Basics: Getting started

Getting started

Where do I start?

Buying or investing in cryptocurrency requires some research. There are many different types of cryptocurrencies on the market, all specifically designed to be fit-for-purpose. So, it is important to understand which offers the best fit before investing. 

Investors need to set some goals and outline a strategy before buying in an effort to better understand which direction offers the best possibility of positive returns.

StrategyStrategyThere are already plenty of services offering their expertise on first-time cryptocurrency investment

There is a growing market for cryptocurrency strategy on top of the already healthy service industry offering expertise on first-time cryptocurrency investment strategy.

Investors understand it is important to build and implement a plan before buying cryptocurrency, much the same as how to approach investment in the stock market.

Also like the stock market is the lack of a successful instance of a get-rich-quick scheme guaranteed to offer returns.

Instead, the main intention of compiling a cryptocurrency strategy should be minimising risk.

There are multiple options when it comes to taking ownership of cryptocurrency, one of which is mining MiningCryptocurrency relies on miners to perform this task to process transactions, bundling transactions together and verifying them before adding them to the blockchain.. While it is a more long-term and heavy investment path, mining MiningCryptocurrency relies on miners to perform this task to process transactions, bundling transactions together and verifying them before adding them to the blockchain. can produce a steady stream of cryptocurrency on autopilot allowing investors to sidestep exchanges and P2P transactions.

What about security?

Security SecurityThe act of storing your cryptocurrency safely in a digital wallet. A wallet is secure because it is encrypted and requires a personal key to open. may be the most important consideration when investing in cryptocurrency for the first time. There are heightened risks of losses at the hands of hackers without taking the appropriate measures to store digital assets. The added element of risk comes partly due to the permanency of cryptocurrency trading, and the lack of a safety net in the form of a third-party overseer. However, the great attraction to cryptocurrency and the reason for its inception was the lack of this centralised authority, and there are security SecurityThe act of storing your cryptocurrency safely in a digital wallet. A wallet is secure because it is encrypted and requires a personal key to open. measures designed so this can be appreciated.

Investors can avoid these risks by taking their funds offline and placing them in cold storage wallets.

These wallets come in different forms, but most commonly in what are known as hardware wallets, which are specifically designed-for-purpose USBs or printed physical copies of public and private keys.
Software wallets perform the same task digitally on a computer or online and are often regarded as a more convenient storage option. There are pros and cons to both, which should be researched before getting started with cryptocurrency investment for the first time.

What is most important as a first-time cryptocurrency buyer is finding a trustworthy market or source with a reliable reputation, rather than committing to buying in a market offering comparatively cheap services.
Exchanges and broker brands offer catered services to suit different investors.
P2P (peer-to-peer) is also a viable option worth considering when buying cryptocurrency for the first time.

It is vital when entering the world of cryptocurrency for the first time to understand the importance of security and the risks coming with being exposed to scammers through a second-rate market.
There is no central authority to take complaints or report scams, or safety nets allowing transactions to be retrieved - once a transaction has been made on the cryptocurrency market, it is permanent.

Trustworthy marketTrustworthy marketthere are already plenty of services offering their expertise on first-time cryptocurrency investment

How do I know which cryptocurrency to buy?

Part of implementing a strategy should be about building a portfolio. While spending everything on a single currency may reap big rewards if the currency performs well, it may be wise to spread investments across multiple currencies, dividing and balancing investments into different portfolios to minimise risk.

This is commonly referred to as asset allocation, which is a strategy often implemented when investing in the stock market, easily crossing over to be applicable with cryptocurrency.

One of the defining factors in deciding how to diversify a portfolio should be a cryptocurrency’s market cap.
A market cap is a cryptocurrency’s price, multiplied by its circulation.

A smaller market cap usually means a cryptocurrency’s price is likely to be more volatile offering more risk, while a larger market cap offers stability and long-term opportunity. 

Holding a portfolio made up of multiple cryptocurrencies with a variety of market caps provides opportunities for growth balanced out with more steady and reliable prospects to cover potential losses.

Like regular stockbrokers and financial advisors, third-party services can help cryptocurrency investors maintain their portfolios offering a hands-off approach. This type of automation is perhaps more important in the cryptocurrency world, as markets operate 24/7 offering little hope for investors to monitor the markets entirely themselves. 

Cryptocurrency automation tools are generally recommended to make sure strategies are always implemented, not just when investors are online.These services usually come in the form of online programs or applications and can be the difference when action is required when there is volatility in the market.

FAQ

Where do I start with cryptocurrency?
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Buying or investing in cryptocurrency requires some research. There are many different types of cryptocurrencies on the market, all specifically designed to be fit-for-purpose. So, it is important to understand which offers the best fit before investing.

What should I do before buying cryptocurrency?
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Investors need to set some goals and outline a strategy before buying to better understand which direction will suit best. There is a growing market for cryptocurrency strategy meaning there are already plenty of services offering expertise on first-time cryptocurrency investment.

Are cryptocurrency transactions permanent?
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It is vital when entering the world of cryptocurrency for the first time to understand the importance of security and the risks coming with being exposed to scammers through a second-rate market. There is no central authority to take complaints or report scams, or safety nets allowing transactions to be retrieved - once a transaction has been made on the cryptocurrency market, it is permanent.

What is a market cap?
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A market cap is a cryptocurrency’s price, multiplied by its circulation. A smaller market cap usually means a cryptocurrency’s price is likely to be more volatile offering more risk, while a larger market cap offers stability and long-term opportunity. Holding a portfolio made up of multiple cryptocurrencies with a variety of market caps provides opportunities for growth balanced out with more steady and reliable prospects to cover potential losses.

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