How to Invest in Cryptocurrency: A Beginner’s Guide

Cryptocurrencies are a game-changer in wealth creation. With their propensity to embark on strong rallies, major tokens like Ether (the native token of the Ethereum Blockchain) and Bitcoin have made many investors overnight millionaires and billionaires.

Naturally, this has generated a lot of hype for the cryptocurrency market in recent years. There were over 221 million crypto users in 2021, more than double the number in the previous year. The market cap of cryptocurrencies exceeded $3 trillion at one point that year, with all projections showing strong growth for the next decade.

If you are interested in boarding the cryptocurrency rocket ship but don’t know where to start, you have come to the right place. H2cryptO is the world’s first cryptocurrency exchange with live client support 24/7/365 and a dedicated focus on protecting their clients’ interests through transparency, education, and democratization.

Our vision is to make crypto investing accessible to all. If popular crypto “buzzwords” like Bitcoin, blockchain, altcoins, Ethereum, Dapps, and NFTs sound like Greek to you, this guide is for you. Read it and you will learn everything you need to know to start trading or investing in cryptocurrencies backed by expert knowledge and understanding.

What Is a Cryptocurrency?

In simple words, a cryptocurrency is money as we know it but reimagined in a digital format. There are no coins or printed currency notes – but you can still use these digital currencies to buy things online from businesses that accept crypto payments. In fact, the first-ever crypto transaction was an order for two pizzas from Papa John’s, by a hungry programmer in 2010.

The cryptocurrency used in that order was none other than Bitcoin, the first, and not surprisingly, the most famous cryptocurrency in the world. Back in 2010, Laszlo Hanyecz had to spend 10,000 Bitcoins or BTCs to get two pizzas. Fast forward to 2022, and those tokens would have been worth a large fortune – $380 million to be precise!

However, Bitcoin is not the only game in crypto-town these days. You can also buy and sell dozens of other popular tokens like Ether (Ethereum), Litecoin, Polygon Matic, Chainlink, Avalanche, Polkadot, Cardano, Cosmos, and Dogecoin, to name a few.

While these tokens all have unique strengths and weaknesses, they all share a common DNA with these basic features:

  • There is no physical money – no coins or printed currencies.
  • They are not controlled by governments or central banks.
  • They do not rely on traditional banks or financial institutions.
  • They are all based on distributed ledger technology, which is similar to the blockchain, and DAG technology.
  • You can buy them at online cryptocurrency exchanges.
  • Cryptocurrencies are all stored in digital wallets fully in your control.
  • They are highly secured and decentralized.

The Primary Uses of Cryptocurrencies

investing in cryptocurrency

Cryptocurrencies can do most of the things that traditional currencies can do, and in many instances, they are more efficient and secure as well. Here are some of the ways in which cryptocurrencies are being put to use:

#I. Purchase With Cryptocurrency Online

As of 2022, more than 120,000 businesses across the world accept payments in cryptocurrencies. This includes huge corporations as well as smaller entities in a wide range of sectors. The big names worth a mention include Microsoft, Amazon, Tesla, Newegg, Home Depot, AT&T, Virgin Galactic, and Subway. Do note that the availability of this service is sometimes restricted to select regions.

#II. Cryptocurrency Trading

Just like fiat currency trading markets, you can also buy and sell various cryptocurrencies for profit. You can speculate on the price movements of various cryptos based on factors like supply and demand, technology updates, and an increase in demand for blockchain apps and services. A number of professional advisory or brokerage services now offer advice on how to invest in cryptocurrency. They provide crypto trading and investment strategy to those who seek a more diversified portfolio. It’s important to note, however, that you should only take investment advice from a qualified advisor.

#III. Cryptocurrency Investing

Apart from their role as a medium of exchange, cryptocurrencies are also extremely popular as investment assets. Investors often hold on to a currency for the long term, with the expectation that its value will increase drastically. For example, the value of Ether (Ethereum) rose a whopping 750% between 2020 and 2021. If alternative assets are one of your investment objectives, you may also seek personalized investment advice from professionals when investing in cryptocurrency.

