You are struggling to get the picture of where to start your crypto journey?
The whole article is for you.
I know you are awestruck by hearing the price of Bitcoin.
No doubt, I was in the same situation.
For example, if you had purchased bitcoin in early April 2017, you would have received a 3,700 percent return in just four years.
The market size for cryptocurrency will get to $1087.7 million by 2026.
El Salvador adopted bitcoin as a national currency with the US dollar in early September and is one of the first countries to do so.
Moreover, cryptocurrency is highly secure, offers a minimal transaction cost and peer-to-peer(P2P) model, which means it involves no intermediary in exchanges.
Only two of the world’s top 100 publicly traded companies invested in blockchain projects in 2014. That number has now risen to 81.
Every transaction you make in cryptocurrency is recorded in a public ledger which is fully fats and transparent. Transactions cannot be copied and reconstructed.
Because blockchain transactions are irreversible, the chances of fraudulent activity are reduced, and your investments are much safer.
Cryptocurrency like Bitcoin has a great store of value and has the potential for higher returns.
I have implanted all the details information about what a beginner should do before starting an investment;
What cryptocurrency is, steps are taken before investing, popular cryptocurrencies, pros, cons, etc.
Check till the end about the validity of cryptocurrency.
What is cryptocurrency?
Cryptocurrencies are digital currencies that are not backed by physical assets like gold, bonds, etc. Moreover, you cannot ask a shopkeeper to accept Bitcoin in exchange for an egg.
Cryptocurrencies are not fiat money, which means they are not a national currency like the Indian rupee, the US dollar, or the British pound.
Cryptocurrency uses cryptographic methods to operate and follows a decentralized process of transactions. Decentralized, here, suggests that it does not have any governing body to regulate cryptos.
Cryptocurrencies are secured by cryptography and stored in the virtual wallet. The first cryptocurrency ever introduced was Bitcoin, and its founder was Satoshi Nakamoto.
Cryptocurrency came into buzz during the pandemic, which means the year 2019. Digital currency like Bitcoin, Ethereum, Dogecoin, etc., are backed by robust technology, Blockchain.
Now, what’s Blockchain? Keep calm and go with the flow.
Blockchain is a decentralized technology that records transactions in chronological order every time a purchase or sale of cryptocurrency takes place and links every transaction. All trades are stored in a separate ledger known as blocks.
Cryptocurrency is a digital currency that is exchanged, utilized, and transacted in the virtual world.
Steps to be taken before investing
Cryptocurrency is a highly volatile currency, and it is essential to research before investing.
There is a high risk, and you could lose your money also. Before taking a step forward, think twice, and as a beginner, you must read this article till the end to get a clear picture of cryptocurrency.
I have covered every single point, which is essential. Read the article and make your decision.
1. Understand the cryptocurrency
Before investing, you must understand stocks, virtual markets, and digital currency. Research companies and coins you are planning to invest in.
If you are buying stocks, it is vitally important to thoroughly analyze and observe the prospectus and companies. So you have to do some research in the case of cryptocurrency.
New, valueless coins are being created every day, and I don’t want my users to lose a penny. It would be best if you recognized the investment case in each trade.
Many cryptocurrencies are not backed by any physical asset, unlike stocks. Bitcoin, too, is not supported by any asset. Due to external factors, cryptocurrency prices are rising rapidly.
So it is essential to understand the potential and pros and cons before investing.
2. Highly speculative market
Cryptocurrency is exceptionally transformable. It changes from time to time and is awfully dynamic. Its ups and downs can affect the bearish and bullish market.
Cryptocurrency can have high risk, high rewards and attract short-term traders to invest in it.
As cryptocurrency is in the early stage, so many traders try to speculate the market, and as you are a freshman, it will cause some trouble to you.
But do not worry, as I said, I have covered all the points in this article.
You have to calculate risk and check through companies white paper before investing. And make sure you divide the amount in small numbers and invest in diversified stocks to reduce the risk of loss.
I advise you to allocate a small portion of the amount to begin your portfolio and invest a low amount initially. With time and duration, you will develop the mindset of an experienced trader.
