Analysis & Opinions

Tips for cryptocurrency beginners

by September 08, 2021 0
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In February 2021, Bitcoin reached a $1tn market value. This boosted the price per coin from just under $54,000 to just over $55,000 and offered yet another milestone in the cryptocurrency’s historic trajectory, which had seen the price grow by 360% in the six months preceding. The digital currency is no stranger to unexpected victories and improbable staying power, and its resiliency has led some to question if jumping into the Bitcoin market is a good idea. 


There are a few things to keep in mind before you make a decision. Here are some tips to keep in mind for cryptocurrency beginners as they look into making some smart investments.


Understand the currency and its popularity

The first tip might seem simple, but it can be a difficult concept to understand. Digital currency is not a fiat currency (a government-issued currency), but it can be purchased and sold using these more traditional forms of money. Also known as cryptocurrency, the digital currency has been an increasingly popular financial option for the past decade. Much of this initial growth was accomplished by Bitcoin.


There are additional tokens, such as Ethereum, Dogecoin, and Binance Coin. Bitcoin is currently the most popular and valuable of these, but the others are rapidly gaining ground. There are currently around 10,000 types of cryptocurrencies being publicly traded as of 2021, and the total value of all of them combined was almost $2tn in August 2021. 


There are a few different reasons why cryptocurrency appeals to users. First, it can be purchased and used anonymously. This is a particularly big plus for individuals who would prefer to not have their purchases tracked by traditional financial institutions. However, it does not necessarily mean that the funds are for anything nefarious. As the difficultly of maintaining privacy online increases, it is only natural to desire to maintain it in any way possible. Cryptocurrency can help users achieve this goal. 


In addition to the above, cryptocurrency has become a popular investment because it is actively growing. It is not a stagnant form of currency, in other words, but is actively expanding into the mainstream and growing in popularity. This makes it an appealing potential investment to anyone with the desire to be part of the growth as it happens, rather than after it has taken place a few years down the line. 


Choose your currency wisely

The proliferation of cryptocurrency tokens is equal parts enticing and frustrating. The wide variety of choices is appreciated by most investors, but it can also lead new adopters into precarious positions. Bitcoin is the most popular option by far and has monopolized quite a lot of investment dollars. This might make it seem like the obvious choice, but options such as Ethereum are quickly growing and give investors the chance to buy before the price skyrockets. 


The choice of the token is ultimately up to you. Just make sure that you do some research into the price fluctuations and overall growth trends before you make the decision.


Pick a reliable cryptocurrency broker

While some banks are expanding to include cryptocurrency in their accounts, making it easy to buy and sell using the currency, most of the purchasing takes place using cryptocurrency exchanges and brokers. These include names such as Coinbase and Binance, among others. Exchanges make it easy to invest in cryptocurrency, but they can also charge hefty exchange fees that will quickly drive up the price of your investment. With this in mind, do some research into the rates related to each exchange along with transaction limits. 


It might be worth investing the time into learning some of the more intricate details behind using cryptocurrency brokers and opting for an option with fewer fees even if it means a slightly less user-friendly experience. 


Be safe

Cryptocurrencies are in their infancy and there are some enterprising cybercriminals taking notice. This can sometimes result in tokens created in bad faith, existing solely to steal money for as long as possible. There are a few things you should do to protect yourself from these individuals. 


First, research the company or creator behind the token. Bitcoin, for example, is the largest cryptocurrency in the world and can be traded, purchased and spent using services such as PayPal. Other tokens will have been created more recently and with much less fanfare. This is where it becomes vital to explore the entity behind the cryptocurrency as well as who is funding the new token. If your currency of choice has yet to make it to the mainstream, your chances of being scammed are relatively higher. 


It is also important to take more common-sense measures against cybercriminals who might attempt to steal more than your money. This includes protecting your network and your personal information whenever you are online. Consider a reputable VPN, for example, as well as a reliable security suite to keep your computer as safe as possible.


Vet companies before you spend

Cryptocurrency has become the payment of choice for a growing number of users. This is especially true in industries where online spending is critical and common, such as online gambling. Before you decide to spend your money at an online gaming website, do your research and make sure that you recognize the name and the license holders of the business. This is true for any other business where you are interested in spending your money. Just as you research the tokens you are purchasing, you should know exactly who will be receiving your personal information when you spend them.


Buckle in! 

Cryptocurrency is a quickly changing industry that is regularly seeing volatile shifts in popularity and value. This is not an investment for those without nerves of steel! If you decide to invest, you must be ready to ride out spikes and drops in value – you are in it for the long haul. 


Potential investors might find cryptocurrency to be an appealing option, but there are important steps that you must take in order to make safe, smart choices.