If you're on the internet frequently, you've probably noticed a lot of talk about Bitcoin and other cryptocurrencies. They're currently lighting up internet message boards and other social networks. In 2018, the craze has slowed with the trade values steadily declining due to the crazy ride they experienced at the end of 2017. Since things are starting to level out and get a little more stable, now is the time to start thinking about entering this investment space. Getting your money in now could pay very large dividends later on down the road. However, the fall may not be entirely finished, so tread lightly and don't risk more than you're willing to lose.
If you're still not sure how to purchase crypto, I've come up with a quick step-by-step guide to the decisions that are involved in getting your money invested:
Step 1: Choosing an exchange from which to buy
This is a very important part of cryptocurrency investing. Outside of your actual investing choices, this step will help you find the best options for the best price. I personally recommend Coinbase, and it is one of the most popular exchanges in the United States. They value your trust and are extremely easy to use for new investors. In fact, according to their company website, this is their top priority. They've recently added to their offerings and now buy/sell Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, and Litecoin. All of these are solid choices and have good overall track records. Another popular name that is slowly coming up is Abra. They allow you to invest in multiple cryptocurrencies as well as fiat currencies. They've also recently announced that they will be allowing customers to invest in traditional stocks and ETFs using crypto! That's pretty amazing. Another name I like is Binance. They have what seems like hundreds of available cryptocurrencies to trade and they are one of the largest exchanges out there. They even offer customers the ability to earn their cryptocurrency, Binance Coin, and allow customers to pay trade fees with it! The last name I'll mention is Poloniex. I started out trading crypto on this exchange prior to the Circle acquisition and I've always enjoyed how detailed it is for pro traders. If you enjoy having access to relevant data and a list of orders to base your buys on, this exchange is a good one for you.
Step 2: Set up an account with Coinbase
This is also very simple. All you need to provide to sign up is your name, email address, a password, and the state in which you live. After that, you'll be required to verify your email address and add your phone number for two-factor authentication. After those steps are completed, you'll be on your home page and ready to add your funding source. Coinbase integrates most banks into their website and you will most likely be able to log in using your normal online banking login after choosing your bank from the list. They also offer the ability to purchase using a debit card, but they will charge an additional fee and some banks will charge a transaction fee as well. My recommendation is to stick with the ACH, especially now that they offer instant deposits.
Step 3: Decide where you want to invest your money
Coinbase has multiple options that are all unique in their own right. You'll need to choose wisely if you decide to invest in individual currencies. If you want to take some of the work out of it, Coinbase now offers The Coinbase Bundle, where they will invest your purchase into a weighted index fund of five different currencies. This is a good option for anyone who is looking to reduce risk while still getting exposure to Coinbase and cryptocurrency. The big one is Bitcoin and most are familiar with the name. However, one of my favorite choices available on Coinbase is Litecoin. The transactions are fast if you ever need to send it to another wallet and the price is fairly reasonable compared to that of Bitcoin. Not to mention, if you send a transaction, the cost is also very low.
Step 4: Make your first purchase!
Since the Coinbase app will charge you fees on each purchase, my recommendation is to visit the Coinbase Pro trading platform, formerly known as GDAX. This will allow you to place buy and sell bids on each of the available trading pairs. The best part is that you will only pay a fee if you are the "taker" of the transaction. This means that you either bought someone else's sell order, or you sold at the highest market buy offer and "took" a buyer's bid. Due to the taker fees, you definitely want to place limit orders. This will allow you to buy or sell at a set price and most likely be the maker of the transaction. There's nothing better than trading crypto as if it is forex and turning coins into more coins while paying zero fees. This is a good way to build up your investment without adding more actual cash into the pool.
Step 5: Be patient, but also be quick to respond
Stay on top of the movement of the price, but don't obsess. If you want to automate your investing, set up your trading platform with limit buy and sell orders to take advantage of the moments when the price is favorable. I could write an entire book on trading strategies, but no one would read it. So I'll keep things simple and just say that you need to do your research and don't invest more than you can lose. The prices are volatile and you can win big, but also lose big, so be prepared. When the price jumps 5-10% in a single day, that might be a good sign to sell some of your investment to secure profit and reinvest once the price has come back down again. The little things and the smart choices are what makes a solid cryptocurrency investor.
Hopefully, this step-by-step guide gives you a quick overview of how easy it can be to get started investing in cryptocurrency. While society may be telling you how dumb it is to invest, that's what people always say about a new asset class. New ideas tend to spark fear and confusion. Don't focus on the negative attention around cryptocurrency. Focus on the potential upside and focus on history. Over time, the price rises and falls like most investments, but the long-term has shown that it will continue to go up. With more people joining in and taking their chances on it, the price begins to not only rise but to stabilize. It may be safer to wait, but the money will be made by those willing to take the chance and invest now while it is still volatile. Don't be left behind. If you're interested in getting started on one of the exchanges I listed in Step 1, shoot me an email at kevin@thepennilessgentleman.com and I'll send you a referral invite for an added bonus! Thanks for taking the time to read! Follow me and please upvote the post if you enjoyed reading! Have a great weekend everybody!
- The Penniless Gentleman