There’s a reason why roughly 16% of Americans have either used, traded, or invested in cryptocurrency. We’re all familiar with the headlines about the huge gains and losses of crypto.
Sadly, getting started with crypto can be easier said than done. If you’re not careful about it, then you could lose massive amounts of money. That’s why we made this introduction to crypto for beginners.
In it, we’ll be going over some advice that every newbie should know before they get started. Let’s take a closer look.
Understand What Crypto Is
This sounds like some obvious advice. But, you’d be surprised how many people invest in crypto that doesn’t understand it. When you think about it this makes sense.
Crypto technology and blockchain can be hard to understand. And, when you mix in influencers and buzzy headlines it’s easy for someone to get invested without being able to explain what crypto is.
However, in our opinion, you should never invest in something that you don’t fully comprehend. How do you know if you have a good understanding of it? Being able to explain it simply to someone new is a good sign.
You should also research the specific company or coin that you’re investing in. Know that most cryptocurrencies receive no backing from cash flow or hard assets.
That means that your only way to make a profit is for the coin to become more expensive.
Know That Crypto Is Volatile
We’ve likely all had a friend tell us that they made thousands off of crypto investments. And, there’s a good chance they’re telling the truth. Cryptocurrency experienced a boom throughout the 2010s.
However, it’s important to remember that what comes up must come down. That’s because cryptocurrency is an incredibly volatile investment. That means that yes, you have the potential to make a lot of money.
But, you can lose a lot of money in the process as well. We’re already starting to see this in many coin types. With certain coin values plummeting it’s important to know what kind of market you’re getting into.
Never trust anyone that tries to convince your crypto is a safe investment financially. History shows that it’s quite risky.
Create Investment Rules
You should always have investment rules or strategies before going to purchase crypto. Broadly speaking, crypto investments tend to fall into two camps.
There are long-term investors that never really sell. They just hold their position for the long haul. Then there are the short-term investors that are just trying to make a profit off their investment before selling.
If you’re a short-term investor, then make rules for when you will give up and sell. A good rule of thumb is if your investment has fallen by 10% or more in value, then it’s time to sell.
Don’t Believe the Hype
These days, there are a lot of celebrity ads and endorsements to buy crypto. Many of these people, like Elon Mush and Jake Paul, often encourage their followers to invest in cryptos that they’re tied to.
However, they often fail to disclose that they have a significant investment in that specific crypto. The same goes for Reddit or similar forums. Everyone that’s commenting likely has something at stake that they want to keep.
So, don’t listen to your favorite influencer when planning your investment strategy. It will likely end in you losing a lot of money. Instead, do your research and make the decision yourself.
Trade or Buy At a Location You Can Trust
There are a variety of different locations where you can trade or buy cryptocurrency. The easiest way to do it is to go to a crypto exchange online.
However, before you do this you will first need to set up an online wallet. This is an entirely digital location where your cryptocurrency will be stored.
Once you set up your wallet account you can start trading or buy online. Alternatively, you can also meet people in person for crypto trades. However, we urge caution when doing this.
You never know who you can trust online. Instead, consider going to a cryptocurrency ATM. These are locations that allow paying cash for cryptocurrency at a physical location.
Just make sure that you go to one with fair terms. If you need a recommendation, then you can’t beat Byte Federal.
Never Invest Money You Can’t Afford to Lose
We touched on the volatility of crypto investments earlier in the article. However, this point is worth repeating. You have the potential to lose all of the money that you sink into crypto.
So, it’s a little like gambling. If you’re going to put money up, then you need to be prepared for the possibility that you will never see it again.
The last thing you want to do is take out a loan or second mortgage to afford your crypto investment.
How Much Money to Start Investing?
Most of the time, you only need $5 to $10 to start investing. However, keep in mind that most exchanges and ATMs will take a significant fee for every transaction you make.
And, if you’re investing with a smaller amount, then this can take a huge bite out of any crypto you receive in exchange.
Appreciate This Crypto for Beginners Guide? Keep Reading
We hope this crypto for beginners guide helped you learn more about investing in this unique currency. The most important piece of advice for beginners is to take your time.
Don’t feel pressure from the market or influencers to invest in crypto that you aren’t sure about or can’t afford. Instead, get a feel for how things work.
Then, when you gain some confidence you can start investing more. Enjoy learning about crypto? You’ll love some of the other topics we have on our page so keep exploring.