Crypto or cryptocurrencies refer to digital assets created using cryptographic techniques and powered by blockchain technology to enable transactions. The blockchain ledger is distributed and electronic, allowing network participants to monitor and verify transactions without the involvement of a third party such as central banks.
Bitcoin is the world’s first cryptocurrency, created in 2008 by an anonymous founder named Satoshi Nakamoto to solve the problem of “centralization” in the traditional banking system. After a decade of Bitcoin introduction, other digital assets such as Ether, Dogecoin, Litecoin and XRP are also on their way to go mainstream. Countries like US, UK, Singapore, India, etc. are making efforts to regulate cryptocurrencies, showing that crypto is here to stay!
So, if you haven’t tried investing in cryptocurrencies yet, here’s a simple guide to start exploring cryptocurrencies.
Instantly buy cryptocurrencies
You can choose to directly buy and store one or more cryptocurrencies by following the instructions below.
Step 1: Select a crypto exchange or broker
Crypto exchanges such as Coinbase, Binance, eToro, and Gemini allow buyers and sellers to trade cryptocurrencies with different fee structures. You can buy crypto with fiat, or on some exchanges you can exchange crypto for crypto.
Rather, the crypto broker is an intermediary that trades on your behalf. Note: Crypto brokers may not allow you to transfer funds from the platform. So choose wisely
Step 2: Create and verify your account
After choosing a crypto exchange or broker of your choice, you will need to register for an account and verify your identity before proceeding. This is a mandatory requirement to comply with the legal requirements of any jurisdiction where your crypto exchange/broker operates.
These requirements may require you to upload a copy of your personal identification documents such as passport, national ID card, driver’s license or in some cases selfie.
Step 3: deposit money
To buy cryptocurrency, you must first make sure that you have money in your account. For example, you can fund your cryptocurrency account by linking your bank account or paying with a credit or debit card. Beware, credit card fees can be expensive. Depending on the exchange or broker and your funding method, you may have to wait a few days before using the money you deposit to acquire cryptocurrency.
Step 4: Place your cryptocurrency order
Once you have money in your account linked to an exchange or broker, you can buy crypto assets from over hundreds available in the crypto space. You may want to go for widely known names like Bitcoin or Ethereum or coins like Shiba Inu or Dogecoin.
To start, search for the crypto of your choice using the ticker symbol, e.g. BTC for Bitcoin and DOGE for Dogecoin. Enter the number of coins you want to buy to complete your transaction.
Step 5: Select a crypto wallet to store your coins
You cannot get any compensation if you lose your crypto assets. Therefore, you should be careful with your money and leave your crypto assets on the exchange of your choice or keep them in hot or cold wallets. However, keep in mind that hot wallets are online wallets and carry a risk of cyber theft because they are connected to the internet, while cold wallets are offline wallets in the form of a USB stick or hard drive.
Cold wallets, on the other hand, should be used with caution: if you lose the associated key code, or if the device breaks or malfunctions, you may never be able to get your digital currency back.
Alternative ways to own crypto
Instead of buying cryptocurrencies directly, you can invest in crypto exchange-traded funds (ETFs) or invest in cryptocurrency companies.
Investing in Crypto Exchange Traded Funds
Rather than investing in an individual crypto asset, you put your money into a pool of cryptocurrencies called ETFs that track the price of one or more digital tokens. Diversification, low cost of ownership, and outsourcing of the knowledge and time-consuming operations associated with crypto token selection are all advantages of ETFs.
The ProShares Bitcoin Strategy ETF was the first cryptocurrency ETF to begin trading in October 2021. On the other hand, this ETF invests in Bitcoin futures rather than directly in the asset.
Invest in cryptocurrency companies
You can buy shares in companies that use or own cryptocurrencies and the blockchain that makes them possible – if you prefer to invest in companies that offer genuine products or services that are subject to regulatory oversight, but still want exposure to the cryptocurrency market.
To buy shares in publicly traded companies such as PayPal, you need an online brokerage account (PYPL). This payment technology company is already famous among individuals who buy things online and send money to family and friends. In 2021, it was expanded to allow customers to buy and sell select cryptocurrencies using their PayPal and Venmo accounts.
Another interesting company might be MicroStrategy Incorporated (MSTR), which has many cryptocurrencies on its books, followed by crypto mining companies such as Bitfarms Ltd. (BITF) and Marathon Digital Holdings Inc. (MARA).
(Guneet Kaur is Chief Technology Editor at Cointelegraph)
Warning: This article contains the author’s own opinion and should be used for educational purposes only.
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Posted: Sunday 01 May 2022, 07:00 IST