How To Start Investing In Cryptocurrency: A Guide For Beginners

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Are you looking to invest in the crypto market this year? Before you expand your portfolio of crypto assets it’s important to do your research. We’re featuring the best cryptocurrencies to start investing in this year, a step-by-step guide to investing in crypto, and so much more!

 

What Are Cryptocurrencies?

A cryptocurrency is a digital currency that uses cryptography for security instead of relying on central authorities like banks. It’s similar to cash but has some key differences. For example, it’s decentralized — meaning it doesn’t rely on any one person or organization to keep track of transactions. And it’s peer-to-peer — which means all transactions take place between two parties directly rather than through a bank.

The first cryptocurrency was Bitcoin, which launched in 2009. It has since spawned a number of different digital currencies, including Litecoin, Ripple, Ethereum, Dash, Monero, and others. These cryptocurrencies are all built on blockchain technology, which allows them to operate without any central authority. This means they can be used to transfer money from one person to another instantly and securely.

 

Most Popular Cryptocurrencies to Invest In

The most popular cryptocurrencies are Bitcoin or Ethereum. The following list is not exhaustive; there are dozens of other cryptocurrencies out there. Some of them are better than others, but it’s very important to do your research and find the one that suits your needs best.

Bitcoin BTC

The first cryptocurrency was created by Satoshi Nakamoto in 2008. It has since become one of the most popular digital currencies in the world, with a market capitalization of $120 billion.

Ethereum ETH

The most popular cryptocurrency by market cap, Ethereum has become one of the most valuable blockchain projects in existence. It was created by Vitalik Buterin, who also founded Bitcoin Magazine. In 2014, he released the first version of Ethereum, which introduced smart contracts and allowed users to build decentralized applications (DApps) using its platform.

Tether USDT

The US dollar is one of the most stable currencies in the world, but it has its limitations. For example, if you want to invest in stocks, you may not be able to because they are priced in dollars. In order to overcome this limitation, people started creating alternative cryptocurrencies which were pegged to the US dollar. This allows them to trade like any other stock, but without having to worry about volatility.

Tether USDT

Tether USDT is a stable coin pegged 1:1 to the US Dollar. It was created by the company Tether Limited, which has a reputation for being one of the most controversial companies in crypto. The company claims it holds all its assets in reserve, but critics say this isn’t true. In fact, they claim that Tether is just a way to wash out investors’ money from Bitfinex, a cryptocurrency exchange based in Hong Kong.

Binance Coin BNB

Binance coin (BNB) is one of the most popular cryptocurrencies in the market today. It was launched by Changpeng Zhao, better known as CZ, who is the CEO of Binance. It has become one of the popular options among investors because it’s easy to trade and offers high liquidity.

US Dollar Coin USDC

The United States dollar coin (USDC) is a stable coin pegged 1:1 to the U.S. dollar. It was created by Circle Internet Financial Ltd., which is owned by Goldman Sachs Group Inc. and Fidelity National Information Services.

Cardano ADA

The Cardano blockchain was developed by IOHK, which stands for Input-Output HK. It is based on the Ethereum protocol but has its own unique features. For example, it uses Proof of Stake consensus instead of Proof of Work like most other blockchains.

Cardano ADA

The team behind Cardano has a strong track record of building successful blockchain projects. They were one of the first teams to build a smart contract platform (Ouroboros) and they continue to innovate by developing new features like Ouroboros 2.0. Cardano was also one of the earliest adopters of proof-of-stake consensus, which makes it easier to scale than proof-of-work systems.

Solana SOL

The company has created a blockchain platform called “Solana” which aims to provide a decentralized network for smart contracts and dApps (decentralized applications). It will allow users to run their own nodes and earn rewards by providing computational power.

XRP

Ripple (XRP) is a digital currency created by Ripple Labs in 2012. It was designed to provide financial institutions with a way to transfer money quickly and cheaply across borders. The company behind it, Ripple Labs, has developed its own blockchain platform called xCurrent which allows banks to send funds between each other without having to rely on a third party.

Terra LUNA

The Terra LUNA project aims to provide a decentralized platform for the development of blockchain applications using smart contracts. It will allow users to develop and deploy DApps (decentralized apps) without having to rely on third parties.

