Maybe you’ve heard a lot about Bitcoin and a litte bit about Ethereum, something about Ripple / XRP, but apart from that, your’re wondering how to get started.
If you already have experience investing in cryptocurrencies, this might serve as a reminder to implement the fundamentals you already know.
The information you’re about to read is action-oriented and will help you make better decisions over a longer period of time.
By the end of the guide, you will know where and how to buy cryptocurrencies like Bitcoin, or other digital coins and tokens.
Here’s the deal:
In the early days of the Internet, there was an event known as the dot-com bubble, also referred to as ‘’the 2000 tech bubble’’, where many companies were literally destroyed by the market crash and declined in history.
However, some of them survived and they have become giants that are known today, like Amazon, eBay, PayPal, Adobe, Apple, Cisco, and Priceline, to name a few.
Those who invested in stocks of those companies back then made a great decision.
It’s the same with Bitcoin and crypto markets today.
If you bought Bitcoin for the right price eight years ago, how much would your life be different when it was at an all-time high and you could sell it at that price point?
Now, think about that for a moment.
When you implement the strategy laid out in this guide, you will raise your chances to effectively capitalize on your investments while minimizing your risk of losing money.
It will also help you to protect your assets from market drops and take advantage of market gains.
Disclaimer: Information provided in this article is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other professionals to determine what may be best for your individual needs. You should not make your decisions exclusively from one source.
There is no guarantee or other promise as to any results that may be obtained from using this content. No one should make any investment decisions without first consulting his or her own financial advisor and conducting his or her own research and due diligence.
Therefore, I disclaim any and all liability in the event that any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.
This content is not intended to and does not constitute legal advice or investment advice and no attorney-client relationship is formed. Never invest more than you can afford to lose. Always seek professional advice before making any investment.
Why Should You Buy Bitcoin?
Think of it as an investment – an asset you own on The Internet of Things (IoT), which is far bigger than many realize.
Blockchain is probably one of the most powerful technologies that the world has seen since the invention of agriculture.
There are many areas of traditional industry that will be disrupted by blockchain technology, like banking and payments, insurance, private transport, healthcare, energy management, retail, and crowdfunding, to name a few.
So, blockchain technology has a huge potential.
The more people use it, the more valuable it will become.
Miners worldwide compete to mine Bitcoin, a process that uses a massive amount of electricity.
That’s why Bitcoin is more then just a programmable money.
It’s like an asset, that’s better then gold.
Gold is not portable, is not a payment system, is not limited in the ammount, is not censorship resistant, is not easy to store, is not seizure of proof, it is not free to store, is not divisible.
Bitcoin is all of that.
Before you make any biased conclusions too quickly, read The Origins of Money.
The article explains how we determine that something has value.
What’s even more interesting is the fact that it was written by Nick Szabo, who many consider to be the true Satoshi Nakamoto – the name is used to refer to the person who’s supposed to be Bitcoin’s mysterious inventor (Szabo has denied those claims).
If you start now, you’ll still be an early adopter.
This is an opportunity of a lifetime.
When the crypto market grows, the value of cryptocurrencies grows.
All those, “what if” questions you’ve asked yourself, from “if I’d invested in that stock 5 years ago,” or if you’d bought xyz.com domain, or if you’d bought bitcoin eight years ago, etc., won’t matter anymore.
When you repeat the same mistake twice, it’s a choice.
However, investing in cryptocurrencies is a high-risk investment because they have a high volatility that grossly exceeds other investments.
Research should be your first step to any investment.
You don’t need to know everything, but the more research you do, the better your decisions will be.
How to Invest In Cryptocurrencies (Beginners Guide)
Before deciding in which altcoins, utility tokens you’re going to invest, look for the following indicators:
check the Daily Volume – the value of the coins being traded in 24 hours; ideally it should be more than $1mn because coins with low volume indicate a lack of interest from other sellers/buyers;
go to reddit.com and find out what people are saying about the coin, about the organization, who started the coin to see if they can be trusted; and
keep in mind there is no guarantee of a fixed return on your investment.
A good rule of thumb is that on average, you will make more over the next 12 months if you invest in coins or tokens with a proven track record.
In addition to that, you can follow Twitter accounts of people who are recognized as leading experts and influencers on the topic.
