Want to invest in Crypto and don’t know how? Learning how to invest in cryptocurrency could be one of the most profitable investments in this decade.
Taking a look at the immense growth rate of Bitcoin’s price from the past decade, one could say that Bitcoin’s growth is gradual but steady. Over the long-term, Bitcoin has proven to be very profitable not forgetting the previous bear markets that we’ve had such as the 2017 bear market. Yikes. All In all it’s TO THE MOON where we’re going. Pretty damn sure of that. Whenever in doubt in a dooming bear market, just zoom out. Most people tend to flip and panic sell when Bitcoin is in a bear market, that’s when the fear and greed index for the digital currency is at its lowest. People lose it and start panic selling and losing all their wins. Instead, you should take it as a chance of buying the currencies at a cheaper discount better than they were before on a bull market. This way, when the bull market is eminent, it’s just profits on profits all the way up. (By the way, I’m at the moment listening to the I’m all the way up song by French Montana. He he he).
Otherwise, let’s get down to business on what we we’re on about. Wait, what was it again we were all so psyched about? Ooh that’s right, BITCOOIINNN, As well as cryptocurrencies as a whole, so don’t you forget that. So if you’re ready to start investing in crypto, this is your go-to guide.
What is Cryptocurrency?
Before we head into the ‘looking for a needle in a haystack procedure of how to invest in cryptocurrency’ for beginners, let us answer ourselves this One Million Dollar question: What is cryptocurrency?
Cryptocurrency is a form of digital currency, that is typically used to purchase goods or services. What differentiates cryptocurrency from regular money also known as the FIAT (like the dollar) is that cryptocurrency utilizes an online ledger known as a blockchain.
Here’s a general break-down of the various terminologies discussed in this chapter of my Blog.
Blockchain: This is a form of digital technology that is unhackable as well as unchangeable. Blockchain is decentralized (meaning not controlled by 1 single entity such as a government or bank). Blockchain manages transactions across many computers. It is merely the technology that can allow virtually any type of transaction to be securely and immutably recorded.
Cryptocurrency: A type of currency, which is in digital format. It is digital money created by a computer code. It is decentralized and is mostly encrypted data used to represent currency. Cryptocurrency uses blockchain technology to process transactions (buying or selling).
Bitcoin: This is a type of token (specifically, a payment token). Brought into the existence by a very prominent, visionary individual by the name, Satoshi Nakamoto back in the year 2011. Bitcoin also uses the blockchain to record transactions.
Why use Blockchain Technology?
The bottom line is blockchain technology is decentralized. In other words, blockchain removes the middle man such as the banks and various financial institutions that we use for payment purposes such as paypal, venmo etc. With the middle men removed out of the equation, blockchain technology could improve efficiency thus making it fast, durable and the most secure way to use in making transactions. Blockchain transactions could help you save time, energy and money which are the most important resources that a genius mind would put into good use. These resources are better allocated elsewhere. With Blockchain technology, you rely on thousands and thousands of computers within the blockchain network to verify your transaction and add that transaction to the blockchain itself. With these numerous computers there to verify a single transaction, the chances are beyond zero for you to get hacked and lose your cryptocurrencies. Thus being unhackable.
Where to Buy Cryptocurrency
The cryptocurrency topic has seemingly exploded in the world with only an average of 3.9%, with over 300 million crypto users worldwide as of 2021 and over 18,000 businesses are already accepting cryptocurrency payments. With these numbers, we’re not late at all, in fact, we are the earliest we can ever be at the moment. And that’s where this question comes into play, where can you buy cryptocurrency?
You can buy cryptocurrency in what is known as a cryptocurrency exchange which is a platform that gives cryptocurrency investors the ability to buy and/or sell cryptocurrencies for other assets like your regular dollar or Kenya shillings or other forms of digital currencies.
The cryptocurrency exchange I use is called Binance. I’m from Kenya so this is what I use mostly and would recommend to any beginner out there who is interested in starting out with crypto. Binance is one of the best and most established cryptocurrency exchanges in the world. Of course there are very many others such as Kraken, Gemini, Coinbase, Robinhood that are widely accepted in the US and widely but not at the moment in Kenya. With time though as crypto adoption increases, we will see these platforms coming straight on our doorsteps. Binance allows you to hold, buy and sell cryptocurrencies and also offers crypto-to-crypto trading in more than 500+ cryptocurrencies and virtual tokens, including Bitcoin (BTC), Ether (ETH), Litecoin (LTC), Dogecoin (DOGE), and its own token Binance Coin (BNB).
Binance has also a digital wallet (a place to store your cryptocurrency). A digital wallet has the following functions;
- Ability to store cryptocurrency.
- Ability to sell and buy other cryptocurrencies.
- Ability to store personal information.
