How to Invest in Cryptocurrency: A Step-by-Step Guide

How to Invest in Cryptocurrency: A Step-by-Step Guide

In this article we will see “How to Invest in Cryptocurrency” and other important tips.

Cryptocurrency is not our future, it is our present.

Decentralized digital assets are traded on major exchanges and you can use them to pay for purchases in stores and utilities.

Therefore, the answer to the question of how to properly invest in cryptocurrency is important for everyone who wants to succeed and increase their capital.

In this segment, we will explain how to choose a cryptocurrency for investment, what are altcoins and highlight the methods of passive earnings on digital assets.

How to Invest in Cryptocurrency: What are Cryptocurrencies?

It is wrong to equate the concepts of “cryptocurrency” and “digital currency” or “digital asset”. Cryptocurrency is a special case of digital currency.

Its particularity is that it exists completely autonomously and has no regulator or registrar.

In other words, this special status constitutes a decentralized monetary system. All transactions using cryptocurrencies are open and irreversible.

The idea behind cryptocurrency is to create a sustainable digital money system for remote payment of goods and services.

The first successful cryptocurrency was Bitcoin, where transaction information was combined into blocks, and these in turn were combined into a continuous chain called blockchain.

Each subsequent block included the result of processing the previous blocks. Solutions to technical complications solved the problem of confirming the correctness of other people's operations on the system.

After Bitcoin, cryptocurrencies began to emerge exponentially. Today, there are already thousands of them. All non-Bitcoin cryptocurrencies are called altcoins.

They exist as sustainable payment systems and market participants. They can be stored in electronic wallets, exchanged for fiat currencies.

Plus, you can use them to trade on exchanges, as well as pay for goods, services, and digital assets.

Many cryptocurrency exchanges (platforms for working with cryptocurrencies) issue proprietary plastic cards for payment in offline stores, and in some regions utilities can also be paid with cryptocurrencies.

Many consumers and traders started thinking about how to invest in cryptocurrencies since Satoshi Nakamoto launched Bitcoin in 2009.

This area of ​​the global foreign exchange market is constantly expanding and opens up more and more opportunities for active and passive gains.

You can make money from cryptocurrency due to its high volatility — quotes are constantly changing, which allows you — with proper foresight — to buy assets cheaper and sell more expensive.

How to Invest in Cryptocurrency Beginners Guide

Beginners have many options for investing in cryptocurrency, and the most obvious way has already been mentioned, speculative trading on the price difference.

The cost of Bitcoin (₿), Ethereum (Ξ), Litecoin (Ł) and other cryptocurrencies changes literally every minute.

The same is true of the value of fiat currencies, energy, bonds and other assets.

But cryptocurrencies are often more volatile because they are decentralized and do not have a single regulatory source. So any factor can affect your price.

Most of the time, cryptocurrencies are traded with each other on exchanges.

For example, Bitcoin for Ethereum (BTC/ETH) or Bitcoin to Tether (BTC/USDT).

But some pairs involve cryptocurrency and fiat currencies. Naturally, the most popular pair is Bitcoin to the US Dollar (BTC/USD).

Here, the answer to the question of how to properly invest in cryptocurrency is conceptually simple because it is based on the same principles as trading regular currencies on Forex. That is, the trader uses both technique and analysis methods to predict future prices and market conditions.

For example, at the time of writing, Ξ1 costs $3.935,89. Let's proceed from this figure, giving an example. You can see a pattern on the chart and you can predict that the price will rise to $4.104,47 during the day.

So you buy a certain amount of Ethereum and then sell it at the top. The difference between the price of the asset at the time of purchase and the price at the time of sale is your profit.

If you already own a certain amount of cryptocurrency, you might want to start investing passively.

That is, making money not by trading an asset, but by investing it.

One of the most popular options is staking. In simple terms, you provide your assets to the blockchain system to keep it running, and in return, you receive a fixed percentage of profit.

If you go into details, new blocks on the blockchain can be created providing computing power to mine the cryptocurrency.

