Basics of Cryptocurrency Investment – 5 Good Moves to Make

Basics of Cryptocurrency Investment
Feb 21, 2022 Reading time : 4 min

Investing in cryptocurrencies is the next big thing. Still, you should know how to invest so that it pays off. 

Primarily, you should know how cryptocurrencies work and learn to recognize solid projects. However, there’s a lot more to cover. Keep reading to learn the basics of crypto investing.

1. Learn More About Buying Crypto

You don’t necessarily need to know how every project functions. The main thing to understand is how to send and receive digital assets, purchase them on the exchange, and withdraw your fiat once you want to collect the returns.

People often get confused about the purchasing process. The best thing to do is find the exchange that’s supported in your country. It will likely have a blog post or a FAQ section that explains how to purchase your first crypto. 

Note that the market is slowly becoming more regulated, so you’ll likely have to pass Know Your Customer verification to purchase coins. Once you send the requested documents, you’ll remove restrictions. The KYC process will also allow you to transfer your coins or fiat straight to your bank account. 

2. Decide on the Amount You’ll Invest and Diversify

Most investors will advise you not to invest more than you’re willing to lose. This means that you should calculate the amount you’re ready to put in the market but won’t cry over it if it drops to zero.

The cryptocurrency market is highly volatile, and you never know when your favorite project might make a rug pull and leave you with worthless tokens. What’s more, this is another reason you don’t invest all in one project.

Diversifying your portfolio will give you a balanced portfolio that can reduce your overall risk since you should hold some well-established coins and also experiment with new projects. The rule of thumb is to invest about 40% of your fiat in Bitcoin or Ethereum, as these are the two top crypto assets to own. Then, distribute the rest to NFTs, other coins, and tokens.

3. Find the Right Wallet/Exchange

There are too many crypto wallets out there, and most of them offer the basics of sending and receiving crypto. These wallets also support multiple coins and blockchains, which helps with portfolio diversification.

Crypto wallets also sometimes come with a news section, so you’ll always know what’s happening in the industry. Plus, crypto wallets are easy to use, and you can download them on your smartphone as well.

On the other hand, if you wish to get involved in trading, you should hold your coins on the exchange. Cryptocurrency exchanges are highly secure, and you don’t have to worry about your funds being stolen.

4. Beware of Scams

Unfortunately, many scams surround cryptocurrencies. For example, if you’re really involved in a project, scammers might approach you, present themselves as a project manager, and demand private keys or personal data.

Other scams involve fake Initial Coin Offering where people behind a fake project steal the investors’ money. Sometimes, you might see a fake crypto wallet, download it, use it for your crypto, and lose all of it. You might suddenly become a victim of phishing emails or accidentally get the latest malware that can infect your wallet and steal your funds. 

Additionally, be on the lookout for dusting attacks. This is an attack where the hacker sends small amounts of crypto that pile up in your wallet. Your wallet then spends these assets; the hacker collects information about you and then targets you in different ways.

5. Secure Your Investments

Finally, you’ll want to make sure your investments are completely safe from adverse events, including fire, floods, or earthquakes. To be completely safe, you should write down your private keys, addresses, and other data.

Then, you can move on to store copies in the safe. If you think that’s not enough, use the metal seed storage to store your private keys. Those are fireproof, shockproof, waterproof, and last a lifetime.

The best thing about metal storage is that it’s offline, cold storage. Cold storages are highly secure since no hacker can access them and no ransomware can affect them.

Final Thoughts 

Investing in cryptocurrencies might seem too complex. However, if you follow the basics, you’ll stay safe. Never invest more than you’re willing to lose, and always diversify your portfolio. Remember, the crypto market is highly volatile, meaning you can lose your investment at any moment.

Additionally, beware of different scams and cyberattacks. Many people give their private keys to someone else online, which is the worst mistake you could make. Still, if you’re cautious, you have nothing to worry about.