How To Invest In Cryptocurrencies In 2021 – A Free Guide

How-To-Invest-In-Crypto

As you already know, it’s difficult these days to walk into a neighborhood bank or even an investment firm and buy crypto/cryptocurrencies/coins (interchangeable). It’s just not easy because sadly and most frustratingly the whole concept of trading crypto is seen as totally shady and complicated in the realm of financial institutions -when in reality it is not.  It shouldn’t be but alas, this is the state of affairs in 2021.  This article will introduce you to how to invest in crypto and build a portfolio in very simple terms.

Table of Contents

  1. 5% to 10% of Your Portfolio Should be Crypto
  2. Pick Your Cryptoassets
  3. Choose a Platform to Buy Crypto
  4. Largest Crypto Exchanges
  5. Save Your Cryptoassets
  6. Types of Crypto Wallets
  7. Secure Your Crypto

1.   5% to 10% of Your Portfolio Should be Crypto

You’ll need to determine in advance just how much of your total investment portfolio you want to allot to cryptocurrency. With current price drops (the mini crash we’re experiencing), affecting most coins like Bitcoin, Ethereum and Litecoin, it can be challenging to make the right choice.   Thankfully we’re here to help.  As some of you have realized, most investing decision-making is a combination of greed and anxiety.  For many, it’s difficult to maintain the greed part in check specially in light of recent and past developments.  Will prices spike up or will it all go down?  Impossible to know really as the trends in crypto have actually revealed in recent years.

Whatever the case, cryptocurrency shouldn’t make up more than an extremely small portion of your investment portfolio. Precisely, how much is totally up to you but if we had to suggest, we would say that you shouldn’t dedicate more than 5% to 10%.

You have to understand that cryptoassets aren’t financial investments like to stocks.  They are more akin to investing in precious metals like gold or silver, they don’t pay interest or generate returns like dividends. The level of confidence of cryptocurrencies depend largely upon their price going up fast and furiously– and  leveling high for long enough to take profit which we recommend should happen after  your initial investment has at least doubled.
Remember that cryptocurrencies since their inception, weren’t intended as investments, that’s not in their DNA. They are means to purchase and exchange…they ARE MONEY. They’ve widely been viewed as a replacement to fiat currencies, like the dollar, euro and the yuan. It’s been assumed that they’ll ultimately represent an extra efficient way to conduct business, particularly online, due to the fact that their worth is established purely by the market and not by centralized or governmental adjustment like fiat currencies often tend to be.

 

2.   Pick Your Cryptoassets (50% BTC, 25% mid cap coins, 25% low cap coins)

How to know which cryptocurrency to invest in?  This is the real dilemma with cryptocurrencies. There isn’t simply one, two or three to pick from but literally hundreds and thousands.

Making the problem even more complex is that more coins are being “mined” every day and that brand new ones come online regularly.   This reality has to be tempered by the fact that many cryptocurrencies born a few years back have already gone into coma and died…quick, short, intense lifespans that boggle the mind and this “history” has only began not even a decade ago.

So what to do?  Currently, the King cryptocurrency is Bitcoin. It’s also the crypto that’s attracting the most focus and financial investment bucks. In an extremely distant 2nd placement is Ethereum, and others like Litecoin, Dogecoin, Cardano, and also Polkadot.  Therefore you have to have to have a healthy mix of Bitcoin and Altcoins (Altcoin is the name given to every other cryptocurrency or coin out there except for Bitcoin.)

Because of its top dog position, Bitcoin appears to be the most dependable in the crowd of available cryptocurrencies. Bitcoin has actually come to be almost synonymous with “cryptocurrency.” What’s fascinating about this is that while all the media hype has been about Bitcoin and it’s rise and valuation explosion as the top cryptoasset, many other cryptocurrencies have grown, executed and provided returns that are even much better.