This is the classic mining method to build new blocks during which you don't need calculations, but only existing coins. This is called Proof of Stake (PoS). Based on that, the more coins you transfer, the bigger your final reward.

Staking, as a cryptocurrency investment, is more energy efficient and environmentally friendly than mining because you don't need powerful graphics cards, processors and a large supply of electrical power.

You just need an intermediary service through which you provide your assets within the selected blockchain.

Many well-known cryptocurrencies operate on the PoS system, for example, Solarium, Cardano, Tezos and Algorand. Ethereum plans to switch to this system soon. This means that there is no doubt about the prospects of the method.

What cryptocurrency to invest in and how to buy Bitcoin

What cryptocurrency to invest in and how to buy Bitcoin

Bitcoin is the correct answer to the first question, but it is not the only one. Bitcoin was the first successful cryptocurrency.

The development of the protocol was completed in 2009, at the same time that Satoshi Nakamoto published the program code.

Bitcoin price is constantly increasing. If at the time of creation it cost a fraction of a cent of a dollar, then at its peak in 2022 the price reached $69.000.

In the Russian Federation, the Law on Digital Financial Assets and Digital Currencies is currently in force. According to this law, Bitcoin and altcoins are prohibited from being used to pay for goods or services, but they can be a form of investment.

For those who decided to start investing in digital assets, the Ethereum (or Ether) can also be very attractive.

It is not a payment system like Bitcoin. Ethereum was conceived as a platform to launch decentralized online services.

This altcoin appeared in 2014 and today the cost of one Ethereum is ₽290.843,83 (RUB) (~$3.900,41).

It has the second position in the market, that is, it follows directly behind Bitcoin. Ethereum has a market dominance rate of 21,07%.

When thinking about which cryptocurrency to invest in, you don’t need to focus on the market leaders.

Many other popular altcoins trade profitably on exchanges and allow you to earn passively.

For example, Cardano (ADA), Ripple (XRP), Dogecoin (Doge,Ð) and Polkadot (DOT).

Binance Coin (BNB) is worth mentioning, the coin of the cryptocurrency exchange of the same name, it is not only sought after in the cryptocurrency market, but also offers its holders a discount on commission fees when trading on Binance.

Which cryptocurrency to invest in: Tips for beginners

  • 1 Tip. See the currency's popularity in the blockchain community. If a currency is present in the main exchanges of cryptocurrencies and reputable publications include news about it in their feeds, it is a promising digital asset.
  • 2 Tip. On-demand cryptocurrencies are supported by e-wallets. Not all digital assets can be stored in these wallets. But if the asset supports most services, then it is popular and there will be no problems moving it between accounts.
  • 3 Tip. Before you start investing, follow the quote history of the selected cryptocurrency. This is easy to do by typing the corresponding query into a search engine. If the price of an asset grows over the long term (excluding general drawdowns), you can work with it.
  • 4 Tip. When Ethereum switches to PoS, issuance will decrease by 2,5% and the currency will become profitable for long-term storage. Ether also provides the dApp to work. Beginners need to choose cryptocurrencies that are constantly evolving and are part of big projects.

Top 10 altcoins for investment

Often, the question of which cryptocurrency to invest in is resolved by choosing an altcoin.

As stated, altcoins are any cryptocurrency other than Bitcoin. At the moment, there are almost 3.000 altcoins, not all of them are promising. Below we show those that are advantageous to invest now.

Criptomoeda Industry Current price 1 year return 1m Return Total of points
Binance Currency (BNB) Cryptocurrency Exchange

$490.00

167.63%

- 9.91%

9.5
Cardano (ADA) Blockchain Platform

$1.29

114.60%

- 1.46%

9.2
Ripple (XRP) Payments

$0.77

93.87%

- 6.63%

9
Dogecoin (Doge) Payments

$0.18

180.80%

1.32%

8
Polka dots (DOT) Blockchain Platform

$27.75

42.68%

2.22%

8
Litecoin (LTC) Payments

$144.70

0.82%

- 5.97%

7.6
Stellar (XLM) Payments

$0.26

- 9.49%

- 3.05%

7.5
Uni swap (UNI) Exchange

decentralized

$15.86

61.60%

4.32%

7.4
Tron (TRX) Blockchain platform/media

$0.07

76.89%

- 25.63%

7
IOTA Internet of Things

$1.12

90.13%

1.35%

6.9

Where to buy cryptocurrency for investment?

