For those who have been considering getting into the cryptocurrency craze, there are certainly a few things worth considering first.
It can be a particularly confusing endeavor, but there are a few basics worth keeping in mind.
There is certainly the opportunity to make (or lose for that matter) a lot of money, so be sure to keep these tips in mind before investing in cryptocurrency.
First Steps
Figuring out where the investment is coming from is the first thing that needs to be done when it comes to investing in cryptocurrency.
The first thing is to note that it is a bad idea to make any investments with debt.
However, the usage of either a credit card or a bank account will work just fine.
Traders are able to fund their respective accounts with a debit/credit card or alternatively, they can use a bank transfer.
One thing anyone who is interested in trading should know about the funding aspect is that there are certain areas that will not allow cryptocurrency exchanges to receive money via credit cards.
Funding the appropriate crypto account with a card is the simplest way, though it can also include fees and limits to how much is transferred. Keep these things in mind.
At this point, it is necessary to decide which cryptocurrencies you prefer to trade.
There are many exchanges in which certain cryptocurrencies are easier to trade than others, and they also have different policies when it comes to the currencies they accept to do this.
Certain exchanges need traders to work with Bitcoin, as opposed to other methods of payment.
There are a few major exchanges that make it easier to use more standard forms of currency that are a good place to start. The first place to start is these “Fiat exchanges”.
Coinbase is the most popular and easiest to use, for the most part. In fact, the company just partnered with Visa too. It has good security in place and is a good exchange to start out with if you’re just beginning.
There are several other exchanges worth considering in addition to Coinbase. This includes:
Of course, each exchange has its pros and cons, so if you want to consider alternatives to Coinbase be sure to look into these to decide which one fits you the best.
Purchasing Altcoins usually requires another cryptocurrency to do so
Additionally, there are a number of exchanges that specialize in “Altcoins”, which are the less mainstream cryptocurrencies.
Most often, some of these smaller coins are not supported by the larger exchanges.
It may be necessary to purchase these altcoins with another cryptocurrency like Ethereum or Bitcoin.
Some of the better exchanges to purchase Altcoins includes:
Make sure to pick the right crypto wallet
It is also important to maintain a crypto wallet prior to purchasing any cryptocurrencies.
This is for organization, clarity, and security purposes.
Some of the wallets traders can choose from include:
There are a number of factors in play to selecting the wallet best for you. This requires a trading strategy, which means a couple of things.
Form some kind of trading strategy
Like any investment, it is important to make sure you are investing only what you are prepared to lose.
Make sure to do a decent amount of research before making any rash decisions, read the news and analysis for each cryptocurrency you are considering.
Sites like FX Empire are a great place to start. The various exchanges also have a wide assortment of information, news, and data worth investigating.
It is also important to have expectations based upon reality.
There is a lot of speculation out there and it is important to understand when it is necessary to accept a loss.
Be sure to compile reliable sources for your data and try not to let emotions get in the way.
If you have a friend or associate who is familiar with cryptocurrency, it does not hurt to hear their advice when you want to begin trading.
One of the most important things to do during this time is to decide which cryptocurrencies you would like to trade.
This could be centered around one coin or include a wide assortment of them.
In addition, these coins are of vastly different sizes and costs, so having a tentative idea of what you want your portfolio to look like is very important as you begin trading.
Also, be sure to note that on some exchanges you may be able to purchase part of one coin without having to spend the entire amount.
For instance, Bitcoin might be at $15,000 per coin, but you can purchase 1/3rd of it for $5,000.
Another thing to strongly consider is the timing through all of this. It is pertinent to decide whether trading is a short-term, medium, or long-term strategy.
The coins being traded are also important, since some are more volatile than others.
As a general rule of thumb, you won’t want to have more than 20% of total investments in one coin, especially if they are smaller.
If they are larger, you will want to consider a more long-term strategy.
If you’re looking to invest in medium length investment periods, having a diverse and blended portfolio makes the most sense.
Any investor will want to use basic risk management philosophies to how the money is allocated.
The general principle states that having an 80/20 blend between larger coins and middle-size and smaller coins makes the most sense.
In general, the larger the coin, the more stable, but even so make sure to keep a close eye on your portfolio as cryptocurrency can shift quickly unlike many other forms of investment out there.
Finally, the number of coins you own in various cryptocurrencies is all relative. Look at it more in how much money you have invested. 1 Bitcoin is equivalent to thousands of other coins for the same cost.
With all of that said, here is a quick synopsis of the various “levels” of cryptocurrency, from the more established and expensive Large Caps to the Mid-Caps to the cheaper Low Caps.
Large Caps include:
Bitcoin
Bitcoin Cash
Bitcoin Cash SV
Ethereum
Ripple
Binance Coin
Tezos
EOS
Cardano
Mid-Caps:
NEO
Ethereum Classic
Cosmos
DASH
Dogecoin
Zcash
VeChain
True USD
Tron’s TRX
Qtum
OKB
OmiseGo
Low Caps
Status
MCO
IOST
HyperCash
ABBC Coin
Unibright
Theta Fuel
Matic Network
BitTorrent
Final Steps
After all of these strategies and decisions are made, it is time to start trading. Keep a close eye on the markets and read the news as well as keep your ultimate goals in mind.
There is no absolutely perfect way to do all of this, but the more you read and follow the industry, the greater success you will have overall.
