What Is Cryptocurrency Investing for Dummies? Basic Concepts

February 10, 2022

Investment

Sean Korbett

Recently, the demand for cryptocurrencies has become so great that even people who aren’t into finance have started discussing them. Investors are actively learning more about this new market, selecting it instead of more traditional assets, like stocks and bonds. Keep reading the new StealthEX article to understand what cryptocurrency investing for dummies is.

Things to Know Before Investing in Crypto

Lots of people get into the market, as they want to earn more. However, making money is possible only when considering money risks. If you are just starting to look into cryptocurrencies as an investment asset, know the primary aspects of this market:

1. The rate of most cryptocurrencies depends mainly on the demand for BTCs, as this asset is the primary on the market.
2. Investing in cryptocurrencies comes with a high risk that an investor should consider. Exchange rates fluctuate hundreds of percent over a few months. 
3. Everyone has to create a plan for investing in crypto. Understand how quickly you want to make a profit, how much you are ready to spend on investments, and what project to select.

The key rule for a beginning is to invest as much as you want to lose if a particular project becomes unprofitable, and learn the cryptocurrency market yourself.

Fundamentals of Cryptocurrency Investing for Dummies 

A competent investor starts with studying the investment market and assets. Fundamental and technical analysis is used to study the virtual money market.

Fundamental analysis is often used to assess the state of a particular cryptocurrency project by checking its:

• Reliability
• Financial capacity
• Prospects for development
• Users

If you’re going to invest in new cryptocurrencies with growth potential, check the following components of the project:

1. White Paper. Find out if there is a white paper on the development of the cryptocurrency, platform, or other assets that are being offered for investment.
2. The team. Pay attention to who is behind the project, analyze the experience of the team and the resources the project has.
3. Roadmap. It’s important that the project has a development plan and that it describes what and in what period the developers plan to implement, what actions to perform to increase the value of their own or cryptocurrency tokens.

Be careful of false information. Some projects promise high profits as dividends, but often they’re just pyramids and exist for a short time, bringing profit only to their owners.

Technical analysis is mostly based on the study of price charts of cryptocurrencies over different periods. It uses various methods, like Elliott waves, Japanese candlesticks, or Fibonacci levels. Technical analysis is mostly used in fairly “stable” markets, which have been around for about a decade. Cryptocurrency rates are volatile and using this analysis is risky.

Pros and Cons of Cryptocurrency Investing

Cryptocurrency investing for dummies offers many benefits for users:

• High yields. The value of cryptocurrencies fluctuates constantly and often the difference is hundreds of percent over months or even weeks.
• Active development of the cryptocurrency market. Today, it’s growing faster than other financial markets. Most of this volume is the capitalization of BTC, but other projects are also showing growth, which is largely due to the increase in the Bitcoin value.
• Flexibility. World-famous shops and financial institutions are already accepting cryptocurrency payments. This provides greater flexibility and freedom for the investor, including the ability to turn their assets into goods and services in a few minutes.

However, before investing in cryptocurrencies, pay attention to these cons:

• Risks of fraud. Some projects are deliberately created for fraudulent purposes to embezzle funds from investors.
• Security problems. Cryptocurrencies differ from stocks and bonds, and the security situation is one of their primary shortcomings. Inexperienced users get terrified after learning that their assets could disappear if hackers gain access to their accounts, and in most cases, it’s almost impossible to get their money back. Some cryptocurrency investors prefer to hold their cryptocurrencies in cold wallets, insulating them from Internet access and the associated frauds.
• Taxes and regulation. There are real risks in the cryptocurrency market, including the dangers of future taxation and additional regulation.

How to Start Investing in Cryptocurrencies: a Step-by-step Guide

Step 1: Build a Cryptocurrency Portfolio

Investing in cryptocurrencies is a risky business. In a good investment portfolio, digital assets should occupy only 10% (up to 30%, if you are ready for high risks), and the rest is stored in alternative investments for dummies, like stocks, bonds, metals, etc. Fortunately, even if 10% of your portfolio is a small amount, coins can be bought in any amount, and picking the mix you need is no problem.

Step 2: Buy Cryptocurrencies 

The best way to invest in digital assets for beginners is to buy them on a cryptocurrency exchange. Such platforms attract many investors, which creates an almost instantaneous transaction rate. There is the largest choice of coins, and they’re easily exchanged between each other, as well as into fiat (USD, EUR, GBP, RUB, etc.).

Step 3: Connect Cryptocurrency Accounting

Once you’ve bought all the coins you need, all that’s left to do is watch the results. It’s inconvenient to manually count profits, so you need to keep the automatic accounting of cryptocurrencies. There are more than a dozen free apps for this purpose.

Beginners should stop here and keep waiting for profit for their purchases. If users are ready for more risks, they need to learn about currency trading for dummies, start mining, and earn extra.

Summary

Overall, cryptocurrencies are now on-demand among large corporations and individual investors. However, it is safe to say that digital assets are extremely risky investments. So before you invest in cryptocurrencies, you need to make sure that you know all the basics. This way, you will avoid losses.

Where to Invest in Crypto?

And finally, if you decide to buy some crypto coins turn to an instant crypto exchange StealthEX. This service is free from registration and does not store users’ funds on the platform. 

Just go to StealthEX. It will automatically guide you to the «Exchange» crypto window.

1. Choose the currencies you would like to swap. For example, BTC to ETH.
2. Enter your crypto wallet address.
3. Send the deposit to the address generated by StealthEX.
4. Once the deposit will be received, you will get your exchanged funds to the address provided in Step 3.

You can also buy ETH with your debit or credit card. To do so, you need to open the «Buy» window instead of « Exchange».

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The views and opinions expressed here are solely those of the author. Every investment and trading move involves risk. You should conduct your own research when making a decision.

You are more than welcome to visit StealthEX exchange and see how fast and convenient it is.