#IV. Decentralized Finance (DeFi)

Blockchain, the underlying technology behind cryptocurrencies, can also be used to deliver other types of financial services including loans, insurance, derivative instruments, lending, and more. A digital asset such as crypto is often quite volatile so DeFi ecosystems in the crypto universe rely on stablecoins, which are a hybrid between traditional cryptocurrencies and fiat currencies like the US dollar.

Cryptocurrency Basics – What Is a Blockchain?

Blockchain is the core technology that makes it possible for cryptocurrencies to exist in their current states. Its main purpose is to securely hold any kind of digital data without the need for a central authority.

For instance, in the case of traditional finance, we need central institutions like banks and payment service providers. When you create a bank account and deposit your cash in it, the data is stored on the bank servers. For security, we have to put faith in the institution holding the data.

These databases are usually stored in centralized servers. In this outdated system, there is a high risk of data loss or manipulation if there are any weaknesses in the security systems. Cybercriminals could potentially steal the financial data, or make illegal changes in the records for personal gain.

Decentralization in Blockchain

In a decentralized ledger, all data related to digital currency ownership and transactions are stored in pieces called blocks. Each block can hold a specific amount of data. As new transactions take place, the block fills up with time-stamped data. At the end of a block, another block is added, creating a chain of secure ledgers.

Instead of storing all the blocks in a single central location, they are dispersed across multiple systems in a connected network. Making changes to the data or removing it from a block is virtually impossible as you would need to reverse or modify the entire block that holds the data.

If someone gains access to one node within the network and makes any unauthorized changes to the data, it will not affect the same data held in other nodes. The entire system works on consensus – if one node has data that has been tampered with, it is quickly identified and deleted.

Transparency in Blockchain

At the same time, the entire system is transparent. Anyone can check the transaction records on the network on any node. They all carry a secure copy of the blockchain that can be viewed using specialized software called blockchain explorers.

All the records are encrypted to provide a high degree of privacy and anonymity to the users of their cryptocurrency holdings. An outsider cannot find your identity by looking at the ledger unless they have access to your unique set of public and private keys.

Using these keys, cryptocurrency owners can track their funds even if someone gains unauthorized access to their funds. If anyone makes any attempt to use stolen cryptocurrency in a distributed ledger, it can be instantly traced.

This is why cybercriminals often wait for years before attempting to move or transfer stolen/illegally obtained cryptocurrencies across the blockchain. There have been several instances where the perpetrators were identified and arrested during this process.

Security in the Blockchain

All transactions in a cryptocurrency blockchain are secured using advanced cryptographic technologies. The very design of a blockchain, with an immutable series of sequential, time-stamped blocks, presents a formidable challenge to outsiders looking to gain unauthorized access.

Each owner of digital assets on the blockchain has highly secure private keys that are virtually impenetrable. As long people keep these keys secure and away from the eyes of hackers, they have nothing to worry about.

The decentralized nature of the system ensures that for security’s sake, no one person or entity can make lasting changes on one node that has any meaningful impact. To seize control of the network, a hacker would have to gain control of more than half of all nodes in the network, which is a tall order in larger, complex blockchains.

The Basic Ingredients of Cryptocurrency Investments

cryptocurrency investment

In this section, you will learn all about the key ingredients you need to get started as a virtual currency or digital cash investor. Though there are only three or four things you need to get started, they all require careful planning and due consideration.

#1. A Funding Source

First of all, you need a payment method to convert your dollars (or local currency), into cryptocurrencies. A bank account with online transactions enabled is the simplest option, as ACH/wire transfer is accepted by many crypto exchanges, including H2cryptO.

While many exchanges do not accept card payments, you can use your credit cards and debit cards on the H2cryptO trading platform. Success is not guaranteed because some banks do not allow the use of credit cards for any kind of cryptocurrency-related transactions.

Consequently, your ease of use may vary significantly while attempting to use credit cards to fund your cryptocurrency investments. The preferred options for a smooth and hassle-free transaction are using ACH, wire transfer, or other cryptocurrencies, if you already own some tokens. ACH and wire payments may take longer to process, however, there are usually less fees associated with them.