How to buy cryptocurrency? There are three main options — a cryptocurrency exchange, a P2P exchange service, and a digital asset exchange website. Below is a more detailed look at each.

Cryptocurrency Exchanges

Quick registration

Using Binance's native cryptocurrency, the BNB, reduces fees by 25%.

92%
PUNCTUATION
ABSTRACT

Binance is a household name for anyone who has ever traded cryptocurrencies or was looking for the best cryptocurrency exchange. It's one of the dominant exchanges in the industry, and there are some good reasons for that.

For starters, Binance has some pretty high trading volumes. If you're a novice when it comes to encryption negotiation (or simply negotiation in general), you may not be aware how significant this point actually is!

See, if an exchange has some high trading volumes, that means people really trust the platform, and there are a lot of cryptocurrencies that go through it constantly.

POSITIVE
  • A well-known cryptocurrency platform
  • More than 100 different cryptocurrencies available for trading
  • Two-factor authentication
NEGATIVE
  • It can be a little difficult for beginners.

A cryptocurrency exchange is a platform for exchanging between cryptocurrencies and sometimes with fiat money at market prices.

Each of the exchanges has its own terminal negociação, usually based on TradingView, with charts and indicators for technical analysis.

You can trade through these terminals on a PC browser or on a mobile device by downloading the app.

Technically, trading on a cryptocurrency exchange is carried out in the same way as with an exchange broker (Forex ).

For new traders, cryptocurrency exchanges often prepare educational guides.

They often explain spot, margin and derivatives trading. Major cryptocurrency exchanges have services for passive earnings, including staking, as mentioned above.

Additionally, many exchanges offer proprietary multi-currency wallets. For example, Binance has a universal Trust Wallet.

  • Pros: many assets, a significant palette of call and put options, additional opportunities.
  • Cons: you need to register and complete verification; most exchanges have a limited selection of fiat currencies.

P2P Exchanges

Quick registration

Local Bitcoins also offers options for purchasing cryptocurrencies via PayPal.

90%
PUNCTUATION
ABSTRACT

Essentially, LocalBitcoins is a marketplace for people to post their offers to buy or sell Bitcoin.

As a user, you create a post in which you specify the exchange rate, location, and preferred payment method for a trade.

You can also boost your post as an ad, which will increase your visibility (this is basically how LocalBitcoin makes money).

If someone is interested in your post, they will respond to you and you can both agree to make a trade using a bank transaction, payment service, or any other available method.

How does localbitcoin work?

Unlike centralized exchanges like Coinbase, LocalBitcoins allows you to trade directly with others.

However, the platform is also not fully decentralized as it records and oversees all your transactions made via LocalBitcoins.

When you initiate a trade, the bitcoins traded are held in the LocalBitcoins escrow service. The transaction is completed only when the seller confirms that the deal has been made.

Another crucial aspect of the LocalBitcoins platform is its native reputation system. Chargeback fraud is a common thing in e-commerce, and while Bitcoin transactions are irreversible, traditional payment providers still allow it.

As a result, some people can be tricked into selling their bitcoins and then lose their money. LocalBitcoins' reputation management system allows users to leave feedback for buyers and sellers, which can help you determine if the buyer or seller is legitimate.

As a general rule, it's safer to deal with older accounts with better feedback than it is to settle new, obscure accounts.

Do not choose offers based on price alone — any offer with an unusually low price should be regarded with suspicion unless the trader has fully verified and received a lot of positive feedback.

Also, you can search the LocalBitcoin forum to see if there are any issues related to the seller's username.

In case of conflict between users, LocalBitcoins has a dedicated support team that assists in resolving conflicts.