You should also follow the accounts of the tech companies that are the driving force behind the coins you’re interested in investing in.
That will help you be on track with all the latest news and updates.
The process of buying your first crypto is quite easy.
All you have to do is to open an account on the cryptocurrency exchange trading platform that you’ve chosen.
There are six signs that are important and that you should look out for:
- Commissions & fees
- Payment methods
- Ease of use
- Customers service
- Community interaction
- Customers service
In 2014, there were only six major crypto trading sites, but now there are hundreds of crypto exchanges you can choose from.
That being said, some crypto exchanges support fiat money with which you can buy and sell coins they have listed, while on others you can buy them only with cryptocurrency.
Best Crypto Echanges to Buy Bitcoin (and Other Altcoins)
Beside Bitcoin, Ethereum, and XRP, there are other very well-established projects like Litecoin, Zcash, Cardano, Stellar, IOTA, and Nano, to name a few.
Kraken offers a diverse range of services, with fully beginner-optimized services.
Their platform is very intuitive and they also offer different verification tiers.
To further explore your options, you can do your own research on Google, Reddit, etc.
In order to buy more altcoins, you’ll have to explore other crypto exchanges that have support for ERC20 tokens.
Probably one of the most recognized crypto exchanges to buy and trade altcoins is Binance.
Most of those platforms will look a bit different from what you’ll be used to on Kraken, or BitPanda, but that’s okay.
It’s pretty much the same information, just displayed in a little different way.
It is also highly recommended you turn on two-factor authentication (2FA) using Google Authentictor.
That will help prevent any unwanted situations, like someone else accessing your account and withdrawing your money.
There are two different addresses associated with crypto accounts.
There’s a public address and there’s a private key.
The public address is something you can get out, and is a link to your digital wallet, so that people can send you money, or you can move your funds around in between your own accounts.
A private key is a password to your account.
If you give someone your private key for your Ethereum, it’s like giving someone a password to your bank account.
They will be able to get access to your digital wallet.
So, private keys, as the name suggests, should remain private, and the public address is what you’re going to use to move your digital funds.
When Is the Best Time to Invest in Cryptocurrencies?
There is no general rule. As you are reading this, one of two things are happening:
The market is going up, or the market is going down. When the market goes up, we all feel empowered and want more of this, and we get greedy. Not because it’s a good investment, but because we want more of this feeling.
When it goes down, we start to feel uneasy. We start thinking how much we’re going to lose.
We want to sell our investments, not because that would be a smart thing to do, but because we want to minimize the pain of losing money.
This can happen to anyone because emotions lead our behaviors.
Most investors fail because they’re too emotional. They buy high and sell low.
That’s why it’s so important to learn how to control your emotions.
One of the best strategies to remove such destructive trading behavior and to get control over your emotions is to follow buy low, sell high investment strategy.
You cannot predict when the market is going to crash and when it’s going to explode. No one can.
The cryptocurrency markets are massively volatile, but you can still make 10x return on investment (ROI) in less than a month.
You can do that if you take advantage of the volatility; this is known as the 10% rule.
It will save you from countless hours of stress and dramatically improve your returns.
If you practice discipline with these small actions, you will see good results over the long term.
The key word here is patience.
Too many times, people lose money because they think they know better. Don’t be one of them.
As Jocko Willink says, “Discipline equals freedom.” Be smart and remain disciplined.
Whatever you do, don’t buy a coin just because you see it going up or down on the crypto market.
You’re not a gambler, but an investor.
The best thing you can do is to research the market as much as you can, so you will be able to control your emotions and invest wisely.
You can make money trading, but for trading you require a special set of skills.
The rule of thumb is that if you’ve never traded before, learn how to do it, or don’t do it at all.
You simply have to learn how to be patient and get yourself informed.
Allow yourself some time to watch, then take notice.
Boring always wins in investing.
It’s not about timing. It’s about being consistent.
How To Diversify Your Crypto Portfolio
These are all the basic steps to make sure you do it right.
You can invest in only few coins, but a good diversification is recommended.
Every good crypto-investor wants to have a balanced portfolio.
A good strategy to achieve that is to educate yourself about other digital coins and decide if you want to have them in your assets.
