Although Bitcoin’s history is short (it appeared in 2009), much has happened since its launch. Its creation has always been surrounded by a kind of halo of mystery, because it is unknown who created it. Satoshi Nakamoto is just a pseudonym of the person or persons who gave birth to the project.
Yet today, eight years after its creation, Bitcoin is not exactly mainstream . Many were surprised that the creators of the ransomware that hit Telefónica and other companies wanted to be paid in bitcoins. We are going to explain everything about this coin.
Bitcoin is a very curious technological idea. By combining computer networks, cryptography and software, it is possible to create a fully distributed virtual currency without the need for a central authority to issue and control it. Eight years later, cryptocurrency is still stable and the use of bitcoins has increased dramatically .
The economics of this coin are the same as any other: scarcity and trust. In other words, there is a solid basis for bitcoin to be worth money, at least as solid as the one that sets gold prices .
And while Bitcoin was the first cryptocurrency, there are many others . It is true that bitcoin is still the most popular, although others, such as etherium, have been rising in value lately because of the other extras they offer.
Bitcoin, how to get them
Clearly, if we want to get Euros, all we have to do is work in a country whose currency is Euros, or go to an exchange office. But how do we get Bitcoin? Of course it doesn’t work, since it is not an official currency in any country in the world.
The beginning of any coin is complicated. There has to be an issuing bank, people have to trust and accept the currency, and gradually it goes into circulation. Bitcoin, on the other hand, has no issuer, the distributed computers that make sure the transactions are correct receive coins as prizes from time to time. This is called mining, and it is a way of creating money with bitcoins.
But before we get our computers working to create money, I have to say that mining is crazy right now. Those who make money with this technique have clusters of computers with dedicated video cards and in areas where electricity is cheap or even subsidized. Making money from mining is a thing of the past.
Then? Where do we get bitcoins? Well, like in the real world, at currency exchanges. There are plenty of them online, and they allow us to exchange regular money (like euros) for bitcoins. Coinbase is a pretty popular exchange site (and wallet, as we’ll see later).
Bitcoin, how to save them
Now we come to the big question: how and where are bitcoins stored? Well, cryptocurrencies like bitcoin are completely virtual . In order to access them, we originally had to use software. This software allows us to see our account balance and make and receive transfers.
The advantage of Bitcoin is that it is an open protocol, there are many programs to manage our money. It is available for Windows, Linux, Mac, Android, iOS… I personally recommend using it on mobile devices, and in Android I like Android Wallet .
However, there are dangers in using the software. If for any reason the device is damaged, erased or formatted, we lose all the money . Let us assume that in the case of Bitcoin the money is in the Bitcoin cloud (aka Blockchain ) and that what the software stores is a copy of the key to access it. If we use software, it is convenient to back up those keys.
Another way to keep track of our bitcoins is to use a web wallet. This way, the web page is responsible for storing our keys, and we will access our accounts with our username and password. Basically what these websites do is a function of the bank .
Coinbase is a good option for this because it also allows you to buy and sell bitcoins. The only bad thing is that if we use this method, we lose some of the fun of owning bitcoins by using a fully decentralized system without relying on the trust of any entity. No one can confiscate our money without stealing our keys. On the other hand, if we have money on a website, we have to trust it.
Bitcoin, price fluctuations.
Right now it may seem that bitcoin is very expensive, over 2,000 euros per change . And that this is not the best time to invest in it. But we have seen similar moments in the past, and the advice should be the same: be careful because it is quite a speculative asset .
Bitcoin has undergone many bumps in the road. The first was the shutdown of Silk Road, an illegal trading marketplace that the FBI shut down in 2013 . Transactions were conducted with bitcoins and the price plummeted.
Not even a year later, the world’s largest bitcoin exchange, MTGox, was attacked and 744,000 bitcoins were stolen from its users. It soon had to be shut down . Again the price fell.
But Bitcoin was not a fad . Although it still had many challenges ahead of it , it managed to overcome every setback. So you have to consider it in the future, either as another asset or as a currency to pay.
Before you start investing your hard-earned money in cryptocurrencies such as bitcoin, etherium, litecoin and others, be sure to read these 4 simple tips to prepare yourself for the world of cryptocurrency. Start by learning the basics of cryptocurrency and blockchain and study the currencies you are going to invest in. The goal is to grow your investment over time and make a profit.
