How to Invest in Cryptocurrency

                                                          

It hasn't been too long since the advent of cryptocurrencies and it is no doubt that this newcomer to the world's economy in such a short time has made its mark. Perhaps due to its unique qualities of decentralization and immutability. Over the years, a lot of cryptocurrencies have emerged in the market with growing acceptance and usage. Bitcoin, being the oldest has gained massive adoption all over the world by companies, investors, organizations and the public. However, the uniqueness of cryptocurrencies and its varying methods of operation from our traditional hard currencies (Fiat currency) can be confusing for the uninvolved and would require some guidance and understanding for those who wish to venture.

Although, some exchanges or trading platforms have made investing in cryptocurrency much easier on their platforms, there's still a slight complexity compared to investing in fiat currency. Unlike a fiat currency, cryptocurrency as observed, experiences wild fluctuations in prices which could be of huge benefit to investors or traders who are willing to take the risk.

Below is what you should know if you're interested in investing in bitcoin or any other digital currency.

What is Cryptocurrency?

In simple and general terms, cryptocurrency also known as virtual currency, digital currency, or crypto coin, is a digital asset based on a network that is distributed across a large number of computers. It was designed to serve as a medium of exchange. Ownership records and transactions are stored in a digital ledger or computerized database.  This decentralizes its operation and thus, exists outside the bounds of any government or central authority. Its existence is greatly dependent on investors, integration into the financial market and public interests in its usage. Bitcoin, which is the first in existence and worth thousands of dollars, is based on a public decentralized technology called Blockchain. Bitcoin as with some other virtual currencies have proven useful as a means of sending and receiving money at a lower cost, uncensored alternative store of wealth, investments, making private transactions, travel transactions and more.

So how do you invest in cryptocurrency?

There are several necessary requirements needed by an investor in the cryptocurrency market. These are; an account in a cryptocurrency exchange, a digital wallet (software or hardware wallet), a bank account, credit card, money (fiat currency), personal identification document, a secure Internet connection and a method of payment. A basic knowledge of the above listed would roughly give you an idea of how and where to invest in cryptocurrency.

Step One: Get a Cryptocurrency Wallet.

This isn't the physical wallet you carry about. It is a digital wallet that you will need to store your cryptocurrency. When it comes to choosing to a wallet to use, you have a myriad of options. There are basically two forms of wallets; software and hardware wallets. Software wallets are mobile applications that connect with your local bank accounts. 

These wallets allow for quick and easy access to your digital currency. Cryptocurrency transactions are much easier on the software wallets. One disadvantage with software wallets is that your digital currency is stored and partly managed by a third party and also open to the internet with a possibility of being hacked. However, there are leading trustworthy wallets you can bank on. Coinbase is the most popular software wallet available in USA. Blockchain.com is another great wallet connected to a bitcoin exchange. Mycelium is another secured wallet.

Hardware wallets are outdated but considered to be very secure because it operates offline. It stores its users private key offline on a physical hardware device preventing hackers from accessing it.

 

Step Two: Link Your Bank Account

In other for you to purchase most cryptocurrencies, you need to link your wallet to a bank account, debit card or credit card. This is because this digital currency are bought with or exchanged for money (fiat currency).  By linking your bank account to your wallet, you can buy and sell cryptocurrency and deposit that money directly into your bank account.

Step Three: Join an Exchange

A cryptocurrency exchange is an online market place where you trade cryptocurrency for fiat currencies, or other cryptocurrencies. Let’s say Ethereum for US Dollars. There are many exchanges on the internet and they vary in their reliability, security, reputation, fees, cryptocurrencies available for trading and exchange rates. Before investing, do your homework in finding leading respectable exchanges to trade on. Among other reputable cryptocurrency trading exchanges are Coinbase, Square Cash and Robinhood.  So basically if you want to trade cryptocurrency you will do that on an exchange.  Also to know is that most exchanges offer wallets for their users.

Step Four: Place an Order

Having gotten your wallet linked to your bank account and registered on an exchange, you are now ready to buy and sell cryptocurrency. You can now place an order on a cryptocurrency exchange for a digital currency.

Investing in cryptocurrency is a risk just as everything in life is. The market can be a very volatile one. So now that you know about the basics, a personal research on trading strategies, technical analysis and a professional investment advice will place you in a better position. Invest your money wisely.

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