For example, coins like Zcash, Monero, PIVX are focused on privacy, Ethereum is all about smart contracting, and others like Nano are focused on scaling payments.
Every day, you see some coins heavily falling while others are vertically raising.
These changes happen in seconds.
The main metric, or rule, which you should follow when buying cryptocurrencies is to avoid blockchain projects which promote technical advantages without explaining how they will reach them.
Step 1: Select Your Coins
There are thousands of coins available on exchanges across the globe, with a huge variety to look into.
There are three different categories when it comes to market evaluation that really define cryptocurrencies.
It’s all about the market evaluation.
It’s calculated by the number of coins or tokens, multiplied by its current price; that’s the real evaluation.
When you spend enough time analyzing the markets and media and how that correlates to the prices of cryptocurrencies, then you will be able to notice patterns that others won’t.
Step 2: Where’s the Price
Is it all new highs, is it all new lows?
You just have to ask yourself, why are you optimistic about this coin?
There are four main categories you should look into:
- Target market (cloud storage, app development, finance, online security, etc.)
- Technology (quick transaction, solid UI, easily integrated, easy to use, etc.)
- Solid team (experienced, diversified skill sets, etc.)
- Growing adoption (media coverage, implementation, high demand, etc.)
You should not invest in any kind of coin or token that doesn’t at least meet three of those categories.
And, generic as it sounds, “Buy low, sell high.”
It’s really simple, but it’s really important.
Don’t chase the hype. It might not always be true, but when you have solid, consistent coins, when you can get a 50% cut from their highs, that is a good opportunity to buy.
To borrow a quote from Warren Buffett, “Be fearful when investors are greedy, and greedy when investors are fearful.”
Start buying when prices drop and sell when they are high.
Step 3: Form Price Levels
If you’re going to buy a coin for a certain price, you also have to learn what the price is you’re going to sell it at if things don’t go your way.
You need to have two plans.
A plan when things go according to plan, and a backup plan when they don’t.
In other words, you need to know what a limit order is, and what a stop limit order is.
A limit order means that you won’t be selling your investments until they reach a specific price that you’ve set.
This setting is not set in stone, and you can cancel it whenever you want.
To limit your losses and minimize risks to your profile, set up a stop limit order. You set the number at what’s your % max you’re prepared to lose.
What that means is that when your coin reaches a certain price, it is going to automatically sell.
Not all exchanges have this option, so what you can do is to set an alarm on your App on your phone that tracks crypto markets and then actually go and sell it physically on your exchange account.
You can also make things easier for yourself and install cryptocurrency tracking apps to track prices and check the markets on your phone, like Blockfolio.
This is a simple app that lets you add a watchlist of digital coins and create a personal track portfolio.
The most useful thing about Blockfolio app is that it displays all currencies on your watchlist in the currency of your choice.
It allows you to display currencies by market capitalization, supported by cool charts and all kinds of ranking factors, like what is being actively traded.
Step 4: Dollar Cost Averaging Strategy
Most people don’t strategize.
They don’t understand why they are putting their money into certain coins, and they think it’s just going to be a get-rich scheme with profits pouring in.
This isn’t going to happen, and if you’re someone who is looking for an easy money, then this guide is not for you.
Investing is a marathon, not a race.
You don’t have to go big from the start. You can go small and start by investing $100, or $1.000, and learn along the way.
However, never invest more than you can afford to lose.
That’s the most important rule there is when it comes to investing.
No one can time a market.
Not even famous investors like Warren Buffett, or Ray Dalio.
Anyone who tells you otherwise doesn’t know what he’s talking about.
Don’t believe the hype.
The idea behind dollar cost averaging is that you will be spreading your investment over a long window of time as opposed to buying in all at once.
It works well if you apply it to the stock market, but it’s much less ideal for the cryptocurrency market, because of the volatility.
The reason why most people lose money with investing is because they think they can control their emotions better than they actually can.
The reality is, there is no glory in having a strategy unless it’s working for you.
You should always be asking yourself if what you’re doing is helping you.
You want to make money, but you want to avoid losing it if possible (medium risk tolerance).
Let’s assume you buy $100 worth of Bitcoin today.
You’re not interested in the price.
For all you know, it could be up 15% or it could be down 15%. You buy in anyway with 10% of your cash.
In one week, you do the same and buy $100 worth of Bitcoin.
