How to start investing in cryptocurrencies?
Have you heard a lot about the cryptocurrency market and would you like to develop your crypto wealth? Unfortunately, you are afraid to take the first step on this unknown market and you are wondering how to approach it? Which way of investing to choose, but above all how to start investing in cryptocurrencies? Should you play for the long term or should you use your capital in a more risky way, hoping for large profits? No matter what path you choose, you must be properly prepared for it! Find out how to start investing in cryptocurrencies and not drown your portfolio thanks to a few simple steps!
This is something completely different than investing in real estate, gold or works of art and often requires at least theoretical preparation. But I will write about this below.
How to start investing in cryptocurrencies – choosing an exchange and a digital wallet
Let’s say you have 10,000. PLN that you want to spend on investing in cryptocurrencies. However, you have no idea where to invest, in what and how to avoid becoming a victim of fraud that will evaporate your money. For this reason, at the very beginning of your adventure with cryptocurrencies, you should familiarize yourself with available wallets and online exchanges that enable trading in digital money.
Fortunately, there is plenty to choose from. Despite the huge number of available wallets and exchanges, there are only a few of the most popular ones. Wallets can be divided into online and offline, these are divided into other, more complicated subtypes, and your task is to choose the one that best suits you.
Large selection of wallets
The most frequently chosen online wallets are: Coinbase, Blockchain, Electrum, Bitcoin Core and Armory, while the best offline wallets are: Trezor and Ledger. The wallet stores your funds and only you have access to it. Cryptocurrencies are sent after presenting the private key – a special sequence of numbers. You must know that money does not physically appear on the wallet, there is only a numerical record of your funds placed in the so-called blockchain.
Do you already know how to start investing in cryptocurrencies and what wallet you should choose? Excellent! It’s time to choose an exchange that will allow you to invest in digital currencies. The most popular platforms are such giants as: Binance, Coinbase, Bitbay or Kraken. The differences between them are primarily the value of the commission related to currency conversion, loans and other transactions in the stock exchange area.
These are platforms you can trust and not worry about being scammed and robbed. Registration and login are protected and to become a member of one of the exchanges mentioned, you must go through a complicated verification process, which includes telephone verification and checking your identity by sending photos of your ID or other document. If the platform does not require such data from you, it may be a site not worth your attention and you should avoid such sites like the plague.
How to start investing in cryptocurrencies – your investing strategy – HODL and BTFD
You have already chosen your portfolio and stock exchange, so you are ready to make your first investment. You don’t have much knowledge, but you decide to take a risk. Okay, so let’s take a look at the safest and less secure methods of investing.
Investing in the cryptocurrency market itself seems easy because it is characterized by a strong upward trend and breaks in growth – corrections. It is safe to say that the market is not saturated yet and will not be for a long time, so you can count on profit by adopting a long-term strategy. Therefore, the most popular strategy is HODL.
Even though it is a misspelled word, it has become the subject of many memes and has gained a huge number of fans. Where did this interesting term come from? Well, on December 18, 2013, an entry titled I AM HODLING appeared on the bitcointalk.org forum, authored by an Internet user with the nickname GameKyuubi. He shared his tactics in this entry, he said that he prefers to hold his bitcoins for the long term because he is a bad player and speculator, he wrote “I’m a bad trader”. GameKyuubi decided to leave his funds and not touch them, so as not to be robbed by other investors.
The title of the entry itself is an obvious typo, but it created a new term that is still used today. Some time after publication, the HODLer Manifesto was created, which consisted of eight theses. The hodling strategy is based on a rational approach to investing. Warren Buffet himself once said that he only invests in what he knows, and his preferred investment period is “eternity”. It was thanks to this tactic that Buffett made his million-dollar fortune. Hodlers, despite many bumps in the road of Bitcoin, thanks to the strategy of holding and not touching their portfolio, are able to see significant profits after a long period of time.
Less popular strategies
You already know how to start investing and what strategy to choose at the beginning, so let’s move on – the next, less safe investment strategy on the cryptocurrency market is the BTFD, which involves buying at low prices at low prices. In practice, this involves investing in a currency after a speculative bubble, after the so-called pump and dump period, i.e. after unnaturally pumped increases and decreases.
However, when using this tactic, an investor must have nerves of steel and not succumb to emotions that may be treacherous and provoke him to buy the currency at an inopportune moment. A real speculator will wait until the “street” sells its assets and waits for the next bubble to explode. Sales, on the other hand, will be planned for the moment of euphoric shopping according to the STFR principle.
How is it with the Hold strategy?
The HODL strategy is much simpler for a beginner investor and does not require specialized knowledge. When investing in cryptocurrencies on your own, you should familiarize yourself with such an investor tool as technical analysis. This will allow you to read charts on your own, determine trend lines or more precisely speculate on increases and decreases in currencies. You can also use the help of experienced investors and watch their movements on live streams. If you trust them a lot, you can even copy their moves.
However, remember that by familiarizing yourself with indicators such as RSI, MACD, EMA you will be able to use the BTFD strategy more effectively. While you’re learning, all you have to do is invest and hold the funds for the long term, hoping for profits in the distant future. If you now know, in very simple terms, how to start investing in cryptocurrencies, you can go ahead and read the next articles about alternative investments.