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Buying your first crypto

As earlier discussed, money has evolved and changed form for many years, and cryptocurrency has provided a monetary system this time around with features such as decentralization, immutable and transparent transaction, and encrypted within a secured network using the blockchain.

Cryptocurrency has proven to be a way to financial freedom, but there happen to be some shortcomings as it happens to be at its early stage. Here is what every enthusiast and investor should know before venturing into cryptocurrency.

• Learning the mechanism of buying and selling
• Getting the right wallet
• Balancing your cryptocurrency portfolio
• Do Your Own Research (DYOR)
• Right Timing
• Playing the Long-Term game
• Risk only what you can considerably lose

Learning the mechanism of buying and selling

When looking to invest in cryptocurrency, the first thing you should learn is the mechanisms for purchasing, exchanging, and selling cryptocurrencies. It is only right to learn the approach to investing in cryptocurrency, as you cannot blindly invest your money in cryptocurrencies.

There is various platform that helps in depositing and withdrawing fiat currency within a crypto ecosystem. When you are confident about the processes for buying, selling, and trading cryptocurrencies, you are more likely to make more productive investment decisions.

(At a later tutorial, we would be walking you through how to register and utilize the functionality of a platform that provides the services of exchanging cryptocurrency.)

Getting the Right Wallet

The type of wallet to choose as a beginner would be preferably on an exchange that offers a variety of wallet addresses for various cryptocurrencies. Cryptocurrencies are assets where the holder is considered the rightful owner. So the concerns regarding how to buy cryptocurrency must also focus on choosing the right wallet to hold the cryptocurrency safely and as a beginner, it is advisable to create an account on an exchange as this comes with numerous wallet options.

Balancing your Cryptocurrency Portfolio

The second point to consider as a beginner who is looking to invest in cryptocurrency is focusing on creating a diversified and balanced portfolio.

There is a popular saying that one must not keep all eggs in one basket, well that applies here too. It is not advisable to put all your money on a single cryptocurrency in the hope that its value will rise. One should keep in mind that cryptocurrencies are risk assets due to their high volatility.

As an investor, the safest approach in this supposed risky market is to rationally diversify your portfolio to include top projects in popular blockchain sectors such as Defi, NFTs, gaming, and layer-one protocols as these top projects have become proven with time. After these bases are covered, making a smaller investment in upcoming projects with possible moonshots can be considered, but monitoring position size is key to minimizing losses.

Do Your Research (DYOR)

In the attempt to make an investment decision of any type, it is required that you spend a decent amount of time researching the project of interest, the same applies to cryptocurrency. A thorough investigation into the origins of cryptocurrency and its utility can help potential investors roughly estimate its potential return and intrinsic value.

At the same time, the research educates investors on the risks associated with specific cryptocurrencies of their choice. When told to invest in a cryptocurrency by someone you know it is advisable to carry out your assessment of the cryptocurrency undermining the guarantee of juicy returns or a risk-free experience as cryptocurrency is inherently risky.

Right Timing

Among the most common mistakes of a cryptocurrency investor is the feeling of missing out on a trend. Despite the cautious effort by most investors to keep emotions in check, most investments in the crypto community are sentiment driven and this often leads to poorly timed investments that result in losses.

When investing in cryptocurrency, your instincts may prove to be irrelevant without the support of adequate research. If a feeling pops up about a specific cryptocurrency, the best course of action would be to thoroughly research that cryptocurrency and point out the key areas where buying seems feasible in relation to historical data and intrinsic value.

Resist the FOMO feeling and wait for the blow-off top and price consolidation before investing, If it’s a token you feel you must have. Otherwise, find another project that’s been trading flat but shows real promise and then rides its wave higher and takes profit when it’s right. If it’s a project you have a long-term motive for, don’t let any fear, uncertainty, or doubt (FUD) sway you from your resolve.

Playing the Long-Term Game

Many a time, people get involved in cryptocurrency with the get-rich-quick mentality, but unfortunately, they soon fade out just as quickly.Cryptocurrency even when proven to be a way to financial freedom, investors are expected to be plagued with the ability to think the long term. Investors should look for projects with a real-world use case, a good community, and a good team to slowly accumulate over time.

Cryptocurrency and the global adoption of blockchain technology are still in their infancy with decades of growth yet to come. So it is best to relax and take a more guided approach to investing in the crypto market to ensure your best chance of a fairy tale finish in the long term.

Risk Only What You Can Considerably Lose

As mentioned earlier, cryptocurrencies are risk assets. With time most token eventually goes to zero. Putting this into consideration, never invest more than you can afford to lose.

Funds used for cryptocurrency investment should come from what’s left after all life’s expenses are taken care of and a little extra has been set aside for emergencies. Never use the money you will need sooner than later for cryptocurrency investments.