If the price went up 10%, you did get a 10% return on your first $100.
After one week, you invest another $100.
If this time Bitcoin has dropped 20%, you haven’t lost much, because you didn’t put all $1,000 in at once.
Instead, you’re getting a great deal on the new Bitcoin, which will cover the lost profits from the first two buy ins.
You repeat this each week for the next 10 weeks (for $1,000 total buy in).
Of course, the price will be different each week.
Sometimes it’s up, and sometimes it’s down.
But your risk is much lower, because you’re protecting yourself from losing it all on one market move, and also getting the upside from buying during the dips.
At the end of your 10-week journey you have invested your $1,000 and own however much crypto the market allocated.
You probably didn’t make 50% ROI, but what’s more important is that you didn’t lose 50% of your investments.
As previously already mentioned, investing in cryptocurrencies has a high volatility, but let’s assume that the market is going up overall.
If that is the case, the value of your portfolio increases over time.
This approach is very powerful, because you’re removing your emotions and personal feelings from the equation.
You’re spreading out your risks and riding the tide of the crypto market.
Ten weeks may seem like a lifetime, but the idea is not to lose your money.
Another simple strategy that works is to buy the dip, lock in profits, cut your losses, and balance your portfolio.
You don’t have to do something just because you’ve read somewhere that ‘this is what investors do.’
Instead, research and find out what works for you.
Learn and stay humble about it.
In most situations, you have options and you have choices.
The one that is the most difficult is when the world is telling you it’s the right one, but it’s not always the truth.
Step 5: Follow Through
You’re in the market that is going to expand greatly over a long period of time.
You’re an early adopter, and you should be happy for that.
You have to take care you don’t get carried away.
People get burned when they chase highs and they don’t have a good strategy in place.
All you have to do is to remain disciplined.
A lot of people want to start trading right away, instead of investing.
The reason why that is not the best decision is because in any given market, over 90% of traders lose money.
That is a proven fact.
If you just toss your money around not knowing what you’re doing, you will become a statistic and will be among those 90%.
So, be disciplined in whatever you do and make sure you come up with a strategy.
How to Safely Secure and Store Your Cryptocurrencies
You’ve bought a cryptocurrency. Now you have to store it.
Most losses are directly related to losing data, or not being able to recover their passwords.
It is easy to buy Bitcoin, or any other crypto asset, but the real challenge is to keep them safe and secure.
There is no middle man.
You’re the only one who is responsible for the security of your investments on crypto markets.
If a security breach happens, and if you have no backup plan, there is nothing you can do to get your funds back. Literally.
That means that you are your own bank.
What it also means is that you’re the only one who is responsible how well your funds are secured and protected.
You have full scale autonomy, because you don’t need anybody to help you, or to trust to store your coins.
There are several options to mitigate risks if anything goes wrong, but first, if you lack computer literacy, let’s take a look at the possibilities of what can potentially happen:
If you somehow downloaded or installed some “software” because you wanted to unlock extremely popular game, this software will scan your hard drive. When it does, it will find the private key and then a new transaction appears on the crypto network that will take all of your “hard”-earned money. All that in just a few milliseconds.
Do you remember when Yahoo’s email database of their users got hacked? Maybe someone by the name of Anonymous John bought that info on the darknet and ran different semantic analyzers. Miraculously, that led to the disappearance of bitcoins and alt-coins from all of the services that use authorization via email.
What about this one: Some guy, who works for Facebook or Google and has admin rights (remember the case with Snowden), simply empties your digital coins and nobody will even notice that.
Back in the day, people had all their crypto money stored on crypto exchanges, but they got hacked and all the money simply disappeared, like in the case of Mt. Gox.
While you browse through pornhub looking for a cool video clip, you catch some trojan in the process, which in return encrypts all the files on your hard disk. If they find links to your wallets and realize what treasure they’ve found…they won’t decrypt your hard drive, and you just can’t send them money, because your keys will stay encrypted.
You lose your unencrypted phone or laptop.
If somehow you catch a Keylogger, everything you type on your electronic device will be recorded, and that will lead to an empty crypto account.
One morning, you log into your crypto account and realize that all your money is gone. What happened? Well, just one NSA agent took advantage of some backdoor in Windows OS no one knew anything about.