Recommended Reading: https://en.wikipedia.org/wiki/Binance
Let’s take a look at how you can start investing in cryptocurrency. It’s a lot easier than you think.
Step 1. Open an Account with a Cryptocurrency Exchange
First, you want to open an account on a cryptocurrency exchange. I opened my first account with Binance a while ago and I kid you not, it only took but 10 to 15 minutes. Opening an account is in most cases free and very straightforward. I’ll just leave my binance link over here in case a little birdie would wanna get started on their crypto journey. Here it is https://accounts.binance.com/en/register?ref=P2JQFB5L
Step 2. Confirm Your Identity
Below are some things you will typically need for opening an account:
- Photo ID, a driver’s license or even your own Kenyan national id.
- First & last name.
- Email address.
Wonder why you need a photo ID to purchase cryptocurrency — especially Bitcoin. The answer is typically because to buy Bitcoin, some cryptocurrency exchanges require the identification of the customer in an effort to discourage fraud and obtain some form of personal information in the case of theft.
Step 3. Buy Your Cryptocurrency
Typically speaking, you can buy cryptocurrency in dollars through cash, debit or credit cards, however, there are other cryptocurrencies that will require you to purchase their currency in bitcoin or whatever base currency you currently have within your wallet. If you buy your cryptocurrency through Binance, it will be stored in what is known as a Digital wallet.
How to Store Your Cryptocurrency
Now that you set up your account and are ready to trade your cryptocurrency, it’s also time to consider how to store your cryptocurrency — safely. Since cryptocurrency is digital, your money could be susceptible to hackers — and if your account information is not secure, then people will try to come after it. Here are some safe ways to store cryptocurrency:
1. Hardware Wallet (Offline Wallet)
A hardware wallet is typically one of the safest ways to store your cryptocurrency. Also known as a cold wallet or off-line wallet, is typically a USB stick storing every bit of your private user information, passwords to access your cryptocurrency accounts, also known as your ‘keys’. The advantage of hardware wallets is they are unhackable because they are offline. The hardware wallet that I use is called the Ledger Nano X.
This way, no other hacker can obtain your passwords to “open” your cryptocurrency accounts. If they cracked your passwords to your cryptocurrency accounts, you would lose your investments. A hardware wallet is my personal choice to securely store my cryptocurrency information.
2. Cryptocurrency Exchange (Digital Wallet)
Similar to storing your cryptocurrency information in a hardware wallet (offline) you could also store your cryptocurrency information (including your password to your crypto account) in what is known as a digital wallet(online) which is software that safely stores your personal information, passwords, and your cryptos. A digital wallet can hold the same data as a regular, leather wallet would, simply in e-form.
However, a digital wallet is not the safest way to store your cryptocurrency. That’s why I would stick with a hardware wallet such as ledger Nano X (offline storage) if you prefer to be on the safety side.
Pros and Cons of Investing in Cryptocurrency
Cryptocurrency has been the talk of the year — and likely decade as it will be in the next decade. And the next, and the next, and the next…Sorry, I’m done now. Let’s take a look at the pros and cons of investing in cryptocurrency below.
- It has astronomical return potential.
- Short time before major returns could be made (you can cash out very fast).
- There is extreme transparency with transactions recorded forever on blockchain.
- 24/7 instant availability to trade/sell.
- Has total anonymity.
- High Volatility.
- No safety in the case of loss or hacking.
- Possible mishandling of cryptocurrency by company founders.
- Very difficult to understand on how its working goes on.
The more you learn about cryptocurrency, the more you don’t consider whether its pros and cons are worth the investment for you. Personally for me, the pros so far and by far exceed my reasons for investing in crypto. I also get asked what is the minimum amount to invest in crypto as a beginner and my answer is always that there is no minimum amount to invest in cryptocurrency but typically the investment platform you use will tell you the minimum investment amount.
How much you invest in cryptocurrency depends on:
- Your financial ability.
- Your ability and willingness to take risk.
- Your comfort level investing in cryptocurrency.
I suggest you do your own research and take some time to think about your financial goals before you start investing in cryptocurrency. But hey if you’re a whale and you can afford a lot of fiat, why don’t you just go all in… LOL. Don’t do that though, I’m talking about myself and where I’ve reached in my level of crypto investing.
The more you know about an investment, the better you’ll be able to decide for yourself whether it’s the right one for you and your current lifestyle. Now, will I invest 100% of my net worth in Bitcoin or another cryptocurrency? Nope, never, not at all. But I am willing to dabble in cryptocurrency and invest a little. And I’m 100% OK with losing that money. Of course I have some of my investments stacked up in stocks, NFTs. Consider your cryptocurrency investments to be a way of potentially growing your net worth. Make sure your portfolio has a lil bit of crypto, just to be on the safe side.
Read first, learn now, and invest once you’re comfortable. You will thank me later!