- Don’t invest in an asset you don’t understand
- Find coins that match your preferences
- Increase your investments
Cryptocurrency and blockchain can be very challenging for newcomers. If you want to invest in bitcoins and other cryptocurrencies but don’t know where to start, this is for you.
4 tips on how to get started with cryptocurrencies
1.- Do your homework
Before you get into cryptocurrency, spend some time gaining knowledge about it and the blockchain. You can’t invest in an asset without knowing how it works.
To get started with bitcoin and blockchain quickly, we definitely recommend taking a look at our free bitcoingraphy here , which will save you a lot of precious time looking for explanations and guides. If not, you need to learn how blockchain works and how the financial system works.
If you want to get started with cryptocurrency, it is very important that you are prepared to look for information on your own. It is a huge mistake if you just trust someone else’s opinion and invest your hard-earned money in a currency that you know absolutely nothing about. In most cases, this will result in you losing money.
2.- Find the coins you want to invest in
The next step is to decide which cryptocurrencies you want to invest in. There are thousands of different coins and tokens priced from a few cents to thousands of dollars per coin. Not only the amount of money, but also the period of time you want to invest will determine which coin to buy.
Instead of buying the currency you’re interested in directly, it’s important to keep an eye on the prices. There are many sites where you can do this. The most popular is CoinMarketCap .
Check historical prices and how the price has changed over time. Compare charts of currencies that have performed positively with those that have depreciated. Get an idea of the market.
3.- Increase your investments
At the end of the day, the goal is to make a profit and increase your investment. You can basically achieve this by buying cheap and selling at a higher price. The general rule of thumb is that if the price of a token is high, it is very likely that it will fall, and vice versa.
But how do you know when it’s time to buy? The answer lies in graphical analysis and an awareness of the current market situation. The most reliable sources are news blogs and Internet websites.
4.- Start small
Investing in cryptocurrency can be dangerous if you don’t know what you are doing. It is very important to follow the golden rule of investing: never invest more money than you are willing to lose. Cryptocurrency markets can change very quickly because of their volatility.
We recommend starting with a fixed amount of money and trying different strategies to make a profit. Stick with those that have proven themselves in the past.
Tips on investing in cryptocurrencies for beginners
Today, cryptocurrency investing advice can be found everywhere and in abundance. However, when Bitcoin appeared in 2009, it was just a curious phenomenon in the world of finance. Although several prophets saw its potential, interest in cryptocurrencies did not reach the general public until many years later.
Investing in cryptocurrency has become increasingly popular, mainly because of the continued support for decentralized finance ( DeFi ) by billionaires and tech entrepreneurs from around the world. Today, investors can use exchanges (or exchange platforms) such as Bybit to buy and acquire cryptocurrencies.
However, if you plan to invest in coins, you should only enter the world of cryptocurrencies if you understand that cryptocurrencies are a high-risk, high-return investment. Because cryptocurrencies are unstable, you can incur significant monetary losses if you start investing without notice.
In this guide, we will discuss some investment tips for beginners so that you can avoid losses.
How to invest in cryptocurrencies for a beginner
If you are a beginner, you can invest in cryptocurrency through brokers or cryptocurrency exchanges, you will need to create and confirm your account, deposit some fiat currency to invest, place an order for cryptocurrency and choose a storage method such as a wallet.
But that’s just a summary of what you have to do to invest. If you want to learn how to dive into the world of cryptocurrency and learn the most important investing tips for beginners, this section is what you need.
Choose an agent or a cryptocurrency exchange
First of all, the first thing you need to do is choose a cryptocurrency broker or exchange. Both allow you to buy cryptocurrency, but there are certain differences between them.
A cryptocurrency exchange or cryptocurrency exchange platform is a space where you can trade cryptocurrencies with other buyers and sellers. Commissions on these platforms are usually low. However, they have several types of trading and interfaces that can be difficult for a newcomer just getting started to understand.
Some popular cryptocurrency exchanges are Bybit, Coinbase and Gemini.
When choosing a cryptocurrency exchange, make sure you choose one that allows you to buy cryptocurrency for fiat currency, such as U.S. dollars. Some exchanges only accept cryptocurrencies, which means you need one cryptocurrency to buy another.
As a newbie, you may not have a cryptocurrency. If that’s the case, you need an exchange that accepts fiat to buy cryptocurrency.
A cryptocurrency broker makes cryptocurrency trading much easier and clearer than an exchange. The interface is easy to use, although commissions can be higher.
