Cryptocurrencies can be a great investment for several reasons. For some, they’re viewed as a haven from excessive inflation or crisis. Others see them as a store of value. There’s also some action for speculative traders thanks to the high volatility and liquidity in the markets. However, it is not for everybody and can be intimidating, even for seasoned traders. There are also many more hurdles you have to jump before you can start investing. In this article, we’re going to give you everything you need to get started with cryptocurrency.
Understand the Different Type of Cryptocurrencies
Some may think that all cryptocurrencies are the same and more or less like Bitcoin, but that couldn’t be further from the truth. Bitcoin is very unique as crypto as it is, it is a stand-alone crypto that was meant to be purely transactional. It doesn’t have special privacy features like privacy-coins and isn’t part of a programming ecosystem like Ethereum.
Ethereum, for instance, uses Ether, its proprietary token and cryptocurrency, as fuel to power applications on its decentralized app framework. Users will then need to use these tokens to use apps and programs to pay for fees. This gives the token an intrinsic value and a demand as long as these apps are used.
Other cryptos of its genre include Tron and NEO. Privacy coins include Monero, Zcash, and Dash. These derive their value from the protection they offer. Transactional cryptos include Bitcoin and Litecoin. They usually get the most recognition and are the most accessible to the average investor.
Get a Wallet
No matter how you want to invest, you’ll need to have a digital wallet to store your cryptocurrency. You can go with the wallet that will be provided by the exchange you’re going to choose, but it’s better to get your own in case the site is overwhelmed with traffic or shuts down.
Know that there are “cold” wallets that use physical support to store your keys and online wallets that exist in the cloud. An offline wallet can be as simple as a piece of paper with your private and public key on it. If you want to understand what public and private keys are, try to see your wallet as a mailbox and the public key as the address.
While anyone can use the address to send money to your wallet, only you will be able to take money out of it with your private key. This private key will never be displayed to the public unless your wallet is not secure.
Bitaddress.org and walletgenerator.net are two examples of paper wallets that allow you to get set up within minutes. The Ledger Nano is an offline wallet that uses a secure USB key. However, if you want a digital wallet, we suggest using something like Mycelium. Binance also allows you to turn your phone into a crypto wallet, though it’s not considered the safest option.
We also suggest that you use as many storage methods as you can. That’s because once you lose your private key, it’s over. So, try to use a combination of physical and digital wallets and find somewhere safe to store a few copies of your private key offline. This could include a bank security box if your portfolio is that valuable.
Choose Your Exchange
The next step is finding an exchange. There are two main types of exchanges: peer to peer and traditional.
Peer to peer exchanges allow you to trade directly with other sellers and traditional exchanges will use an order book to match you with offers. You also have crypto to crypto exchanges that require you to use cryptos exclusively and fiat to crypto exchanges that allow you to use fiat currency.
It’s always better to start with a traditional exchange if you’re just getting started. Coinbase is usually regarded as the most trusted exchange, and one of the most accessible. Binance is another one. The best thing about these two platforms is that they both allow you to use PayPal to fund your account.
If you want to learn how to purchase bitcoins with PayPal, we suggest you check out bestbitcoinexchange.io. They have a list of all the exchanges that accept PayPal as a form of payment and the exact procedure to purchase with PayPal. They also compare different avenues for buying cryptocurrencies and explain which ones would be the most beneficial for you as a beginner.
Once your account is funded, you’ll officially be able to get started with trading cryptocurrencies. It will then be your job to stay on top of the most recent changes and new projects being introduced. We also suggest that you start looking at tax laws in your country to get a clear idea of how much you’ll be able to take back home.
These are the steps needed to start investing in cryptocurrencies. This is only the start and the field is incredibly vast. So, make sure that you learn as much as you can and find others who’ll be able to guide you through the maze of crypto investing.