#2. A Trusted Cryptocurrency Exchange

A cryptocurrency exchange, also called a crypto exchange, is an online platform where you can buy or sell major cryptocurrencies. Basically, they perform the role of a digital marketplace for cryptocurrencies. H2cryptO is one the latest crypto exchanges on the scene, with a feature-set that rivals the best in the business.

You can do the following things at a cryptocurrency exchange:

  • Purchase cryptocurrency tokens using dollars/other fiat currency.
  • Convert one crypto into a different token available on the marketplace.
  • Convert your owned cryptocurrencies back into dollars.
  • Deposit funds in dollars for your purchases.
  • Withdraw your dollar funds to your bank account.

As is evident from that list, crypto exchanges work like brokerage firms in financial markets. They allow you to hold your funds in dollars in your account balance. You can also store your crypto funds in the account. Whether you should do so is a different question altogether – one we will address in a later section below.

Not all crypto exchanges are created alike, and there is no such thing as the best crypto exchange for everyone. For instance, many of the smaller crypto exchanges operate entirely on cryptocurrencies – you cannot use dollars for your purchases. Such exchanges are not ideal for crypto beginners. This is why, especially as a beginner, it is prudent to seek out a cryptocurrency exchange with a true emphasis on live 24/7/365 client support such as H2cryptO.

Exchanges also vary wildly when it comes to the actual number of cryptocurrencies available for purchase and trade. The current crypto market is vast, with thousands of obscure tokens or altcoins, and a few dozen major cryptos with billion-dollar market caps.

If you are solely interested in the bigger tokens like Ether (Ethereum) and Bitcoin, you won’t have to search very hard for them – virtually all exchanges offer trades on these. For the smaller, newer, and obscure altcoins, you may have to look around a bit.

Centralized vs. Decentralized Exchanges

Crypto exchange platforms are also classified into two main categories based on how trades take place. A centralized exchange or CEX is a marketplace where you buy and sell digital assets through a middle-man. When you buy cryptocurrency on a centralized exchange, you are not dealing directly with the person selling/buying the token at the other end.

Instead, a third party facilitates the trade, providing easy transactions and other value-added features in exchange for some costs. The vast majority of the big global crypto exchanges follow the centralized model.

In recent years, a new breed of other crypto exchanges has evolved – they are called decentralized exchanges or DEX.

The action in a decentralized exchange takes place between two interested parties without the presence of a middleman.

If a CEX is like a giant organized marketplace controlled by a third party, a decentralized exchange is like a big notice board where you can buy or sell as you please. The private keys always stay with you, not with a third party.

While decentralized exchanges are arguably safer than CEX from hacker attacks, they are very vulnerable to scam listings. Anybody can post scam crypto tokens for sale on a DEX. In contrast, centralized exchanges often maintain strict policies regarding the eligibility of cryptocurrency listings on the platforms. They also offer some level of buyer protection, which makes them better for the vast majority of average cryptocurrency investors.

#3. A Storage Method for Crypto

When you buy cryptocurrencies on an exchange, the tokens do not leave the blockchain. Instead, you get a set of two keys that give you ownership and control over the tokens. These are called public and private keys, and they have different functions:

Public Key – This is like a bank account or an address that you can use to receive crypto funds from others. You can freely share the public key with others – it does not give them access to your funds.

Private Key – This is like the password that opens the account and gives you the power to spend the cryptocurrencies you own. You should never reveal the private key to anyone – if someone gains your private key, they can freely use your cryptos.

Private and public keys generated in a transaction are closely linked and form a key pair. While you can write down and store your public keys anywhere, private keys have to be stored securely in crypto wallets.

A crypto wallet is a storage solution for public and private keys. You can pick from a wide array of options, with varying levels of protection, complexity, and security. Crypto wallets are broadly classified under the following categories:

Hot vs. Cold Wallets

A hot wallet is a software application that stores your keys either on the cloud or on your desktop/mobile app. It is called “hot” because it is always connected to the internet – potentially giving interested third parties a chance to try and break in to steal your keys.

In contrast, a cold wallet is a storage solution that you can disconnect from the internet when you are not transacting your cryptos. These are usually hardware-based solutions – often involving a rugged device that you can plug into your system using USB or Bluetooth.

