- Date : 17/11/2021
- Read: 4 mins
Find out how to get started on cryptocurrency investments.
With so many new-age investment options in the market, the modern investor today has several choices to make money. Cryptocurrencies are the latest to join the bandwagon on electronic investments. Together with NFTs and tokens, cryptocurrencies have taken over the world by storm in the little time they have been around. They have intrigued new and experienced investors alike and can offer great growth aspects along with some risk. If you want to invest in cryptocurrencies, here is a step-by-step guide that can help you.
1. Identify where to buy cryptocurrencies
You can buy cryptocurrencies in one of the following domains:
- Traditional finance apps: PayPal, CashApp, Robinhood, etc., are some finance apps that allow you to invest in cryptocurrencies. You can create an account on any of these apps as per your liking and pick cryptocurrencies like Bitcoin, Ethereum, Bitcoin Cash, Litecoin, etc.
- Centralized exchanges: These may offer more security to investors compared to finance apps. Exchanges like WazirX, CoinDCX, Bitbns, Coinbase, Gemini, and Kraken are some places that offer cryptocurrencies for investors to invest in. However, you would have to undergo a Know Your Customer or KYC verification before you can start investing via a centralized exchange. This involves submitting your PAN card and identity and address proof.
- Decentralized exchanges: Decentralized exchanges, also known as DEXes, offer peer-to-peer crypto transactions without any intermediaries. Coin Switch Kuber, Uniswap, dYdX, SushiSwap, and 1inch are some popular DEXe options that you can consider.
- NFT marketplaces: Also known as non-fungible tokens, NFTs are the latest rage around the world. NFTs have a high resale value that makes them great investment options. NFT based digital artwork is gaining traction in many parts of the world, and there are several marketplaces that allow buying and selling of NFTs online. These include OpenSea, ArtBlocks, SuperRare, Rarible, etc.
2. Select the right cryptocurrencies
As of 2021, there are over 6,000 cryptocurrencies in the world. The most popular ones include Bitcoin, Ethereum, Tether, Dogecoin, among many others. It is advised to conduct thorough research before you select a cryptocurrency. If you are new to cryptocurrencies, you can talk to your peers, read up on cryptocurrencies in financial journals, or consult a professional financial advisor to get some clarity.
3. Understand the risks
While cryptocurrencies seem like the newest fad to get rich, it comes with a lot of risk and uncertainty. Since cryptocurrencies are very new to the world, there is no historical data to back their performance. Moreover, with fiat currencies still dominating most economies, cryptocurrencies can seem unstable. The laws around cryptocurrencies are also not so concrete yet. Countries like Turkey, Russia, Iran, Nepal, Algeria, Colombia, and Indonesia have also put bans and restrictions on the use of cryptocurrencies. So, investing in them can expose you to high volatility and risk.
Another thing to keep in mind is that cryptocurrencies are plagued by several scams and frauds. Therefore, no matter the platform you choose, you must always set up two-factor authentication for additional protection.
To sum it up
There are several ways to invest in cryptocurrencies. There are also numerous cryptocurrencies to choose from. But no matter what you decide, make sure to understand the pros and cons beforehand. It may also be advised to not make decisions in haste or follow trends when dealing with something new. Instead, try educating yourself with the facts and then take a call.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or tax or legal advice. You should separately obtain independent advice when making decisions in these areas.