Invest In Coins: A Beginner's Guide To Crypto Success

Investing in cryptocurrency is risky, so it's important not to invest more money than you can afford to lose. There are thousands of cryptocurrencies on the market, with bitcoin and ethereum dominating. Their market capitalizations comprise about 71% of the $1.99 trillion global crypto market.

Cryptocurrency is a digital asset investors can buy and trade on crypto exchanges. While thousands of cryptocurrencies have unique aspects, many share common traits. They are typically considered alternatives to fiat currencies like the U.S. dollar. Most cryptos are decentralized, meaning they don't have government backing and users don't need a bank to complete transactions.

There are several ways to invest in cryptocurrency. You can buy cryptocurrency directly by using one of the major cryptocurrency exchanges, such as Coinbase or Binance. Another way is to buy shares in a company with significant Bitcoin exposure, such as a Bitcoin mining company. A third option is to invest in a Bitcoin-focused fund such as an exchange-traded fund (ETF).

If you want to invest in cryptocurrency, you can follow these five easy steps:

1. Choose a broker or crypto exchange.

2. Create and verify your account.

3. Deposit cash to invest.

4. Place your cryptocurrency order.

5. Select a storage method.

Choosing a Broker or Exchange

When choosing a broker or exchange to invest in cryptocurrency, there are several factors to consider. Here are some key points to help you make an informed decision:

• Supported assets: If you plan to invest in cryptocurrencies beyond Bitcoin, check the list of supported assets before selecting a platform. Some brokers and exchanges offer only a limited range of cryptocurrencies, while others allow trading in hundreds of digital currencies.
• Payment methods: Consider the payment methods available on the platform. While most brokers and exchanges support wire transfers, some also allow the use of credit cards, debit cards, and other digital payment options for purchasing cryptocurrencies.
• Fees: High fees can eat into your investment returns. Research the fee structures of different platforms, including trading fees, withdrawal fees, and any other transaction fees that may apply.
• Security: As crypto exchanges are a prime target for hackers, prioritize platforms with robust security measures. Look for features such as two-factor authentication, cold storage of assets, and insurance for user funds in the event of a security breach.
• Customer service: If you're new to crypto investing, opt for a broker or exchange with excellent customer support. This can make a significant difference if you have questions or need assistance during the trading process.
• Reputation: Research the reputation of the broker or exchange before signing up. Read customer reviews, check their history, and stay informed about any news or regulatory issues that may impact your decision.
• Regulatory compliance: Ensure that the platform complies with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. Also, check if they are registered as digital asset service providers (DASPs) or approved by relevant financial authorities, providing an extra layer of protection for your investment.
• Trading features: Consider the trading features offered by the platform. If you're a beginner, look for user-friendly interfaces and educational resources. If you're an experienced trader, seek advanced trading tools, margin trading capabilities, and support for complex order types.
• Liquidity: Large-scale traders often prefer platforms with higher liquidity, enabling them to trade more significant volumes of cryptocurrencies.

Remember, choosing between a broker and an exchange depends on your experience level, trading preferences, and risk tolerance. Brokers are generally considered a safer option for beginners, while exchanges offer more direct trading opportunities and may be preferable for experienced traders.

Creating and Verifying Your Account

To create and verify your account, you'll need to choose a cryptocurrency broker or exchange. While both let you buy crypto, there are key differences between them. A cryptocurrency exchange is a platform where buyers and sellers meet to trade cryptocurrencies. Exchanges often have relatively low fees, but they tend to have more complex interfaces with multiple trade types and advanced performance charts, which can be intimidating for new crypto investors. A cryptocurrency broker takes the complexity out of purchasing crypto, offering easy-to-use interfaces that interact with exchanges for you. Some charge higher fees than exchanges.

Once you've decided on a broker or exchange, you can sign up to open an account. Depending on the platform and the amount you plan to buy, you may have to verify your identity to prevent fraud and meet regulatory requirements. You may be asked to submit a copy of your ID and, in some cases, a selfie to prove your appearance matches the documents submitted.

