Chapter 6: The Process of Investing in Crypto
Now that you learned all the theories about crypto trading from chapters 1–5, you might be wondering what the practical steps consist of. In this Crypto Fundamentals chapter, we will explore what the actual process of investing in cryptocurrencies involves, so make sure to put on your thinking hat and decide how you can apply these in your own trading.
In recent years, cryptocurrencies have emerged as an asset class that provides you an opportunity to invest and earn substantial incomes. Their massive popularity has grown all over the world, despite the lack of government backing. The promise of significant returns within a short period has attracted investors, further reinstating their potential.
However, the growth of online investments has increased fraud cases, and cybersecurity has become a great concern. As a new investor, you are required to familiarize yourself with the process of crypto investing to avoid falling into the hands of online scammers. Here are some steps to take that will enable you to invest in these digital currencies:
1. Select the Right Crypto Exchange
With the worldwide lack of crypto regulation, cryptocurrency trading lacks a fixed structure or uniformity. Exchange platforms fill in this gap by creating a platform to buy, sell, and store your digital currencies. Thus, choosing a reputable crypto exchange platform is critical when investing in cryptocurrencies.
2. Open a Trading Account
You have already selected the Crypto Exchange platform, now open an account with the platform. The trading account is similar to your bank account; you will be required to provide credentials for verification to complete the registration process. The services you select, the amount you intend to invest, and the available coins trading options will determine the registration details you will be required to provide. In most cases, the trading platforms will ask for your KYC (Know Your Customer) data, including photo identity, PAN card, and proof of residence (address). In addition, you will be required to set up the appropriate payment option.
3. Add Funds to Your Account
How much crypto do you intend to have in your investment portfolio? The best way to determine the amount to invest is by first deciding how much crypto you want to buy. The explosive rise in cryptocurrencies is appealing, but you also need to remember that digital coins are highly volatile and hard to predict. Conduct some thorough research on market trends to determine the safest amount to invest based on your financial status and availability of funds.
After determining the amount of crypto to purchase, you will have a solid budget. It is time to transfer that money to the trading account you opened in step two to be used to buy cryptocurrencies. You can opt to make an online transfer from your bank to the crypto-trading account. However, this process will require you to link both accounts. Moreover, you may be required to wait for a particular time before purchasing the digital coins depending on the set policies, either by the exchange platform or your bank.
4. Purchasing and Investing in Cryptocurrencies
After opening and transferring money to your trading account, it is time to buy digital currencies. Different exchange platforms — and IXFI is no exception — offer numerous digital coins to choose from. The most common ones are Bitcoin, Ethereum, Cardano, Binance Coin, Tether, XRP, and Dogecoin, among others. Decide on the coins you intend to invest in based on the offers, your market analysis, and funds available.
5. Storing Your Cryptocurrencies
Storing your currencies after making the purchase is the most crucial step. Cryptocurrencies are not backed by any formal financial institution and are not protected by the average insurance policy. Therefore, the risk of loss is higher, especially with the increased cybersecurity cases. It’s recommended that you store your private keys in your crypto wallet. Check our article on crypto wallets to understand what they are, how they are used, and the different types you can choose to keep your crypto assets and codes safely.
6. Maintaining Your Investment
The worst mistake you can ever make as an investor is to forget about your crypto investments. It would be best to have a strategy to maximize your profits by observing the market trends and getting expert opinions. Always start with small investments and grow them over time as you understand the industry and its potential. Here are a few suggestions to maintain your investment:
· Add crypto to your primary investment dashboard so that you can frequently monitor performance and make appropriate adjustments
· Join crypto communities to learn from experts and other investors — a good start would be the official IXFI Telegram group
· Monitor headlines on government regulations, Exchange updates, and market changes — you can also do this in the IXFI News section
Are you still confused about where to start?
You can safely test things on your trusty exchange pal, IXFI. IXFI is an exchange platform that enables you to sell and buy numerous cryptocurrencies and the biggest advantage it offers to beginners is a friendly and intuitive design, so trading is made easier by a mile.
So check out the IXFI All-in-One exchange platform here, and put your knowledge accumulated through Crypto Fundamentals to the test. Practice makes perfect, right?