Cryptocurrencies are unpredictable. Nobody knew that a Bitcoin whose inborn value was $0.00 and currently it peaked at $65,000, undoubtedly unimaginable in 2010.
Bitcoin is a worthy example of a volatile cryptocurrency. It was unpredictable that it would fall below 25% in a week and another day a meteoric jump.
Cryptocurrency could drop in second with baseless humor; yes, you read it right. Due to baseless humor, the cryptocurrency dropped not because of political or economic factors.
Knowledgeable traders buy cryptos at a low rate and sell at a high price, but in the case of a beginner, they purchase cryptos at a high price and later on have to sell at a lower price, which is upsetting.
4. Do your research
Every individual fails to understand this process.
DYOR- Do your own research is the exceptional work you should do before investing. You cannot depend on past results and begin your journey of investment.
Work on the present situation, check for the daily updates, go through every magazine and journal daily to know the market situation.
Don’t make a mistake by looking past scenarios and investing in cryptos. Keeping knowledge about the past is great, but keeping in view of the past and investing today, is the worst decision in my perspective.
Before investing, investors see the future, current situation, white paper, and many factors.
Being a freshman, it is essential to have in-depth knowledge about cryptos you will invest in today.
Cryptos are difficult to understand as a freshman. It would be best if you did a detailed study about the cryptos you will invest in.
As said before, many times, prices of cryptos fluctuate due to unsupported facts. It is inconvenient for the newcomer to grasp the market situation.
If you invest heavily in cryptocurrency without researching, you are deep in a hole.
I advise you, for instance, to invest small amounts in different portfolios, and after you gain experience, you can invest heavily with high risk and high rewards.
Being Bitcoin, the first cryptocurrency, it gained popularity, but the returns are neither stable nor guaranteed. Individuals who bought Bitcoin before 2017 and sold before 2020 suffered a huge loss.
6.Invest a sufficient amount that you are ready to lose
Don’t invest vast amounts of money in cryptocurrency if you are not ready to lose it all. The Crypto market is highly unpredictable.
Being a beginner, you must go thoroughly with white paper and companies reputation. At least for three months, you should do a detailed, in-depth study of cryptocurrency, its types, where to invest, etc.
Keep in mind that before starting your trading, invest the amount in different portfolios, and you are ready to get started.
7.No security from the government
Cryptocurrency follows a decentralized method to exchange. And there is not a single governing body to regulate it. There is no security from the government as the cryptos method of exchange restricts it.
Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh, and China have banned the exchange apps from forbidding the use of cryptocurrencies.
In the case of the USA and India, there is no law declared to date.
But the Indian government is planning to prepare a bill on cryptocurrency.
Cryptocurrencies are taxable gains in the United States, according to the Internal Revenue Service (IRS). Since 2014, the crypto community has received at least 24,000 warnings.
In other countries, there is no law yet. Still, in my view, with an increasing number of investors in the digital market, there are possibilities that government will intervene to regulate the market.
Types of cryptocurrencies available in market
Bitcoin (BTC), the big name of cryptos, is still the most popular exchange in the market. It is a digital currency hatched in 2009 and introduced a decentralized ledger system.
Unlike government issued-currencies, known as fiat money (Eg. INR, USD), Bitcoin is run by decentralized authority and promises to offer low transaction fees than traditional online methods.
There are no physical Bitcoins and are not backed by any physical assets.
Bitcoin is in-demand market cryptos and fueled the emergence of hundreds of cryptocurrencies.
2. Ethereum (ETH)
Ethereum is the second most popular crypto. Ethereum has features like innovation, allowing for recording smart contracts to the blockchain.
Ethereum has utilized the full potential of blockchain technology. It is described as “the world’s programmable blockchain.”
Ethereum platform has its cryptocurrency, known as Ether or ETH. Ethereum is based on blockchain technology and supports decentralized applications (dApps).
The distinction between Ethereum and Ether is that Ethereum is a blockchain-based platform whereas, Ether is its cryptocurrency.
Ethereum allows developers to create and launch decentralized applications for any purpose, including making their cryptocurrencies.
3.Lite coin (Ł)
Litecoin is the first altcoin created in 2011 by former Google engineer Charlie Lee just after two years of the introduction of Bitcoin.
