A Beginner’s Guide to Buying Cryptocurrency

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In the rapidly evolving world of digital finance, cryptocurrency has emerged as a widely popular investment and payment method.

As the market continues to expand, more and more people try to clarify why cryptocurrencies are so popular and whether should they join in buying it

This article will provide a clear understanding of the reasons behind such investments and what to do if you want to buy cryptocurrency.

Why people buy cryptocurrency? 

Cryptocurrency investments have become increasingly popular as people recognize the potential for growth in the digital currency market.

A Beginner's Guide to Buying Cryptocurrency

The rationale behind investing in cryptocurrencies is the belief that as demand for a specific digital currency increases, its value will also rise.

Consider Bitcoin as a simplified example. Suppose both businesses and consumers find Bitcoin more appealing than the US dollar.

In that case, they might convert more money into Bitcoin, and companies would be more inclined to accept Bitcoin payments. 

If this occurred on a massive scale, the demand for Bitcoin would surge, subsequently driving up its price in dollars.

As an investor, if you had purchased Bitcoin before this increase in demand, you could sell it for more US dollars than your initial investment, thus earning a profit.

The same principles apply to Ethereum. Ether, the cryptocurrency of the Ethereum blockchain, is required by developers to build and maintain applications on the platform.

Theoretically, the demand for Ether would grow as more applications are developed on the Ethereum blockchain.

However, some people view cryptocurrencies as more than just investments. For instance, Bitcoin enthusiasts often regard it as a superior monetary system compared to the existing one and advocate for its use as a daily payment method.

Is cryptocurrency a good investment?

Cryptocurrencies have garnered much attention in recent years due to their decentralized nature and potential for high returns on investment.

Before making any investment decision, always learn the positive and negative sides of the assets you're dealing with. 

Cryptocurrency pros

Cryptocurrencies offer several advantages, including decentralization, lower transaction fees, accessibility, and security. Let's regard each of them. 

Decentralization

Cryptocurrencies operate on decentralized networks, such as blockchain technology, eliminating the need for a central authority like banks or governments.

This decentralization allows for increased transparency, reduced corruption, and greater control over one's finances.

Lower transaction fees

Cryptocurrency transactions often have lower fees than traditional financial transactions, such as wire transfers or credit card payments. This cost-saving aspect is especially beneficial for international transactions and money transfers.

Accessibility

Cryptocurrencies can be accessed and used by anyone with an internet connection, making them a viable financial option for a wide range of people worldwide. It also enables seamless cross-border transactions, fostering global financial inclusion.

Security

Transactions on blockchain networks are encrypted and require a digital signature, making them highly secure.

Cryptocurrencies are generally immune to counterfeiting and identity theft, which are more common issues with traditional payment systems.

Potential for high returns

Cryptocurrencies have shown the potential for significant gains in value, attracting investors seeking high returns on their investments.

Potential for high returns

The market's high volatility allows investors and traders to aim for high incomes in shorter periods than traditional instruments. 

Cryptocurrency cons

Cryptocurrencies also present challenges like market volatility, regulatory uncertainty, limited adoption, security risks, and environmental concerns. Always keep in mind these variables before investing. 

Volatility

The world of cryptocurrencies is known for its pronounced volatility, with prices often experiencing rapid and unexpected shifts.

This can lead to significant losses for investors who are unprepared or lack adequate risk management strategies.

Regulatory uncertainty

The legal status and regulatory framework surrounding cryptocurrencies are still evolving, with different countries adopting varying approaches. This can create uncertainty for investors and businesses, potentially harming widespread adoption.

Limited adoption

While cryptocurrencies have gained popularity, they have yet to be widely accepted as a payment method by many businesses and consumers. This limits their practical use in everyday transactions.

Security risks

Although cryptocurrencies offer increased security through encryption, they are not 100% immune to cyberattacks, theft, or hacking. Investors must be vigilant in safeguarding their digital assets and private keys.