Private keys written down on a piece of paper and stored in your home safe would also be considered a cold wallet. But due to the fragile nature of paper, this is not a recommended solution. If you lose the private key, your cryptos can never be recovered!

Cold wallets offer more security at the cost of convenience and easy access. For the latter, hot wallets are great, but they come with additional risks.

Custodial vs. Non-custodial

When you buy crypto(s) at an exchange, you have the option to store the keys in a hot wallet available at the exchange. This is a custodial wallet, where the responsibility of holding the keys safely is given away to a third party, namely the exchange. It is like entrusting your cash to a bank or a hotel safe – if you trust them to keep it secure, do it by all means.

Non-custodial wallets are the ones where you have total control over your keys. You decide where to store it, what kind of security to assign, and so on. However, non-custodial wallets come with added responsibility – if you lose the wallet or the access code to it, the cryptos are gone.

Custodial wallets come with some nifty features against this kind of thing. For starters, you don’t have to worry about stashing away your wallet in a secure location. And if it involves an access password that you forget, resetting it is a viable option. If you lose your non-custodial wallet password, you may never be able to recover the funds inside.

Best Crypto Wallet for Beginner Investors

For beginners in crypto investing, the custodial, hot wallet available with the exchange is a good starting point. This is especially true if you are only investing smaller amounts in cryptos. However, in the long run, you should maintain a separate non-custodial wallet for your cryptos.

At major exchanges, clients only keep around 2% of their crypto purchases in the online wallet on average. The remaining 98% is kept secure in personally owned and managed wallets, either online or offline.

This is a recommended option if you want to invest considerable sums in cryptos down the line.

#4. ID Documentation

Know Your Customer or KYC is a mandatory policy used to prevent money laundering and terrorism financing in most parts of the globe. Particularly in the US, the rules are quite stringent under the Patriot Act and other relevant laws.

All companies providing any kind of financial services have to perform KYC on all customers to remain compliant. Trusted and law-abiding exchanges like H2cryptO have to request some ID verification from clients on sign-up. The following government-issued photo ID documents are accepted:

  • Driving license
  • Passport
  • Any other ID document that provides proof of name and date of birth

The documents have to be uploaded in the form of scanned copies to the exchange website after you sign-up for KYC verification. You cannot invest in cryptocurrencies as retail investors at most exchanges if you are below the age of 18.

#5. The Process of Buying and Investing in Cryptocurrencies

Below is a simple guide explaining the steps required to open an account at a cryptocurrency exchange and start investing:

  1. Choose a cryptocurrency exchange such as H2cryptO and visit the website using your browser.
  2. Sign up and create your new account – they will ask for your email address, name, and a few other personal details.
  3. You will be asked to provide government-issued ID proof to verify your account (KYC).
  4. Deposit some money into your crypto exchange account using either wire transfer, ACH, or credit cards and debit cards (if supported).
  5. Browse through the available cryptocurrencies on the market and look at the current prices and latest performance metrics.
  6. Pick a token from the list and place your order – for high-value tokens like Bitcoin, you can place fractional orders for small investments.
  7. Store the private keys to your crypto in a wallet – either the online wallet available at the exchange or in a private offline wallet (recommended).
  8. Hold the crypto tokens until the prices reach your target limit – you may either decide to hold the token further, or sell it at a profit.

How to Pick the Best Cryptocurrency Exchange

The best crypto exchange is the one that provides the features that you need, offers 24/7/365 live support, and charges reasonable transaction costs. That said, here are a few vital factors to consider when picking a crypto exchange for investments:

#I. Accessibility

Your place of residence will have a massive impact on your ability to buy and sell cryptocurrencies legally. For example, you cannot buy crypto legally from any cryptocurrency exchanges if you live in China.

While the situation is markedly better in the United States, the regulatory environment surrounding crypto is constantly evolving. New York is currently the strictest state with laws related to crypto exchanges.

In New York, a business will need a special BitLicense to provide exchange services to residents of the state. Moreover, only a handful of approved coins are allowed on the marketplace.

