Before you think of investing into cryptocurrency, do not just rush in because a friend told you about cryptocurrency, a certain social media hype or a Youtube video excited you about it, and you start throwing money sporadically at it. When you do so you’ll be running down the ditch. Do some research into it- spend some time to understand what cryptocurrency is? Probably a knowledge or a little knowledge of what blockchain technology is, the type of cryptocurrencies before investing. My previous blog post/Youtube video addressed this topic, you can probably check on it.
Before investing in cryptocurrencies you need to consider the following:
- Understand the type of Cryptocurrency you are investing in
Before you chose a cryptocurrency to invest you need to research into that crypto by considering the following indicators:
- What is the technology behind it?
What is the use case of that crypto? what problem is it solving? what technology is it addressing? Because cryptos comes with numerous innovations and technologies. If you research and find its use case interesting and convincing to you, then you can mark it as a potential investment opportunity.
- Read the whitepaper of that Crypto
A whitepaper is a document made available by the developers that shed light on the technology and purpose of the crypto project they are embarking on. It tells prospective investors how the crypto project was visioned, the paramount issues it is solving thus, its purpose. It could contain diagrams, statistics and formulas. It can also contain the working team behind the project; the personalities behind it, what their education or tech background is; their tech achievement background, successes they’ve recorded in previous projects Etc. very important in making the project valid and trustable.
Where can I find cryptos whitepaper? You can locate crypto white papers on the project website or another place you can check the whitepapers is to check on a site known as Coinmarket cap on Coinmarket cap.com.
- Social media following
If the project has a strong Social Media following will give a clue that it has a good community base that supports it. One need to do due diligence by finding out if the crypto has a strong community that believe in it on platforms like X, Reddit, Instagram etc.
- What is the TVL of the crypto?
TVL means Total Value Locked. It is the total amount of user funds deposited in a decentralized finance (DEFI) protocol. These funds could be trusted to the project for several purposes such as staking, lending etc. Examples include; Uniswap, BlockFi and platforms that allows staking such as Binance, Lido etc. In most cases you can find the TVL of a crypto on platforms such as DeFIPulse, DeBank, DeFiLama etc. The higher the amount, the more trust people have in that project- it denotes the popularity of the project which reflects the number of active users. This is one of the strong indicators to validate the robustness of a crypto project.
2. Create a Crypto Wallet for storing your Crypto
A Crypto Wallet is where your crypto is safely stored and secured with a private key, in this case only you can access wallet. It could be hot wallet-wallet that is created with an online app or access through the internet such as the Exodus wallet, Phantom wallet, metamask wallet etc. They could also be offered freely on platforms or exchanges where crypto is purchased. It could also be a cold wallet or hardware wallet-a wallet that allows you to purchase and store your crypto off the exchanges or without relying on the online wallets or the internet for storage; it is considered more secured since it allows you to store your purchased crypto offline and away from possible attacks from scammers or hackers. Examples include Ledger nano S, ledger nano X and Trezor. In case you are interested in purchasing one, you can visit their site https://www.ledger.com/ to make a purchase and it will be shipped to you no matter where you are located in the world.
- Invest at the right time
After you have identified your choice of crypto/cryptos the next thing that comes to mind is to start to invest. But should you just rushed in to invest immediately? Well, I will advise you take a pause and understand the market condition/situation at that point you think of investing, in this case you need to understand what is known as Crypto bear market and Crypto bull market.
The bear market is when the market is in a steady decline to the downside, this can happen due to political uncertainties, economic recessions, general fear and greed index been high, sometimes what is suspiciously known as ‘’whales manipulation’’ etc. can trigger the market to experience a volatile decline. It is at this point that any smart investor will like to invest because most of the coins become cheap or relatively cheaper to invest and then wait for a price uptrend to harvest some profits.
On the other hand bull market is where there’s an uptrend which can witness the market sometimes skyrocketing into all times highs; it is this point that profits are made and depending on the level of the profit rise and amount invested can possibly turn people into crypto millionaires or harvesting some juicy profits.
In light of this, before you invest you need to take the above into consideration, and make sure you invest at the right time, thus during a bear market and not invest in a bull market where people are taking profits. A lot of new investors make this mistake and regrettably throw themselves in hot waters.
- Security
Once you take that step to deal with crypto, know that you are obviously going to be dealing with the internet space which is not free from hacks, virus attacks, scams etc. therefore there’s the need for you to take the security of your Wallets very seriously. Unlike the traditional banks where that burden of security is handled for you, with crypto you are the one to take care of that,, because is seemingly considered as personal banking. Once someone hacks your account all your funds can be drained easily. You need to do the following to ensure your device/wallet security;
- Install the latest anti-virus on your device-laptop/phone etc. and keep updating it.
- Do not use Mozilla firefox as the browser for your crypto transactions, some people consider it not to be secured, therefore use browsers like the brave browser which is regarded to be more trusted and secured to use.
- Do not use and old email address you have been using over time, especially an email you have used in your Facebook accounts or a lot of online activities. Create a new secured email address, and I recommend using protonmail which is considered to be highly secured.
- Create a strong password for your device/devices and back that with Google Authentication also known as 2FA.
- Plan out the investing
The mistake beginners do including me was putting all my cash in quickly without a define strategy. When one does this you can easily run into loses especially if you do not study the market well to understand the price trend. It is good to strategically invest gradually by relying on what is commonly known as DCA- Dollar Cost Average, in this case if you have say $ 1,000 to invest, instead investing all at once, you can divide the money into 4, thus 1,000 divided by 4 will give you $ 250, so you can probably buy when the price seemingly indicates a rise and fall pattern or during a market correction or steadily falling to the bottom so you don’t lose so much or miss substantial gains. When this strategy is applied, you can be assured of been on your way to becoming a smart and strategic investor because you will be able to hedge yourself against much loses but balancing your portfolio with steady gains.
- Find a platform to purchase some crypto
After the above are put in place, is time to now head over to purchase your first crypto. Locate a crypto platform where you can purchase some crypto, there are quite a number of platforms out there you can purchase some crypto from but not all are available in all countries. Some of these include; Coinbase, Kucoin, FTX Exchange, Binance etc, but in case you are in Africa especially in Ghana you can safely purchase crypto with the local Ghanaian cedis from ecurrency4u or a site known as Paxful.com which is a Peer to Peer platform.
Conclusion
Cryptocurreccy is now and the future, investing in it can put one in a good financial position if you understand and find a good crypto project to invest in and invest at the right time. Also, make sure to not over spread your money, as a beginner probably with little money you can just chose some few cryptos to invest especially invest in the more trusted ones that have stood the test of time such as Bitcoin and Ethereum. Remember crypto is not a get rich quick investment, you need to be patient with your investing.
Dizcova Yourself in Crypto!!
Happy investingy
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