Investing in Your First Cryptocurrency
So you’ve decided to start dabbling, researching a little, and taking that next step in controlling your own finances. You’ve decided to start building up your wealth. Great! We need more people like you in the world of personal finance.
Disclaimer: I am not a certified financial planner and all investment decisions should be made by the discretion of the investor. This is merely educational content, and should not be taken as investment advice. Thank you!
In today’s day & age, in order to gain financial independence and the freedom you desire, one must begin building a position in financial assets. These “financial assets” are things like stocks (stonks 🚀), ETFs, or bonds, which are instruments that can make you money by increasing in value over time; cryptocurrency is a relatively new & rapidly expanding financial asset in the modern world. This is an paradigm shift for finance.
Cryptocurrency, or crypto for short, is a purely digital asset meaning that it exists exclusively online — on the blockchain. This “blockchain” is what makes the difference between true verified ownership of your assets and trusting someone else (a third-party); the blockchain is what determines who owns what, when, where. This advancement is called a distributed ledger technology (DLT) and made possible by the internet.
Without too much explanation about the underlying technology, the real means of this blog post is to show you how to get your “virtual” hands LOADED with some crypto assets, so let’s get into it.
First things first is registering to a crypto exchange or two… these are the services that will source and sell the cryptocurrency directly to you, the buyer.
Depending on the country you live in, you may have a few options, or an overwhelming amount of options to choose from. For this example, I’m going to choose a Canadian exchange named Newton — based in Canada, where I live. Among the multiple features to consider, no-fee deposits & trading are things you should be looking for. Usually, more popular exchanges in your country offer “high liquidity”, meaning that a whole lot of crypto is exchanged there everyday and that’s what will keep your fees low. Great. Let’s move on to registering and making your account. Again, depending on your country’s rules & regulations you may need to provide personal identification, for security reasons. This is what’s called Know Your Customer/Client (KYC), a security layer that protects the exchange from Anti Money Laundering (AML)— and other shady activity. Another thing they will most likely require is for you to enable Two-Factor Authentication, a common account-security measure that will keep your crypto exchange account safe from the dark web hackers. After you’ve successfully and securely input your information onto the exchange, you’ll soon be ready to buy & trade some crypto as soon your account is verified!
Excellent, assuming you’re signed up, verified, and ready to trade with the money that you’ve deposited, it’s time to choose from your exchange’s menu of cryptocurrencies and make your first trade. Depending on the variety of coins and the risk you’re willing to take, it may be smart to start with an investment in one of the top 10 coins by market capitalization, which just means that there’s a whole lot of money invested into them by a whole lot of people! These are generally accepted to be “safe” holds and won’t scare you as much as the other thousands of coins when they inevitably dip in value — just like any other serious investment would.
At the time of writing, a few of the major listed cryptocurrencies include the first ever (most obvious and widely known) Bitcoin (BTC), followed by Ethereum (ETH), XRP (XRP), and Litecoin (LTC). Once you’ve selected which coin interests you the most, choose how much fiat (dollars, euros, pounds, yen, lira, pesos, etc.) you want to trade, and then confirm your trade.
Congratulations! This must mean that you’re the new owner of some crypto!… well, kinda. While you’re technically the owner of your crypto money just like you’re the owner of your fiat dollars at the bank, these institutions (the exchange or bank) are capable of getting hacked into or halting access to your money. This is the exact issue that cryptocurrency was meant to be a solution to! Now… I really don’t want you to worry too much about this since most major crypto exchanges are extremely safe & reliable, and in some cases can even have an insurance policy on your funds. If you’re ready to increase your efforts and take the extra step to securing your highly valuable crypto, I’ll have a blog post explaining the steps & benefits of securing cryptocurrency on a “hardware wallet”, as opposed to simply keeping it on an exchange account.
While you’re technically done here, I highly recommend tracking all of your cryptocurrency purchases and transactions — including the first. Although you can use pen & paper, free applications like Cryptopro.app for iOS (referral AB30B5) can help streamline this task.
Here are some Crypto Pro screenshots on the iPhone:
… If you have an Android device you may want to try out CoinMarketCap, Blockfolio, or any of the other top trackers on the Google Play Store.
The benefits of having a portfolio tracker is the ease of checking the total value of all your cryptocurrency and the diversity of your holdings, meaning the total piece of the pie each coin takes up. For tax purposes, a tracker is extremely beneficial as well. Personally, I try to diversify my holdings into multiple cryptos to reduce the risk of one potentially collapsing in value. Play around and see what percentages you like, and where you might be able to improve your portfolio distribution!
Getting into your first crypto might be the first and/or smartest move you could make towards improving your finances and getting the first step in the door to financial freedom.
Whether your portfolio increases into the positive or negative territory, remember what you invested into cryptocurrency for. For me, it is the long-term value appreciation, where short-term drops and short-term gainzz in value don’t mean sh*t. Thanks for reading! ;)