No such restrictions exist in the other states, but at least 31 are contemplating new regulations related to cryptocurrencies. At the best crypto exchanges, you can always find the most up-to-date information regarding the geographical availability of their services.

#II. Crypto Exchange Fees

Virtually all crypto exchanges charge some fees for their services. This could be a fixed amount or a percentage of your trades. Given the extreme volatility in crypto markets, many crypto exchanges have a flexible fee structure.

Picking a crypto exchange solely based on a low fee structure is not a good idea, especially as a beginner. With lower fees, you also lose out on all the bells and whistles, like user-friendly interfaces, additional protections, 24×7 support, insurance, and more.

Furthermore, if something is free on the internet, it usually means that you are the product. The crypto exchange may use your data or sell it to third parties for revenue. This is why you should not make high crypto exchange fees a decisive factor in rejecting a particular platform outright.

Often, the best crypto exchanges have higher fees to pay for all user-friendly features that are included in the package. Keeping this in mind, the sensible option is to compare the features and costs of different crypto exchanges and pick one that offers the most useful features at the lowest fee structure.

#III. Security

Unlike traditional financial securities and stocks, crypto investments are not backed by assurances from any central authority. Holdings in crypto exchanges are not protected in the same way banks and financial institutions handle money.

The best crypto exchanges rely on a diverse array of security measures to protect the holdings of their clients. Some rely on financial measures like insurance and collateral backed by institutional-grade protection. Others rely on high-grade encryption and other cybersecurity tools to keep hackers at bay.

Look for basic features like two-factor authentication, a clearly specified password policy, and HTTPS when picking a cryptocurrency exchange.

Avoid newer, or lesser-known crypto exchanges unless they have some solid credentials. For example, H2cryptO is a relatively new crypto exchange launched in 2022. But it comes with the backing of one of the largest blockchain VC funds – Draper Goren Holm.

#IV. Liquidity

With any marketplace for crypto(s), you want the freedom to buy or sell your preferred tokens on-demand, without any delay. Since crypto prices can change drastically in mere seconds, you need high liquidity to make successful trades.

If a crypto exchange has a healthy trade volume, this is not a major issue. This is one area where size truly matters – with more clients on board, the best cryptocurrency exchanges can offer higher liquidity.

#V. Client Service/Support

Online support is a major factor that drives our choices in banking, insurance, and eCommerce. We always gravitate towards businesses that offer a superior service experience. Quite shockingly, this is one area where even the best crypto exchanges have failed to live up to modern expectations.

It is quite telling that in a market filled with hundreds of crypto exchange options, H2cryptO is the first-ever cryptocurrency exchange with a dedicated 24/7 live client service portal. Unlike traditional stock markets, crypto-assets never sleep – it is a 24/7 trading environment. You need round-the-clock service from experts in case problems to occur during trades.

The reason why client service has been overlooked by other cryptocurrency exchanges is quite simple – in the past, crypto markets were a niche frequented by clients who knew the lay of the land. They were technology experts, programmers, and others who didn’t require much hand-holding.

Even the more popular crypto exchanges did not have to bother too much about guiding or educating their clients. They could get away with a largely self-service model. But that is no longer the case. The market has grown significantly in the last few years and more beginner investors are interested in cryptocurrency exchanges.

Without extensive documentation, how-to guides, and live client support, the crypto market can seem quite daunting to a newcomer. Most crypto exchanges these days leave client support with some documentation and guides, at best.

This is why H2cryptO has invested heavily in a state-of-the-art live support system with 24/7 availability, 365 days a year. If there is any trouble with your crypto investments, you can quickly get access to troubleshooting on the crypto exchange platform, no matter the hour.

The best crypto exchanges in the modern context should offer live chat, email, and phone support to clients. H2cryptO is leaps ahead of the competition in this regard, making it the best crypto exchange for newcomers. This is a game-changer in the market of global crypto exchanges.

