and retrieve your crypto coins. Let’s take an example of a bank account where you deposit your money in the bank account and use it to make transactions or savings. That’s the same way the wallet works.

It is advisable to choose a secure cryptocurrency wallet to avoid it being compromised through phishing.

Types of wallets.

Hot wallets

They are popular in the crypto world, where they are connected to the internet and available online. Mostly they are user-friendly. The only downside is they are vulnerable to security threats and fraudsters.

1. Mobile wallet — You download it and install it on your smartphone. It makes it more convenient for everyday activity. You also have to check the safety and security level of the wallet platform.
2. Web Wallet — These you access through a web browser like chrome, safari, or Firefox.

Cold Wallets

They store coins in an offline mode making them more secure than hot wallets.

1. Hardware wallets — They come in portable devices like USB drives or external hard disks. You create a seed password to help you access the cryptocurrency. When transacting, you have a private key where the device requests transaction details and validates them. Your key never leaves the device, making it secure from online phishing from fraudsters.
2. Desktop Wallet — It’s A cold wallet installed on your desktop where the owner has complete control of the private password and the coins. It is an offline wallet making it more secure.
3. Paper Wallet — It is a physical piece of paper and contains all the details of your cryptocurrency. The downside of them is they are easy to lose when the amount of writing is misplaced.

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The crypto wallet will depend on the cryptocurrency you want. For example, Bitcoin looks for a wallet that can store Bitcoin.

The good thing is nowadays, some wallets can store multiple cryptocurrencies.

A good example is

Coinbase. It is a platform to buy, sell and store multiple cryptocurrencies like Bitcoin, Ethereum, Litecoin, and more.

For someone looking for a ‘cold’ wallet for offline storage, Ledger Nano X. supports over 1500 cryptocurrencies, has high security, and connects with the internet when you plug it on a device either through USB, Bluetooth, or external hard drive. The only downside of it is that it’s expensive and has limited wallet storage.

Let’s move on to the next step, where to buy the cryptocurrency at crypto exchanges.

Crypto exchanges are platforms that allow you to trade your currency into crypto coins. They are easy to use for beginners and are more common in the space. An example is

Coinbase is the most commonly used crypto exchange since it accepts most money transfers like credit cards, PayPal, and wire transfers. The transaction fees depend on the method you are using, and it is secure.

The procedure of creating an account and start transacting is;

1. Create an account with your information (Full name/ email address/ phone number)
2. Verifying your identity normally they ask for an ID card/passport
3. You Create a 2 step verification method to help secure your account.

The account is now set up, and you can start transacting, buying, selling, or even holding your coins. Keep in mind some of these critical factors when making a transaction;

1. How secure the platform exchange is, you don’t want to lose your coins through phishing.
2. Choose transactions with lower fees and the number of payment options like PayPal, credit card, or wire transfer.
3. For example, the platform offers coins; for example, if you want to buy Dogecoin, make sure it is available.
4. Check the reviews left by other traders to have an in-depth understanding of the platform.