It was named Litecoin because it is the lighter version of Bitcoin. You can use Litecoin for international transactions.
There is no third party involved in the transaction or exchange of Litecoins. Moreover, it has fewer transaction fees than Bitcoin or any other cryptocurrencies.
4.Bitcoin cash (BCH)
Bitcoin Cash was designed to have a larger block size than Bitcoin, allowing more transactions to be stored in a single block.
In November 2018, Bitcoin Cash split into Bitcoin Cash ABC and Bitcoin Cash SV (Satoshi Vision). Bitcoin Cash ABC is referred to as Bitcoin Cash now.
Dogecoin is a sarcastic meme coin and is considered an altcoin. It was introduced in 2013 and had the picture of Shiba Inu dog as its logo.
Dogecoin is also known as “DOGE.”It is completely private, decentralized, and safe. Dogecoin is a new and rapidly growing form of digital currency,
Dogecoin was created under 2 hours as a joke. Jackson Palmer, the founder of Dogecoin, jokingly tweeted that he is investing in Dogecoin, a fake meme-based coin, mocking the vast number of altcoins appearing every day in the market.
But everyone took it seriously and built the large community, which Palmer has ever imagined in his wildest dream. Jackson Palmer and Billy Markus worked together and made Dogecoin in reality.
6.Binance coin (BNB)
Binance Coin is a cryptocurrency created by the Binance exchange and is traded under the symbol BNB.
The world’s largest coin exchange Binance introduced its cryptocurrency Binance coin (BNB). It became popular due to its wide acceptance and ability to reduce Binance trade fees.
- Binance coins have several usages, including;
- Make credit card payments
- Pay for travel arrangements (on select websites)
- Buy virtual gifts
- Process payments
- Make investments
- Make loans and transfers
- Donate to charity
Ripple is a global payments network with central banks and financial services as their clients. It is a cryptocurrency technology and a digital payment network for the financial network.
Ripple uses a peer-to-peer(P2P) decentralized platform for the transaction. It allows faultless transactions between international currencies, including dollars, yen, euros, or cryptocurrencies, like Bitcoin or Ethereum.
Ripple functions as a medium of exchange and an international payment settlement and remittance system.
E.g., a person A in the USA wants to receive its settlements in Bitcoin. You can pay using your fiat currency, and A will receive its payments in Bitcoin with Ripple.
How to make money with cryptocurrency?
I have covered every point about cryptocurrency; what cryptocurrency is, types of cryptocurrency, etc.
Now, how you can make money with cryptocurrency in India, which means how you will sell and purchase cryptocurrency and where you will store it.
A cryptocurrency exchange is an online platform to buy and sell digital currencies. When it comes to buying, selling, and trading cryptocurrency, each exchange app has its own set of rules.
There is no fixed governing body to guide the cryptocurrency market and a fixed process to trade, and there are many privately available platforms.
Due to the absence of crypto regulation in India, you can effortlessly buy and sell cryptocurrency with the exchanges apps.
Beginners should look for exchanges with accessible web and mobile interfaces, educational resources, and readily available customer service.
2. Open a trading account
You have to open a trading account in cryptocurrency exchange apps and provide all the relevant details it asks for.
You are required to submit your photo identity and address proof. Link your bank account to exchange apps for easy withdrawal and deposit of money.
Moreover, you have to fill in the form for KYC( Know your customer) data to kick off your investing journey.
You have to provide your personal information like an Aadhar card PAN card linked to your registered mobile number.
3.Link your trading account
After opening your trading account, you have to link your bank account with a trading account to transfer money. It will be a more straightforward method as you can buy and sell without any inconvenience.
You can transfer funds from an online bank account and use UPI transactions for cryptos exchanges.
I advise you not to use a credit card for purchasing cryptocurrency. It is not worth it; create a debt to fulfill your want. Moreover, many credit card companies do not allow users to buy cryptos on credit.
4. Buy and sell
The next step is to place an order. Your crypto exchanges apps will provide you with numerous cryptos to buy. Make sure you purchase cryptos in which you did your research.
Place the order and receive your cryptos on exchange apps. You can check it through the application in your information tab.
