The Ultimate Guide To Cryptocurrency Investment

Cryptocurrencies are seeing a massive surge in popularity. While they used to attract a very niche audience just a few years ago, today, everyone wants to learn how to invest. The global cryptocurrency market was valued at 332 million US dollars in 2017 and is projected to reach 394.60 billion by 2028.

Cryptocurrency is a broad term for digital assets with transactions that are verified and records maintained by a decentralized blockchain system using cryptography, rather than by a centralized authority like a bank. Bitcoin is the most popular cryptocurrency today as a currency that functions as a store of value. One study from 2019 estimates ~100 million people currently hold Bitcoin.

The most important feature of a cryptocurrency is that it is not controlled by any central authority: the decentralized nature of the blockchain makes cryptocurrencies theoretically immune to the old ways of government control and interference.

Cryptocurrencies can be sent directly between two parties via the use of private and public keys. These transfers can be done with minimal processing fees, allowing users to avoid the steep fees charged by traditional financial institutions.

Today cryptocurrencies have become a global phenomenon known to most people. In this guide, we will tell you all that you need to know about cryptocurrencies and the sheer that they can bring into the global economic system.

How to set up an Ethereum wallet

Setting up an Ethereum wallet is as easy as installing software on your mobile device, laptop, or desktop. When you install the app, your Ethereum wallet is automatically created. You can then receive ether (ETH) to your wallet immediately, store it safely, and use it as you please.

Step 1: Choose a wallet type

There are several types of Ethereum wallets available, each with its own advantages and disadvantages. The most common types are:

• Physical hardware wallets: These are devices that allow you to keep your crypto offline, providing a high level of security.
• Mobile applications: These apps make your funds accessible from anywhere, but they are more susceptible to cyber-attacks.
• Browser wallets: These are web applications that let you interact with your account directly in your browser.
• Browser extension wallets: These are extensions that you download and install on your browser, allowing you to interact with your account and applications through the browser.
• Desktop applications: These are applications that you install on your computer (macOS, Windows, or Linux) if you prefer to manage your funds that way.

Step 2: Choose a wallet provider

Once you've decided on the type of wallet that suits your needs, it's time to choose a wallet provider. There are dozens of different wallet providers to choose from, each with its own unique features. If you're new to crypto, look for a wallet with a "New to crypto" filter to ensure it includes all the necessary features for beginners.

Step 3: Download and install the wallet app

Go to the official website or app store of your chosen wallet provider and download and install the app. This should be a free process.

Step 4: Open the app and create your Ethereum account

When you open the app for the first time, you will likely be asked to choose between creating a new account or importing an existing one. Click on creating a new account. This is when the wallet software generates your Ethereum account.

Step 5: Store your recovery phrase

Some wallet apps will ask you to save a secret "recovery phrase" or "seed phrase." This phrase is extremely important as it can be used to generate your Ethereum account and submit transactions. Keep it safe and never share it with anyone. The recovery phrase should consist of 12 to 24 randomly generated words, and the order of the words matters.

Step 6: Fund your wallet

Now that you have set up your Ethereum wallet, you can start receiving and sending ether (ETH). You can buy as little as $30 worth of ETH to get started.

Tips for keeping your wallet secure:

• Always back up your private keys and seed phrases securely.
• If you use a web wallet, bookmark the site to protect yourself against phishing scams.
• Remember that transactions cannot be reversed, and wallets cannot be easily recovered, so always take precautions and be careful.

How to keep your cryptocurrency safe

Keeping your cryptocurrency safe is one of the most important things you will learn as a trader or investor. Unlike fiat money, which is protected by regulations and institutions, you are solely responsible for the security of your cryptocurrency. Here are some ways to keep your cryptocurrency safe:

• Understand the differences between hot and cold wallets. Hot wallets are connected to the internet and are therefore more susceptible to cybercrime. Cold wallets are not connected to the internet, so they keep your funds protected from hackers, but they are at risk of being damaged, lost, or stolen.
• Use two-factor authentication. This practice requires users to enter two layers of identification to access their accounts, which deters cybercriminals from malicious activity.
• Use strong, unique passwords. Avoid using the same password for multiple accounts, and use a combination of numbers, letters, and special characters.
• Explore different types of wallets. Online and mobile wallets are inherently vulnerable to criminality in the cyber sphere. Hardware wallets can be more secure as they give you direct, offline access to your coins, and they're protected by a private key. Paper wallets are another option, which involves keeping your addresses and keys written down on paper and stored in different locations.
• Only allow authorised devices to access your wallet. Strengthen your security by only allowing logins from devices that you trust.
• Keep up to date with the latest information on cryptocurrency safety.

How to invest in cryptocurrency

Cryptocurrency is a broad term for digital assets with transactions that are verified and records maintained by a decentralized blockchain system using cryptography, rather than by a centralized authority like a bank. The most popular cryptocurrency today is Bitcoin, which functions as a store of value.

Understanding the Basics

Cryptocurrencies are sent and received directly between two parties via public and private keys. This eliminates the need for intermediaries like banks and allows for lower processing fees.

Where to Buy Cryptocurrency

You can purchase cryptocurrencies on exchanges, from individuals, or through an Initial Coin Offering (ICO). When choosing an exchange, consider factors such as liquidity, fees, purchase and withdrawal limits, security, and user-friendliness.

Storing Your Cryptocurrency

You can store your cryptocurrency in online wallets provided by exchanges or opt for greater security with paper or hardware wallets. Hardware wallets, like USB drives, offer enhanced protection but may be costly. Paper wallets involve printing your public and private keys on a piece of paper, providing complete control and security.

