Cryptocurrency is no doubt a thing of interest for all. Despite being around for quite some time, it is now that it’s observed to be gaining momentum with people going bonkers to invest in cryptocurrency. Having said that, crypto is no road to take with your eyes closed. Where on one hand, it enjoys the attention it’s getting and tons engaging with it, on the other end, the scenario’s not quite the same. It is debated to be a risky step, and here’s why:
PS.: No we’re not trying to scare you off with a danger list right at the very beginning of this read. We’re simply bringing these to your notice with the intention to expand your awareness about the potential risks, & the ifs and buts, and then further help you with some tips to get past them and well, play the crypto game like a pro!
So, the mood-breakers. To begin with, the inherent nature of crypto is advanced, if not “complex”, this is the very basic roadblock when it comes to crypto investment for teens or crypto investment for students or even adults for that matter. Then follow volatility which is frequent & drastic fluctuation of prices and its limited acceptance as a medium of payment; as well as the crypto world lacking regulation and security, often not being strongly immune to hacking, fraud, etc. In addition to these, the mining process is said to require a large amount of energy, posing potential harm to the environment.
Again, despite these crypto is still a fun deal. The only takeaway? We just gotta know better! So let’s brush through some basic tips n’ pointers when taking into account to invest in cryptocurrency.
First things First: Learn about Investment
The very obvious first and foremost point to (strictly) remember when considering to invest in crypto, or anything for that matter is to take time to actually study or research it first-hand. No, don’t simply go for it because your bestie’s in or some far-off relative thought it was intriguing. Even so, just simply learn it yourself, as deeply as you can. Be alert enough and informed enough to make a decision, by yourself. Asking for guidance from an elder though is always a good thing!
Pro tip: When the money goes down the drain, having someone to blame won’t be of any help. :p
Getting the Basics of Investment Right
Now let us take a quick tour of the basics of investment in exchange. The best tip is to know the basics right, right?
Pick a Cryptocurrency Exchange
Today, if you have to buy anything, say a diary, where would you first go? Most likely amazon, no? Now taking this reference for the case of crypto, the ones who want to trade/buy or sell crypto, go to crypto exchanges. These act as the meeting point for the buyers and sellers and are mere platforms with various cryptocurrencies on display, open for purchase, sale, or trade. They thrive on the fees they charge for the services they offer.
- A few that you may have heard about before are – Binance, Coinbase Exchange, KuCoin, Bisq, and Gemini. Binance, Coinbase Exchange, Gemini, KuCoin or Bisq.
Landing on these websites may be a tad intimidating at first, and it might take a few to find your way through the interface.
- It is always better to take time to know the exchange, ensure its legitimacy and educate yourself on all its clauses inside out. You wanna be sure to know the terms and the functioning. Check payment methods, trading fees, customer support, security, overall reputation, and more.
You must also look for exchanges that entertain fiat currency, i.e USD, INR, Euro, etc. transfers and purchases. In some, only crypto purchases just bring in the additional exchange between an intermediator.
Create your Account
The very common step –is that you simply have to create your account, as you would for any other platform, with basic mandatory verification.
Once the verification process is complete, you may (or may not) go ahead to deposit money into your crypto wallet for purchases.
Place the Order
Post that you’re all ready to make your crypto purchase, once you decide which.
There is a plethora of cryptocurrencies to invest in, many of which are widely loved and trending. Such as Bitcoin (BTC), Ether (ETH), Tether (USDT), Binance Coin (BNB), Solana, Terra, and more. Now how to know which?
There ain’t a certain cryptocurrency suggestion anyone could give you, but there sure are some factors you should consider when contemplating which crypto to go for. These are:
- Purpose of the Purchase: whether you’re looking for crypto to store or as a medium of exchange, or even to further build stuff (dApps)!
- Reputation and Acceptance: Just like you’d check the basic reputation/review for any brand or product, quickly dig into the current image of the crypto and enquire how it is working/being ranked or preferred in the market. Next, also consider its adoption. Not every crypto works everywhere or for different purposes. You’d wanna make sure to pick one with as wider use and base as possible so you’re not confined or restricted later and have growth potential.
- Background/Tech Check: While you may or may not be aware yourself of or understand it, but try learning a bit about the technology on which the cryptocurrency is based. This background check will help you determine if it is more advanced and better developed than the rest and, how secure it is, etc.
- Market: Lastly, examine the overall market demand for crypto. This is essential as many aspects have a direct impact on it.
Once the choice in crypto is made, enter the choice of payment method. As suggested previously, payment methods being offered must be looked into prior to going for the exchange. There are usually the following couple of options:
- Bank Transfer
- Credit or Debit Card
- Cryptocurrency itself
- PayPal
- Even Cash (for exchanges with a physical presence.)
Opt for a Storage Method
Once you are through with the offer, you’d be asked to opt for the desired storage method, as in where you’d want to keep it. The storage options may differ from exchange to exchange, less in the cases of brokers. These could be keeping the crypto in the crypto wallet on the exchange itself, or on independent fee-based hot or cold wallets for increased security.
Hot Wallet & Cold Wallets: The two are simply wallets to store cryptocurrency. The point of differentiation being – Hot wallet is connected to the internet and can be accessed only with internet-powered devices, whereas a cold wallet isn’t and is present in the form of tangible external devices. Both have equal pros and cons and hence it all boils down to preference. Hot Wallets, being completely dependent on the internet, are easier a target for hackers and frauds. On the other end, Cold Wallets are not as convenient in terms of use and keep.
A Generic Checklist
Here’s an additional checklist of things that you must be in the know of/aware of/remember –all of it.
- Here for the longer term: We’re going to have you put your commitment issues aside! (ooof)
When investing in crypto, don’t get in thinking of it as a one, or a few, time thing. Neither can a few times guarantee you a big win. Think long-term and let that formulate your choices.
- A Strategy: Simply being in the game doesn’t get you returns. Build and have a solid trading and investment strategy. And mind you, not the one adapted random well-wishers, wannabe advisors, or gurus. Sources like these are a big no-no. That is a losing move right there, even before you win.
- A Diverse Assortment: Don’t keep it all in one place. That’s just inviting unnecessary risk. Diversify your portfolio every step of the way. The sectors you choose, the coins themselves, etc.
- Risk and Volatility: These two are crypto constants, and always are part of the games. Hence, a, accept it. It’s never gonna be without it, and if anyone does advise you or claim otherwise, then that’s danger –so step away. The craft is to know how to tackle them and sail smooth. So, b, draft a strategy that takes these two factors into consideration and dodges them well.
- “Buy the Dip”?: Um, maybe not. Against the saying, it may not be always advisable to buy the dip. Which is basically, investing in crypto when the value/price is dipped or down. Though it does benefit the average cost of stock over time, there still exist better ways (read: safer, less risker) around that, so try exploring them. Even if you do go for the dip, have a risk-managing kit in place.
- The OG Saying: “If you don’t own your keys, then you don’t own your bitcoin”. That’s an old mantra that’s been going around in the crypto space. Basically, it relates to storage.
So among the storing options, there’s one where you can keep the coins on the exchange and another in wallets. Cue to the Hot/Cold wallets we talked about above. The differentiating point is…the keys! You don’t have the keys to the exchange or any third party; implying no guarantee of ownership. And that’s well, danger.
Conclusion
Overall, that was a quick run-through of the very basic procedure of investment in cryptocurrencies. It may seem easy but requires much brainstorming and accurate decision-making to prevent big monetary falls. As hinted throughout, one must have an alert mindset before stepping into something like this, even more so when investing as a teen or student. Absolute assistance or at the very least parental monitoring is advised.
