cryptocurrencies

In less than a decade, cryptocurrencies have made their way onto the mainstream, and remain integral to the portfolios of millions of investors across the world. 

While the rage in digital currencies have created innumerable fortunes, they’ve also caused plenty of gloom and doom, especially in recent months, with Bitcoin down by nearly 50% within a year, and the rest of the market following suit, and investors losing nearly $830 billion in the month of May alone.

All of this begs the question, should beginners invest in cryptocurrencies? The answer is a resounding Yes!

Cryptocurrency Investing For Beginners

Despite the unregulated and anarchic nature of these investments, they represent a new beginning for financial markets, something that isn’t restricted by laws, borders, or nationalities, and it would be unfair to restrict beginners and retail investors from wetting their beaks with their own money.

Traditional financial markets, given their centralized regulation and management, are often stacked against small players. With archaic rules such as 501D for accredited investments, retail investors are essentially locked out of early-stage, and alternative investments, in the guise of protecting them.

Crypto, coupled with DeFi tears down all such regulations and restrictions, giving rise to a bold new frontier for financial markets, investors, and traders alike. While there are substantial risks that investors need to be aware of, staying clear of this market altogether stands to leave plenty of value on the table.

For beginner investors, there are a few essential guidelines and best practices to adhere to, for a safe and fruitful experience. While none of these can guarantee returns, they can protect you from facing massive losses in the form of scams, thefts, and other schemes. 

  1. Invest Only What You Can Afford To Lose – The golden rule that stands true for all forms of investing. It is quite cliché, but if you don’t want to lose sleep every time the markets tank, make sure to invest only what you are willing to lose.
  2. Never Succumb To FOMO – Easier said than done, considering this entire segment is driven by the fear of missing out on quick gains. There is a lot of manipulation in crypto, something experienced trades get accustomed with, but until then, it’s better to tread lightly.
  3. Diversify – When it comes to cryptocurrencies, it is not enough to just diversify on your holdings. Given the number of scams, and lack of regulations, investors should consider spreading their dough across multiple exchanges, and wallets to stay safe.
  4. Invest In Research & Education – Before making your first trade, it is recommended to get a thorough understanding of the markets, their structures, asset classes, and how they work.
  5. Trade With Fake Money – There are plenty of apps, and even exchanges and platforms that allow traders to try their hands with demo accounts before dipping their toes in the real markets. This is ideal for testing strategies, research, and honing your skills.

How To Buy Cryptocurrency?

There is no dearth of avenues for buying and storing cryptocurrencies, with mainstream fintech majors such as Square, PayPal, and even Visa getting in on the action, investors are often spoilt for choice. 

However, there are a few things that first time buyers have to keep in mind, especially with regards to local laws, taxes, and the mode of payment.

A common question among beginners is, can you buy bitcoin with a credit card? The answer is yes, it is possible to buy depending on the terms of the exchange, but it is worth noting that most credit card companies consider such transactions as cash advances, and levy additional fees, and interest compared to regular credit card purchases. 

Final Words

Cryptocurrencies are essentially the future of finance, and anyone who fails to get in on it right away, stands to miss on substantial wealth creation opportunities in the long run. By starting small, putting in effort for research and learning, and keeping emotions in check, this can definitely be a positive experience for most beginners.

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