Cryptocurrency Investment Options – A Primer

The blockchain-powered financial market is rapidly expanding with each passing day. Investors have access to a wide range of options in the modern marketplace, with varying levels of volatility, risk, and potential for returns. The following are some of the myriad ways in which you can make your money work in cryptocurrency markets:

#I. Buy and Hold (or HODL)

For a beginner in the world of crypto(s), this is probably the easiest avenue for investments. In this approach, all you need to do is buy a particular cryptocurrency token and hold it for the long term. With the long-term valuations of popular tokens like Bitcoin and Ether (Ethereum) on a consistent upward curve, holding is a very common strategy adopted by most crypto enthusiasts for wealth generation.

HODL is an intentional misspelling of the word “hold,” used as a meme by crypto enthusiasts. Created in 2013 by mistake, it was soon converted into a handy acronym for “Hold On for Dear Life.” It is used as encouragement among crypto enthusiasts to resist the temptation to sell cryptos for immediate gain, in exchange for better returns in the long run.

#II. Crypto Mining

Mining is the way by which cryptocurrency blockchains process transactions securely. Miners use expensive computer hardware made up of processors and graphics cards to solve complex math equations. When the “x” number of equations is solved, a new block of transactions is validated and added to the blockchain.

Mining is also a process by which fresh tranches of tokens are released into the market. In exchange for their efforts, miners receive a percentage of the newly minted tokens. Bitcoin and Ethereum are the most popular tokens for mining.

While you can start mining with a basic computer setup, to make real profits you need considerable investments in equipment and infrastructure. Due to its massive power requirements, mining is also not very eco-friendly. This is one of the reasons why Ethereum is moving away from “proof of work” (based on mining) to “proof of stake” (based on crypto staking).

#III. Crypto Staking

The traditional equivalent of staking would probably be depositing large funds in a long-term fixed account. The bank will use such funds to provide loans and other credit services, creating vital liquidity in the economy. In exchange for this access to funds, you get a fixed interest as income.

Since there are no banks or financial institutions to provide liquidity for transactions in the blockchain, the system relies on investors who are willing to deposit or “stake” their crypto assets at the exchanges. These tokens are locked in a validator node. The node is then used to review and process transactions in the blockchain.

Staking has come up as a more efficient, environment-friendly alternative to mining in cryptos. While Bitcoin still uses a mining protocol, newer coins like Solana and Cardano all follow a “proof of stake” protocol. Due to high transaction costs, even Ethereum is involved in a complex process to convert from proof of work to proof of stake.

To control an entire validator node, you would have to invest a significant amount of crypto tokens, often worth hundreds of thousands of dollars. With that said, staking pools also exist, giving smaller investors a chance to invest their tokens to earn interest income while providing vital liquidity to the blockchain.

#IV. Invest in Crypto Businesses and Securities

This is another option to gain some indirect exposure to crypto markets in your investment portfolio. Instead of directly holding volatile cryptocurrencies, you can invest in companies with strong intrinsic value that operate in this realm.

For example, companies like PayPal and Square already have support for cryptos and hold some cash reserves in the form of Bitcoins. This approach is basically classic stock market investing, with a focus on firms with interests in Bitcoins or other forms of blockchain technologies.

However, it is still early days for advanced investment instruments and securities based on cryptocurrencies. For most investors, the traditional buy-and-hold investment strategies should serve as the basic starting point for their forays into the market.

How to Pick a Cryptocurrency for Investment

cryptocurrency investing

For starters, you should assess each coin across the following main factors:

#1. Market Capitalization

The easiest way to pick a relatively safe coin for investing is by looking at its position on the market capitalization charts. The market is heavily skewed in favor of the bigger currencies, with Bitcoin alone accounting for around 40% of the total value, followed by Ethereum at 19.6%.

Market cap tells you the total value of a cryptocurrency by multiplying the price of the individual tokens by the total number of tokens in supply. Popular tokens have more demand and may offer lower risk and better returns down the line.

While it can give you a good idea about the popularity and legitimacy of a cryptocurrency, it should not be the sole determining factor for investment. For instance, Dogecoin is a crypto that has a high market cap and investor interest purely based on online hype.

#2. Current Supply

Bitcoin has an astronomically high value due to its extremely limited supply. There are already 18.7 million mined tokens, with just 2.3 million waiting to be mined – for a total of 21 million tokens/coins.

The combination of an increase in demand and low supply drives up the price of the token, making it more attractive from a long-term investment perspective.

