How to Invest in Cryptocurrency for Beginners
Cryptocurrencies are digital assets created using computer networking software that enables secure trading and ownership.
Bitcoin and most other cryptocurrencies are supported by a technology known as blockchain, which maintains a tamper-resistant record of transactions and keeps track of who owns what. Public blockchains are usually decentralized, which means they operate without a central authority such as a bank or government.
Cryptocurrencies have emerged as an asset class that provides you with a chance to invest and earn substantial returns. The asset class, has garnered massive popularity in recent years. To start trading, you will need to set up an account and you can invest as little as Rs100 to begin with.
Buying cryptocurrency has never been easier. You just register with an exchange, click “buy” and Bob’s your uncle — you’re a bonafide crypto trader. But there’s more to investing than just buying your chosen cryptocurrency. As an experienced investor, you probably have many questions about crypto, including what you need to know before investing, how to buy it, and how to safely store (and protect) your investments.
Here are steps that will enable you to trade in these digital currencies.
Step 1: Select Right Crypto Exchange
Due to the absence of crypto regulation in India and other countries, there is no fixed structure or uniformity to trading in cryptocurrency. But using the crypto exchanges platforms, you can easily buy or sell your cryptocurrency. WazirX, UnoCoin, CoinDCX, and CoinSwitch Kuber are popular cryptocurrency exchanges platforms.
Step 2: Open a Trading Account
You have to open a trading account at the Crypto exchange of your choice. This account will be similar to that in a bank. While registering, the exchange will verify your credentials based on the services you opt for, the amount you plan to invest, and the available coins trading options.
It will require sharing KYC (Know Your Customer) data and setting up payment options. For KYC, you may need to submit copies of your PAN card, photo identity, and address proof. Notably, Crypto exchanges function round the clock throughout the year, unlike regular stock exchanges.
Step 3: Fund Your Account
After opening an account, you have to transfer some money into the crypto-trading account to buy cryptocurrencies. You may transfer the funds online from your bank account to the crypto-trading account. It, however, requires linking both accounts. Moreover, depending on the policy, you may have a waiting period before purchasing digital coins.
Step 4: Buying and Investing in Cryptocurrency
Following an account and money transfer, you need to decide on the coins you intend to invest in. By far, some of the popular ones are Bitcoin, followed by other altcoins such as Ethereum, Cardano, Binance Coin, Tether, XRP, and Dogecoin, to list a few.
Step 5: Store your Cryptocurrency
Storage is the most important part after you make your purchases. Crypto exchanges do not have any formal institution backing them, and they most assuredly do not carry your average insurance policy. They also face the uncertainty of being hacked. Therefore, you must store your codes to your account and your assets securely. It is usually advisable to store your purchased coins in a crypto wallet.
Step 6: Choose a Strategy
Make an excellent strategy to earn more profits by adopting Elliott Wave Theory. Elliott Wave Theory concentrates on the psychology behind the market sentiment, so it acts well for speculative assets like cryptocurrencies. Moreover, you can get some crypto expert’s opinions that can be beneficial before expanding one’s investment in cryptocurrency. One should always start with small investments and study the market carefully instead of blindly following anybody’s advice.
Pros and Cons of Investing in Cryptocurrency
- Possibility of massive gains: Cryptocurrency, specifically Bitcoin, is the best-performing investable asset of the last decade. It may tank, or it may continue its skyward trajectory.
- Support an emerging technology: Blockchain technology is touching nearly every sector — public, fintech, medical— and your investment in crypto is supporting those sectors.
- You can earn some for “free”: You can’t “mine” stocks, nor can you watch short videos to earn free real estate — but you can do either to earn free crypto!
- Buying crypto isn’t the only way to invest: Crypto and blockchain ETFs are convenient ways for stock traders to add crypto to their portfolio without exposing themselves to the high risk of holding actual crypto.
- High risk and volatility: Crypto is still too unpredictable to bet the farm on, which is why traditional wealth advisors recommend limiting your portfolio allocation to 10% at max — if at all.
- Vulnerable to theft, fraud, and scams: Squid is just the latest cryptocurrency scam where its developers made off with $3.38 million of investors’ money.
1. How much should I invest in cryptocurrency as a beginner?
Ans : How much money do I need to start investing in cryptocurrency? In theory it takes only a few dollars to invest in cryptocurrency. Most crypto exchanges, for example, have a minimum trade that might be $5 or $10. Other crypto trading apps might have a minimum that’s even lower.
2. Which cryptocurrency is best to invest for beginners?
- Bitcoin (BTC) The original and most well-known cryptocurrency, Bitcoin has become a household name (and market cap leader) since it was created anonymously in 2009 by Satoshi Nakamoto. …
- Ethereum (ETH)
- Bitcoin Cash (BCH)
- Litecoin (LTC)
- Cardano (ADA)
3. Which app is best for cryptocurrency?
Ans : Best Apps to Buy and Trade Cryptocurrency in India
- Binance App India. Binance is the largest exchange in the world by trading volume and has a mobile app with a superior user interface.
- WazirX App India.
- Coinbase App India.
- CoinSpot App India.
- Kraken App India.
- Unocoin App India.
- ZebPay App India.
4. How do I invest in crypto?
Ans : You can easily buy cryptocurrency through traditional finance apps like Cash App, a peer-to-peer payment service owned by Block, Inc. (formerly called Square) that allows users to buy bitcoin only or PayPal, which allows users to purchase four different cryptocurrencies: bitcoin, ethereum, bitcoin cash and litecoin.
5. How do I start trading cryptocurrency?
Ans : Cryptocurrency Trading Steps
- Step 1: Make a cryptocurrency brokerage account.
- Step 2: Fund your account.
- Step 3: Pick a crypto to invest in.
- Step 4: Choose a strategy.
- Step 5: Consider automated crypto trading.
- Step 6: Store your cryptocurrency.
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