Introduction

Cryptocurrency Investing has become a common option for many investors. Did you know that the cryptocurrency market is expected to reach 861.00m by 2025? This shows how popular these digital tokens are. Cryptocurrency investing comes in many forms, from investing in crypto firms and funds to directly purchasing cryptocurrency. Cryptocurrency is based completely on blockchain technology. This is a chain of data allocation and registration, which is governed by just one single institution. However, this venture can also be confusing, risky, and even rough. So, do you plan to invest in cryptocurrency? This content will provide details on how to do so.

Cryptocurrency Investing: 7 Steps You Should Follow

Many investors are currently investing in cryptocurrency. So, if you want to do the same, you just need to know how to invest in cryptocurrency correctly. That way, you can avoid all unwanted issues or mistakes during the process. The steps mentioned will tell you how to conduct cryptocurrency investing:

Step 1: Comprehend and Allocate the Investment

It’s vital to have a good knowledge of the asset class and the investment needed in that particular asset class. All these things should be done before investing. The cryptocurrency market is pretty volatile, and a small portion of the portfolio is allocated to such highly risky avenues of funding.

It’s recommended that you invest 5% to 10% of the portfolio in the form of digital tokens. Investing in cryptocurrency is pretty comparable to investing in stocks. However, they are not the same. As an investor, you should learn that cryptocurrency is just a medium of trade.

Also, countless cryptocurrencies have been introduced in the past decade. Many of them have either vanished completely or have become flatlined. This clearly shows that the investments you get to make might go all the way towards zero.

Step 2: Pick a Cryptocurrency of Your Choice

Choosing a cryptocurrency stands out as a massive challenge for many investors. While well-known cryptocurrencies like Bitcoin, Ethereum, and Dogecoin often dominate discussions, the cryptocurrency market offers over 10,000 digital tokens as of December 2024. Due to such reasons, it becomes demanding to pick the right one.

However, Bitcoin is the most popular and exchanged cryptocurrency in the market because of its significance and volume. The majority of the crypto investors pick Bitcoin, but you’re free to pick various other cryptocurrencies that have been doing exceptionally well compared to the biggest one.

Step 3: Have a Good Understanding of Cryptocurrency

Apart from knowing how to invest in cryptocurrency, it’s also crucial to have a good understanding of it. Cryptocurrencies are digital money, which is used as an alternative option to make payments online. Uncovering how many types of them are available in the market, what are the types of risks involved and methods used for trading them is highly crucial. Be sure to learn all these things before you start investing in them.

Step 4: Pick a Platform to Purchase Cryptocurrency

Once you know how to invest in cryptocurrency, it’s vital to pick an exchange platform or broker to begin the investing. The exchange platforms are known as online sections for trading cryptocurrencies and the brokers will offer platforms that will perform trading for the exchanges behalf of you.

You will surely encounter many exchange platforms and brokers on the internet and you must pick the one after conducting proper research on them. At present, the best and reliable exchange platforms for cryptocurrency is Coinbase, Gemini, and Kraken. Apart from that, for cryptocurrency brokers, Sofi and Robinhood stands out as the most popular options.

Step 5: Store Up the Cryptocurrency

To store the cryptocurrencies, you will need crypto wallets that come in two forms: cold wallets and hot wallets. The cold wallets are not connected to the internet, but the hot ones are. This is a bit of a strange and tricky process. This crypto wallet is a software program and not a physical wallet, which was created only to store all the cryptocurrencies.

Furthermore, these wallets also store the public and private keys, which will connect you to the blockchain where your digital tokens exist. They don’t store these digital funds as such, but they will surely let you access them via the blockchain with private or public keys.

You will need both keys to complete the entire transaction. Also, they are called keys because they help unlock the cryptocurrencies present on the block. Apart from that, you will encounter many digital wallets, such as:

You should pick the one that balances between amenity and safety. You will also encounter digital wallets on crypto exchange platforms. Don’t forget to check them out to know which one is the right one for you.

Step 6: Secure the Crypto Wallet

Knowing how to invest in cryptocurrency is not the only thing you must be stay aware of. Learning how to keep all your crypto wallet safe is also vital. That way, you can prevent hackers from hacking into the wallets. The most effective ways are using 2-factor authentication and a strong password.

You must also remember where you store up the private keys so that you can access your digital tokens easily. Furthermore, keeping the private keys stored in offline wallets will prevent all the black-hat hackers from accessing them through the internet.

Furthermore, if you’re using a hardware wallet, be sure to keep its firmware well-updated. Doing so will not let the hackers to access the wallet.

Step 7: Place An Order

Selling and purchasing of cryptocurrency will become much easier for you when there is good amount of funds in your account. You will surely have countless of these digital tokens with you, including the most popular ones to pick from, even when the brokers or exchange platforms don’t offer you all the cryptocurrency.

If you’re using Bitcoin, it will be a good idea to opt for fractional shares because recently they were worth between $30,000 and $60,000. The brokers or the exchange platforms will give you the chance to pick the sort of order you wish to place.

At present, the most well-known order types that you will encounter are “futures”, “spot” and “margin” trading. Be sure to pick the one based on your requirements.

Also Read: A Complete Guide on How to Apply for IPO in Zerodha

Conclusion

Investing in cryptocurrency has become a popular option among many investors these days. If you’re interested in doing so and will accept all the risks that come with it, you will encounter countless options. However, before you begin the investment work, you must choose a cryptocurrency, choose a reliable exchange platform, store digital tokens in crypto wallets, and protect the cryptocurrencies. The cryptocurrency market is pretty risky. You should proceed further after gaining a proper familiarity with it and use the correct techniques to avoid any unwanted issues.