Cryptocurrency is changing the way people manage their finances in a number of interesting ways, making it one of the most exciting emerging modern fields.
That said, it’s not exactly the easiest topic to get your head around. If you’ve done your research, you’ll likely have found that understanding the underlying concepts of crypto was a complicated pursuit, and the prospect of investing yourself brings with it its own set of unique concepts to learn about.
This article aims to simplify that process and offer you some fundamental knowledge so that you can get going. Here are 10 tips for starting your crypto journey.
- Getting the Basics Down
This article assumes you already have a basic understanding of the way crypto works, so it’ll instead focus on exactly how to take your first steps to invest (while avoiding the common pitfalls).
To delve deeper, it’s important to do some further research into the concepts surrounding blockchain and decentralization in general, and then, start to look into the different types of coins and what differentiates them (the differences between Ethereum and Bitcoin, for example). There are plenty of resources online – the beginner’s guide page on the cryptocurrency subreddit is a great place to start.
- Automated Index-Based Portfolios
An automated index-based portfolio can be an invaluable asset when you’re just starting out with your crypto investments. These platforms allow you to reap the benefits of a crypto index fund, which uses automated indexes to spread your investments across multiple assets in a balanced and advantageous way.
It can be hard to get a grasp on exactly where to invest at first even if you’re familiar with how the process works, and just like anything else, it’s a skill that takes time to develop, so having an automated service that helps you keep things optimized is a real benefit.
- Choosing Secure Exchange
A crypto exchange essentially acts as a platform through which people can buy, sell, and trade various types of cryptocurrency, and it’s essential to recognize that not all of them are created equally.
Once you get a feel for things and start making your own investments, it’s key to choose an exchange with a high level of security: safe bets currently are platforms like Coinbase and Kraken.
- Start Small
As is the case with any investment strategy, crypto or otherwise, it’s always best to start small in the beginning to minimize any potential losses. As a beginner, it’s only natural that you’ll make mistakes somewhere down the line, and when you do, it’s much less of a blow if you’ve only invested a small amount.
Of course, there’s a balance between investing frequently enough that you gain experience and keeping yourself financially stable, so a good rule of thumb is to only ever invest an amount that you can afford to lose. This amount will be different for each person.
- Use a Reputable Wallet
A crypto wallet allows you to send, receive, and store cryptocurrency in a safe and secure manner. These wallets come with private keys that enable only you to gain access to your crypto.
There are several different types of wallets – software wallets, hardware wallets, and those that come built into exchange platforms. Hardware wallets are the safest option given that they’re entirely offline: the best way to keep data safe is, of course, for it to never be expressed on the internet, but there are software options available too that leverage tight encryption methods to keep your data secure.
It’s generally best to avoid using the built-in wallets on exchange platforms if you can help it, because these are the most vulnerable to attempts from hackers at stealing your assets.
- Diversify Your Portfolio
The benefits of using an automated index-based portfolio have been explored above, but if you choose to go it alone, the principles of diversification become very important.
No matter what type of investment strategy you’re using, dumping all of your investment into one type of coin isn’t a good idea. Each type of cryptocurrency is prone to a variable degree of fluctuation, and so by splitting your investment over multiple coins, you lessen your chance of a big loss. In this case, even if the value of one coin drops, your investments in others remain stable.
- Always Be On the Lookout for Scams
Unfortunately, one of the biggest problems with crypto historically is the prevalence of scams. There are many different types of scams, but nearly all of them boil down to increasingly clever ways of promoting fake investment opportunities.
Avoiding scams comes with experience, so you’ll be more susceptible to them as a beginner. That said, you can still avoid being scammed by researching any prospect thoroughly and asking about it on public forums (the crypto Reddit board linked above is a great place to do so), using two-factor authentication (2FA), and never sharing any of your private keys.
- Keep Your Eyes Peeled for Market Changes
A skill you should start to hone from the beginning of your crypto journey is staying up-to-date with market trends. The crypto market is changing constantly, and keeping an eye on these fluctuations and adapting accordingly is often what separates a beginner from an expert.
This is something you’ll learn to do over time, but one of the most basic ways of having your finger on the pulse is to follow reputable crypto news publications and simply spend time researching the nuances in the market – always strive to learn something new about crypto every day, and this will put you in good stead.
Once you get a bit more advanced, there are also some technical analysis tools you could use to track moving averages and more, but that’s a story for another day.
- Think Long Term
It’s easy to get caught up in the here and now when it comes to crypto but remember: the real emphasis is on the long game.
It’s probably not a good idea to start trading straight away. Instead, focus on long-term investment to steadily build your portfolio. Reacting to market changes as a beginner can be a recipe for disaster because you haven’t built up the necessary experience to know how to react; at the end of the day, this is a game of patience, so once you’ve made your investment, do some research into how the types of coins you’ve invested in have changed over time to build up a knowledge base for when you do decide to trade.
- Don’t Forget About Regulations
Many mistakenly view cryptocurrency as something of a wild west, lawless landscape, but this isn’t the case. Deregulation doesn’t mean you can simply do what you want – there are still tax laws and other legal requirements you’ll need to abide by, and these can differ depending on where you live.
If you’re confused, approach the online community for some help.
Bonus Tips
Here are a few extra bits to augment the effectiveness of the above points:
Set Yourself a Clear Goal
The guidelines above have discussed the how, but have you taken care to consider the why?
When you first start, it’s important to establish a clear goal for why you want to invest in crypto – having your overall goal in mind will keep you on the straight and narrow and prevent you from making poor decisions.
Regarding the goal itself, it can be whatever is most meaningful to you, whether it’s gaining a bit of passing income as part of a broader overall strategy, to crypto being a much larger part of your life strategy for accruing long-term wealth. These goals ground you in reality.
Stay Calm
One aspect of investing in crypto that isn’t spoken about enough is the requirement for a level head. Many people panic when they see fluctuations in the market, and it’s key to avoid making any rash decisions. Never act when you’re stressed out, and always consider the bigger picture. Understand that the market will fluctuate – that’s all part of the game. It’s your decisions that dictate the overall outcome, and as long as you don’t panic, you’ll be able to recover from most apparent ‘losses’.
Remain Eager to Learn
There will never come a time when you feel you’ve learned everything there is to know. Keeping an open mind and always being eager to learn more – especially from those who are more experienced – will make you a better investor going forward.
There are plenty of great blogs around that you can subscribe to for more information, and you’ll find that most people are willing to help if you reach out and ask.
Wrapping Up
Hopefully, you’re now a little clearer on how to get started with investing in crypto. It can be a lot of fun even if you’re not making much profit to begin with, and over the long term, you can amass some seriously significant gains. Good luck!
