How to Invest in Cryptocurrency

How to Invest in Cryptocurrency Safely in 2024: The Ultimate Guide

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Do you want to invest in cryptocurrency? If yes, Bitcoin is the most well-known virtual currency that comes to mind, right? But there exists a myriad of cryptocurrencies. So, you can invest in cryptocurrencies in many ways: buy cryptocurrencies directly, invest in crypto funds and companies, buy cryptocurrency stock, or buy crypto-related ETFs on a brokerage platform. Let’s learn everything about the newest, inventive virtual asset and how you can invest in it safely. 

What Is Cryptocurrency?

Before investing in crypto (short for cryptocurrency), understand everything about cryptocurrencies and how they work. Unlike cash, cryptocurrency is a virtual currency. It can be bought and traded in certain ways. Mostly, cryptocurrencies are decentralized meaning they aren’t issued, backed, or regulated by any government entity. 

Cryptocurrencies are created digitally by using a technology called blockchain. Blockchain is also known as distributed ledger technology that produces high-security encrypted records of virtual coins and their associated transactions. These records are linked and distributed across a large network of computers accessing the blockchain. The system can be accessed by anyone with an active internet connection and has high security, transparency, speed, and accuracy. 

Everything You Need to Know Before Investing in Cryptocurrency

Investing in cryptocurrency is risky because of its volatile nature. Two worst-case scenarios regarding cryptocurrency pricing are regulatory changes and considering them illegal and therefore worthless. Even then, most crypto enthusiasts are heavily attracted to the potential upside of investing in cryptocurrency.

If you have decided to invest, performing careful research on any digital coin is important. Consider paying attention to transaction fees while buying crypto because the fees vary depending on the coin and currencies. 

It’s 2024 and the cryptocurrency market is evolving rapidly. Every day new developments are happening in this space and some might affect your crypto holdings. So, it’s very important to stay updated. Also, cryptocurrency investors should understand tax consequences while buying and selling crypto. 

As mentioned earlier, cryptocurrency as an asset class is riskier to invest in. So, you must never spend more than you can afford to lose. 

Types of Cryptocurrencies

As of January 2024, CoinMarketCap lists 8,751 cryptocurrencies. Among them, some have low market capitalization with low trading volumes and others are well-established with higher market capitalization and significant trading volumes.

Bitcoin is the earliest and remains the best-known cryptocurrency. All other coin-based cryptos are collectively called ‘altcoins’, or alternatives to Bitcoin.

As of January 2024, the following are the top 10 cryptocurrencies based on market capitalization

4 Best Tips on How to Buy Cryptocurrency

  1. Deeply understand about crypto investment
  2. In a volatile crypto market, do not idolize the past market
  3. Manage risks
  4. Only invest that you can afford to lose

3 Advantages of Investing In Cryptocurrency

  • Safe and Secure: No one can access your cryptocurrencies without access to the crypto wallet’s private key.  
  • Transparent: Users can view transactions in real-time using Blockchain Explorer because of the decentralized nature of the blockchain system.
  • Decentralization: The decentralization nature makes it difficult to compromise the integrity of the cryptocurrency network. 

3 Disadvantages of Investing In Cryptocurrency

  • High Volatility: It’s difficult to predict the rise and fall of the prices of cryptocurrencies. 
  • Regulatory Concern: Most crypto transactions are not subject to government regulation with any legal protection.
  • Risk of Hacking: No doubt that cryptocurrencies are hard to hack, yet their inherent online nature makes them exposed to untrustworthy online activities.  

5 Tips To Keep Cryptocurrencies Safe And Secure

As human beings, we all are very cautious about keeping our money secure. Likewise, it is the top concern for you as a crypto investor to keep your crypto investment safe and secure. Here are 5 tips on how you can successfully secure your crypto investment in 2024.

  1. Invest using a crypto hardware wallet
  2. Protect access with strong authentication like passwords, 2-factor verification, and a secure internet connection
  3. Stay aware of phishing scams
  4. Never share your private key for the digital wallet with anyone
  5. Deal with only secure wallet providers and reputable exchanges

How To Invest In Cryptocurrency In 2024?

While investing in cryptocurrencies, you might think about buying and holding more than one crypto coin. Buying cryptocurrency directly is the most common way to add crypto to your portfolio. But when it is about investing in cryptocurrency, there is more than one option for you. 

Directly buy cryptocurrencies

You can directly purchase and store one or more cryptocurrencies. You have thousands of options to buy well-known and well-established digital currencies like Bitcoin and Ethereum to newly listed and unknown ones. 

Invest in companies that support cryptocurrencies

There are companies that partially or totally focus on cryptocurrencies. Companies like Robinhood Markets Inc., PayPal Holdings Inc., and MicroStrategy Inc. are some of the options for you to invest along with cryptocurrency mining companies and mining hardware makers. 

Invest in Cryptocurrency-focused funds

If you find it hard to choose from individual cryptocurrency companies, you can invest in a cryptocurrency-focused fund instead. You have options for exchange-traded funds (ETFs) like index funds and futures funds. These funds offer shares to investors based on Bitcoin spot prices.

Become a crypto miner

Another direct way to invest in cryptocurrency is by mining crypto in a crypto network. Crypto miners earn rewards for validating transactions which they can store, hold, or exchange for another currency.

How to Buy Cryptocurrencies from an Exchange in 6 Steps

You can use a cryptocurrency exchange if you directly want to invest in cryptocurrency. Here’s a 6-step process on how to invest in cryptocurrency through an exchange:

  1. Choose a reputed cryptocurrency exchange

Select a well-known and well-reviewed exchange with a large number of crypto coins.

  1. Open an account with the cryptocurrency exchange

Complete the registration process with the exchange platform by providing your personal information and verifying your identity.

  1. Transfer fiat money to your exchange account

You need to transfer another currency like the US dollar, Indian Rupee, or European Euro, into your exchange account to be able to buy cryptocurrency. 

  1. Choose the cryptocurrency to buy

An exchange platform lists cryptocurrencies supported by them. Before you buy crypto, research on crypto coins and then buy them. 

  1. Place an order for the cryptocurrency

Next, follow the steps for the exchange to place your order and buy one or more cryptocurrencies. 

  1. Hold the cryptocurrency in a digital wallet

After completing the purchase of cryptocurrency, the access information to your funds is stored in a digital wallet. This digital wallet can either be hosted by the cryptocurrency exchange or other digital wallet providers. 

The Last Thought

There is more than one way to invest in cryptocurrency if you are ready to accept the risks. However, the cryptocurrency market is volatile and riskier than investing in other asset classes. Even then most investors are hopeful regarding the unpredictable price movements that can wipe out your entire investment in a minute or conversely, double or triple your investment – only time will tell. 

How To Invest In Cryptocurrency FAQ

How Can I Invest in Bitcoin?

You can invest in Bitcoin through crypto exchanges like Coinbase, traditional brokers like TradeStation, and financial apps like Robinhood.

How Can I invest in cryptocurrency as a beginner?

As a beginner, try to research what is crypto. How it works, their advantages, and the risks associated with them. If understood fully, choose a crypto exchange, make a profile, add fiat money, and buy the crypto of your choosing.

How much money do I need to start investing in cryptocurrency?

You can start investing in Bitcoin or other crypto with as little as $5.

How to Invest in Cryptocurrency Safely in 2024: The Ultimate Guide
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