How to start investing in cryptocurrencies from scratch

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18 de May de 2023

To start investing in cryptocurrencies from scratch, we will quickly review some very simple basic concepts.

We will delve into the different options available to start buying cryptocurrencies and how to do it with any of them. You will see that it is also super easy.

After this, I will talk about aspects that I consider you should know before starting to invest in crypto, such as the most profitable cryptocurrencies today, the money needed, or what you should do with them once you have acquired them. I hope you enjoy it and that it is enjoyable.

What are cryptocurrencies?

Cryptocurrencies, also called cryptocoins or cryptoassets, are a digital medium of exchange and payment. They are simply an alternative to traditional or fiat money payment. They use cryptographic methods to secure your financial transactions, control the creation of new cryptocurrency units, and verify the transfer of assets.

They are a decentralized alternative to digital currencies. This is something that attracts attention, since many people see it as a disadvantage and, in reality, it is the opposite. Being decentralized means that your money is NOT controlled by a central authority or government entity, such as a bank. Instead, the currency network operates autonomously and is maintained by the users who participate in it.

Key characteristics of cryptocurrencies

  1. Accessibility: you can buy Bitcoin from €1 practically. There is no entry barrier as in other financial assets such as indices or futures, for example.
  1. Transparency: directly related to decentralization. The transactions we make using cryptocurrencies are validated by other users, recorded on the blockchain, and can be consulted.
  1. Profitability and volatility: volatility can be scary sometimes, those fluctuations in the price of Bitcoin, for example, in such a short time. However, thanks to this, we also have great opportunities to obtain profitability or profits with our investment.

 

How to invest in cryptocurrencies from scratch

We will see 4 different ways to invest in cryptocurrencies. You will see that there is no better or worse way, it will all depend on how you want to do it: anonymously, simply, or in the safest way possible. Now you will understand, let’s see it.

1. Exchanges

It is the most popular method to buy cryptocurrencies today. Investing through an exchange is very easy and within reach of anyone. It simply involves a few simple steps that you can do from your computer or mobile device. The steps are:

  1. Find a secure exchange (Binance, Coinbase, KuCoin, etc)
  2. Open an account: At this point, you will be asked for KYC verification and various data.
  3. Choose the crypto asset you want to invest in (Bitcoin, Ethereum, Ripple).
  4. Enter the amount you want to buy.
  5. Complete the purchase: You will have different payment methods available depending on the exchange.

As I said, it is very simple and you can do it from your mobile device in a few minutes. The problem is that many people associate the exchange with a broker and leave their assets and funds directly in it. This is a huge mistake, as exchanges can and often do suffer constant attacks from hackers. If you leave your cryptos in a exchange, it can pose a serious danger. Acquire your cryptos on the exchange but store them in a cold wallet, safe from dangers and theft.

2. Buying at ATMs

ATMs like Bitbase are becoming more and more common in cities around the world.

cajero bitcoin

Through these ATMs, you can buy Bitcoin or any other cryptocurrency directly and send it to your wallet. The steps will be as follows:

  1. Choose the cryptocurrency you want to buy.
  2. Enter the amount you are going to buy.
  3. Scan the wallet where you want to receive your cryptocurrencies.

If you are looking for a secure cold wallet, I recommend ours. It is very simple and the safest on the market for storing Ethereum or Bitcoin.

3. P2P Platforms

These are platforms where users can buy and sell cryptocurrencies directly with each other, without the need for an exchange. These platforms provide a place where crypto buyers and sellers can meet and transact with each other. Users often prefer P2P platforms to escape fromnew European Union regulations and also at the national level in Spain. Among its advantages are:

  1. Anonymity: P2P platforms offer users the possibility to buy and sell cryptocurrencies without having to provide personal information, which increases the anonymity of transactions.
  2. Less control: users have greater control over their transactions and their cryptocurrencies, without having to rely on exchanges.
  3. More competitive prices: often these platforms offer more competitive prices than exchanges.

 

4. Buy from Material Bitcoin

On our website you can buy Bitcoin completely securely, we are a company registered with the Bank of Spain and fully regulated. The advantage of buying Bitcoin on our website is that you will send your Bitcoin directly to a cold wallet. It can be ours or it can be another one. The advantage is that ours is anti-hackers, bumps, floods and even fire. With it, you have a 100-year guarantee. I’ll tell you step by step the process you should follow.

