Finding someone who doesn’t know about cryptocurrency is becoming more uncommon. Now that stories are coming out about people changing their lives, everyone wants to get in on the action. That’s led to 34 million Americans now owning at least some cryptocurrency.
However, starting to invest in cryptocurrency isn’t as easy as buying stocks. Keep reading to learn how to start investing in cryptocurrency.
Understand the Technology
Cryptocurrency isn’t like traditional stocks. You aren’t investing in a company you expect will do well. You’re investing in an asset that offers unique functionality to its holders.
It pays to understand what you’re investing in before making your first purchase. Check the different types of cryptocurrency available, how they differ from each other, and which ones offer the most value to investors.
Try to stick with the established coins when doing this. Some alternative coins created on the major blockchain networks don’t offer much value and are purely speculative.
Create an Investing Strategy
Once you understand cryptocurrency’s blockchain technology, you’ll need to decide how to start investing. You have a few ways to do this.
The first is to dollar-cost average your investments. You spend a little money every month and spread your investment over time.
This route lets you get exposure at multiple pricing levels and reduce your risk.
You can also put all your money on a coin at once. This method is risker but can be more profitable if you purchase a new coin that hasn’t grown in value yet.
Find an Investing Platform
While you can buy a few cryptocurrency coins on a small number of investing apps, your choices are minimal. If you want to purchase anything you want on the cryptocurrency market, you need to sign up for a cryptocurrency exchange.
Find the exchange that offers the coins you want. Bigger exchanges will offer all the major coins.
However, you’ll need to look harder to find less-established coins. Say you want to buy Sand, for instance. You’ll need to find a website dedicated to a coin or a smaller exchange that has the coin listed.
Be Prepared for Volatility
Cryptocurrencies don’t work the same as stocks. They’re still new, so there is a lot of volatility.
Because of that, some new investors panic when they see their investment drop by a lot. They panic and sell everything they have.
Doing this is a mistake. Even if an established cryptocurrency drops, the chances are good that it will eventually bounce back. The moment you sell, you cement your losses.
Cryptocurrency is a long-term investment when you stick with established coins. You need to learn patience and wait out down markets.
How to Start Investing in Cryptocurrency? Now You Know
The cryptocurrency market is still new, so there is a lot to learn about how to start investing in cryptocurrency. However, there are a set of best practices available that will help you make your first cryptocurrency purchase. Use the guide above to find somewhere to buy a cryptocurrency and make your first purchase.
Head back to the blog if you’re interested in more tips that will help you make smarter investing decisions.