Many blockchains like Ethereum also “burn” a percentage of available tokens, deleting them from the supply altogether. This is often used to reduce the overall supply, improve the prices, and maintain balance in mining/staking circles.

It can also have a beneficial impact on investors, increasing the value of the token. Factors like current circulation, demand, and future supply can help you figure out if a crypto will have more or less value later down the line.

#3. The White Paper

Most cryptocurrencies are developed with a certain vision and some specific goals. Blockchains and tokens are developed to solve problems. A white paper is an official document from the project developers that outline the vision, goals, and stated roadmap of a cryptocurrency.

The best cryptocurrency white papers have the following features:

  • A clear vision and ambition to solve a major problem in the market.
  • Practical roadmap with realistic milestones and achievable goals.
  • Transparency and clarity regarding governance, and other aspects of project management.
  • Written in lucid language and presented with attention to detail, without excessive grammatical errors or poor formatting.

The quality of a white paper can often help you identify promising blockchain projects and outright reject scam offerings. Avoid making any investment decision without at least reading the white paper once, especially when dealing with lesser-known cryptocurrencies.

#4. Use Cases

Bitcoin may be the most valuable cryptocurrency on the market, but the most useful blockchain ecosystem is Ethereum. Tokens with a well-developed ecosystem of apps and different use cases will have a better chance of attracting new users and investors.

Tokens with wide acceptance can command high values in the trading markets. Ethereum is the perfect example of this process in action – it has a flexible blockchain ecosystem, where developers can create new tools and apps to solve different problems.

Bitcoin creates value solely from its demand and rarity, a bit like a digital version of gold. Ethereum has applications in diverse areas like smart contracts, Non-Fungible Tokens, and Decentralized Finance (DeFi).

Crypto Investment: Beginners’ Tips and Strategies

These are some basic tips to keep in mind when investing in cryptocurrencies. Please note that this should not be taken as investment advice. Do due diligence and research about individual cryptos and consider their market risks before investing.

Use Money You Can Afford to Lose

Crypto investing is a high-risk high-reward endeavor. Even with extensive research and proper planning, there is no way to predict the price movements within the market with any degree of certainty.

Never use borrowed money to invest in cryptocurrencies. If the funds have other pressing use cases, like paying your bills, clearing your debts, or your retirement fund, address those needs first.

Diversify Your Crypto Assets

Investing all your money into a single token is often a bad idea, even if that token is something valuable like Bitcoin or Ethereum. In the beginning, you can start small with tokens in the top 5 or top 10 lists by market cap.

In due time, with experience and confidence, you can consider exploring smaller projects outside the top 10, with higher risk and of course, greater reward potential.

Then there is also the wide world of NFTs, staking, and other forms of DeFi investments to consider. In the early stages of your crypto investments, stick with the tried and tested ones like Bitcoin.

Take a More Dynamic Approach

The crypto markets are always in a constant state of flux. While you should maintain a long-term perspective, it doesn’t mean that you can just buy some cryptos and forget them for a few years.

Often, the market volatility will present you with interesting options to either cash in and exit with a high profit, or increase your investments by getting an exciting token at a lower price.

If a promising opportunity comes up, don’t hesitate to take your profits and exit. You can even convert those gains into idle assets for long-term staking profits, instead of buying and holding for years.

Join the World’s First Crypto Exchange with 24/7/365 Live Support

The cryptocurrency revolution is here to stay. With trillions of dollars pouring into crypto markets each year from businesses and individual investors, crypto investment opportunities are rapidly evolving and maturing.

But there is still massive untapped potential out there in the world, with over 7 billion people yet to try the benefits of investing in cryptos. The secure crypto trading exchange H2cryptO has been designed to democratize the crypto markets and make them more beginner-friendly.

At H2cryptO, we are the world’s first cryptocurrency exchange to roll out 24-hour live support for all our clients. You can buy and trade Bitcoin and all other major cryptos on the platform with consummate ease.

Join H2cryptO and start investing in just a matter of minutes. If you have any doubts or queries, feel free to contact our support team using the options available here. Get started with crypto and H2cryptO today!