Thanks to Bitcoin reaching over $60,000 not once but twice in 2021, the option of cryptocurrency as both an investment and value-generator have been firmly established in commonplace discussion and regular household economics.
However, getting into crypto and trading in the various coins and tokens is another matter entirely.
Educate Yourself First, Then Step In
The most important thing a person can do towards entering crypto as an investment channel is to be educated about it first. Fortunately, there are plenty of good, in-depth resources available online that can be found with a few simple searches.
In this regard, a new entry can easily learn how crypto works, what blockchain technology actually is, what to expect from crypto as an investment, and what to begin to watch out for. This first step doesn’t take long either; a day or two of good reading provides more than enough on how to avoid 90 percent of the problems people typically have with crypto.
Set Aside Your Investment and Define a Goal
Going into crypto blindly isn’t a smart idea, but it is a very powerful way to get caught in a vicious money trap, chasing bad moves with more bad moves and losing money quickly. Instead, a better strategy is to define a simple but attainable goal, and set aside the funds to do it with. The trick here is to not add more funds chasing a bad turn. Instead, patients and more research oftentimes play out better.
For example, many lost tremendous value in 2021 when they bought at a high point, and if they sold in 2022, they realized a painful loss. However, those who hold their positions are seeing their value return. It’s best to start with a small amount and develop with practice.
Set Up a Wallet
A digital wallet is a software tool that allows the code associated with your crypto holdings to be stored in it. You can use the wallet app itself for basic management of holdings or utilize a dedicated portfolio tracker to view the crypto assets in a wallet.
There are hot wallets, always connected to the Internet, and cold wallets, hardware that only connects when the user plugs them into an Internet-connected computer. Cold is safer, but less convenient to use. Hot wallets are available in the cloud and in PC or mobile app form, but they can be broken into online as well.
Buy Some Crypto
The primary way to get into crypto is through an exchange. However, whether with simple holder accounts like PayPal, or true exchanges like Binance or Kraken or Coinbase, all are centralized in control.
So, the lesson here is to use the exchange to move from regular currency, fiat, to crypto, and then put the holdings in a wallet that the user actually controls. This protects the crypto in case the exchange fails (and they do, as vividly seen recently with FTX).
Buy an NFT
Artwork and music can be bought via crypto through non-fungible tokens, or NFT. These can be purchased through NFT exchanges like OpenSea or the WAX network via wallet connections.
One has to have the right crypto coin to initiate purchases and sales, but it's not a hard aspect of the market to learn quickly. Further, collections have proven to be valuable for the right choices.
Try Out DeFi
Alternatively, decentralized finance tools (DeFi), swaps and exchanges allow for further investment options. Value growth can be earned with liquidity pools, exchanges for tokens and coins gaining in popularity, and staking, which involves locking up coins in a DeFi tool for a time and being rewarded with a return on top of the principal invested.
The best way to think of DeFi is as the intermediate or advanced level of crypto investing once you have learned the basics above.
Stay on Track With Awareness
Ongoing research is essential to stay on top of changes. Crypto markets move up and down very fast. Again, the extreme value gain of markets in 2019 and 2020 was dramatically reversed in 2021.
So, checking the latest crypto news daily is the minimum one should be doing to at least be aware of what is happening in the digital world. In addition to regular news sites, getting connected to crypto forums helps as well. For example, r/cryptocurrency provides vivid pulses on market changes.
Crypto is not the wild, wild west of its early years, but there is still a learning curve. Research, limited practice trades, and connecting with experienced networks helps tremendously. You can learn it in a short amount of time.
