Crypto 101: How To Start Investing in Crypto (Part 1)

Photo by Brian J. Tromp on Unsplash

From the title alone, you might think that I will use this article to promote a place for you to invest in cryptocurrency, right? Wrong, we’re not doing that here.

So, let’s start with the big question: how and where exactly should you start investing in cryptocurrency? So, there are 8 key things that you need to learn and do if you want to start investing in cryptocurrency (at least from my perspective) which is:-

1. Learn The Basics of Cryptocurrency
2. Know When to Start Investing in Cryptocurrency
3. Decide Your Style of Investing in Cryptocurrency
4. Pick Your Crypto Exchange
5. Check The Regulation and People's Opinion on That Exchange
6. Decide on What Cryptocurrency You Want to Invest in
7. Depositing Money and Buying Cryptocurrency
8. Choose Where to Store Your Cryptocurrency

Now, let’s begin covering all of this thing in detail.

Learn The Basics of Cryptocurrency

Cryptocurrency is a pretty hard topic to uncover and learn about. But if you do it right, it can be a pretty interesting topic. There are also 8 main things that you will need to learn about crypto before messing around with it, which are:

1. The meaning of cryptocurrency,
2. The good and bad nature of cryptocurrency,
3. The blockchain technology,
4. Tokenomics of cryptocurrency,
5. The ecosystem of cryptocurrency,
6. The categories of cryptocurrencies,
7. The Decencentralized Finance (DeFi) aspect of cryptocurrency and
8. How the cryptocurrency market works.

Googling your way in learning about cryptocurrency is one way to start your lesson, but you can also check out all of this on The Crypto Archives. I have and will prepare a lot of articles regarding all of these things for any crypto beginner.

Know When to Start Investing in Cryptocurrency

All types of investment in this world have one thing in common, which is timing. Timing can be the key to getting a profit or loss from investing. This also applies to cryptocurrency. The most basic timing or market condition that you need to learn about cryptocurrency is the bear market and the bull market.

Knowing when this will happen will save you a great amount of money when you start investing. For your information, a lot of people lose money investing in cryptocurrency because most of them started to invest during the peak of the bull market, which is pretty dumb if you ask me. They just follow what people have to say out of Fear of Missing Out, which is a big no-no in cryptocurrency.

Decide Your Style of Investing in Cryptocurrency

There are two ways of investing in cryptocurrency, which are a long-term investment and a short-term investment. For long term investment, it involves you to hold your crypto portfolio for a long period of time usually between months or years. For the long-term investor, there is also a way for you to gain dividends from your cryptocurrency by using the staking mechanism to earn a staking reward. But staking mechanism availability depends on what exchange that you use.

For short-term investing, it involves you to buy and sell your cryptocurrency for a short period of time usually in a matter of days, weeks or even hours. In other words, we call this thing trading. Trading also involves your capability to analyze the market using fundamental and technical analysis. But as a beginner, I do not recommend you to do this.

Pick Your Crypto Exchange

When I first started investing in cryptocurrency, picking the right crypto exchange was the hardest part because I was lost with the meaning of Centralized Exchange (CEX) and Decentralized Exchange (DEX). So I’ll try to explain both of these exchanges so you people don’t face the same issues I used to face.

Centralized Exchange or CEX is a third-party provider or exchange that provides a set amount of crypto for their customers. If you are looking only to invest and are not so caught up in the cryptocurrency technology, CEX is the best place to start. Most CEX also support a debit and credit card transaction for you to buy your cryptocurrency. The transaction payment is also fairly cheaper than DEX. Some examples of CEX platforms are Kraken, Binance and Coinbase.

Moving on to Decentralized Exchange or DEX. This type of exchange is fully operated on blockchain technology and doesn’t involve a third party. It only involved a recipient and sender of a certain cryptocurrency. If you’re really serious about blockchain technology, this is a great place to start. Transferring real money into a DEX still requires a third party and your debit or credit card. But I need to warn you about something: the transaction price or gas price (GWEI) is stupidly high, especially during the bull market. Can you imagine swapping 5 USD worth of Ethereum for Shiba Inu can cost you upward of 30 USD? For your information, the gas fee is just a fee for miners who approve a transaction on DEX. Some example of DEX is Uniswap, SushiSwap, and PancakeSwap.

This is the first part of this article. Stay tuned for the second part.

Thanks for reading, and as always, learn about crypto every day.

(Disclaimer: This article is not financial advice and is only for educational purposes)