Exploring Crypto: Teen's Guide To Smart Investments

Investing in crypto is a young buyer's market, with Generation Z (currently aged between 18 and 24) completing 17.40% of all cryptocurrency transactions. However, many U.S.-based crypto exchanges require users to be at least 18 years old. So, how can those under 18 invest in crypto?

Firstly, it's important to note that there is no rule against children buying cryptocurrencies and minors can make cryptocurrency investments with the knowledge base and support of guardians. However, it's recommended that minors only invest with the help of a parent or guardian, as crypto is a high-risk and mostly unregulated investment.

There are several ways for those under 18 to invest in crypto:

- Using a parent or guardian: A parent or guardian can create an account with a crypto exchange and transfer crypto to their child's external wallet.

- Asking a friend or relative over the age of 18: A similar method to the above, this involves asking someone over the age of 18 to buy and transfer crypto to a self-custody crypto wallet.

- Using a crypto debit card: Some platforms don't require KYC to purchase crypto with funds from a bank account using a credit card.

- Trading goods or services for crypto: Minors can run a physical or online business that accepts payment in crypto and store the earnings in a wallet to cash out when they turn 18.

- Participating in airdrops and bounties: This requires holding existing crypto and some blockchain projects will distribute airdrops and bounties to holders to increase awareness.

- Buying crypto with gift cards: P2P platforms offer multiple payment options, including prepaid cards and Amazon gift cards, which can be converted into crypto.

- Participating in a crypto rewards program: These usually involve promoting blockchain projects, such as by sharing referral links.

- Receiving crypto as a gift: There are several ways for those under 18 to receive crypto as a gift.

- Using a crypto exchange: Some exchanges don't require ID verification, meaning minors can buy crypto if they have access to a supported payment method.

Overall, while it is possible for minors to invest in crypto, it's important to approach with caution and only invest money you can afford to lose.

Crypto Custodial Account

A crypto custodial account is an adult-managed investment account that allows a parent or guardian to open an account on behalf of a child. While the assets in the account legally belong to the child, the adult has control over the private keys that control the cryptocurrency. Most custodial accounts these days are web-based exchange wallets.

Custodial accounts are a good option for parents who want to give their children a head start in investing and help them become familiar with cryptocurrencies, which are seen as the future of finance. They can also be a good way to teach children about risk management and how to make sensible investments and balance risk and return.

When opening a custodial account, parents will need to authenticate their identification and confirm that they have funds in their account before linking their bank account and adding money to the cryptocurrency account. It's important to note that cryptocurrencies are among the riskiest investment options currently available, so parents should be careful not to invest more than they are willing to lose.

Some popular crypto exchanges, such as Coinbase, allow parents to create custodial accounts for their children. EarlyBird is another platform that offers crypto investing through custodial accounts.

Crypto Wallet

A crypto wallet is a place to securely store your crypto. They are designed to store your private key, keeping your crypto accessible at all times. They also allow you to send, receive, and spend cryptocurrencies like Bitcoin and Ethereum.

There are several types of crypto wallets:

• Hosted wallets – These are the most popular and easy-to-set-up crypto wallets. When you buy crypto through an app, it is automatically held in a hosted wallet. A third party keeps your crypto for you, similar to how a bank keeps your money. The main benefit of a hosted wallet is that if you forget your password, you won't lose your crypto. However, a drawback is that you can't access everything crypto has to offer. Coinbase is an example of a platform that offers a hosted wallet.
• Non-custodial/self-custody wallets – These wallets put you in complete control of your crypto. Non-custodial wallets don't rely on a third party to keep your crypto safe. While they provide the software to store your crypto, the responsibility of remembering and safeguarding your password falls on you. If you lose or forget your password, there is no way to access your crypto. Coinbase Wallet is an example of a non-custodial wallet.
• Hardware wallets – These are physical devices, about the size of a thumb drive, that store the private keys to your crypto offline. Most people don't use hardware wallets because of their complexity and cost. However, they can keep your crypto secure even if your computer is hacked. Examples of hardware wallet brands include Ledger and Trezor.
• Paper wallets – Keys are written on a physical medium like paper and stored in a safe place. This makes using your crypto harder because it is digital money that can only be used on the internet.
• Online wallets – Keys are stored in an app or other software. Look for one that is protected by two-step encryption. Coinbase Wallet and Exodus are examples of online wallets.

It's worth noting that crypto wallets are different from crypto accounts or apps, which are used to buy, sell and transfer cryptocurrencies. Crypto wallets are specifically designed to store your private keys and keep your crypto accessible.