Polkadot DOT

The project was launched in 2017 by IOHK (Input Output Hong Kong), a blockchain development company based in China. It aims to build a decentralized network of blockchains called the “Interoperability Layer” (IOL).

Honorable Mentions

 

Litecoin LTC

Litecoin (LTC) was created by Charlie Lee who left Google to start his own company, Charlie Lee Labs. The goal of this project was to “create a new kind of Internet currency based on strong cryptography… enable online payments to anyone anywhere in the world instantly and securely at near-zero cost.”

SHIB

Shibcoin (SHB) is a blockchain-based decentralized cryptocurrency that was launched in 2017 by the Shibden Group. It has gained popularity due to its unique features like instant transactions, zero fees, high transaction speed, and no third-party involvement. The coin is available for trading on various crypto exchanges including Coinbene, Bittrex, Bitfinex, HitBTC, KuCoin, OKEx, and Upbit.

Monero XMR

Monero was created by a developer named Riccardo Spagni who wanted to build a privacy coin. He had previously worked at Google where he helped develop Chrome and Gmail. The project started out as a fork of Bytecoin but has since diverged into its own unique identity. It uses ring signatures which makes it difficult to trace transactions back to the sender. This means that users can send money anonymously and without fear of being identified.

Why Are There So Many Cryptocurrencies?

The number of cryptocurrencies has exploded from just one in 2009 to thousands of cryptocurrencies today. This explosion is due to two main reasons: first is that blockchain technology allows people to build new types of decentralized applications (dapps) which allow users to interact directly without going through a third party. This means that dapps eliminate the need for trusted intermediaries such as banks or payment processors. Secondly, it is now possible to issue digital currencies using smart contracts, meaning they are automatically executed once certain conditions are met. As more people start to invest, there will be more opportunities for those with the right knowledge and skills to make money from it.

 

A Step-by-Step Guide To Cryptocurrency Investing

We will cover everything from choosing your broker, to setting up an account, to finding a profitable strategy. 

Step One:

To start investing in crypto assets, you should first decide if you want to use a brokerage firm that works with cryptocurrencies or if you want to use an online exchange platform on your own. It is important to note that when you choose to work with a broker, you are actually trading cryptocurrencies with that broker. This means that you get to speculate on the price movement of the crypto assets, but you don’t actually own any. Instead, you would profit from the rise or fall of a particular cryptocurrency’s price.

Alternatively, buying cryptocurrencies from an exchange means you own and hold the crypto assets. Exchanges typically offer a bigger variety of cryptocurrencies in comparison to a broker, and creating an account allows you to buy and sell crypto within the marketplace. 

If you choose to work with a brokerage firm, then you should determine what type of account you would like to open. You can open a margin account, a leveraged account, or even a cash account. Each option comes with different risks and rewards. If you choose to use an online exchange, such as Coinbase, Kraken, Gemini, etc., you should do a large amount of research before choosing one.

Step Two:

Once you have decided on a cryptocurrency investment method, you should open an account.

Some brokers require you to deposit fiat currency while others accept credit cards. Once you have deposited funds, you will be able to trade Bitcoin and other popular cryptos. You may also be required to provide some personal information when opening an account. Your broker will walk you through the exact steps and should be able to answer all of your questions. 

If you are using an online exchange, creating an account is usually free and the website or app will walk you through setup. However, you will most likely be asked to verify your email address and phone number. After verifying this information, you will be given access to your crypto trading dashboard. Here you can see information such as, how much cryptocurrency you currently hold, historical charts, and current data. Typically, the dashboard is also where users can perform basic trades.

Step Three:

The next step, when using both, cryptocurrency exchanges and brokers, is to begin researching. It is important to give yourself a “base” knowledge and stay up to date on current cryptocurrency market news, such as volatility and the risks associated with crypto trading. 

Still, Deciding?

We know there is a lot to learn when you are new to the crypto world, but we hope you feel a little better after reading our guide. The cryptocurrency world is fast-paced and ever-changing. To keep up with all the current crypto news, make sure to check back with us weekly. To continue your learning journey, try reading AI Crypto Investing for Beginners.

Disclaimer: Nothing discussed here should be considered investment advice. Please conduct your own research before investing in anything.

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