As a newcomer, you must be pondering what is cryptocurrency, how do we use it, and how to get them. Well in simple terms, cryptocurrency is a type of digital currency that usually exists electronically only. No physical bill or coin exists of it unless you use a service that enables you to cash in cryptocurrency for a physical token. We usually exchange cryptocurrency online with someone using a phone or computer without the use of an intermediary like a bank. Some well-known cryptocurrencies are Bitcoin, Ethereum, and Litecoin, but along with these, there are many more varied cryptocurrency brands. Even now as we speak, new ones are continuously being created!
We generally use cryptocurrency for making quick payments, to avoid transaction fees which regular banks charge, or due to the anonymity it offers. Some even possess cryptocurrency as an investment in the hope the value goes up. Cryptocurrency can be purchased through an online exchange platform. We can also earn cryptocurrency through a complex process called “mining” which needs advanced computer equipment to solve highly complicated math puzzles.
In 2023, investing in cryptocurrency may be quite tricky due to the crypto market's volatile and dynamic nature. Due to the recent revolution in digital currency and the requirements for digital financial platforms to meet contemporary exchange demands, investing in cryptocurrency is believed to be one of the profitable means of earning. Fintra brings you a comprehensive step-by-step guide to investing in cryptocurrencies in 2023. We assure you that this blog will assist in investing in cryptocurrency as a beginner efficiently.
Following are the steps and guidelines involved in investing in cryptocurrency:
One of the first steps to take before investing in the crypto market is to do research and study it well. Since you are an amateur who is stepping into the zone for the first time, it's a wise idea to prepare well for the drill. Get to know what you are getting yourself into by first doing basic research. Basics can be learned from the internet, or by facilitating yourself with some guides or courses available online or offline. There are various platforms that can be handy to create a fundamental understanding of cryptocurrency. Some such platforms such as EToro, CoinDCX Go, Warix and BuyUCoin do assist with investing in cryptocurrency and providing a step-by-step guide to invest in cryptocurrencies in 2023. Investing in a cryptocurrency will turn out to be very easy if you grasp the basic knowledge of the crypto markets thoroughly. Therefore, be sure to do the initial research to understand how to invest in cryptocurrencies.
After deciding that you are going to begin investing in cryptocurrency, the first question which will come to mind will be how much to invest as a beginner. To be honest there's no such rulebook about the amount of investment one should do to begin with. However, experts advise that it's always better to start on a small scale, and then increase at a steady pace. For example, Bitcoin can be divisible up to eight decimals, so you can and should purchase a small fraction on an initial basis.
Every day the market is booming with digital currencies, and it's your task to explore the crypto graphs for choosing the cryptocurrency you are desiring to invest in. Due to having nearly more than 8000 cryptocurrencies in the market that have volatile and dynamic values, there was a possibility to have crypto hype "crypto craze" in 2022.
Do bear in mind that different currencies will display different graphs for their market values every second. For example, for the year 2019-20, the crypto graphs revealed that the prices of cryptocurrencies fluctuated dynamically. Hence, to decide on the choice of cryptocurrency to invest in, you'll have to examine these graphs.
As a rule of thumb and as a beginner, you must check out and study all the various platforms that record cryptocurrencies' values. Such platforms will assist you to create a clear sketch of definitive cryptocurrencies' persistent values along with their market competitions. Websites like EToro, CoinDCX Go, Warix and BuyUCoin can be such platforms to assist in screening the cryptocurrencies' values. After having reasonable knowledge, you can finally determine which currency you will invest in.
The next step involves choosing the most suitable and reliable exchange platform. It's advised to pick the exchange platform which suits the scale of your investment better, the type of cryptocurrency you're going to obtain, and facilitates you within your region. Try to hunt an exchange platform that has the largest trading values for the cryptocurrency selected by you. Always consider the source of your funds because some exchange platforms don't allow individuals to make money deposits via fiat. Most platforms will restrict one from depositing in the form of Bitcoin only.
In this respect, you must do considerable research and look for platforms that facilitate the purchase via fiat, and as mentioned earlier, every platform will have its pros and cons. Choose an exchange platform as per your customized needs. Also, try to hunt for exchange platforms that enable to invest in several cryptocurrencies and altcoins, this provides a wider scope. It will diversify your portfolio and have exposure on a greater scale in the crypto market.
