By Areej Salem
Bitcoin (BTC) and crypto seem to be buzzwords these days, as BTC is making top news headlines every day after its blazing bullish start to 2021. The million-dollar question is how to invest in crypto?
Since you have landed on this page, dear reader, the chances are that the crypto hype has already caught your attention and you want to invest in crypto.
Although the market is known for its volatility and faces countless challenges from regulators and finance watchdogs, you can still invest in it. And here’s how you can invest in crypto and bitcoin!
Before You Invest In Crypto
Before we get started we would like to clarify that until this point the crypto market has been anything but predictable and it is hard to understand why the prices are soaring or even plummeting. Sometimes a celebrity can nearly crash the crypto markets with a silly tweet and other times big adoption news can hardly tick up the price.
But to make it even easier for you, here are 15 Crypto Terms You Must Know Before Trading!
Are Bitcoin and Crypto are the same thing?
Moreover, an important thing is to know that bitcoin and cryptocurrency are not the same things. In other words, bitcoin is not a synonym for crypto whatsoever. Bitcoin is the first-ever cryptocurrency created. Bitcoin, which was solely created to transfer money as it simplifies and increases the speed of transactions without any government restrictions or third-party mediation, is considered a trendsetter for the whole crypto market due to its large dominance but however, that’s not always the case.
While other cryptocurrencies, dubbed as altcoins, may have use cases in their ecosystem other than merely trading. For example, Ethereums native coin, Ether, can be used for trading and exchanging value but that’s not the sole purpose of the Ethereum blockchain, as Ether is used as gas to run the whole network.
Another thing you should know is that the market is saturated with scam projects. That is exactly why you should be super careful where you put your money.
Now enough with the chit-chat, and let’s dive in!
1. Set Up A Crypto Wallet
Just like you pocket your dollar bills in tangible wallets, cryptocurrencies need to be securely stored in either of these two wallets’ types: non-custodial wallets, and hosted wallets.
Non-custodial wallets that can be a physical hardware device, a program, or an app on your mobile or can be a hosted service wallet. Non-custodial wallets don’t rely on a custodial or a third party so you would be fully in charge of your crypto possessions. The best non-custodial wallets to consider in 2021: Ledger Nano X, Trezor One, and Metamask among others.
Hosted wallets, hence the name, are a service that is hosted by a third party. You can think of it as how a bank holds your money on your behalf. The most practical feature about this kind of wallet is that in case you have forgotten your passwords they can still retrieve your crypto while if you used the non-custodial wallets, your money would be lost forever. Among the best hosted wallets to consider in 2021: Blockchain.com wallet and BitGo.
So the first thing you need to do before you buy crypto is to choose the right type of wallet that shall store the public and/or private keys for cryptocurrency transactions.
2. Join a Crypto Exchange
Now that you have set up a crypto wallet, you are ready to add some funds to it. In order to achieve this, you should join a crypto exchange by creating an account. There are plenty of crypto exchanges out there so you should check a few things like security level, daily trading volume and liquidity, transaction fees, and most importantly geographical restrictions for support purposes.
Once you are shored up on an exchange, start creating an account. Depending on the exchange you would be asked to provide documents that verify your identity. This procedure is known as Know Your Customer (KYC), so don’t take this personally.
3. Add Funds to Your Crypto Exchange Account
Once you set an account in a crypto exchange, you can start adding funds using your bank account or debit/credit card. If those options are unavailable in your country due to regulations or simply because your traditional currency is not supported yet, you can buy crypto from trusted traders that will transfer the amount you paid for to your wallet. Among the best crypto exchanges in 2021 are Coinbase, Binance, BitMex, and CoinMENA.
The most important thing to remember is to check your country’s crypto regulations to avoid any unnecessary legal drama.
4. Buy Crypto!
Give yourself a pat on the shoulder because you now have a fully funded account and now it’s time to make your first purchase and pick a cryptocurrency to invest in! There are more than thousands of crypto coins that are active now with different projects and use cases. With Bitcoin being the most popular among them all, there are also Ethereum, Cardano, Ripple, and Dogecoin among others.
If you have been paying close attention to the article so far, you must realize that doing your own thorough research is my mantra. I really can’t stress this enough because none of you want to be this guy.
To put this into perspective, choose one or more cryptocurrency bearing in mind what the White Paper promises including the total market cap of that coin, project behind the coin, its use cases, developers and team’s reputation, underlying technology, and timeline or roadmap.
5. Manage Your Crypto Investments
Congratulations. You’re a crypto investor now, and now it’s time to pick a strategy. Crypto investing has two types of strategies: speculation or HODLing.
Speculation means trying to make profit out of the daily volatility or price change of crypto. On the other hand, HODLing is a long term investment in which traders mitigate the volatility risk by storing the coins for a longer period of time and patiently lurking for prices to tick up hitting all-time high to cash in their profits quickly.
Keeping in mind that crypto exchanges get hacked a LOT, we advise that you keep your crypto stored in a cold storage (not connected to the internet). Lastly, there’s no such thing as ‘safe bets‘ in crypto trading, as a beginner we recommend that you be extra careful and don’t put all your eggs in one basket.
Disclaimer: The Cryptocurrency market is considered highly speculative, risky, and largely unregulated. Anyone mulling investing in it should be aware there’s a risk of losing their entire investment.