5 Steps to Your First Cryptocurrency Investment
Before making any type of investment, it is essential to have a solid understanding about what you are investing in. Start off by understanding the essentials about blockchain technology and cryptocurrencies, you can find the basics here.
If you are convinced about this breakthrough technology, let’s get going step-by-step:
Step #1: Convert Fiat Currencies into Cryptocurrencies
The process of converting cash into crypto is still time consuming and complex, this is a sign that you still form part of the early investors.
There are numerous ways to successfully complete this step. Nevertheless, the most recommended way is by visiting the Coinbase website and signing-up for an account. This is the simplest way to convert fiat currencies into cryptocurrencies.
Step #2: Provide Your Credit Card or Bank Account Information
After providing your credit card/bank account details, it may take 2-3 business days to receive your funds. Once received, you have an option to make an investment in four distinct cryptocurrencies:
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Ethereum (ETH)
- Litecoin (LTC)
All of the coins above currently form part of the top 5 cryptocurrencies, with Ripple (XRP) being the only one that is not available for purchase through Coinbase.
You will not necessarily hold on to these cryptocurrencies, they can be transferred to other exchanges where you can buy numerous other coins.
In the next few steps we will discuss the options
Step #3: Transfer Cryptocurrencies
After having acquired your first cryptocurrencies, you have the option to transfer them to a digital wallet on your personal computer at home or to an exchange.
If you decide to transfer to a wallet, you have to make sure it’s a wallet of the same type. For example, if you purchase Ethereum, then you may transfer your ETH to an Ethereum wallet.
In order to transfer the cryptocurrencies from Coinbase to your wallet, you will need to click “Send” on your Coinbase account, enter the address of your personal wallet and define the amount you desire to transfer. Be aware that it can take anywhere between 2-15 min for them to transfer and show up in your wallet.
Examples of wallets include:
- Ledger Nano S (Hardware Wallet)
- Trezor (Hardware Wallet)
If you want to trade the cryptocurrencies that you have acquired from Coinbase for other alternative coins (“alt coins”) then move to step #4.
Step #4: Open an Account on an Exchange
Open an account with an exchange that trades the cryptocurrency that you seek to obtain. You can check on which exchanges your desired coin is being traded utilising a website called Cryptocurrency Market Capitalizations. Below is a series of images that demonstrate where you can obtain this information.
Note that the website ranks the exchanges based on the trading volume of that given coin (higher ranking = higher volume).
Once you have identified the exchange, in most cases you will have to make an account, providing your personal information.
Let’s take Bittrex as an example. Bittrex is a common exchange that allows you to trade most of the more popular cryptocurrencies. Once signed-up and logged-in you will see a tab called “Wallets.” In this section will show you all the account balances. Next to each coin you will see a “+”or a “-“. To “Add” or “Deposit” coins, press the “+” button, which will reveal the address to which you have to send them.
Copy the address and go to where you have your coins stored (Coinbase and/or personal wallet) and locate the “send” or “withdraw” section. Once located, enter the Bittrex address that you copied and enter the amount you want to transfer.
Once sent, your transaction will show up in the “Pending” section of Bittrex, it can take about 10 mins depending on the coin type. When the transaction is confirmed, it will show up in your balance and you are ready to trade.
Simply search for any of the coins you desire to attain and place a “Bid” (a buying order).
Examples of exchanges include:
Step #5: Monitor Your Investment
Cryptocurrency Market Capitalizations is a quick and easy tool to use to have an overview over your investment. The website lists out all cryptocurrencies that are tradable in the market, providing information such as: 24h fluctuations, market capitalization, etc.