How to Invest in Cryptocurrency: A Beginner’s Guide

Step 1: Choose what cryptocurrency to invest in In the same way that you'd evaluate the potential risks and financial health of a company before buying its stock, you'll want to understand and carefully evaluate the different, unique characteristics of each cryptocurrency you're considering for investment. You may choose to invest in one or several different cryptocurrencies. Vetting cryptocurrencies can be more difficult because they have become a popular vehicle for fraud, such as pump-and-dump schemes. Those risks might leave you wondering how to invest in cryptocurrency without falling victim to a scam. In order to avoid pump-and-dump schemes, avoid smaller/newer cryptos that are being heavily promoted on social media platforms. It's critical to analyze the investment risk of a given cryptocurrency and social media experts may not have your best interests in mind. Although you may be able to minimize your exposure to fraud and cybersecurity risk by investing through a large, reputable platform, because the whole industry isn't regulated, it's impossible to eliminate this risk. For example, in 2022, we learned FTX, which was formerly considered a reputable platform, was being run by bad actors who misappropriated clients' funds. And on November 2, 2023, its founder, Sam Bankman-Fried was found guilty of fraud and money

: Step 2: Select a cryptocurrency exchange Cryptocurrency must be bought through an exchange or investment platform, such as Coinbase, Gemini, or Kraken. Some factors you may wish to consider when selecting an exchange are security, fees, the volume of trading, minimum investment requirements, and the types of cryptocurrency available for purchase on a given exchange.

Step 3: Consider storage and digital wallet options Cryptocurrency is completely digital, which means you should have a digital place to keep your coins safe. One choice is to keep them on the same platform where you're investing.
Nowadays, many new cryptocurrency investors prefer this method. Just make sure you pick a platform that will be responsible for custody and safekeeping of your assets. Such platforms are regulated, have strong protection against hackers and online threats, and carry financial insurance. If you choose not to hold your cryptocurrency on the more popular platforms, you'll need a crypto wallet; these hold the private keys that allow you to access your crypto by unlocking the digital identity that is associated with your ownership, recorded on the blockchain. You can opt for either a "hot" or "cold" digital wallet. A hot wallet is accessible via the internet and generally more convenient. A cold wallet is a physical storage device, much like a USB drive, that keeps your cryptocurrency keys completely offline and generally more secure. Holding your cryptocurrency in a wallet provides an extra layer of protection.

Step 4: Decide how much to invest Just like any investment, the amount you choose to put into crypto will depend on many factors, such as your budget, risk tolerance, and investing strategy. You'll also want to consider any minimum investment requirements and transaction costs, which vary across crypto exchanges. If you want to invest in a cryptocurrency with a high value per coin, most exchanges allow you to invest on a dollar basis, rather than buying a whole coin. his prans rru dor rerd a buac means you don't need a huge amount of money to invest in something like Bitcoin. Focus on the total amount of money you want to invest, rather thar the number of coins you want to buy. And always remu7ember, don't invest more than you can afford to lose. At Stash, we recommend holding no more than 2% of your overall portfolio in any one crypto in order to limit crypto specific risks.

Step 5: Manage your investments Cryptocurrency is a unique investment because it can be used to buy things and can also be held as a long-term investment; how you manage your crypto holdings depends on your investing strategy and goals. You may wish to consider applying the Stash Way, a philosonhy focused keys completely offline and generally more secure. Holding your cryptocurrency in a wallet provides an extra layer of protection. and transaction costs, which vary across crypto exchanges. If you want to invest in a cryptocurrency with a high value per coin, most exchanges allow you to invest on a dollar basis, rather than buying a whole coin. Investing , diversification, and investing for the long Related investments to explore SHOWS If you're not quite ready to dive into cryptocurrency, there are some related J investments to consider. For example, some Exchange Traded Funds (ETFs) offer "ways to play" in the crypto market, but do not directly hold cryptocurrency or its derivatives. In general, these ETFs hold stock in companies with exposure to or involvement in processes that interact with or support crypto markets by participating in mining or simply by holding large balance-sheet positions in cryptocurrency. These investments allow you to dabble in this emerging landscape without taking the cryptocurrency plunge.

What do I need to know before buying cryptocurrency?

Cryptocurrency is a risky investment, so approach it with your eyes open to potential pitfalls. Digital currency is volatile, it's largely unregulated, and there are many unknowns about how this new form of currency will develop in the future. What to look for in a cryptocurrency to investment Every cryptocurrency is different, so the best option depends on your individual circumstances. That said, beginning ivestors may wish to explore more established currencies, as there is plenty of information about how they work and their performance over time. How much should I invest in cryptocurrency as a beginner? Never invest more than you can afford to lose. At Stash, we recommend holding no more than 2% of your overall portfolio in any one crypto in order to limit crypto- Specific tasks