Two popular cryptocurrency brokers are SoFi and Robinhood.
The importance of cryptocurrency wallets will become clearer as you go through this article. Some advanced cryptocurrency enthusiasts also prefer to store their assets in physical wallets . However, it is important to remember that not all brokers will allow you to transfer your assets from their platforms.
For example, neither SoFi nor Robinhood will allow you to transfer your assets into a wallet or anywhere outside of your account using them. If you want to keep your cryptocurrencies safe in your wallet in the future, keep this in mind when choosing a broker.
Get an account
After choosing a broker or exchange, the next step is to sign up for a platform. Platforms require you to verify your identity using various methods. This is necessary to prevent fraudulent activity.
For this verification, you may be required to send a photo of your passport or driver’s license. The platform will ask you to upload selfies to compare it with your passport or driver’s license photo.
To buy cryptocurrency from an exchange or agent, you must have fiat currency in your account. You can deposit by transfer or with your credit or debit card.
Once you have deposited the funds, it will be a few days before you can use them to buy cryptocurrency. The exact time will depend on the platform you use.
Pro Tip: While you can use your credit card to deposit funds on some cryptocurrency exchanges, we do not recommend doing so. The company that issued your credit card will treat this purchase as a cash advance. Typically, cash advances may have a higher interest rate and include a cash advance fee. Thus, you may have to pay a certain percentage of the transaction as a cash advance fee.
Choose the cryptocurrency you will be buying
Once the money you deposited is available for you to use, you can choose from hundreds, if not thousands of cryptocurrencies. The most popular ones are Etherium and Bitcoin.
You can identify your cryptocurrency by its code or ticker, which is similar to an alias. For example, BTC is the code for Bitcoin. These are the codes of some popular cryptocurrencies:
- Bitcoin (BTC).
- Tether (USDT)
- Etherium (ETH)
- Binance coin (BNB)
- Cardano (ADA).
Depending on the cryptocurrency you use, you may not be able to buy the entire cryptocurrency due to its exorbitant price. Fortunately, many exchanges allow you to buy fractions of a coin.
Instead of buying 1 BTC, which has been fluctuating above $60,000 lately, you can buy one hundredth or any other fraction of a bitcoin.
Choose your storage method
Your bank may be insured, but a cryptocurrency exchange is not. Cryptocurrency exchanges are vulnerable to hacking, and you could lose your money if you don’t keep your investment safe.
As we mentioned earlier, if you buy cryptocurrency through an agent, you probably have no choice but to keep it in your account. But if you buy cryptocurrency on an exchange, you can transfer your money to a hot or cold wallet.
A hot or tethered wallet works on computers, tablets, phones, and other devices connected to the Internet. Your money will be stored online in a hot wallet. While this method of storage is convenient, your funds are susceptible to hacking and theft because of the constant connection to the Internet.
A cold wallet does not have an internet connection. You can “carry” your cold or physical wallet with you, like a hard drive or USB drive.
However, you must be careful when using a cold wallet. If you lose your wallet’s private key, you will never be able to regain access to your cryptocurrency. Likewise, if your device has problems or malfunctions, you could lose your money.
What is the best cryptocurrency for beginners?
One of the best investment tips we can give you is to invest in popular cryptocurrencies like Ethereum or Bitcoin. Not only are these coins less volatile, but they also bring a high return on your investment.
On the other hand, meme coins such as Dogecoin or Baby Doge Coin are very volatile because their value depends on expectations. The moment an expectation dies, the value drops.
If you want to reinsure yourself, choose a currency among the less volatile cryptocurrencies .
What to do when investing in cryptocurrencies?
When you invest in cryptocurrencies, you have to be careful because a market drop can lead to losses. Here are some investing tips to keep in mind.
Read the briefing paper
Any list of basic investment tips will always prompt you to do your own research before making any investments. Any crypto project’s white paper is a guide or report that will tell you everything you need to know about the cryptocurrency. It details the philosophy behind cryptocurrencies and how they work.
By reading the white paper, you will get two advantages: on the one hand, you will learn all the intricacies of this or that cryptocurrency. On the other hand, you can judge a project by a white paper. If there is an error in it, you know that the project is not worth the effort.
For example, Baby Doge Coin’s white paper and roadmap talks about creating a new religion and many other things not related to cryptocurrency. While Baby Doge Coin attracts some investors with its charitable contributions, no amount of fads or celebrity tweets will make it a good long-term investment.
