Getting to know the technology
Those who follow the technology that is related to CryptoCurrencies are convinced that the technology of blockchain will change the world and remain with us forever. Its significance is often compared to that of the internet itself - the technology, they say, will provide and endless number of second layer applications that use the network of Bitcoin. In the early days, the internet was thought to be the same as e-mail only; now, of course, we know that it was the foundation of solutions that turned our previous world and economy upside down.
Stock exchanges, brokers
In order to buy CryptoCurrency, you need to, at least on a basic level, become familar with how the stock exchange works and what the roles of the brokers are. Unless you have someone you trust with up-to-date, working knowledge of this topic, you should take the time and get to know this topic as well in order to use it successfully.
Since this is a new area, many frauds try to make money on people gullibility and greed. It is essential to be able to differentiate between a legitimate crypto-project and a simple con. Therefore, we need to know some basic concepts and be able to use the tools that rank CryptoCurrencies according to their different features. Also, you need to recognize when someone wants to scam you before investing in a project. If the people that want to do business with you are rarely available and you find no information on them, their introductory materials are full of empty phrases without any substance.
Movements of the market
While this is not closely related to the technology itself, this may be one of the most crucial elements of your knowledge. When do people buy? When do they sell? What is it like when the market panics, how do you recognize when it is happening?
Does who have prior experience with stock exchange definitely have and advantage - no wonder that many veterans of the exchange switched to dealing with CryptoCurrencies in the past years. Also, it is worth mentioning that although CryptoCurrencies and the way the move have many common features with the classic stock exchange, dealing with CryptoCurrency is still a completely new are and it is hard to see in advance what will happen in a few years' time.
Long term investment
The first time people buy Bitcoin they usually do it with the aim of leaving their investment alone for a couple of years. They later realize, that no matter where the market moves, they can't not deal with their investment, since more often than not, they put more into it than they should have. Basically, you should never put more into it than what you don't care if you lose, without getting worked up about it.
You can buy CryptoCurrencies from different platforms, brokers and exchanges. You can store them in a specialized electronic wallets or on paper. - we are dealing with how to buy and store them later.
Using the shifting of the exchange rates, most beginners start with this area with altcoins (everything other than Bitcoin). Due to the (seemingly) easy profit, they jump into different deals without thinking them over. Trading goes through CryptoCurrency exchanges like the traditional Forex platform, but we trade with CryptoCurrency instead of USD or EUR. Some exchanges allow you to trade with USD as well, like Kraken. Getting profit from the shifting of exchange ratio is an interesting question - our portfolio might shrink in dollar value, but grow in BTC.
Registration on the site of a broker or a stock exchange
When you decide to buy CryptoCurrencies, you need to create an account on a site that makes buying and selling them possible. Whether its a simple broker or a stock exchange, due to security concerns you will need to go through a somewhat thorough authentication procedure. There are pages where you only need an email address, but on other sites (like, e.g., Coinbase) you may need one of the following:
- a picture of both sides of your ID
- your residency card
- a photo of your passport where your face is visible
- a profile image
If they require a photo that is older than six month, they usually provide the means to take a photo with your computer's webcam.
It is important to adhere to the security measures of the site and use two-factor authentication (2FA). You'll get a code in text message to your phone when you want to login to the site. Your login will only be successful if you provide the right code.
If you already have access to the exchange or broker, you need to select which CryptoCurrency you want to buy from. As a rule of thumb, you should buy when it is low or going down and not when it is high or rising. Choosing the CryptoCurrency you want to buy is always a complex process, so you need to decide first whether you are in for the long run or want to trade. If you want to trade, you'll need to dive into the specifics of trading.
If you "only" wish to buy it and at some point in the future, sell it, and realize some profit, you need to examine the following.
- How popular is the coin? You need to look through the social media platforms - if you see a small(er) community around a specific coin, it is usually a good sign.
- Who are behind the coin? It is important to see who started the project. If there is no information available, it is a sign to consider - maybe it is not a serious and trustworthy piece of work.
- Is that coin trying to solve real problems or is it just a new player in the large field of CryptoCurrencies? If the answer is the former, and you see a down-to-earth approach to a solution, you have every reason to presume that it has a future.
- What does "the internet" say about this specific currency? Do some searching to find out how people on the internet relate to this product.