The LocalBitcoins website is not a masterpiece of design, but it does its job — it lets you discover and post local Bitcoin ads easily.

If you want to buy bitcoins, all you have to do is enter relevant search criteria like location, sum and payment method into the search.

POSITIVE
  • The largest peer-to-peer Bitcoin trading platform
  • 4.000 new members signing up every day
  • Escrow services that protect both parties to transactions
  • An automated trading app
  • Easy and fast process
  • A reputation system for screening buyers and sellers
  • Access to a global network
NEGATIVE
  • need to be vigilant
  • Higher rates for fiat currency
  • Bid/Offer spread can be very wide in illiquid markets

The difference between this service and a cryptocurrency exchange is that there is no access to the world market.

Resource users create orders to buy or sell one asset for another.

P2P digital assets and services allow you to exchange cryptocurrencies for trust funds and vice versa.

They can be beneficial if you urgently need to obtain one asset over another. Often, these services give you the chance to make an exchange with more favorable quotes than the market.

  • Pros: You define your own transaction terms, being able to buy/sell an asset more profitably than the market value.
  • Cons: sometimes it's hard to find a partner who agrees to your terms; in this case, the service receives its percentage of each order.

exchangers

An exchange website is a service where registered users can exchange one digital asset for another or for fiat currency.

The keyword here is “trade”, not sell or buy. Orders are not created here as it is done on P2P services, the exchange rate is set by the platform itself.

Obviously, the exchanger will not set prices very different from the market. Service commission is normally included in your rate.

For beginners, the exchanger can be convenient as it does not require a thorough verification, and all transactions are carried out quickly.

But in general, the activities of these websites are not regulated by a government enforcement agency, so there is a high risk of getting caught by a scammer.

How to recognize and prevent fraud on cryptocurrency exchanges?

  • Pros: no verification is required; quick exchange of many assets in any direction.
  • Cons: The service may have a high commission and its activities are not regulated.

What is the best method to buy cryptocurrencies?

At times, changers can be beneficial. P2P exchange services are in high demand.

But the most convenient method is a cryptocurrency exchange. The main exchanges are regulated, transparent and have good technical support.

They provide users with multi-currency wallets and various options for depositing and withdrawing funds, including direct payment from a bank card and instant transfers to it. In addition, they provide additional features including staking.

Best platform for investment and your personal finance

In this article we will see “How to Invest in Cryptocurrency” and other important tips.

By now you should already have a general idea of ​​how to properly invest in cryptocurrency.

Choosing a cryptocurrency exchange is critical because you will be trading and betting on their terms.

By the sum of the factors, we recommend the Binance cryptocurrency exchange as one of the top options.

Binance was launched in 2017 and is based in Hong Kong. The scholarship works with residents of all countries with no regional restrictions. The service is translated into 26 languages ​​and customer service supports 11 languages.

Key Features and Benefits: The cryptocurrency exchange offers classic and advanced trading, leveraged (margin) trading and derivatives including futures and options.

Rates are below the segment average of 0,1%.

There is an integrated P2P exchange service as well as a fast cryptocurrency purchase service.

You can pay directly by credit card, bank transfer and other cryptocurrency wallets.

There are excellent guides for beginners. In terms of passive earnings, the platform introduced a comprehensive and unique Binance Earn solution with different staking options.

Another advantage of Binance is the aforementioned BNB token. First, it is a token that is actively traded. Secondly, keeping it in the account reduces the commission for spot trading by 25% and the commission for futures trading by 10%.

How to invest in cryptocurrencies: step-by-step guide

It's time to show you how to invest in cryptocurrency. For example, we will use Binance’s cryptocurrency exchange to explain step by step what you need to do to register, fund your account, analyze the market and start trading.

  • Step 1: Registration

Go to Binance's official website; your region will be detected automatically.

If not, select a region in the upper right corner. Then click on the “Register” button. Select “Create Personal Account”, enter your email and create a password. You will receive a confirmation code by email. Enter it in the appropriate field.

