Understanding and Getting Started with Cryptocurrency
Updated: Feb 9, 2022
Today, I will cover a few beginner steps for anyone wanting to invest in cryptocurrency, but before I do, I need to do a little setup.
I'm still a little bit surprised at the number of people I meet each day who know so little about cryptocurrency. But I guess I shouldn't be since Bitcoin has only been around for a little over 10 years. We're still in the early adoption phase of cryptocurrency as a new technology and financial system. But make no mistake, it's here to stay.
For perspective, I first discovered the internet in 1993 when I visited a friend at college who was studying to get his masters degree. He said, "have you heard of this thing called AOL (America Online)?" Then he introduced me to chat rooms where we met some fascinating people. Fast forward 8 years, and in March 2001, I found myself working at Dave Ramsey's company, developing his online businesses and products. The internet was just starting to hit the mainstream after 10 years in the public eye. Companies like Google and Amazon were beginning their run to dominance.
Many people just continued going through their daily lives while others saw the opportunities and futures of Google, Amazon, and the like. They made millions. Well, here we are again at another technology convergence, but this time it is in the financial sector instead of the commerce sector (i.e. Amazon). Will you sit by and watch the opportunity pass you by?
For my primer on cryptocurrency theory and where it's headed, read...
Bitcoin and Cryptocurrency Investing. Real Thing or Passing Fad? Is It Too Late To Get In?
Easy Steps to Get Started with Cryptocurrency
Develop a system to educate yourself on cryptocurrency. As with any investment, you should only invest at the level of competency you have. For example, if you're not a well educated, savvy investor, you probably shouldn't be day trading. Safer investments would include mutual funds or investing inside your 401k. However, if you take the time to educate yourself on different investing methodologies like swing trading, day trading, or buy and hold, you can venture out beyond mutual funds investing in search of higher returns, just like learning to play a new sport investing works the same way. Of course, you're probably not going to be very good at it first, but if you keep learning, practicing, and working with a good coach or team/community, you'll get better at it. Resources: Coindesk - cryptocurrency news Cryptonews - cryptocurrency news
Watch the market. There are over 8,000 cryptocurrencies. Just like during the days of the .com era when everyone was investing in tech stocks but many of the tech stocks imploded, not every cryptocurrency will make it to become part of the new financial system. So how do you know which ones to buy? First, you need to stay educated and connected to the market and the right people. To do that, you need to watch the market. Check the market at least weekly. If you download a portfolio tool as I'm about to discuss, you'll be able to watch your crypto portfolio's value in real-time. Coinmarketcap - tracks many of the available cryptocurrencies. Provides information, news, websites, and where to buy specific cryptocurrencies.
Setup your trading accounts. There are literally hundreds of places to buy cryptocurrencies. Everyone is trying to get in on the game at this stage of development, including PayPal, Venmo, and others. Personally, I think they should have done this years ago, but maybe its not too late for them. You need to realize that not every cryptocurrency is available on every exchange. Similarly to a stock getting listed on the New York stock exchange, there are steps and a system to getting listed. For example: There are over 8,000 crypto currencies, but on Coinbase, one of the largest exchanged, less than 100 crypto currencies are available to trade. If you want to trade one of the lesser-known cryptos, you'll need accounts on different exchanges. As you get started, I recommend setting up several accounts to give you access to multiple trading platforms and a wide variety of cryptocurrencies. Coinbase - easy to use and one of the most developed exchanges. Very easy for beginners. Trade on the phone app or at coinbase.com. Limited to 50-100 cryptocurrencies. Known to have higher trading fees than other exchanges. Kraken - great alternative exchange. Has a wide variety of cryptocurrencies for trading. Currently rated as #5 exchange. Kucoin - a wide variety of alt-coins if you are interested in buying cryptocurrencies that are just starting. These carry more risk but also may have a higher opportunity for exponential growth. The exchange interface will be a little confusing for beginners, so be sure to watch some videos on how to trade. Coinmarketcap List of exchanges
Download a portfolio tool to watch your investments more easily. Once you decide to step into the crypto investing world, you'll want to get a portfolio management tool to keep track of your crypto portfolio as you may buy cryptos on several different exchanges. For example, I currently have cryptocurrencies across 5 different exchanges, but I update my portfolio with each trade to keep track of my cryptocurrency valuations. It makes it super easy. Blockfolio is my tool of choice. https://blockfolio.com/ Download the app. List of crypto portfolio tools