Tips for Investing in Cryptocurrency

• Capital Gains Tax: Cryptocurrency is considered an asset for tax purposes, so you'll need to pay capital gains tax on any profits made from selling crypto.
• Short-Term Investing: Due to volatility, cryptocurrency is often viewed as a short-term investment rather than a long-term one. Timing the market can be risky but may offer the potential for quick profits.
• Volatility: The cryptocurrency market is far more volatile than the stock market, with values fluctuating by 30% or more in a single day. It's open for trades 24/7, 365 days a year.
• Doing Your Research: Educate yourself about the technology and market dynamics before investing. Understand the whitepaper, the value proposition, the team behind the project, and potential use cases.
• Diversification: Consider diversifying your portfolio across multiple cryptocurrencies like Bitcoin, Ethereum, Cardano, Litecoin, and thousands of others. Each differs in price, availability, demand, transaction speed, fees, and underlying technology.
• Risk Management: Remember that cryptocurrency investing is high-risk, and you should only invest what you can afford to lose.

Investing in cryptocurrency offers the potential for high rewards but also carries significant risks. It's crucial to do your research, understand the technology, and carefully consider your risk tolerance before diving into the world of crypto investing.

How to buy Ethereum in Canada

Ethereum is the second most valuable virtual coin after Bitcoin. It is a decentralised, open-source software platform with smart contract functionality. In other words, it is a blockchain network that allows for direct transactions between buyers and sellers without the need for intermediaries.

Ether is the native cryptocurrency for the Ethereum blockchain. It is the fuel that makes the Ethereum blockchain run.

If you want to buy Ethereum in Canada, you can do so directly at one of the country's crypto exchanges, such as Newton, Wealthsimple, NDAX, Bitbuy, Shakepay, or CoinSmart.

First, you will need to create an account on a cryptocurrency exchange. Then, fund your account with Canadian dollars or another fiat currency.

When choosing an exchange, consider factors such as liquidity, spread, fees, purchase and withdrawal limits, trading volume, security, insurance, and user-friendliness.

Once you have set up your account and deposited funds, you can start trading Ethereum.

It is important to note that cryptocurrencies are highly volatile and speculative investments. There are risks involved, including price volatility, cyber-attacks, fraud, and a lack of regulation. Always do your own research before investing, and only invest what you can afford to lose.

How to earn Ethereum online

Ethereum is a popular virtual currency that has seen tremendous growth over the past few years. Here are some ways to earn Ethereum online:

• Faucets: These are websites that give away small amounts of Ethereum for free. They usually require you to solve a captcha or perform a simple task to receive your Ethereum. An example of a faucet is FreeEthereum.com, which offers various tasks such as clicking links and completing quizzes.
• Airdrops: Projects conducting an Initial Coin Offering (ICO) may give away tokens or coins to people registering for their ICO. Participating in these airdrops allows you to get free Ethereum without any investment. Keep an eye out for new ICOs and their airdrop programs.
• Online Games: Many game platforms offer rewards in Ethereum tokens for completing tasks or winning competitions. These games provide a fun and easy way to earn Ethereum. For example, Ether Kingdoms is a popular crypto-based RPG where players can earn tokens as rewards.
• Freelance Work: If you have skills that are useful to others, you can offer them on freelance websites such as Upwork and Freelancer. You can bid on projects and earn Ethereum in return. For example, if you are a web developer or designer, you can find relevant projects on Upwork and get rewarded in Ethereum upon completion.
• Cryptocurrency Trading: Trading cryptocurrencies is another way to earn Ethereum. While it requires knowledge and experience, it can be a great way to accumulate Ethereum over time without any initial investment. Binance is a popular crypto exchange offering various trading options for Ethereum and other cryptocurrencies.
• Microtasks: Microtasks are small tasks that can be completed for a small amount of money. Microworkers, for example, offers a range of microtasks that require no investment and pay in Ethereum. These tasks often involve data entry, image tagging, or simple surveys.
• Referrals: Many services and companies offer referral programs where you can earn commissions or rewards when someone signs up through your link. For example, Coinbase, a popular cryptocurrency exchange, offers a referral program where you can get rewarded in Ethereum for each new user that joins through your link.
• Bots: Automated scripts or bots can help you earn Ethereum by searching for and executing profitable trades on your behalf. 3Commas is a popular trading bot that allows users to automate their trades on multiple exchanges, maximizing their profits.
• Staking: Staking involves delegating your Ethereum tokens to a validator to support the Ethereum network. As a reward, users receive tips in Ethereum. Huobi is a popular staking platform that offers various ways to earn rewards by staking ETH tokens.
• Lending: You can earn passive income by lending your Ethereum and collecting interest payments. Nexo is a platform that allows users to lend their crypto and receive interest payments.
• Accepting Ethereum as Payment: If you run a business or sell goods and services, you can accept Ethereum as a form of payment. Coinbase Commerce is a popular platform that allows users to set up and accept ETH payments.
• Bounty Programs: Bounty programs usually involve completing specific tasks, such as social media marketing or bug testing, and offer predetermined rewards in crypto. Gitcoin is a popular platform that allows users to participate in bounty programs and earn Ethereum as a reward.
• Liquidity Pools: By depositing your Ethereum into a liquidity pool, you can earn passive income through interest payments and trading fees. Uniswap is a popular liquidity pool platform that allows users to deposit ETH tokens and earn rewards.

It is important to note that the cryptocurrency market is highly volatile and unpredictable. Always do your research and be cautious of scams when dealing with any service that promises free Ethereum.

Frequently asked questions