What is Cryptocurrency?
Cryptocurrency is a type of encrypted digital currency. It allows peer-to-peer transactions and is based on decentralized blockchain technology.
This means cryptocurrency isn’t controlled, monitored or registered with or by any central authority like the bank or government.
It also means that people can buy, hold and sell it anonymously, which is one of the main appeals of cryptocurrency.
As a result, crypto started off with a bad reputation. During the early 2010s people would use crypto to buy illegal drugs online. However, as we entered the 2020s crypto has grown into so much more.
These currencies have turned into legit technologies that are bringing value to the world. Many analyst claim the next Googles and Amazon’s will come out of crypto.
How to Start Investing in Cryptocurrency
Step 1: Do Your Research
Before you start investing you need to spend a lot of time researching. Your research will help you predict your investments future.
There are a number of different cryptocurrencies out there, some of which have been here for a while and others that are just now starting to take the world by storm.
While there may be a variety of options for you to choose from, not all cryptocurrencies are the same. This is why it is crucial to do your research and learn which cryptocurrency you should invest in for the best results.
Before doing anything else, prospective investors need to narrow down their options and decide which cryptocurrency to start their investing journey with. Below we’ve given you a list of the most common and popular cryptocurrencies to help jumpstart your research.
- Bitcoin
- Ethereum
- Dogecoin
- Zcash
- Dash
- Ripple
Step 2: Pick Your Favourite Cryptocurrency
After you’ve done some research, you can choose which cryptocurrency you want to start investing with.
There are pros and cons to each cryptocurrency so choosing which cryptocurrency to start investing with depends on what outcomes you are hoping for, your level of risk, and the level of confidence you have in any given cryptocurrency.
Most people choose to invest in Bitcoin because it has been the most reliable and has the most recognition in wider society.
In fact, Bitcoin is such a stable in the cryptocurrency world that many people, from laymen to market commentators and media, tend to use the performance of Bitcoin to make predictions on the wider cryptocurrency market in general, despite the fact that there are actually some cryptocurrencies that have performed better over the years.
Though Bitcoin, like any crypto, is still a speculative investment, its dominant position in the market makes it the ideal pick for more risk-averse investors.
Step 3: Download an App and Start Investing
So now that you’ve understood what cryptocurrency actually is and have determined which cryptocurrency you’d like to invest in, all that’s left to do is download an app and start investing!
With the newfound popularity of retail investing, a lot of easy investing platforms have surfaced to meet the demand.
This is great news for new investors because now there are a ton of options out there for you to choose from.
Below we’ve listed 4 different investing apps and their pros and cons, so that you can make an informed decision on which cryptocurrency investing app is best for you.
The Best Crypto Investment Apps:
1. Robinhood:
Robinhood is by far the most popular investment platform for retail investors and has become a household name over the last few years.
However, many investors refer to it as the training wheels of investing apps. In other words, it’s a great app to start off with but once you get used to investing you’ll want to switch to an app that provides more features.
Pros:
- Traditional Brokerage with Crypto Options: Robinhood is the only investment brokerage that offers users the option of buying cryptocurrency. This means that investors can include cryptocurrency in their traditional investment portfolios (Stocks, Bonds, ETFs, etc.) rather than being forced to use a separate, dedicated cryptocurrency exchange.
- Beginner friendly: It is easy to use and intuitive, making Robinhood one of the more beginner friendly platforms for investing in cryptocurrency.
- No Commission Fees: Robinhood does not charge fees fro trading cryptocurrency.
Cons:
- Limited number of Cryptocurrencies: Compared to other platforms Robinhood offers a relatively small number of cryptocurrencies that investors can purchase. Available cryptocurrencies are: Bitcoin (& Bitcoin Cash), Ethereum (& Ethereum Classic), Dogecoin and Litecoin.
- Withdrawal Restrictions: Robinhood does not allow users to withdraw bitcoin. This means you are essentially trusting the company to hold onto your investment, rather than being able to transfer it to your own wallet.
2. Coinbase:
Coinbase is the world’s largest Bitcoin broker. It allows Investors from the US to carry out trades through ACH bank transfer and European investors to do the same through SEPA transfers.
Pros:
- Beginner friendly: The platform is incredibly easy to use, requiring only a bank account to connect to Coinbase and start investing.
- Large number of Cryptocurrencies: Coinbase offers the option to buy over 50 different cryptocurrencies.
- Offers the option to buy instantly when using a credit or debit card.
Cons:
- Processing time: Purchase made through bank transfer can take up to 5 days to go through.
- Relatively high fees: With a flat 1.49% fee per transaction, Coinbase is less affordable than other options
3. Binance:
Binance is the worlds largest crypto trading platforms. However, that dose not mean it is the best. It does offer a lot of unique features but it has faced a lot of backlash in the last few years. This includes the USA banning them.
Yes, you read that right. The USA banned them from U.S based customers because they are not a USA based company. This means users could have easily laundered money. However, since then Binance has tried to offer a US based app but it dose not include full features.
Pros:
- Low fees: Binance has some of the lowest fees of any cryptocurrency trading platform. Spot trading fee is 0.1% and the fee to instantly buy/sell is 0.5%.
Cons:
- Not Beginner Friendly: Binance is allowing for a greater chance of newbies accidentally taking actions that they may not intend.
- Limited Availability: Binance may not be available in all countries or US states
- LImited Ability to Use Credit Card: Binance US does not allow traders to make purchases through credit card, and charges a loftier 4.5% fee for using a debit card.
Blockfolio:
Blockfolio is unique in that it is most well known for its cryptocurrency portfolio tracking app which allows users to see and manage various different portfolios and platforms all in one place. It also serves as a typical cryptocurrency investment platform, allowing users to buy and sell.
Pros
- Can Track Multiple Platforms: Blockfolio allows investors to track all their investments in a single place, making it perfect for users who use more than one platform to invest in cryptocurrency.
- Free to Use Tracker: Binance does not charge users to use its tracker, one of its most useful services.
- Make Money: Blockfolio gives users $10 for every trade made through the platform.
Cons:
- Less Control: Blokfolio does not allow users to set buy limits, meaning
- May be Less Secure: Blockfolio was teh recent victim of a hacking attack where
- No desktop interface: Users can not access Blockfolio through a desktop app and are therefore dependent on the online
- Manual Price Updates: ONe of the main drawbacks of Blockfolio is that prices need to be updated manually, which can get annoying real fast.
Conclusion
So there you have it, a step-by-step guide on how to start investing with cryptocurrency. Just remember to keep in mind the risks, as you would with any investment. Cryptocurrency is extremely volatile, making it a somewhat risky investment. Because it is not backed by a government or a physical asset like gold, its value is not as safely guaranteed, making it more of a speculative buy. With that said, go ahead, start investing!