After selecting a suitable crypto exchange, another step to take before you trade and/or purchase cryptocurrency is to get your KYC done. To do this, you simply need to upload various documents like PAN card, Aadhaar card, photo identity proof, address proof, etc., with the exchange. This ensures that the account is legitimate and it prevents fraudulent practices. Later on, you'll be required to specify the payment option(s) which will be used for deposits and withdrawals while trading cryptos. However, always be mindful of the fees charged by the crypto exchanges on transactions because you don't want them to get a bit every time you transact!
After you have invested in cryptocurrency, the next step is to obtain a digital wallet, known as a crypto wallet. Wallets are like online banking, they help to maintain your crypto assets, exchange them, and provide a platform to organize all of the cryptocurrency in one place.
Various types of crypto wallets have their own modes of functioning, features and security levels. For example, the only significant difference between hot and cold wallets is whether the wallet is connected to the internet.
The following defines the usual types of wallets that are used:
Hot Wallets are mobile or desktop wallets that facilitate daily transactions of cryptocurrencies. Such wallets are handy for storing a small number of values because they assist daily exchanges. Only for short-term investments. These wallets are required to be connected to the internet, and due to this, such wallets are less secure. Hot wallets are known to be highly accessible because of the internet, but unfortunately, they are more vulnerable to security threats and attacks by fraudsters. Hot wallets are user-friendly, but there is always a risk to the users’ privacy and security.
For long-term investments, cold wallets are used. Obtain a cold wallet if you plan to invest for a greater period on a larger scale. Such wallets are not connected to the internet. The other types of cold wallets are Paper wallets or Hard wallets. Cold wallets store crypto tokens in offline mode and they provide improved security. These wallets are a safe option when compared to other wallets because they act as a vault to carry out daily transactions. Some of these wallets are connected to the internet while some aren’t, and users must pick the wallet according to their needs.
A hardware wallet is a device that stores your cryptocurrency in the one of hardware. There are various hard wallets in the market and they can be connected to the internet. Using such wallets is considered to be the safest way to save cryptocurrencies.
Paper wallets refer to the paper receipts of your passkey and codes. Although they're considered safe, paper wallets are also vulnerable to wear or tear and loss.
Online or web wallets are such wallets that enable their users to access the wallet by using a web browser. Fintra advises never to store your cryptocurrencies into these types of wallets. Online wallets and online exchanges are very vulnerable to cyber threats. They are also attractive to hackers. Online wallets are claimed to be the quickest way to execute transactions, and such wallets enable an individual to handle a significant number of cryptocurrencies.
Wallets that can be downloaded and installed into mobile devices are called mobile wallets. These wallets allow individuals to access cryptocurrencies through their mobile devices along with carrying out their daily activities. Mobile wallets are based on the internet, therefore, one should protect these from security risks. One can also instantly scan the QR code from mobile wallets and also make payments.
A more secure way to store cryptocurrencies other than a mobile wallet and online wallet is to use a desktop wallet. Still, don't get too relaxed, you must always make sure to provide ultimate security to all your wallets. Desktop wallets are termed to be the best ones because these store bitcoins and other types of cryptocurrency in offline mode and provide higher security.
Along with the knowledge of wallets, you must also be aware that there are two different types of digital keys- public keys and private keys. Both these keys are used for the exchange of cryptocurrencies, send or receive cryptocurrencies, convert them back into fiat currencies and money, and making a purchase. Private keys are secret keys that get stored in online mode in the bitcoin wallets. Both these keys exist in the form of alphanumeric form, and if the private keys of the bitcoin wallet get lost, all your bitcoins will get lost. Thus, it is extremely imperative to store the private keys carefully and prevent them from unauthorized access. Do note that certain wallets will store private keys in offline mode, and some will store the private keys in online mode.
Cryptocurrencies are new to all, hence, like any new trend in the markets, they will tempt everyone to jump in. However, be careful not to get blindly influenced by this frenzy. As we have stated in the blog above, always first acquire the right knowledge, get trained, and then only proceed with your investment. Use resources such DCX Learn platform that is provided by CoinDCX Go, it will assist you to enhance your knowledge and get your basics straight before you test the waters.
Always keep in mind the Pareto Principle of the 80/20 rule. This rule applies to the crypto markets as well. While investing in cryptocurrency, always remember that the top investments make the highest shares of your revenues.
After undertaking the steps been described in the blog above, hopefully, you're ready to precisely observe the cryptocurrency markets. Keep yourself updated with the latest market trends, and look for various market capitals of each cryptocurrency because each of the cryptocurrency will have its highs, lows, or medium market capitals, respectively.