Interested in getting into crypto? You’re definitely not alone. The space has exploded in recent years going from complete obscurity to drawing the attention of every big player in the investment space.
So should you invest in crypto? Yes, you should.
Love it or hate it crypto is the talk of the town, but more than that its underlying technology is the next big thing in tech. Beyond that, it could even be the next big thing to revolutionize our financial system.
This article will not talk about why you should invest in crypto but also walk you through how to buy and which coins are the best to kick off your crypto investment journey.
What is crypto?
Let’s start by briefly going over what it is and to do that let’s go over what it is not. Cryptocurrency is not a traditional fiat currency.
Not long ago, for every dollar you held, an equal amount of that in the form of gold was stored by the government to back its value. This meant you could go to a bank and exchange your bills for actual gold or silver. Over time this system was eliminated and replaced with the fiat we use today. Fiat money is backed by the government and that value is determined by the strength of the government in the global markets.
A cryptocurrency is a form of tender whose value is determined by the number of people involved in that coin. Every coin on the market has a project or mission it is trying to accomplish. People buy into the currency based on that mission or objective.
The Polar Philosophies of Crypto
You should be aware of the key polar philosophies of the crypto space. As a crypto investor, you will fall into one of these two camps and they will determine your modus operandi in the space.
- Crypto speculator
- Crypto enthusiast
The Crypto Speculator
As a crypto speculator, your primary interests will lie in selecting coins purely on profit potential. In this camp, you will likely not keep up with the details of a coin past your initial discovery research.
The Crypto Enthusiast
As a crypto enthusiast, you have a belief in the changes the technology can bring. You will still look for coins that will give the best ROI, but you will also do this with an eye for projects that bring meaningful changes to the space.
The two philosophies above may sound similar, and there is some crossover, but where the differences scream is when the coin’s performance begins to flounder. The speculator will pull out when the going gets tough and move into the next most promising coin. The enthusiast will hold for as long as it appears the project the coin is working on is advancing meaningfully.
Nothing is wrong with either viewpoint. For the speculator, crypto is another form of investment like stocks or bonds. For the enthusiast, investment is based on global or social impact.
Why Invest in Crypto?
You may not realize it but financial institutions like JP Morgan Chase and Visa are already experimenting with the technology to simplify money transfers and significantly reduce the fees they need to pay.
A number of countries are experimenting with similar technology known as a CBDC. China has replaced its entire fiat system with this technology.
In the gaming space, it provides you something tangible and of value for your time and effort that you can take away with you once you are done with that particular game.
The reality is cryptocurrency is the next logical evolution of our financial system. It offers the benefits of something like a store credit, but with the ability to take that credit and exchange it at any time for any currency of your choosing.
For these reasons, you should invest in crypto, even if only a small amount.
What Coin is Best
Alright, let’s start cutting to the chase, which coin should you start with? For someone new to the space, this question is very easy to answer. There are only 2 you should bother with at the beginning. The original that started it all, Bitcoin, followed by the coin that improved it all, Ethereum.
If you’re going to invest in crypto and you can only choose one, then choose Bitcoin. It has survived every bear market, has the highest value, and holds the majority of the market capitalization. Enthusiast and speculators alike hold Bitcoin and it is even the official currency of El Salvador.
Are you interested in the NFT market? If so, then Ethereum will be your top pic. Ethereum introduced the concept of smart contracts; smart contracts opened the door to decentralized finance and is the technology that allows NFTs to work.
Why Bitcoin?
Bitcoin is tried and true. Is it volatile? Yes. However, over time it has continued to perform. Bitcoin was around 25 cents in 2012 and today stands at 50k+ dollars. It has been able to do this thanks to its design; Bitcoin’s total supply is capped and while more can be mined, the total amount distributed by this process is reduced by 50% every four years. The result has been a catapulting of price each time this event occurs.
Investors consider Bitcoin to be a long-term hedge against inflation and global economic instabilities.
Why Ethereum?
Where Bitcoin led the way with crypto, Ethereum has led the way with decentralized finance (defi). Many other currencies have come along with the vision of taking over the defi space, but Ethereum simply has too much of a head start and too much of the market to be overthrown anytime in the foreseeable future. Like Bitcoin, it has cemented its place in the crypt space and despite its often exorbitant transaction fees, continues to grow.
Where Do I Buy?
Alright, now that you have a coin in mind, where do you buy it? You can find these staple currencies just about anywhere, but in your case, we will utilize what is known as a centralized exchange (CEX). Some of the most popular are:
- Binance (Binance.us for those in the states)
- Coinbase
- Kraken
- Crypto.com
Which you should use is a purely personal preference. Each has pros and cons along with different fees for use. I recommend you explore each and choose the one you feel most comfortable with to begin.
How Do I Buy?
Now we get into the fun part! For this, I will walk through getting set up on Binance.us. The steps will be similar for all the above exchanges. If you do not yet have an account, you can use my referral link to help support the website.
After creating your account, the steps are as follows:
- Verify yourself (Required to make deposits and withdraws to an account)
- Link account and make a deposit
- Buy your crypto!
Verify Yourself
All CEX compliant with US regulation will require this and is part of the KYC process. This step will require entering your name, home address, and an upload of your photo id. Some exchanges may also require your social security number, so please be aware of that.
Once you enter this data along with your photo id, an automated system will attempt to verify it against records on file. If successful, you’ll immediately be able to begin making deposits, should that fail, you may be asked to submit additional documentation to verify your identity. If this occurs, verification is usually completed within one business day.
Link Account & Make Deposit
The next step is to link a bank account or credit card and make a deposit. All exchanges, including Binance, will place a hold on any money that is deposited. The length of the hold varies per exchange but you should expect it to take a few days. During this time you will be able to make trades on the platform but you will not be able to withdraw funds from the platform until the hold is released.
Buy Your Crypto
Alright! You have money on account, you know what you want to get, now get it! On Binance, you select the Buy Crypto nav option, on some exchanges this may be called “Market” but regardless of the name, you will be able to buy. Simply select which currency you want, select USD as the currency you will pay with and that’s it!
What Do You Do Now?
Hold it! I recommend that you move the money from the exchange to your own crypto wallet, but depending on the rules of your exchange you may have to wait a bit for your deposit to clear and the funds on the exchange released.
Once you are ready to move your money, you can learn how from this article.
Congrats, you now know why and how to invest in crypto. As you gain more confidence in the space, you may eventually want to buy coins that can not be found on centralized exchanges. When you reach that point, you can read more about how to do that here. Until then, happy investing!
