Cryptocurrencies should be a conscious investment choice. Block chain, mining, decentralization – all of that sounds difficult, but in fact these are essential concepts every first-time investor should be aware of in order to allocate the funds wisely in how to buy cryptocurrency as a beginner. So, what does it take to make a smart investment in cryptocurrency?
How to buy cryptocurrency: explained
It couldn’t be easier: one of the simplest strategies for how to buy cryptocurrency is via a finance app. If you don’t want to mess with wallets and crypto exchanges, you can use a finance app such as Revolut. In addition to other financial services, you can use the app for how to buy cryptocurrency such as Bitcoin or Ether. It’s child’s play: Once the app has been downloaded, all you have to do is submit your ID digitally and provide personal information. Then load money onto the app and you can buy your first crypto.
But be careful: the crypto assets remain on the app and you can only buy, sell or exchange for other currencies. You cannot transfer the purchased cryptos to any wallet. In contrast to those who use paper or hardware wallets, you are not really in possession of the cryptocurrencies because you do not have the “private keys” or “private keys” (more on this in the next section).
Be your own bank – protect your data with the crypto wallet!
Many crypto enthusiasts want to store their crypto money themselves. To do this, they use a wallet. There they keep the keys to their cryptocurrencies. The associated cryptos can be found on the corresponding blockchain. The private keys and public keys are stored in the wallet for each currency. The public keys are used to allow payments to be made to the wallet. The wallet gives an overview of monetary values and makes it possible to send and receive coins and to check the current account balance. A well-known saying in the Bitcoin community is: “Not your keys, not your coins.” That means something like «You can only really own your cryptocurrencies if you control the private key yourself.
There are different types of wallets:
1. Mobile Wallet
2. Desktop Wallet
3. Online Wallet / Cloud Wallet
4. Hardware Wallet
5. Paper Wallet / Mind Wallet
How to buy cryptocurrency on crypto exchanges or marketplaces
Buying cryptocurrencies is easy. The first step in how to buy cryptocurrency is to create an account with one of the many crypto exchanges. Important: The right platform does not exist. Rather, it depends on personal taste and needs. Some specialize in being very user-friendly. One example of this is Coinbase. Others are aimed at specialists with a large selection of coins and various trading functions. These include, for example, Binance and Kraken.
Important: If you buy coins from a crypto exchange, they are usually automatically stored there. The rule is: only those who control their own keys really own their cryptocurrencies. In the past, exchange wallets were the main victims of attacks. It is therefore advisable to transfer the coins to a personal wallet and also is advisable to do this process through staking.
How much should I invest?
Current studies by the crypto bank SEBA show that even a small addition of Bitcoin to the investment division offers considerable advantages. For example, if you add four percent Bitcoin to a classic portfolio, the Sharp ratio – the expected return – in relation to the volatility increases by 50 percent. If you expand the allocation with a whole basket of cryptos, it improves even further. So you don’t have to invest that much to feel the positive effects.
As a beginner, which strategy should I choose?
There are over 8,500 cryptocurrencies, we have to take a differentiated look at them. Bitcoin remains the most important currency as digital gold. For beginners, one investment division is sufficient. However, the ecosystem has evolved and there are now many cryptocurrencies in which the area of application and the respective advantages are clearly recognizable: Be it Ethereum as a platform for decentralized financial applications (DeFi), Chainlink as Oracle, which verifies and verifies data from the real outside world provides various decentralized platforms or Uniswap, whose token incentivizes to provide liquidity to its decentralized trading platform (DEX).
Bitcoin remains the most important currency as digital gold.
However, selecting these successful and promising cryptocurrencies requires a lot of experience. There are therefore also providers on the market, such as Crypto Finance , Sygnum or SEBA , who provide a prefabricated basket of crypto currencies as a traded “tracker”. This is traditionally traded like a share and held in the portfolio of your own house bank. In this way, no prior technical knowledge is required to get to the crypto currencies.
Should I invest directly or indirectly?
It’s a matter of preference. Often, indirect investing, for example via a tracker, is a bit more expensive, but less complicated. If I want to hold my coins directly, I have to dig deeper into the matter and open an account, as described in this blog post. In return, the coins are actually in my possession.
Bitcoin – a bubble?
This question will probably only be answered in a few months or years. The current price gain tends to be driven by institutional, i.e. professional investors. How much of it comes from speculative sources is difficult to assess. It is clear that institutional investors do not make decisions based on their own gut instinct, but rather thoroughly analyze their options beforehand.
And finally, where should you buy Bitcoin or any other cryptocurrency with little effort and risk? Among novice users, the safe stand most wide spread method of how to buy cryptocurrency is via an exchange platform.
How to buy cryptocurrency on an exchange platform
A cryptocurrency exchange is the immediate venue for traders, miners, investors and people who simply need to convert the crypto coins to traditional fiat money. All of the exchanges are either for the purpose of earning or cashing out.
Cryptocurrency market vs stock market
Crypto currency market acts in the same way as the stock market, where traders capitalize on the price changes. However, crypto currencies are significantly more profitable than their traditional analogues since they are prone to higher volatility.
Let’s say, an investor in the traditional market may earn a decent profit from fluctuating stock prices that grow by approximately 9% annually (which is a good index). Meanwhile, on the crypto market where the currencies can rise by up to 20% per day (and times higher per year), a trader may receive a staggering ROI and knock up a fortune. But this is one side of the coin! The crypto currency market might as well fall sharply in value overnight and leave the investor holding an empty bag.
Some traders opt for several exchanges to carry out daily operations. So the yearn not only from daily price fluctuations butals obene fit from the difference in exchange rates offered by various exchanges. This is called arbitrage trading. Still, in the traditional market, traders follow just the same strategies, so there is nothing fundamentally new.
For customers to observe the market changes involving a desired crypto currency, some exchanges of ferreal-time graphs that allow you to track the fluctuations in the fullest details. Traders use them to determine the most appropriate time for entering the market.
How to buy cryptocurrency: Where to start?
User-friendly cryptocurrency exchange
To date, there is a sufficiently large selection of exchanges that provide more or less the same conditions on the market. But there are also those that favorably differ from the others. Especially if you renew to this business. Meet the British crypto – exchange CEX.IO. This platform is really one of the best. It is available in many countries around the world, and for 5 years, it has earned the trust of almost 2.5 million customers. Their interface is simple enough to understand and navigate through. When it comes to the choice of crypto currency, here are 8 popular coins that you can buy/sell for USD, EUR, GBP and even RUB.
