Cryptocurrency and blockchain technology has changed the traditional financial world, offering multiple possibilities to people worldwide. One such possibility is cryptocurrency investing or trading.
Investing in cryptocurrencies has grown in popularity, providing consumers with chances for financial growth and diversification. However, managing the complex and volatile cryptocurrency market may be difficult, particularly for newbies. In this guide, we explain how and where to buy crypto and check out four investment strategies.
How To Start Buying Crypto
Typically, when an investor wants to buy crypto, they do research to find a digital asset to invest in. This is a necessary step to find a solid asset. However, there is a safe (relatively) way to invest in popular and solid cryptos. If you want to find out how to buy cryptocurrency, here is a general guide with steps:
- Choose a trustworthy exchange. Choosing the best crypto trading platform or cryptocurrency exchange is vital when buying and selling cryptocurrencies. Research several exchanges based on characteristics such as security, fees, user interface, customer service, and cryptocurrency availability. The best options include WhiteBIT, Binance, Coinbase, Kraken, and Gemini.
- Create and verify an account. Sign up and establish an account once you’ve decided on an exchange. The process entails supplying your email address, creating a secure password, and completing any required identity verification procedures, which may include presenting identification documents.
- Set up two-factor authentication (2FA). For an extra layer of security, enable two-factor authentication. Connect your exchange account to a two-factor authentication tool on your mobile device, such as Google Authenticator or Authy. This step helps to safeguard your account against illegal access.
- Secure your wallet. While exchanges provide crypto wallets for storing cryptocurrency, having your safe wallet is recommended. Wallets are classified into three types: hardware wallets, software wallets, and mobile wallets. Choose a wallet that meets your security requirements and preferences.
- Fund your account. You must first fund your exchange account to purchase cryptocurrencies. Most exchanges accept various funding methods, such as bank transfers, credit/debit cards, and even e-wallets. Follow the instructions provided by the exchange to deposit funds into your account.
- Place an order. Navigate to the exchange’s trading interface once your account has been funded, and you’ve picked which cryptocurrencies to purchase. Select the crypto trading pair (for instance, Tether (USDT) to WhiteBIT Token (WBT) and enter the amount you want to buy. You can make either a market order (purchase at the current market price) or a limit order (set your price).
You can also use a cryptocurrency exchange, such as WhiteBIT, to opt for a quick exchange. The convenient calculator will show how much you get for fiat or cryptocurrency. For instance, if you invest $100 in Bitcoin (BTC), you get BTC 0.003898 (as of June 16).
Best Ways To Buy Crypto
The method described above is a guide to buying cryptocurrencies on exchange or trading platforms. However, it’s not the only way to purchase digital currencies, like Bitcoin, Ether, Doge, etc. Here are a few other options:
- Cryptocurrency exchanges. This method has already been described. However, you may use centralized or decentralized exchanges. The first option is more user-friendly, and the second is cheaper but difficult to use by beginners.
- Peer-to-peer (P2P) exchanges. P2P platforms directly connect buyers and sellers, allowing them to exchange cryptocurrencies without using a third party. LocalBitcoins, Paxful, and Bisq allow users to purchase cryptocurrencies from other people using various payment methods, such as bank transfers, cash, and even gift cards. P2P systems offer freedom and privacy, but they must be used with caution and due diligence to ensure safe transactions.
- Crypto investment platforms. Users of some financial services, such as Robinhood, can invest in cryptocurrencies alongside traditional assets such as stocks and ETFs. These platforms offer a one-stop shop for investors wishing to diversify their investment portfolio across multiple asset types.
- Crypto ATMs. Crypto ATMs are devices where consumers can purchase cryptocurrency with cash or debit/credit cards. These ATMs make it straightforward and convenient to buy cryptocurrency, particularly for individuals who prefer in-person transactions.
- Brokerages. One typically needs to create and verify an account, deposit funds, and place an order through the brokerage’s trading platform to buy cryptocurrency. Some of the best options are Coinbase and eToro since they offer a user-friendly interface.
In all these cases (except for the crypto ATM solution), users must choose a platform. Do your research to ensure that the website you select is trustworthy and follows guidelines by authorities that regulate digital assets in your country or region.
Best Strategies Regarding Crypto Investments
This section explores four investment strategies that can help people get started with cryptocurrency investments. These strategies cater to various risk profiles and investing objectives.
Buy-And-Hold
The buy-and-hold strategy is one of the most basic and popular strategies in the cryptocurrency industry. This option means purchasing cryptocurrencies and storing them for extended periods. These periods usually take years. Investors do so, hoping that their value will increase over time.
Investors must perform extensive research to find cryptocurrencies with solid fundamentals and long-term growth potential beforehand. Because of their established track record, widespread use, and stable underlying technology, Bitcoin (BTC) and Ethereum (ETH) are appealing long-term investment options.
Typically, short-term market changes can be significant and appeal to investors to sell their assets if the price increases significantly. Thus, the buy-and-hold strategy necessitates patience and discipline not to get tempted.
Historically, top-tier cryptocurrencies have shown the potential for huge long-term gains. Investors who follow this method should examine their investments regularly and stay informed about market developments. Still, they should resist the temptation to make rash decisions based on short-term price swings.
Crypto Index Funds
Crypto index funds simplify gaining exposure to a diverse range of cryptocurrencies. Like the traditional index funds method, this strategy tracks a certain index or a selection of cryptocurrencies, allowing investors to benefit from market performance rather than individual coin selection.
Investing in a crypto index fund provides diversity, which reduces the risk of investing in a single cryptocurrency. These funds are often comprised of a combination of well-known cryptocurrencies such as Bitcoin, Ethereum, and other famous altcoins. Investing in an index fund allows investors to acquire exposure to the larger digital asset market while avoiding the need for extensive research and active management.
Dollar-Cost Averaging (DCA)
Dollar-cost averaging (DCA) is a strategy where a constant amount of money is invested in a cryptocurrency at predetermined intervals, regardless of price. This method is especially successful at reducing the effects of market volatility and eliminates the need to try to time the market.
Investors can use DCA to accumulate cryptocurrencies at an average cost over time, avoiding the risk of making significant investments at market peaks. They profit from the potential for lower average prices and avoid the psychological burden of trying to time market entry by spreading the investment over time.
DCA is a strategy accessible to new and experienced investors. It offers a systematic approach to constructing a cryptocurrency portfolio and can help mitigate the influence of short-term market swings on overall investing performance.
Staking And Masternodes
Staking and master nodes are investment ideas that let investors earn passive income by contributing to network consensus and assisting with blockchain operations. These tactics are common in proof-of-stake (PoS) and delegated proof-of-stake (DPoS) cryptocurrencies.
Staking is keeping a cryptocurrency in a designated wallet and actively engaging in block validation or consensus methods. Stakeholders help to secure and operate the blockchain network while earning benefits in the form of more money.
Masternodes require a larger investment. Full nodes that execute additional duties such as transaction validation, privacy features, or quick transactions are known as master nodes. Investors that maintain a master node give essential services to the network in exchange for a percentage of the block rewards.
