Investing in cryptocurrencies

They are volatile and highly unpredictable, leaving even some of the most seasoned fintech companies clueless of their machinations. Cryptocurrencies are definitely something you should invest in. Some of the common how-to’s related to the purchase of bitcoins have been addressed in this article. After reading this article, you will be able to buy cryptocurrency of your choice without running into too many problems.

But first, a general introduction

The biggest cryptocurrencies with the heaviest market capitalizations (at the time of writing this article) are Bitcoin and Ethereum. They are mined by computers which solve increasingly complex mathematical problems and generate a unique code which serve as a cryptographic token. You can either buy bitcoins – which requires a visit to the nearest cryptocurrency exchange – or mine them using your computer.  For the purpose of this article, we would be addressing the former since it is a lot easier.

Which cryptocurrency to buy?

Ever since the advent of the Bitcoin in 2009, various cryptocurrency assets have popped up in the market. This surge of options can overwhelm the consumer who is just buying a bitcoin for the first time.

Here are the following cryptocurrencies which should give you more than your money’s worth if invested wisely:

  • Ethereum
  • Litecoin
  • Ripple
  • Monero
  • Bitcoin

All these can be purchased from third party websites, also known as cryptocurrency exchanges. The most popular (and secure) include Coinbase, Coinmama and Buy And Trade Crypto.

The run down

The first step would be to register for a digital wallet which will be used to store all your bitcoins in a safe place. This will allow you to buy and sell bitcoins securely over an encrypted connection. The three types of wallets you can make use of are i) software wallet ii) web wallet iii) hardware wallet.

Software wallets require you to install software on your computer and mobile device. They give you complete control over your bitcoins but are only as good as the security on your computer.

Web wallets are hosted on third party websites, which are safer alternatives to software wallets because they use the highest levels of security to protect your digital tokens. They are easy to control with a mouse and can always be switched from one wallet to another without much of a hassle.

Hardware wallets are small physical devices which you can fit in your wallet, pocket or safe. They are protected by a pincode known only to you. Some of the popular bitcoin wallets include Breadwallet and Bitcoin Code.

Selecting a payment method

It is convenient and easy to connect your wallet to the bank account. Other options include linking to a PayPal account, credit or debit card, but these usually have their own transaction costs which could eat up a big chunk of your investment. They also have longer verification processes before a successful transaction is completed.

Choose an exchange

These are markets where you can buy and sell your cryptocurrencies. Two of the most reputable cryptocurrency exchanges are Buy and Trade Crypto and Bitthumb.

Using best practices

As is true with everything else on the internet, it is important to utilize best practices and to always keep a watchful eye on the general volatility of cryptocurrencies.