Follow your trading plan
In crypto investing, a trading plan is one of the best investment tips for beginners to keep in mind. It refers to the initial plan that determines how you will buy and sell cryptocurrency. Your trading plan includes the following elements:
- A focus on the market
- Risk map.
With a trading plan, you stay focused and target only those trades that fit your parameters and recommendations. The most important part of creating a trading plan is following it. Change your plan only when you have found a better trading method.
A cryptocurrency trading plan fits your strategy with your market share, so you work in a controlled environment and get measurable results. This way, you can anticipate possible outcomes.
More importantly, a trading plan allows you to manage your risk to limit your portfolio losses. By sticking to a risk/reward ratio, you can prevent excessive losses.
Don’t let greed make your decisions. Beginners often invest in high risk cryptocurrencies because of “FOMO” or fear of missing out . However, they end up losing their money because they don’t know the right time to sell. If making a lot of money were that easy, more people would be doing it.
So don’t let rush, emotion, or any relevant information cloud your decision to follow your cryptocurrency trading plan.
Target Prices and Stop Losses
Even if you don’t want to lose when trading cryptocurrency, it is inevitable. However, you can set a limit on the amount of losses you take.
An order-stop-loss is a limit that you set in the trading platform to sell your assets when they reach a certain price. By doing this, you minimize the losses you incur. For example, if you buy a token at $50, you might set a stop loss to sell it if the price falls to $45. In this case, you are prepared to face a loss of 10%. As a beginner, you need to know when to remove your stop loss order .
On the other hand, a cryptocurrency’s target price is an estimate of the future price of the token. Experts rely on historical performance and earnings projections to set it.
When investing in cryptocurrencies, check their target prices to get the most out of your investment.
Avoid looking for the perfect market timing
It is virtually impossible to enter and exit the market safely without incurring a loss. When you enter the world of cryptocurrency investing, you must be prepared for ups and downs.
It is better to avoid searching for the best spot in the market, as it is time-consuming and stressful. Instead, invest in the market and walk away when it becomes too volatile.
After all, investing in cryptocurrency is not the only thing you do, right? You have other things to do. To really find the middle of the market, you have to read long financial statements and reports, which can bore you very quickly.
Also, if you’re constantly watching the market, it’s going to be an emotional roller coaster all the time. And if that happens, you are likely to abandon your trading plan.
Invest only what you can lose
One of the best investing tips for beginners is to invest only what you are willing to lose . Don’t let your emotions get the best of you. When you let distractions (whether it’s tabloid headlines or tweets from billionaires) influence your investment decisions, it leads to losing money.
New cryptocurrency investors only invest in a certain cryptocurrency because everyone else does. Yes, the idea may be appealing, but what happens in the end? Is the coin the sensation of the moment or does it have future potential as well?
Don’t succumb to the pressure just because you think everyone around you is investing in a certain meme cryptocurrency. Instead, do your research, follow your trading plan and be sure to evaluate your purchases.
Beware of cryptocurrency scams
When people are unfamiliar with the world of cryptocurrency, they often make the mistake of not learning about fraud and how to avoid it.
The U.S. Federal Trade Commission recently announced that more than 7,000 investors lost a total of more than $80 million to fraud between October 2020 and March 2021. As interest in investing in cryptocurrency and blockchain technology grows, more and more people are entering the market without any prior research.
As a result, they become easy targets for scammers. Some of these scammers trick investors by pretending to be celebrities or government agents. Seriously, Elon Musk is not going to offer you money in exchange for you sending him cryptocurrency.
Or maybe someone wants to give you “investment advice” in exchange for money or cryptocurrency. Don’t fall into these traps. As a general rule, when it comes to investment advice for beginners, don’t trust anyone who says they can make you a lot of money for doing simple tasks.
Investigation and due diligence
As with stocks, fundamental analysis is crucial when investing in cryptocurrencies. With stocks, you need to consider hedging inflation and other factors, but with cryptocurrencies you need to consider the behavior of the currency over the past few months or weeks.
You will find many self-proclaimed cryptocurrency investing experts everywhere. They will tell you that you can buy their tutorials to get rich. Don’t trust anyone when you investigate.
Listen to licensed financial advisors and always verify every fact and information you hear or see online. More importantly, do your due diligence before investing in cryptocurrency.
