Cryptocurrency is a new asset class that has turned a lot of heads in the investment world. It all started with Bitcoin and has grown ever since. Investing in cryptos is a craze that isn’t going away anytime soon. Bitcoin skyrocketed in value over the past years, and if you want to join in on the fun, here is a step-by-step guide on how to invest in cryptocurrencies to get you started.
1. Choose Platforms To Buy Cryptocurrency
Cryptocurrency Exchanges, brokerage services, and Payment services are common options for an individual to buy Cryptocurrency from. Among these options, Cryptocurrency Exchanges(Centralized and Decentralized) are more popular among investors because:
- Novice investors will find Centralized Cryptocurrency Exchanges to be an acquainted and comfortable way to invest and trade in Cryptocurrency. Users using Centralized Exchanges may log into their accounts, examine their account balances, and make transactions through applications and websites, as opposed to using Crypto Wallets and peer-to-peer transfers, which can be complicated.
- When it comes to transactions and trading, Centralized Cryptocurrency Exchanges provide an extra layer of security and reliability. Consolidated exchanges provide greater comfort by allowing transactions through a well-developed, Centralized platform.
- Decentralized Cryptocurrency Exchange users are not required to transfer their assets to a third party. As a result, there is no possibility of a firm or organization being hacked, and users are protected from theft and hacking.
- The use of peer-to-peer exchanges stops marketplace manipulation. This guards customers against Wash Trading(when the buyer and the seller conspire to increase the trading volume of items) and False Trading.
- Filling out the know-your-customer (KYC) form is not required for customers on Decentralized Cryptocurrency Exchanges, ensuring privacy and anonymity of the investors.
Where To Buy Cryptocurrency?
Following are some popular Cryptocurrency Exchanges where you can buy your first Cryptocurrency:
To choose a Cryptocurrency Exchange, you can look for these criteria:
- Check the kind of security and legitimacy an Exchange provides.
- Research about the methods of purchasing (like bank transfer, debit cards, credit cards, online payment services like Paypal, or payment apps for Crypto like NOWPayments, CoinGate, or Bitpay) available on the platform. For beginners, a platform that allows the purchase of Cryptocurrency through Fiat Money will prove helpful.
- The number of different types of Cryptocurrency available on the platform.
- Fees applied by the platform to store, sell and buy Cryptocurrency.
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2. Integrate Exchange With A Payment Option
Assemble personal paperwork after choosing an Exchange. The information asked would be determined by:
- The place of residence and the regulations that govern it.
- Policies of the Exchange.
You will have to connect a payment option after the Cryptocurrency Exchange has validated your identity. Directly connecting bank account, debit card, or credit card is possible on most Cryptocurrency Exchanges. Coinmama, Paxful, and CEX.io are Exchanges that accept credit cards.
It is a good idea to check that your bank allows deposits at your chosen Cryptocurrency Exchange because some banks may not permit deposits to sites or Exchanges connected with Cryptocurrency.
Researching the fees associated with each payment option is crucial to decide on an Exchange or a payment option. Exchanges also charge fees on every transaction which can be a Flat fee (in case of low trading amount) or a specific percentage of the trading amount. Credit cards may include a processing fee along with transaction fees.
3. Buy Cryptocurrency
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4. Ensure Safety Of Cryptocurrency
Wallets for Cryptocurrencies offer a secure way to store digital assets. Keeping your Cryptocurrency funds in a self-controlled Wallet than on an Exchange ensures that only you can access the Access Details to your funds. It also allows you to store funds outside of a Cryptocurrency Exchange.
Although most exchanges provide users with wallets that are not a secure option for substantial or long-term Cryptocurrency holdings. There are many types of Cryptocurrency Wallets to choose from, like Hot Wallets, Cold Wallets, Paper Wallets, etc.
Investing in Cryptocurrency is simple but planning for its future and security can perplex investors. Digital Estate Planning is a process that can help Cryptocurrency holders to organize and update Digital Assets (email accounts, blogs, social media accounts, photo libraries, cloud storage accounts, etc.) so that after sudden demise or incapacitation of the Cryptocurrency account owner, the beneficiaries have one place to go and access, manage, or close digital accounts according to the wishes of the deceased person.