You’ve probably heard about cryptocurrency bitcoin by now, with its increasing value and presence in mainstream media coverage over the past few years. But you may still be wondering, What is it? What can I do with it? How can I get some? In this guide to investing in bitcoin and other cryptocurrencies, we’ll answer all of these questions and more so that you can understand your options for how to invest in bitcoin and other cryptocurrencies and get started right away.
1) Choose a cryptocurrency
When it comes to investing, you don’t want to hop on every new train that comes your way. When you invest in a cryptocurrency, you need to be able to assess whether or not its worth it. However, if you have heard of Bitcoin then chances are that some other cryptocurrencies might also interest you. A few good options are Ripple, Litecoin, Ethereum and Dash. Each of these has their own advantages so choose based on your interests. To learn more about why one cryptocurrency is better than another check out our guide on how to invest in bitcoin.
2) Do your research
Before investing, it’s important to understand how cryptos work, what sort of risks they pose, and how they’re valued. There are dozens of cryptocurrencies out there right now; each one offers its own strengths and weaknesses. Investors need to figure out which currencies they want exposure to before choosing a platform. After getting an understanding of which currencies you want exposure to, investors should look at exchanges and wallets where their new coins can be stored. It’s important that investors use trusted exchanges or wallet services rather than keeping cryptocurrencies on websites like Coinbase because hackers may target these sites in order to get your cryptocurrency holdings.
3) Pick a reputable exchange
Of course, you don’t have to trade cryptocurrency stocks if you don’t want to. You can also buy cryptocurrency directly, although it is more challenging. Coinbase allows users to purchase Bitcoin, Etherium, Litecoin and Bitcoin Cash on its exchange platform. The site also provides users with wallets that are encrypted by default. More recent developments include Ethereum Classic coming soon to Coinbase, along with Facebook’s announcement that it will list a new virtual currency on its own social network—Libra Coinin 2020. If you are looking for more information about investing in crypto assets, check out our piece here.
4) Take your time
The cryptocurrency market is a fast-moving one. Any given day, any cryptocurrency or token that seemed like it was on fire can take a nosedive into oblivion. So if you’re thinking about investing, don’t fall victim to common cognitive biases such as FOMO, which stands for fear of missing out. Yes, many investors who were there at Bitcoin’s inception saw incredible returns—but only because they sat on their wallets and waited patiently.