  1. You enter here.
  2. You scan the QR code of your wallet or enter the public key of your wallet.
  3. You start the purchase process.

compra bitcoin material bitcoin

You can buy through Apple Pay, Google Pay, credit card and bank transfer. If you don’t have a wallet, buy it from our website and then add Bitcoin to it.

Cryptocurrency investment strategy

To start investing in cryptocurrencies, you can follow different investment strategies. Let’s look at them one by one in detail.

1. DCA strategy

The DCA (Dollar Cost Averaging) strategy is a very simple way to invest in cryptocurrencies for anyone, including novice investors.

This strategy consists of investing a fixed amount of money in cryptocurrencies at regular intervals, regardless of whether the price has gone up or down at that time.

For example, if you decide to invest $100 in Bitcoin every week for 10 weeks, regardless of whether the price has gone up or down during that time, you will have invested a total of $1,000 in Bitcoin over 10 weeks.

The idea behind the DCA strategy is that by investing a fixed amount of money at regular intervals, you reduce the risk of buying at the market peak and also reduce the risk of missing out on investment opportunities if the market recovers after a fall.

The DCA strategy also allows you to avoid the need to make precise predictions about market movements, as you are investing a fixed amount at regular intervals, regardless of the cryptocurrency price at that time.

2. Systematic purchases (at key intervals)

Unlike the previous investment strategy, with systematic purchases, you wait for the chart to do something, to see an opportunity. You don’t have to be a stock expert or know charts to follow this strategy. Perhaps you see news and decide to buy, or you see the chart drop and decide it’s a good time to buy.

The idea is to make systematic purchases driven by a stimulus (news, rumors, drops in the chart).

3. Trading

Trading is about making profits by catching small price movements. To trade, you need to educate yourself, as you will use indicators, support and resistance levels, entry patterns, etc. The idea is to know exactly what the chart is telling us and predict its movements.

4. Buy signals or alerts

These are alerts or signals that you usually hire experts to receive when there is one of these opportunities on the chart.

We have our own Bitcoin buy alerts service. We have an AI or artificial intelligence that tells us which moments are a good buying opportunity, giving it a weighting of better entry or much better entry. What we do is assign a grade to that entry that the Artificial Intelligence offers us and, in this way, we calculate the % of risk of each of these opportunities.

You will simply receive an alert when it is time to buy. If you are interested, here is our buy alerts or signals for buying bitcoin service.

Hodling vs Trading

hold y trading

Hodling

Hodling refers to buying cryptocurrencies and holding them for a long period of time, while trading involves buying and selling cryptocurrencies in shorter periods of time with the aim of making a profit.

Now, what are the advantages and disadvantages of each of these strategies? If you decide to hodl, a big advantage is that it’s less stressful, as you don’t have to constantly monitor daily market movements and can trust that over the long term, cryptocurrencies will tend to increase in value.

Additionally, if you believe in the long-term potential of the cryptocurrency, hodling will also allow you to benefit from any price increase that occurs over time, as it’s up to you when to sell. For example, Bitcoin can be a good long-term investment.

To mention some disadvantages of hodling, it doesn’t guarantee immediate profits, and you may have to wait a long time before seeing any returns on your investment. Additionally, if the market moves against your expectations, you’ll have to wait for the cryptocurrency price to recover in order to make a profit. That’s why you should hodl with extra money, that is, money you don’t need. Don’t put the money from your mortgage into hodling.

Trading

On the other hand, if you decide to trade, the big advantage is that you can make profits more quickly by buying and selling cryptocurrencies in shorter periods of time. Trading also allows you to take advantage of market opportunities and capitalize on price movements of cryptocurrencies to make a profit. But trading also has disadvantages: it’s more stressful and requires you to be aware of daily market movements in order to buy and sell at the right time.

If you don’t have enough experience and knowledge, you may make wrong decisions and lose money instead of gaining profits – in fact, it’s the most likely outcome if you decide to venture into it. Trading also involves buying and selling commissions that can reduce your profits.

To be clearer, trading has greater risks, but if you have enough training and experience, you’ll also have greater opportunities to obtain short-term benefits. Holding does not involve as much risk or training, but it does require patience in the very long term.

What is the most profitable cryptocurrency?

It depends. I know it’s one of the worst answers you can receive when you ask a question, but I’ll tell you why. What you just read about holding and trading is before this section for a reason. And that’s because some coins will compensate you for holding them, while others will do so for trading.

