We all know that cryptocurrency is a thing nowadays and I know that you are curious and wants to enter into the crypto space but the problem is , how to start and how to dodge the scams emerging while going along the way? How to invest in a country with a weak support in cryptocurrency?
So in this article, I'm going to show you how to do it. Before proceeding, I want the readers to know that this is only based on my experience and you can always make your own way. It is just to give you an idea on how to start. Think of me as a training wheel.
Before investing in cryptocurrency, you must know all of the things you need to know.
Here are some materials you might want to read first:
- http://www.moneyaftergraduation.com/2018/01/08/everything-you-need-to-know-before-investing-in-cryptocurrency/
- https://www.forbes.com/sites/forbesfinancecouncil/2018/03/30/seven-questions-to-ask-before-investing-in-cryptocurrency/#2c24c05349d0
- https://medium.com/decryptionary/what-is-bitcoin-for-dummies-a-guide-for-beginners-8b3d9c0a8065
- https://medium.com/@coinagogo/explain-bitcoin-to-a-5-year-old-2091d003f5b3
- https://www.forbes.com/sites/bernardmarr/2018/01/17/a-complete-beginners-guide-to-bitcoin-in-2018/#4a327f694418
- https://cryptominded.com/glossary-cryptocurrency-terms-need-know/
- https://www.benzinga.com/general/education/17/12/10945338/bitcoin-and-cryptocurrency-101-understanding-the-basics
If those materials seems very difficult to understand or something inside you wants to go back and decides not to risk your earnings, then don't invest in cryptocurrency.
1. Make your fiat money to a digital one.
Before investing to digital coins, you must convert your physical money to something that can be exchanged to any cryptocurrencies. You might be asking, "Exchanges does this job. What does this man say?". In my country Philippines, there is an app called coins.ph that lets you have a Philippine Peso, Bitcoin and Ether wallet and you can convert it anytime from Peso to Bitcoin vice versa, Bitcoin to Ether vice versa and Peso to Ether vice versa.
There are some exchanges (e.g. Binance) that you can exchange many cryptocurrencies from Bitcoin, Ether and USD Tether only. In that case, you must convert it first to Bitcoin or Ether. Else, if you are using an exchange app that accepts Visa/Mastercard as a mode of payment, then you can skip this step. However, if you are only investing to bitcoins, might as well proceed to step 4 after doing this.
2. Put it in the exchange.
Before doing this step, please be careful in choosing exchanges that you use in buying cryptocurrencies. I won't recommend any exchanges but here's my standards in choosing or vetting a good exchange:
Reputation. You might want to have a background check for your prospective exchanges. Does this exchange has been hacked previously? If so, is it resilient enough? Search over the internet for reviews, watch in youtube, read some reddit discussions to validate. Investing in cryptocurrency requires a lot of research.
Fees. For you to maximize returns, you must choose exchanges with the lowest fees to begin with. If the fees in the withdrawal of your coins is very high, it is like ordering in a fast food chain wherein the cashier eats half of the burger you bought and what you get is not the one you expect to consume. Sad, right?
Identity Verification. Exchanges who are not compliant to AML/KYC regulations is definitely a red flag. Cross it out immediately. Know your customer is a type of identity verification that asks for your information to check who you really are. They might ask for your address, picture of you holding your ID, billing statement and business verification. This is essential to ensure that the financial institution (the exchange) is compliant to Anti-Money Laundering Act. It will take many steps, but it will also protect you from scams and Money Launderers.
Good Rate. Rates are also a good thing to check whenever you're choosing an exchange. Trust me, it will save you money and will help you maximize your investments.
Payment Methods. Choose exchanges with very convenient payment methods. In my opinion, I won't let exchanges know my visa details so I'm more of transferring Bitcoins instead. That is why I included a step to convert cash to Bitcoin or Ether because it is safer for me.
3. Know your coins.
Now it's time to buy digital coins. I suggest when you're investing, you must diversify your portfolio. As many investors suggests, you must not put all your eggs in one basket cause when something bad happens, nothing remains. It will also help you lessen the loss. Why? for example, if you're investing only to bitcoin, your portfolio will only rely to bitcoin's run. If it happens bitcoin had 50% loss, your portfolio will also face the same fate. Whereas when you also invest to Litecoin, Bitcoin Cash and NEO and NEO happens to have 20% gain, the loss will somehow lessen.
In investing coins, you must know both Fundamental and Technical analysis. If you don't want to have your own analysis because it requires time to learn things, then watch videos, read some discussions. You can also watch the market by going so sites such as Coin Market Cap, Coin Check Up - CoinCheckUp provides also their Whitepapers (Information about the project) and other fundamentals so it's a cool thing for me, and Trading View.
So I repeat, Investing in cryptocurrencies Requires a lot of research.
4. Put it in a safe place.
Internet is a very dangerous place. There are ways to store all of your coins:
Exchanges. Binance and other exchanges offer wallets on every coins for you to store coins. Yes you can store it in exchanges but it is really not recommended. There are recent hacks on some exchanges and you might want to protect your coins from those exploits right? If so, we'll process to other ways.
Hot Wallets. Wallets are like bank accounts, you can store coins there. Every cryptocurrency has their own wallets (e.g. NEM has its Nano Wallet, Cardano has Daedalus etc.). Hot Wallet is a type of wallet that requires you to sync all blocks on the network always for you to keep updated on your transactions. For me, aside from it is heavy in data consumption, it also has risks because it is connecting to the internet.
Cold Wallets. There are many types of cold wallets. Paper wallets (Printable wallet with your private and public key) and Hardware Wallets. Cold Storage is the most recommended ways to store your digital wallet especially when you are planning to invest in long term. Cold Storage doesn't require you to connect to internet connection. All it does is to store all your private keys and if you are using Paper Wallets, you can check your balance in some sites that offer facilities to view your balance using your public key and when you're using hardware wallets such as Trezor and Ledger Nano S, you can check it on their proprietary secured softwares.
5. Use portfolio apps.
In case you are diversifying, it is hard to keep track of your coins so it is a good way if you enter all of your transactions on a portfolio application. This will help you identify all of your total gains and losses and provides helpful report to oversee all of your investments. Coin Tracking is the best portfolio app I used though it takes time for you to master on how to enter every transaction, just google it and you will eventually know how to use it.
To conclude, investing in Cryptocurrency takes a lot of things to learn especially when you aren't really inclined into technology. But if you are really willing to get into cryptosphere, then you will be able to get into it and master it.
Good luck and keep HODLing!
Some ideas are taken on these articles:
https://blockgeeks.com/guides/best-cryptocurrency-exchanges/
https://coinsutra.com/cold-storage-cryptocurrency/
Images are taken from Google Images.