Environmental impact

The energy-intensive process of mining certain cryptocurrencies, such as Bitcoin, can harm the environment due to high energy consumption and carbon emissions

Profit from cryptocurrency gains are taxable. You should pay crypto taxes in Australia, Canada, the U.K. and the USA. For example, the tax on crypto in the UK can be calculated effortlessly using an online tax calculator tool.

How to buy cryptocurrency

If you are new to cryptocurrencies, it is essential to first understand how the process works. Follow these steps to know how to buy cryptocurrency. 

Choose a cryptocurrency exchange

The first step is to select a platform where you can buy cryptocurrencies. These platforms, known as cryptocurrency exchanges, allow users to buy, sell, and trade digital currencies. For this, you can check out Paybis.

Each exchange has its own unique features, fees, and supported currencies. Researching and selecting an exchange that best meets your needs is crucial.

Always opt for reputable and safe exchanges like WhiteBIT. Check the independent security audits and do your research thoroughly. 

Create an account

After selecting a suitable exchange, the next step is to set up an account on this platform. The process typically requires providing personal information and verifying your identity with a government-issued ID.

Secure your account

Given the sensitive nature of digital assets, securing your account using strong passwords and two-factor authentication (2FA) is essential. This will protect your investment and reduce the risk of unauthorized access.

Deposit funds

You'll need to deposit funds into your exchange account to buy cryptocurrencies.

Deposit funds

Most platforms accept payment methods like bank transfers, credit cards, and debit cards. Keep in mind that each exchange may charge different fees for depositing funds.

For instance, WhiteBIT accepts 10+ national currencies, including the most widespread, like US Dollar, Euro, and British pound. 

Buy cryptocurrencies

Once your account is funded, you can purchase digital currencies using the platform's trading interface. Be sure to monitor market trends and conduct thorough research before buying cryptocurrency.

What to know before you buy cryptocurrencies

When deciding which cryptocurrency to buy, it is crucial to consider several factors.

Market capitalization

This is the total value of all coins in circulation for a specific cryptocurrency. A higher market cap typically signifies a more stable and established currency

Market capitalization is often used to indicate a cryptocurrency's potential for long-term growth.

Use case and utility

Each digital currency serves a unique purpose. Understanding the underlying technology and use case of a cryptocurrency is essential before investing.

A currency with solid utility and real-world applications will likely succeed in the long run.

Team and community

The success of a cryptocurrency largely depends on the team behind it and the supporting community.

Research the developers, their backgrounds, and the strength of the community to make an informed decision.

Risk tolerance

Cryptocurrency markets are known for their volatility. Evaluate your risk tolerance before investing, and consider diversifying your portfolio to mitigate potential losses.

Which cryptocurrency to buy now

If you're wondering what cryptocurrency to buy now, staying up-to-date with market trends and emerging projects is essential.

Which cryptocurrency to buy now

Some popular options include:

  • Bitcoin (BTC): As the first and most well-known cryptocurrency, Bitcoin remains a popular choice for new and experienced investors. Its scarcity, widespread adoption, and established network make it a reliable long-term investment.
  • Ethereum (ETH): Ethereum is the second-largest cryptocurrency by market cap, known for its smart contract capabilities and wide adoption for creating decentralized applications (dApps).

When considering of buying crypto assets, it's crucial to stay informed about market trends and keep an eye on emerging projects. Bitcoin and Ethereum are popular due to their established networks, diverse use cases, and widespread adoption. 

Wrapping up

Always conduct thorough research and consider your investment goals before diving into the ever-evolving world of cryptocurrencies.

Remember that the best cryptocurrency to buy is the one that aligns with your personal risk tolerance and financial objectives.

About the author 

Peter Keszegh

Most people write this part in the third person but I won't. You're at the right place if you want to start or grow your online business. When I'm not busy scaling up my own or other people' businesses, you'll find me trying out new things and discovering new places. Connect with me on Facebook, just let me know how I can help.

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