Simply put, due diligence is a comprehensive evaluation of the cryptocurrency market, especially the specific coin you want to invest in, to determine trading potential and minimize losses.
When you start and have already done proper due diligence, your confidence in your purchase increases and protects you from market distractions and fears. For example, cryptocurrency developers can launch aggressive campaigns and get celebrity endorsements to create more buzz when launching their coin.
As a result, many investors, without hesitation or research, invest. But once the expectation dissolves or goes nowhere, they are left with nothing. One of the many investing tips for beginners and one of the most basic rules is not to act impulsively because of FOMO. Instead, take your time . Do your research, read the white paper, read the expert analysis, and then decide if you want to invest in a particular cryptocurrency.
Keep your keys safe
Cryptocurrency wallet passwords are not like email account passwords that you can reset. If you lose your key, you will lose access to your wallet and the money in it.
Although you can get your money back in some cases, the process is long and tedious. Instead, do yourself a favor and try not to lose or forget your password.
It is equally important to keep your key safe from prying eyes. Don’t leave your wallet or store your key in a place easily accessible to others. The best way to keep it safe is to remember it.
Avoid trading on emotions
Every Cryptocurrency Investing Tips for Newbies guide will tell you how to put your emotions aside when entering the cryptocurrency market. Beginners very often feel overwhelmed with both positive and negative emotions when they win or lose money.
But don’t let those emotions dictate your next move or cloud the conscious decisions you make. The best way to control your emotions is to stop looking at market charts.
If you’re glued to the screen watching the ups and downs of the market, you’re bound to get stressed and make bad decisions.
Avoid margin trading
Trading on margin allows you to borrow money from a broker or cryptocurrency exchange to make larger investments and get better results from your trading. However, as a beginner, stay away from margin trading because it also increases the impact of loss on your portfolio. Remember, risk only what you are willing to lose.
Meme tokens are dangerous
Meme coins or tokens are no different from any other cryptocurrency, except that they were conceived as a joke or meme. These tokens are a risky investment because they are created without any specific business plan in mind.
The basic principle that drives these currencies is speculation. To make money from them, you have to carefully study market movements and take advantage of the surge in demand in the small windows you have.
In a post on Reddit, the creator of Dogecoin, a decentralized cryptocurrency with a large community. The name “Dogecoin” comes from an Internet meme — the popular meme reads: “puffing and selling, unbridled greed, fraud, unscrupulous actors, questioning others, lack of research, using others, all have no value. ”
In fact, he left the community because such practices are all too common in the meme coin trade. In addition, he also advised : “Keep learning as much as you can about how cryptocurrencies work, how markets work, and never risk more than you can lose; be alert and vigilant.
When you buy bitcoin, you know there is an official document with consistent information. You can do your research and make a trading plan based on it. On the contrary, the value of a meme coin rises and falls depending on market expectations and attention.
Since there is no reliable way to determine their true value, investing in these coins will always be risky. You could lie down for a moment, and in the meantime the coin could lose all of its value. That’s how volatile these currencies are.
Choose a cryptocurrency.
The best rule of thumb when considering cryptocurrency investment recommendations is to choose between one or two coins first. For example, do your research, create a trading plan and buy bitcoin and any alternative or altcoin you want.
It will be hard enough for a beginner to learn all the terminology and jargon in the crypto world. If on top of that you try to invest in five currencies at once, you may have to quit your main job.
While it is a good idea to diversify your portfolio, you should first take a closer look at fundamental analysis . Fundamental analysis is an approach used by cryptocurrency investors to determine the intrinsic value of a crypto-asset … an individual cryptocurrency and invest in it. Monitor your progress and then make other investments depending on the outcome.
Consult reliable sources
Everyone seems to be an expert on cryptocurrency today. From WhatsApp group chats to YouTube videos, the amount of information is limitless. However, you shouldn’t trust every source you get.
A great tip is to make sure you get information for fundamental analysis of the cryptocurrency market from reliable sources. For example, Cointelegraph is the best place to read news about cryptocurrencies. Another reliable source on this topic is Coindesk , where you can learn about current fees for different cryptocurrencies and market trends.
Now you know the basics of cryptocurrencies and all the important things to know before you start.
Investing in cryptocurrencies is not as easy as it sounds. Take small steps and invest only what you can afford to lose. Gather as much information as you can before investing your money, experience is one of the most important commodities in the cryptocurrency space!