Next, you need to specify your phone number; a verification code will be sent to him. After confirming the number, you will find yourself in your personal account.

Please note that for some regions, just one confirmation is sufficient — email or cell phone. You may also need to pass a simple anti-bot check.

In this article we will see “How to Invest in Cryptocurrency” and other important tips.

  • Step 2: Verification

At the top of your personal account, you will see a notification that you need to verify your personal details.

You can access the verification menu from this notification or by clicking on your account icon in the upper right corner and selecting the “Security” section and then the “Verification” subsection.

Use the verification type that works best for you (they differ in confirmation complexity and fiat final entry/exit limits), click “Start” and follow the onscreen instructions.

You will need to provide ID document scans.

Verification with Binance

  • Step 3: Fund your account

In the upper right corner, hover over the “Wallet” section, select the “Wallet overview” subsection, or directly select “Fiat and Spot”.

Then press the “Enter” button and indicate what you will enter — fiat or cryptocurrency.

For example, click on “Enter Fiat”, specify the currency, amount and transfer method, such as from a Visa/MC bank card.

You will immediately see the commission amount for the transaction. Click "Continue" and follow the onscreen instructions. You will be redirected to the payment service.

  • Step 4: Market Analysis

Hover your cursor over the “Trading” section, click on the subsection you are interested in, such as “Classic Trading”.

You will find yourself in a terminal where you can select any asset available for trading, for example an ETH/BTC pair.

On the screen, you will see a chart with range and indicator options for technical analysis. You will also have the transaction file. At the bottom of the screen, there is a feature to view your exchange transactions.

Use technical analysis tools to predict quotes (eg identify patterns on a chart).

The methods of fundamental analysis will also help you, such as viewing current news.

Make transactions in the trading terminal based on the forecast within your trading strategy.

By the way, you can download it to your mobile gadget by hovering over the “Applications” in the upper right corner of the screen. Scan the QR code, download the app and follow the onscreen instructions.

  • Step 5: Buy Cryptocurrency

To open a transaction to buy the selected cryptocurrency, go to the bottom of the trading terminal.

Select the purchase terms and click “Buy”. You can also buy cryptocurrencies through the P2P exchange service by going to the eponymous section on the website.

  • Passive income through Binance Earn

Now that you know how to buy cryptocurrency on Binance, you can start investing through the Binance Earn service.

To access it, click on the “Earn” button located on the top menu. Binance Earn is a convenient passive earning method for beginners.

The “Earn” menu contains all the digital assets that you can earn money with by lending them to systems blockchain.

Please note that you must have an appropriate asset in your account.

You will have the opportunity, if necessary, to buy the appropriate asset on the exchange and exchange it for an existing one.

Or you can buy it through a P2P exchange or pay directly with a bank card.

Binance Earn offers three types of deposits — guaranteed (low-income, low-risk), high-yield (high-income, high-risk) and automatic investment according to an individual plan with an adaptable level of income and risk.

For each type, there are detailed explanations.

For any asset, you can see the deposit period, its cash price, and the estimated annual interest income.

To start investing, click on “Start Staking” next to the selected asset, and the system will provide you with information about the existing conditions.

Then you need to select the amount you want to invest and activate cooperation.

How much can you earn investing in cryptocurrencies?

When you know how to properly invest in cryptocurrencies, it is fair to ask the question: how profitable and promising are cryptocurrencies as an investment?

Let's look at specific numbers.

For example, the price of Ethereum rose from under $1.000 to $4.800 at its peak.

Ethereum (ETH) Value

These are idealized conditions dictated by the general progress of the cryptocurrency environment at this stage, but the example perfectly shows that there is no limit.

Good option: Starting with $500, you can earn up to $1.000 a month in six months. Bad option: almost immediately to draw. It all depends on your analytical skills and the success of the chosen strategy.

On Binance staking, the guaranteed option to deposit to BNB now gives 7,28% per annum. The high-yield SANTOS/BTC pool has an increased risk, but the annual return is 86,99%.