To make a long story short, we propose that your cryptocurrency basket ought to be mostly made up of Bitcoin due to it’s dominance. So basically 50% in Bitcoin which is the leader in market capitalization (market cap).  25% in mid cap coins like Ethereum, Litecoin, Cardano, Dogecoin, Ripple, Polkadot, Solana, Chainlink and the final 25% in low cap coins like Monero, Aave, VeChain, Chilliz, PancakeSwap, Shiba Inu, Enjin, Filecon,  etc.   Other cryptocurrencies should reasonably make a much smaller portion of your portfolio. Therefore if Bitcoin as The King of cryptocurrency is risky, any other cryptoasset you should consider holding must also be viewed as even more riskly or speculative.

Take this very seriously.  Realize that many of the cryptocurrencies -hot in their time- that have actually come on the market in the past decade or so have actually either entered a comatose state or vanished totally. And also given the many highs and lows common with cryptocurrencies, your financial investment could vanish entirely with really little notice.

3.   Choose a Platform to Buy Crypto

One of the drawbacks of buying cryptocurrencies is that it’s impossible to buy, sell or exchange them all in a centralized place like a bank or a firm. Banks don’t want to touch them (yet) neither do investment brokerage companies.

Generally, you’ll be limited to acquiring, holding, as well as selling cryptocurrencies on committed cryptocurrency exchanges.

4.   Largest Crypto Exchanges

 

5.   Save Your Cryptoassets

Cryptocurrency is usually stored in a cryptocurrency wallet, which can be either a hot or cold wallet. This is a pretty complicated subject, particularly since there are so many wallets out there. Yet we’ll attempt to boil it down to the basic facts.

A cryptocurrency wallet is a software application program that stores the public as well as personal secrets that link you to the blockchain where your cryptocurrency exists. Wallets do not actually save your cryptocurrency but allow you to access it on the blockchain with your public key (your “cryptocurrency address”) .

Along with enabling you to gain access to, obtain and send out crypto, a digital wallet also presents a document of transactions that are saved on the blockchain, as well as your present balance.

6.   Types of Crypto Wallets

There are numerous kinds of electronic wallets:

Desktop computer wallets are set up on your desktop computer. Because storage space gets on your very own computer, the details is more secure than with on-line wallets.

On the internet wallets are on the cloud and can easily be accessed from any type of computer system. They’re way more user-friendly to use, but your exclusive key is saved online and managed by a third party. This makes them less safe.Crypto Wallets

Mobile wallets. As you can tell and the name implies, this kind of purse/wallet is an application on your mobile. They have the advantage of having the ability to buy items where various cryptocurrencies are accepted.
Hardware wallets. They likewise let you access your cryptocurrency from numerous devices such as a USB key.

Which digital wallet you select will certainly vary depending on the balance between safety and convenience that you choose. Some cryptocurrency exchanges also use electronic wallets for your cryptos.

You can also use software programs to track your cryptocurrency just as you would certainly other sorts of investments. With a Personal Capital’s cryptocurrency BETA -for example- you can input the quantity of crypto you possess, and track it alongside the other assets in your portfolio.

7.   Secure Your Crypto

Keeping your crypto secured after you buy it is very essential. This is even more true if you made the decision to use your cryptocurrency to acquire items or if you have a hot wallet. Primarily anytime you make use of crypto online, you have to ensure that your investment is safe. That’s why we suggest utilizing a VPN like NordVPN to make certain your on-line deals are protected and encrypted.

Your online connection is safe when you utilize a VPN (Virtual Private Network). Having your connection and crucially, your data encrypted means that nobody can see any of your on-line activities. It’s an additional layer of security that ensures both your information as well as your crypto acquisitions are entirely anonymous. It makes it harder for others to hack right into your accounts, particularly for individuals that possess a great deal of crypto. ExpressVPN is another VPN that can assist in safeguarding your accounts and also add an added layer of defense.

Good Times!

Bitcoin has actually had a lot of highs and lows over the years. For example, back at the dawn of 2013, Bitcoin was trading around $130.00 compared to currently trading at $34,860, today June 25, 2021.

So, regardless of where or how you choose to buy, sell and save your cryptocurrency, strap yourself and get used to instability. Cryptocurrencies are much less predictable than conventional financial investments. And also with any kind of investment, it’s crucial to remember that they law of gravity also affects cryptoassets.  What goes up will/can come down!