A Beginner's Guide to Crypto Investing
So what's all this buzz about Bitcoin, Cryptocurrency, and Blockchain technology?
You've been hearing all over the news about Bitcoin and how people are making millions from it but you have so many questions like:
- How do I buy/sell/trade bitcoin?
- Is it a bubble?
- Is it too late to start investing?
I started learning about Bitcoin back in January after watching the documentary 'Banking on Bitcoin' (available on Netflix). After watching the film again with Blake, I started investing in October. I could kick myself for not investing sooner but my opinion is that it is never too late. As Bitcoin is becoming mainstream there are much smarter cryptocurrencies out there worth your attention.
If you have major FOMO and would like to learn how to start investing in Bitcoin and other cryptocurrencies or altcoins, keep reading. I won't go deep into the subject matter but rather give you the steps I took to start investing.
1. What type of investor are you? HODL vs Day Trading
Hodl: An enthusiastic misspelling of Hold, prompting bitcoin users to avoid the temptation of selling off their coins once price starts rising.
First things first. Don't be stupid and take out a mortgage on your house to invest in bitcoin (yes, people are actually doing this). I cannot stress enough that you should only invest what you feel comfortable losing. Cryptocurrency is extremely volatile so don't throw your life savings into it. I invest with my "play" money meaning I haven't gotten my nails done in a few months. :)
So now that you have some money set aside to invest, let's talk strategy.
- For transparency, my strategy is holding as a long term investment (#HODLIFE). I've bought coins and I don't plan on withdrawing for USD anytime soon. Even if there is a major drop in prices, I'm more focused on the long term.
- Another strategy is day trading. Day traders are in heaven right now when it comes to the volatility of cryptocurrency. They buy low, sell high and buy back in when the price drops.
- If neither of those strategies fit you, try developing your own. A strategy I use with my E*Trade account is selling half of my shares every time the value doubles.
2. Buy coins
- Coinbase: It's the most popular exchange due to it's app and UI. Great for beginners but it limits you to buying Bitcoin, Ethereum (Ether), Litecoin, and the recently added Bitcoin Cash. Set up your account on desktop or through the app where you can connect your bank account or credit cards. After buying into a coin, a digital wallet will be created where you can track your investment.
- Binance: I tried a few other exchanges for buying altcoins before landing on Binance. I really like its UI and the wide variety of altcoins. You cannot buy altcoins with USD on most exchanges so I send BTC from Coinbase to Binance to then trade for altcoins. I downloaded the Google Authenticator app to set up 2-factor authentication. The initial setup is a breeze but you'll need to verify your account if you plan on withdrawing large amounts of money.
Now again, these are just the steps I've taken and preferred resources. If you'd like suggest different exchanges or articles, please leave a comment below.
3. Track your coins
- CoinCap app: This is optional but I love seeing all my coins in one place. Without this app I'd have to check each exchange and calculate my totals. CoinCap is a handy app that gives you the ability to create a portfolio, enter the number of coins you own and track your investments. It also gives you real-time view of the Coin Market Cap.
4. Store your coins
- Ledger Nano S: This is a hardware wallet I've recently purchased and will write a review about. This is for those who want to hodl. You can send your coins from a digital wallet to a hardware wallet for added security.
Those are the four steps I've taken over the past 3 months of crypto investing. Do your research and I hope you also find this to be an exciting hobby.
Let me know your thoughts in the comments below.