All of the above suggests that you can really earn big in digital assets if you “catch a wave”.

Are there risks in cryptocurrencies?

You've decided which cryptocurrency to invest in, found one exchange with favorable conditions (eg Binance) and developed its own strategy.

But this offers no particular guarantee.

Observing the rules of money managementBy diversifying your investment portfolio using stop limit and additional functions of the trading terminal, you can reduce risk, but not completely eliminate it.

As criptomoedas are extremely volatile, sometimes their quotes change unpredictably.

Of course, with experience, you will learn to spot even less obvious patterns and to predict trends accurately.

But even being a “scholar” of the direction of the market or asset, you don't always win. You will still lose several bets. That's how the market works.

Staking also has its own risks, such as the so-called fraud projects.

These are fraudulent companies that collect funds from investors and then simply disappear.

Staking exchanges scrupulously weed out untrustworthy partners, but they also cannot completely eliminate risk for investors.

So when deciding to start investing in digital assets, you should be risk tolerant but try to minimize risk by all available means.

How to invest correctly in cryptocurrency: 5 tips

Rule 1 “Luck favors those who are prepared. Read some books on stock trading such as The intelligent investor, by Benjamin Graham.

Take some online courses, study a variety of guides. You don't need financial education, but you must master the basics of technical and fundamental analysis to trade successfully.

Rule 2 - Do not violate the principles of money management. Let us immediately point out that in trading you cannot use funds that you cannot risk losing at the current moment.

In the process itself, on average, the fee should be about 2-5% of the deposit amount. There are other money management principles, they are universal and excellent at reducing risk. Be sure to study them.

Rule 3 — I appeal to reason and not to feelings. A successful investor is stress resistant.

If you have difficulty with emotional moments (you react aggressively and thoughtlessly), you need to practice and not allow momentary feelings to affect your decisions.

Otherwise, failure is guaranteed with even the most successful strategy.

Rule 4 — Diversify your portfolio. The easiest way to reduce your risk is to trade multiple cryptocurrencies.

So, an erroneous forecast with one asset will be leveled by successful forecasts in other directions. If you're stacking, invest in multiple projects, not just one.

Rule 5 — Improve yourself.

There are no universal strategies. So your strategy must be flexible.

Constantly monitor the market, learn from peers, communicate with other traders in the community, dive into guides. Even passive investing is good to some extent.

Summary of how to invest in cryptocurrencies

Now you know how to select a promising cryptocurrency, how to start investing, and what it takes to succeed.

Technically, there is no difficulty, whether it is active trading on the exchange, P2P exchange or staking.

However, this area needs to be studied and prepared to take risks. So you can earn and even make investing your main source of income.

In this article we will see “How to Invest in Cryptocurrency” and other important tips.Frequently asked questions about investing in cryptocurrencies

 

Why is it advantageous to invest in cryptocurrencies?
Digital assets are as much a part of our financial life as a bank card in our pocket. Cryptocurrencies are volatile, so they allow you to make good money from the price difference. You can also earn income from staking, a greener version of traditional mining.
What are the best platforms to invest in cryptocurrencies?
An exchange website and a P2P exchange service make it possible to buy cryptocurrencies, but you can start investing with just one exchange. The exchange allows trading with market quotes, offers different options for risk diversification and passive income.
Why is Binance the best choice for beginners?
We will immediately notice that it is the best choice not just for beginners. It is one of the leading cryptocurrency exchanges in the world. Offers spot, margin and derivatives trading. It has a proprietary P2P exchange service, proprietary currency wallet, and many staking programs. No exaggeration, Binance offers everything you need to make a successful cryptocurrency investment.
What risks do you need to know?
Cryptocurrencies are highly volatile digital assets whose prices are constantly changing and are sometimes difficult to predict. You should be prepared for the fact that you will sometimes make mistakes in forecasts, and this will bring financial losses at a specific stage. In the field of betting, there is a danger of finding scammers. Risk will always be with you, a successful investor has to tolerate it well. He must cut his way through the thorns to the stars of success (and profit).

 

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