Basics to Investing in Cryptocurrencies

You might feel that you have missed the opportunity to profit from the crypto market, but the opposite is true. Cryptocurrency is a baby and still has a lot more room to grow. However, before you begin throwing your money into this market it’s important to do the proper research. Please answer the following questions before investing:-

1) Do you understand what Bitcoin is?

2) What problems is Bitcoin trying to solve?

3) Do You understand what Blockchain is?

4) What are miners?

The more you understand what bitcoin is the more you’ll understand how other coins, such as Ethereum, work. You can research all this yourself through Reddit, Google and Youtube.

The Market

Please don’t make any wrong assessments, Cryptocurrency is a market and it behaves like any other market. The stock market, Real estate market, tulip bulb market and now the Crypto Market all behave the same and the basic principles can be applied. It’s important you understand this and don’t believe that this is “different” and the rules don’t apply here. The more you understand how markets work, the smarter you’ll be with your investment. Here are some good books about investing:

[A Random Walk Down Wall Street] (https://www.amazon.com/Random-Walk-Down-Wall-Street/dp/B0118LNMA4/ref=sr_1_1?ie=UTF8&qid=1500844237&sr=8-1&keywords=walk+down+wall+street)

[The Bogleheads’ Guide to Investing] (https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/1118921283/ref=sr_1_4?s=books&ie=UTF8&qid=1500844559&sr=1-4&keywords=bogle)

[The Intelligent Investor] (https://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661/ref=sr_1_1?s=books&ie=UTF8&qid=1500844611&sr=1-1&keywords=intelligent+investor)

The Four Pillars of Investing

Investing Rules

Not everyone will agree, but long term holding is the safest way to make money while you invest. Below are the strategies for long-term investing.

1) You can’t time the market. No one has ever successfully timed the market consistently over multiple stocks and the crypto market is no different. Stay away from being a day trader and avoid trying to “guess” the highs and lows. Sure, some people have better luck than others but the risk/reward is high in doing this.

2) Don’t sell/buy on emotions. A quick search in this community and you’ll find story after story of people panic selling when the price drops or buying high because they are afraid of missing out. Don’t make this mistake! If you truly believe in what your investing and you are holding for the long-term then it doesn’t matter what happens from day to day. When the price drops, that is a perfect opportunity to buy more, not sell. If you can’t handle the ups and down of the Crypto Market then you probably shouldn’t invest. Don’t be one of those guys who buys high, sells low.

3) Invest only what you’re willing to lose. This seems like common sense, but it needs to be said nonetheless. You don’t throw all your retirement money, savings, etc. into the Crypto Market (really, any market) no matter how much you believe in it. If you have so much invested that it’s causing you to have restless nights, affect your health or mood then you’re investing more than what you should. I personally invest 10% of income, 20% if I have no debt. If you are young with no family you may be able to invest more. Use your best judgement!

4) Diversify your Portfolio. We all heard the saying “Don’t put all your eggs in one basket” and that applies here too. If you want to make it simple, just invest in your top 10 and put a bigger percentage in the safer coins such as Bitcoin an Ethereum. By diversifying your portfolio, you decrease your risk, and that is what we’re all trying to achieve.

5) Understand the coins you’re investing in. You’d be surprised how many people go to Reddit and see a highly voted comment saying “Buy XYZ” and they listen and buy it without doing any research. If you see a coin that is popular take that as the first step in researching the coin and then make an informed decision. What problems is company trying to solve? How active are the Devs? Do they have a community online? How active is it? These are just the basic questions you should be asking. There is a post on this sub that goes into more details about this. You can find it HERE

6) Stay away from ICO’s The book “A Random Walk Down Wall Street” goes into detail about IPO (Initial Public Offering) and how there is substantial evidence to stay clear from them. ICO’s (Initial Coin Offering) are like IPO’s but much riskier. There are many “Coins” who are taking advantage of this and are making some easy money. Here is a quote from Nic3up from his post HERE

Anyone can make a whitepaper, build a bootstrap website and then fill it with pseudo technological jargon terminology; and it’ll seem legit enough for a community to follow it and give them millions of dollars in mere seconds.

Wallets & Exchanges

Okay, you did all the research, you know what coins you want to invest in and are ready for the next steps. I would recommend going HERE to learn all about this. After that, you’re on your own but hopefully you are much more prepared.


Thank you for reading this far! I know there are a lot more details I could cover but this is meant to be a basic beginners guide. If I missed anything or am wrong about any details I provided please let me know.

EDIT: I wanted to add a few things for clarification.

Dollar-Cost Averaging (DCA)

This is another tip you can do if you are uncomfortable investing all your money at once. If you have a $1,000 you can invest $250 every week on the dips. For example, if you bought XYZ at $40 one week and $30 the next week your average price would come out to $35.

Don’t Forget The Risk Factor

Please keep in mind that investing in anything will always come with a certain degree of risk. The goal is to the minimize that risk as much as possible. Sure, a few people get lucky but more people lose everything believing in getting rich quick.