The First Steps to Start Investing in Cryptocurrency


Bitcoin, the first cryptocurrency, was launched over a decade ago, and the financial industry made developments around the new technology. Right now, the cryptocurrency market is experiencing rapid growth. At present, there aren’t only digital currencies available, but loads of different digital assets based on blockchains like crypto tokens and NFTs have started popping up.


There are different ways in which you can start investing in cryptocurrencies. A lot of options are there for people who are just starting out, and the steps you will take will depend on whether you want someone to help manage your own investment or if you want to follow cryptocurrencies’ decentralized protocols and manage your investment yourself. 


One should still keep in mind that cryptocurrencies are still a relatively new asset class and that investing in them still carries a certain degree of risk. There is still the possibility that you can lose the value of your investments, so you should always make sure that you are in the right financial state before investing. It would also be wise to check in with yourself and assess your risk appetite.


If you’re starting out, first, you would need to know how to buy cryptocurrencies. Here are some ways:


  • Traditional Finance Apps


This is probably one of, if not the easiest, ways of buying cryptocurrencies. Recently, there have been financial service providers that have decided to adopt the new technology. 


Take CashApp and PayPal, for example. Both of them have recently added functions to purchase cryptocurrencies, but while CashApp only offers Bitcoin, PayPal offers four different currencies: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. PayPal users who have holdings in Bitcoin can also use their balance upon check out, adding to its appeal. 


If you do find yourself in the right financial position to invest in cryptocurrencies, then you might want to check out Bitcoin Profit, a cryptocurrency trading site that can get started safely and easily on your crypto journey investment. 


There are other finance tech applications and companies that are joining the bandwagon, like Robinhood, a mobile application used for stock investing. For Robinhood, they offer seven cryptocurrencies overall, including the popular meme-based crypto, Dogecoin. Another example is SoFi, a personal finance provider, offers an even greater selection of 21 different coins and crypto tokens. 


Because applications and products like PayPal are well known and are already established in the market, it helps make new investors feel at ease with their purchases when they are able to use the slick features that their apps offer. However, as with any new technologies and integrations, there are still limitations. For example, Paypal currently does not let their users send any of their cryptocurrency holding to any kind of crypto wallet, but the company has previously stated that they are working on a solution for it. 


  • Centralised Exchanges


There are thousands of cryptocurrencies and crypto-assets out there, which limits the offerings of traditional finance apps. If you buy cryptocurrencies through crypto-centered digital wallets and exchange providers, you are bound to be offered a lot more choices and functionalities. 


The digital wallets and crypto exchanges that are available for you to use will depend on your current location and the area where you live, but fortunately, there are safe options in most locations, just like the Bitcoin Profit platform.


Centralized exchanges provide protections that might be welcome to some investors. These protections can range from insurance against cybersecurity breaches to clearer regulation guidelines, which is thanks to the fact that exchanges are still licensed businesses. Centralized exchanges also have much more intuitive user interfaces that are more user-friendly to new cryptocurrency investors. 


It should be noted that centralised exchanges involve relying on a central authority that acts as a middleman between you and your assets. They have the discretion to freeze your assets or constrain them from taking part in some actions or types of commerce. Centralised exchanges are also obliged to follow the “Know Your Customer” regulations, so they are required to collect your personal information, which is a downside if you want to preserve your privacy.


Coinbase is currently the largest and longest-running cryptocurrency exchange platform in the United States. It was founded in June 2012, and it offers buying, selling, and trading of 50 different cryptocurrencies. 

 

Another popular crypto exchange is Binance. It operates in select states in the United States and is currently the exchange with the most variation of cryptocurrencies to offer. They have 500 cryptocurrencies and tokens available, including two cryptocurrencies of their own creation.


  • Decentralised Exchanges


Some investors would prefer to use exchanges that follow the decentralised nature of cryptocurrencies.


Decentralised exchanges, sometimes called DEXes, are run by the code it’s built on instead of being managed by a company or organisation. Some examples of decentralised exchanges include UniSwap, SushiSwap, dYdX, and 1inch.


Like everything else, there are advantages and disadvantages to using DEXes. Since you do not have a single entity managing all the user assets involved, decentralised exchanges are less attractive to hackers since they are unable to target a huge amount of accounts at once. But instead, hackers are able to exploit bugs in the system in order to drain money from the protocols. 


With decentralised exchanges, there aren’t a lot of rigid rules when it comes to collecting a user’s personal information, so there isn’t much that can be done when a user loses their funds on these kinds of exchanges. DEXes also tend to have far more complex user interfaces that tend to be harder to use than conventional or traditional finance applications. 


NFT Marketplaces


NFT stands for non-fungible tokens, and they have recently received quite a lot of attention and huge resale prices. These tokens have a wide variety of uses, ranging from digital asset access and ownership, but it has also recently received hype over being used for NFT-based digital artwork. 


For those who are interested in acquiring NFTs, there are a lot of marketplaces that allow users to get a hold of NFT collections and artwork. The market called OpenSea might just be the most popular NFT marketplace. To be able to join this marketplace, you need to already have an Ethereum wallet that has an existing fund of ether in order to purchase NFTs. 


There are other popular options for purchasing NFTs, such as ArtBlocks, SuperRare and Rarible. Other NFT marketplaces even allow the purchase of NFTs by using payment methods that are more familiar to us, such as credit cards. 


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