For holding, I would look at the historical chart, its trend, and the cryptocurrency’s own project – that is, what’s behind it, what it’s used for, its applications, etc. It’s something like a mix of technical and fundamental analysis. For short-term trading, you’ll look for volatility and pay more attention to technical analysis – that is, the chart itself and its movements. You’ll care less about the overall trend because you’ll be hunting for small price movements, whether bullish or bearish, since trading allows you to make money when the market goes down – this strategy is known as short-selling. However, to name a few, the most profitable cryptocurrencies could be:

1. Bitcoin

bitcoin criptomonedas

Bitcoin is the first cryptocurrency and already has a fairly robust history compared to other cryptocurrencies. Its underlying trend is clearly bullish. Additionally, it is the first in terms of market capitalization. With only 21 million Bitcoins in existence, its value increases as demand increases and supply dwindles. It is also secure, as it is decentralized and not controlled by other companies.

2. Ethereum

ethereum

Behind Bitcoin, we have Ethereum in terms of market capitalization. It also has a bullish trend. This cryptocurrency is highly valued for its project, as it is the basis for the creation of smart contracts and decentralized applications, which means it has great future potential for solving problems in areas such as banking, data management, or electronic voting. It has a great team of developers behind it and high long-term potential.

3. XRP

XRP may be a bit riskier than investing in Bitcoin or Ethereum, but it still has a fairly positive underlying trend. The technology behind XRP allows for fast and economical transactions worldwide, particularly attractive for cross-border transactions where fees and transaction times are often high.

4. Cardano

cardano cripto

Cardano is a cryptocurrency that uses an innovative approach in its blockchain technology, making it more secure, scalable, and sustainable than other cryptocurrencies. In addition, its development team is composed of renowned experts in the industry, increasing confidence in their ability to continue improving and evolving. Its goal is to carry out a large volume of transactions while ensuring security. It also has a large community of committed followers and users, indicating strong support and demand in the market. In addition, its adoption is increasing, with significant projects and institutions joining its network.

How much money do I need to invest in cryptocurrencies?

As we said before, cryptocurrencies are much more accessible than other financial assets such as futures and indices. As for the amount, there is no minimum as such to invest in cryptos. Some exchanges have a minimum amount of $10 and on others, such as Coinbase, you can start investing even with $2. As you can see, it is super accessible for all those who want to start. Still, I recommend that you educate yourself at least a little before you start.

How to start educating myself about cryptocurrencies?

Well, it’s simple, start by getting a general idea of how they work, and what is most important in this exotic world. Here are some options for you to train yourself based on your current level and desired level.

  • If you’re a beginner:

For this, we offer our crypto articles, which will give you a general idea and the necessary knowledge to start investing and delving deeper.

  • If you have intermediate knowledge:

For more knowledge and an intermediate level, we recommend our more comprehensive cryptocurrency course, which will help you understand charts and price movements.

  • If you’re seeking advanced knowledge:

Finally, if you’re looking for a personalized and complete trading course, we recommend the Professional Traders School, where you’ll learn how to profit from cryptocurrencies and other financial assets, regardless of the market situation.

Where should I store my cryptocurrencies?

No matter how you acquired them, once you own cryptocurrencies, you must store them in a secure location. Cryptocurrency wallets are designed for this very purpose. There are hot and cold wallets, with hot wallets being connected to the internet and used for easy transactions, while cold wallets are used to store cryptocurrencies safely and out of harm’s way, as they are not connected to the internet.

material bitcoin wallet

 

Usually they are combined, traders often have both, storing the larger amount in a cold wallet and small amounts in hot wallets to be more agile in their trading.

If you are going to store cryptocurrencies for the long term, I definitely recommend a cold wallet. And not only that, but I recommend our Material Bitcoin plate  because it is not only the safest on the market right now, but it is also very easy to use.

We offer a free personalized assistance service and have many video tutorials solving any doubts that may arise. It is a way to buy Bitcoin or Ethereum without headaches, thinking about making your savings profitable in the long term.

You can start right here and today. I hope I have helped you with this tutorial on how to invest in cryptocurrencies from scratch. If you think I have overlooked any important topic that you would like to delve into, just ask me in the comments and I will try to solve it as soon as possible. Good luck in the crypto world!

David - Material Bitcoin

David - Material Bitcoin

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