Crypto Exchange

Minors can legally invest in cryptocurrencies, but many crypto exchanges require users to be at least 18 years old. The most popular crypto exchanges, such as Coinbase, Crypto.com, Gemini, and Kraken, do not allow members under the age of 18 and do not offer custodial accounts. This means that parents cannot buy crypto for their children through these platforms.

However, there are alternative ways for minors to invest in cryptocurrencies. One way is through a custodial account, which is an adult-managed investment account that allows a parent or guardian to open an account on behalf of a child. The assets in the account legally belong to the child, but the parent or guardian has control over the account until the child reaches the age of majority. EarlyBird is one platform that offers custodial accounts with crypto investing options.

Another option for minors to invest in cryptocurrencies is through decentralized exchanges (DEXs). These exchanges are unregulated and allow users to trade cryptocurrencies directly on the blockchain. Since they are unregulated, there are no age restrictions on DEXs, and teens can connect their own digital wallets to trade. However, it is important to note that DEXs are highly risky, and users cannot exchange fiat currency (such as US dollars) for crypto. Users must already have crypto in a digital wallet to use these platforms.

Additionally, minors can also receive cryptocurrencies as gifts from their parents or guardians. For example, cryptocurrency gift cards can be purchased and given to minors, allowing them to explore the world of crypto with a small amount of digital currency.

Overall, while there are options for minors to invest in cryptocurrencies, it is important to approach this space with caution due to the high-risk and volatile nature of crypto investing.

Crypto Debit Card

To obtain a crypto debit card, you typically need to sign up for an account with the card provider and complete a Know Your Customer (KYC) verification process. Some card providers may also require you to stake or lock up a certain amount of cryptocurrency tokens for a period of time before you can receive your card.

It is important to note that crypto debit cards are subject to local regulations, and the availability of these cards may vary depending on your jurisdiction. Additionally, when using a crypto debit card, the cryptocurrency in your account will be converted into the respective market's currency for purchases and ATM withdrawals.

One example of a crypto debit card is the Coinbase Card, which is issued by Pathward, N.A., and is currently available to Coinbase customers in the US (excluding Hawaii). The Coinbase Card offers users the ability to earn crypto rewards on everyday purchases, with no spending or annual fees. It also provides industry-leading security features, such as two-factor authentication and card freezing.

Another option is the Crypto.com Visa Card, which is available in multiple tiers, each offering different benefits and rewards. To obtain this card, you need to sign up for a Crypto.com App account and complete the KYC verification process. For higher tiers, you may also need to stake or lock up CRO tokens for a period of 180 days. The Crypto.com Visa Card offers benefits such as up to 5% back on spending, airport lounge access, and exclusive merchandise welcome packs.

Crypto Rewards Program

A crypto rewards program can take many forms, including cashback rewards, staking rewards, credit card rewards, and travel rewards. For example, a company may offer a cashback reward in the form of a percentage of a cryptocurrency when a customer purchases a product or service. Alternatively, staking rewards are earned when customers hold cryptocurrency in a wallet to support blockchain network operations. Credit card rewards can also be linked to cryptocurrencies, where customers receive digital assets as rewards that can be converted or exchanged for other benefits.

The benefits of crypto rewards programs are numerous. Firstly, they offer an easy entry point for customers to begin investing in and understanding cryptocurrencies. Secondly, the global nature of cryptocurrencies removes financial barriers and allows companies to build international partnerships. Additionally, cryptocurrencies can help limit a company's financial liability in the event of a data breach or security incident. Finally, with over 70% of American consumers familiar with Bitcoin, crypto rewards present a significant marketing opportunity for companies.

It is important to note that while crypto rewards programs are gaining traction, they are not intended to replace traditional loyalty programs. Instead, they can work alongside existing programs, providing customers with more options and flexibility.

When it comes to investing in cryptocurrencies as a minor, there are some key considerations. While there are no laws prohibiting minors from investing in cryptocurrencies, most crypto exchanges require users to be at least 18 years old. This means that minors often need the support of a guardian or parent to make investments. It is crucial for minors to have a good knowledge base and involve their guardians in the process to ensure safe and informed investment decisions.

In summary, crypto rewards programs are an innovative way for companies to engage with their customers and offer them desirable rewards. At the same time, minors interested in investing in cryptocurrencies should educate themselves and seek guidance from guardians to navigate the complex world of crypto investing safely.

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