All you have to do is set your selling amount, and automatically exchange apps will connect your deal with other investors, and Boom! You are bank account gets debited with a sufficient amount.
5.Store your cryptocurrency
Here comes another concept of wallets.
There is an in-built wallet in exchange apps to store your cryptocurrency. You can keep it in your exchange app or your cold wallet.
The cold wallet is an offline wallet that allows you to store your cryptocurrency without the risk of losing it.
There are two ways in which you can store your cryptocurrency:
Hot wallet: These wallets are online wallets stored in your cryptos in the digital world.
Cold wallets: These are offline wallets to store your cryptocurrency and offer a private security key to access it. But cold wallets charge fees to keep your cryptos.
I suggest you store your cryptocurrency in cold wallets, or else there is an 80% chance of losing your cryptos.
6.Maintain your investment
As you start your investment journey, do not blindly follow any influencer advising you to invest in stocks. Make sure you gain enough knowledge, and then you invest.
Make an excellent strategy for at least a week. I am not saying a month as cryptocurrencies are highly speculative and volatile.
You can consider expert opinions on various cryptos and what are there in future results.
Pros and cons of cryptocurrency
Probability of gains: With the rising demand for cryptocurrency, profits are high chances.
Decentralized technology: decentralized technology, in which no one is superior to another, grabs investors’ interest and impacts the growth of cryptocurrency industries.
Incredible security: Cryptocurrency uses blockchain technology to record transactions. Blockchain technology ensures that all data are recorded in chronological order, and hackers cannot manipulate the transaction details.
- High risk and volatility:
It is true.
You can earn countless profits.
One worthless rumor can bring up unbearable loss.
Indeed, the crypto industry is speculative
2. Unprotected theft, frauds, and scams: You are definitely in danger if you are not alert while making transactions. As you are making transactions in the digital market, numerous fraudsters exploit you in many ways. My recommendation is to keep your eyes, ears, and brain open.
Is cryptocurrency legal?
Till now, there are no regulations or laws established to regulate cryptocurrency.
Cryptocurrency is highly volatile and has the potential of high risk.
The Indian government has plans to regulate cryptocurrency. They will be introducing a bill for the regulation of cryptocurrency.
Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar, and Tunisia have banned cryptocurrencies in their location.
Before investing, consider ‘are you ready to take high risk and bear loss.’
Should i invest in cryptocurrency ?
Many exchanges apps have restriction to geographical restrictions, means, some exchanges apps don’t serve residents of certain region.
Before, you start investing, make sure your exchange app is available in your region.
You can buy cryptos in 24/7, unlike our traditional trading our which is fixed till date. Moreover, prices fluctuate in large percentage in this industry as they are highly volatile.
If you are ready to afford high risk, then you are ready to for investment. I advise you as a freshman you should invest maximum 5% in cryptocurrency, and after getting the picture of whole market you could invest more.
Cryptocurrency is extremely risky, volatile and unpredictable. Which might give you a FOMO.
And, FOMO must not be your motivator for buying cryptos. You must get rich knowledge about cryptos.
Cryptocurrency are for those investors who have a suitable risk appetite, as cryptocurrency market can generate higher returns than the other asset class investment.
In addition, you can diversify your portfolio, to reduce the risk of loss and enhance your knowledge in trade sector as well as you can accumulate a considerable number of cryptos in your portfolio.
Cryptocurrency is rising exponentially. The cryptocurrency market is highly speculative, and many experienced investors have opted to invest money elsewhere.
Cryptocurrency is an asset class investment where you can invest and earn worthwhile returns. Lack of government backing and physical assets, these assets have gained massive popularity in a decade.
Bitcoin was the first cryptocurrency to be created using blockchain technology, and it has the potential to change the way people think about money. Forbes recommended Bitcoin as the best investment in 2013.
After the 2008 financial crisis, the world realized that existing economic systems had flaws, and Bitcoin emerged as a decentralized monetary currency.
For beginners who want to start trading in crypto, I recommend investing as low as 5% and investing sufficient amounts that you are ready to lose.
And as you get started with your journey, familiarize yourself with numerous types of trading as these can impact your cryptos price.
If you have decided to invest in cryptos, self educate yourself on the risk and keep an eye on the industry.