Buying Your First Crypto? 7 Things You Should Know

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Cryptocurrencies are quickly reaching a wider audience, with an estimate of 1 in 10 people investing in them. Currently, crypto investors translate to more than 100 million people around the world. Today, many top companies are offering their customers the option of paying for products and services using cryptocurrencies. 

The most valuable cryptocurrency is Bitcoin which is roughly $48,000 per coin. Just like any other cryptocurrency, its value is highly volatile. For instance, the price of bitcoin was $63,000 per coin in April this year. There has also been a surge in other cryptocurrencies such as Ethereum, Dogecoin, UFT, Ezy, and some 4000 others in existence as of January 2021. 

If you are wondering whether to invest in your first crypto, here’s 7 things you need to know.

1. Always Do Your Research

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There is a lot of vague information when it comes to investing in cryptocurrencies. Doing your research will equip you with enough information to know how it works, what types of cryptocurrencies are there, and what you can buy with it. It also helps you understand what market prices mean and find out about the latest news on a particular coin. Some useful sources of information include community forums, podcasts, and social media platforms like Twitter.

2. Don’t Invest More Than You Can Afford

Investing in crypto holds the biggest risk compared to other investments. It is a highly volatile asset that keeps fluctuating in market price. While its high-risk nature makes it possible to cash out big returns, you can equally make big financial losses in a short amount of time. In addition to extreme fluctuations in market price, crypto is unregulated in most cases. There is no Federal Deposit Insurance Corporation (FDIC) insurance for crypto or a buyer of last resort.

3. Resist the Fear of Missing out (FOMO)

Jumping on the crypto bandwagon based on several people trading in it may not always give you the best results. The best way to invest is to assess your finances, evaluate the merits and plan carefully. 

4. Beware of ‘Unit Bias’

It is easy to assume that bitcoin is more expensive since it trades at about $48,000, while Ethereum, for example, trades at about $3,500. However, not all coins are equal in development and implementation. Hashrates and security models may also influence market gains. For instance, the price of Dogecoin was up by 13,500% since the start of 2021, as opposed to bitcoin, which was up by 89%. 

5. You Can Buy a Fraction of a Coin

It is not mandatory to buy a whole coin. Bitcoin, for example, can be bought to the eighth decimal so that you can purchase bitcoin for as little as $10-$25. 

6. Don’t Trust, Verify First

Though the crypto market is implemented on blockchain technology, it still is prone to scammers and fraudsters online. For instance, a recent impersonation of “Saturday Night Live” led to the alleged defrauding of people out of crypto worth $5,000,000.

7. Start Small

To better understand the market, start by investing small amounts of money in one type of cryptocurrency and grow from there. It is important to remain patient despite extreme market fluctuations and average your crypto value based on a long-term view.

Quick money may be the motivating factor behind considering buying your first crypto and striking it big in the global market. However, crypto has just enough potential to cause as much financial loss as its potential to earn.