You get an email from the service where your crypto-money is stored, but the name of the website is not poloniex.com, but polonex.com, and it will look identical. All that it takes is one click on that link and your crypto account will be empty before you can say, “what just happened?”
These are just few scenarios, but that will give you some idea of what can go wrong.
And cryptocurrencies are nothing like paper money.
You’re responsible for its safety, and if something goes wrong, there is very little you can do.
First, protect your documents against identity theft.
If web-servers get hacked, then all data will be scattered all over the Web and used elsewhere.
After you’ve acquired them, then your best chance of keeping your cryptocurrencies safe is to know how to store them.
You have two options:
1. You Can Keep Them On The Exchange
This approach is great from a usability point of view and ease of use, but the downside is that all your assets won’t be secure if a cryptocurrency exchange is hacked.
This is one of the least secure options, because you leave the management of your private keys in the hands of a third party.
If any administrator decides to go rogue, they will have full access to the wallet.
It is recommended not to store large values in an online wallet and to enable 2-factor authentication (2FA) when you log in.
Many people prefer to do this with apps like Google Authenticator for securing their online profiles.
There have been numerous cases reported when hackers used social engineering techniques to hijack passwords and phone numbers, so they could have access to victims’ online accounts.
Sometimes you have no other way but to keep your digital coins on the exchange.
However, keep in mind that everything that is online can be hacked.
2. You Can Store Them by Yourself
You can store them on through mobile, desktop, hardware, or a paper wallet.
Think of your wallet as a location where your private key is stored.
Coins are never stored in your wallet. They are part of the Blockchain.
What is stored in your wallet is your private key.
Whoever has control of it has access to the coins.
Think of it like a hammer of Thor, Excalibur, or any other object with magical powers you can think of.
And, whoever has access to the private key has all the power – unlimited access to the coins.
The difference between your ordinary bank account and the one you use in the crypto world is that you don’t have a third party like a financial institution taking care of your money.
The more autonomy you have, the more responsibilities there are.
You’re solely responsible for the safety and security of your investments.
If you lose your smartphone, get malware on your laptop, forget your password, or lose your private key…all your coins could be gone.
That’s why you should have more than one backup.
The Top 5 Bitcoin Wallets That You Should Use For Storing Your Cryptocurrencies
Never keep large amounts on a crypto exchange.
Every time you want to send your coins, you just connect your hardware wallet to your computer and then take it offline once the transaction is complete.
This way you can store your private keys offline and minimize the risk of exposing them to attacks from the internet, viruses, trojans, and all kind of other malware or spyware software.
The Best Bitcoin and Altcoin Desktop/Mobile Wallets
One of the most secure and easy to use is Exodus.
It’s a free world’s first multi-cryptocurrency desktop wallet, that was crafted by JP Richardson and Daniel Castagnoli.
They have seamless UI and are easy to use.
However, smartphones are much easier to be hacked than PC, so mobile wallets are not the best choice to store your crypto.
That’s why any mobile wallet is unsafe in terms of your private key security.
They are only good for having small amounts ready to pay.
It is strongly recommended that you make regular backups of your wallets in case of physical damage of your device and to minimize risks if your device gets stolen or lost.
Most mobile apps automatically update themselves, and if a hacker got access to the developer’s account, they could potentially infect your mobile device and steal your digital coins.
The private keys are the most vulnerable parts.
You should not expose them on the Internet at any time at all.
If you really want to make your investments safe from any hacker on the planet, you have to create a paper wallet and safe print your key.
This method enables you to avoid storing your digital data on any device, providing the strongest security possible, at the expense of usability.
If you have no machine where you have installed your software wallet connected to the Web, there is no connection to your wallet account.
It should be in your best interest to keep that paper wallet in a safe place, because if you lose a piece of paper, or if it is destroyed, the funds in the wallet are going to be unusable.
Just makes sure you store your paper wallet somewhere safe.
That line of code can be worth thousands or millions of dollars.
The blockchain technology will be part of the future like the interent was to the generation before.
Like with anything in life, there are those who support the change, and those who oppose it.
Blockchain will substantially reshape the global economic structure.
You can either be on the side of those who will do something with the opportunity of this new future, or you can be a passive observer and wait to see what others decide.
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