Funding Your Account

The fastest and cheapest way to fund your account is usually with an online funds transfer from a connected bank account. Depending on your exchange, you may also be able to use payment apps like PayPal. Some cryptocurrency exchanges give you instant access to trade, while others may require you to wait for funds to clear before buying. If you can buy cryptocurrency immediately, you may have to wait until the deposit clears before you can withdraw funds from the account.

When you think the moment is right, click the buy button to enter an order. The exchange will turn your dollars into Bitcoin, stored in the same cryptocurrency account, similar to holding stocks in a brokerage account. Once your trade executes, you are officially a Bitcoin owner.

If you move forward and make a Bitcoin purchase, you can choose between storing your Bitcoin in the same exchange account you used to buy the currency or external software, hardware, or paper cryptocurrency wallet. Offline storage with a hardware wallet, known as cold storage, is considered the safest and most secure place to keep your Bitcoin.

Alternative Ways to Fund Your Account

If you want to buy cryptocurrency through a third party, you can take advantage of a growing number of alternative investment options. For example, Grayscale Bitcoin Trust enables investors to invest in Bitcoin through a traditional investment fund that, in some ways, is similar to an ETF. The shares of this fund trade with the symbol GBTC on the OTC exchange OTCQX and can be purchased through your brokerage account.

Another way to get indirect exposure to Bitcoin and the crypto industry is through other cryptocurrency and blockchain industry-focused ETFs, like Siren NASDAQ NexGen Economy (BCLN), Bitwise Crypto Industry Innovators (BITQ), and Capital Link NextGen Protocol ETF (KOIN). Consider fees and risks when investing in any ETF, particularly one focused on a relatively new industry.

Placing Your Order

To place your order, you must first choose a broker or exchange that supports your desired cryptocurrencies. Popular crypto brokers include Robinhood and SoFi, while leading crypto exchanges include Binance and Coinbase.

Once you've chosen a platform, follow these steps to create and verify your account:

• Select an account type that aligns with your investment goals.
• Provide proof of identification, typically a government-issued photo ID.
• Read and agree to the platform's terms of service.
• Link your bank account or another funding source to facilitate deposits and withdrawals.
• Fund your account with the desired amount to start trading.

After setting up your account, you can proceed to place your orders for the chosen cryptocurrencies. Remember to do your research, understand the risks, and make informed decisions when investing in cryptocurrencies.

Selecting a Storage Method

The container you choose for your coins is critical to their long-term storage. The right storage will preserve the condition and appearance of the coins and therefore maximise their value.

Coins should be stored in hard plastic Mylar flips, coin books or albums, or hard plastic coin roll containers. Cardboard/plastic flips requiring staples are also acceptable, assuming the staples are properly clamped. Improperly stapled flips can easily scratch other coins.

Avoid soft plastic PVC holders and other soft plastic packages. Over time, PVC will damage the coin’s surface and destroy its potential value. Avoid other containers that might allow chemical reactions over long periods. Any box or can that might rust or decay over time is not a good container for coins. A rusting can will eventually damage the contents. Avoid soft plastic bags such as baggies, which will also damage coins over time.

A climate-controlled environment is also critically important to long-term storage. Coins should be stored in locations that are not subject to large temperature variations or humidity changes. Attics and basements are possibly the worst environments for storing coins. Keep coins in safes, safe boxes, or at least in main-floor locations with consistent temperatures.

More valuable coins should be stored in hard plastic containers such as TPG (Third Party Grading Service) holders or modern hard plastic holders designed specifically for coins. Even holdered coins should be stored in a properly climate-controlled environment.

Avoid storing coins in containers with other items that might cause unattractive toning. Silver coins will react to environmental gas emissions from a variety of common household items, in the same way that silverware darkens when stored. Even coins stored in appropriate holders may “tone” over time due to gas emissions from cardboard boxes, fabrics, or paints.

Whether your coin collection consists of one rare coin or a whole safe full, the method you choose for storage requires thought and care. It is also wise to physically examine your coins’ appearance to be certain they remain in pristine condition.

Frequently asked questions