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Crypto can be an intimidating place for newcomers to the market. There is a lot of information to process, and people often find themselves wondering if they should buy crypto or not.

In this blog post, we hope to answer some common questions that new investors might have about buying into cryptocurrency.

Should You Buy Crypto?

If you are interested in investing in crypto but aren’t sure whether it’s something you should pursue, consider these points:

  • You should buy crypto if you are not happy with your current financial situation and want to diversify your portfolio.
  • You shouldn’t buy crypto if you have a history of investing in high-risk, speculative stocks and can’t handle the emotion of the price going up as well as down.
  • Be careful about how much money you invest and never allocate more than you’re willing to lose. 
  • You shouldn’t buy crypto if you want guaranteed security and stability but instead invest in other types of assets that may provide better returns with less risk, such as stocks or bonds.

Now that we discussed some things to consider before ever buying crypto, next let’s talk about finding the right crypto for you. 

Making the decision to buy

You are on the verge of buying some cryptocurrency, but you have a few questions about how to do it safely and with confidence.

It’s easy to get caught up in the hype around cryptocurrencies like Bitcoin or Ethereum and as of more recent, DOGE! But there are many other factors that can put you at risk if you don’t know what you’re doing.

We will teach you how to get started, what questions should you ask before investing in any project and how much money do you need to invest in order for it make sense.

This way when you find a new coin or token out there, you can decide if its worth your time researching more into it. 

Things to look out for

It’s easy to buy a coin at the wrong time and lose all your money if you don’t know what you’re doing. It’s also easy to buy a coin that never makes any movement and you end up missing out on other opportunities because your funds are tied up. Without knowing what to look for, you can also fall prey to fraudulent products that don’t even offer a real cryptocurrency, and are solely designed to steal your money. This becomes more prevalent when the markets enter a bullish cycle and prices start to climb.

After reading this, you should be able to immediately spot the red flags and avoid the traps – although even the best can be fooled.

We aren’t going to be giving you advice on what coins to buy but we will share what you should know in order to make educated decisions when it comes to buying cryptocurrency, and how to verify and confirm your coin research.

Market research

Here are questions you should ask yourself. There are two primary things to consider when you are evaluating a coin but in reality there is a host of other things that can help you decide in what coin or coins you want to buy.

It’s like a mini checklist to go over every time you are researching a coin. 

Validation of coin.

This is what we call the fundamentals of cryptocurrency. Identifying the pros and cons, along with characteristics of a coin to measure it’s potential for short-term or long-term gains. 

  • How real is this project?
  • What is the agenda and purpose for creating the blockchain?
  • Who is the development team and what experience do they have in this space?
  • Who is the competition?
  • How likely are they able to achieve their mission?
  • How are they marketing?
  • Is their company growing?
  • How are they dealing with compliance, legal and regulations?
  • What’s plan for global expansion and do they have a clear, laid out blueprint?

The next thing we want to look at, once we decide we like the details and data we found from our checklist of fundamentals, is the market conditions. We cover this in more depth in our free Bitcoin fundamentals trading course. 

Choosing your trading strategy

You don’t need to be a trading expert but it would benefit you greatly to learn some Bitcoin trading basics.

The more prepared and educated you are when it comes to understanding market cycles and knowing how to read a few indicators, the more likely you are to succeed and gain higher profits.

You might only be interested in buying cryptocurrency to hold on to it long term. You will still learn how to pick the right coins that have the most potential and can sell at your convenience.

For others that want to dabble with trading and learn how to read charts, it would be encouraged so you can be prepared and have the experience it takes to become a successful trader. You can learn a number of techniques and strategies that help you increase your probability of winning your trades.

Timing the market

When you are evaluating a coin and deciding on if you are going to purchase it, knowing when to get in and out of the market is just as important as knowing the attributes of a coin.

There are numerous coins that once ranked in the top ten for valuation and daily market activity that have lost 99% of it’s value and hasn’t been able to recover. Many people who purchased these could have profited had they known basic information about trading Bitcoin and understanding market cycles.

You will start to make well-rounded, and educated trading decisions when you understand fundamentals of a coin and know how to navigate market movements. You can’t win them all but you definitely give yourself an edge. 

What amount should I invest in cryptocurrency?

There is no rule about how much you should invest in cryptocurrency. You should consider the circumstances and factors involved like current financial situation, investment objectives, and risk tolerance.

In general, it is best to invest a small percentage of your available funds into the cryptocurrency market at one time as this strategy reduces stress from trying to predict whether or not you will be able to make money with these investments.

You can start by investing as little as $50 and see how it goes, but the amount of crypto that you have will depend on your goals for using it.

Cryptocurrency Storage & Security

Protecting and securing your crypto assets long-term is the primary goal and there are lots of amazing hardware storage solutions but not knowing how to use them can leave you vulnerable so unfortunately, even some of the best methods are not completely fail-safe.

There are only a few ways we suggest storing your coins. But not everyone actually needs a wallet, at least in the beginning.  If you have under $500 in Bitcoin it’s up to you if you want to spend $80 to protect your money.

If you have more than $500, it is highly suggested you get a wallet. Even if you don’t have $500 in value today, it can increase and be worth $500 the next time you check your account. 

Make sure you have backup plans for accessing your funds should something happen like what happened to this guy who lost all his Bitcoin. 

This guy stored his private keys (the private key provides access to the funds) on a piece of paper in his fishing gear, who after being arrested, the landlord cleared out all the belongings in his house and took it to the dump. 500 Bitcoin ( £46 million) no longer accessible because the information was tossed in the trash. 

I have a close friend that had hundreds of Bitcoin on a computer he had back around 2010 and he can’t remember the password to access it. The coins are gone.

There are countless stories like this so the lesson here is you are in control of your money. Put your coins on a hardware wallet that is encrypted and stored offline. This is called cold storage where the coins cannot be accessed without using the wallet or private key.

This means even if your wallet was stolen, as long as they did not have your password, nobody would be able to access your coins and you could still access them with your recovery pass phrases.

Keep in mind, not all wallets are readily capable of storing every coin. You will find that the more popular coins are usually supported.

There are many wallets to choose from and they all work great and have top of the line security features. It comes down to personal preference and budget. Check out the hardware wallet reviews here.

Now that you know how to research a coin, identify the coin that you want and safely store it, you need to be aware of the crypto and blockchain scams, because there are many.

Avoid Cryptocurrency Scams

There have been companies in the past that have claimed to have a legitimate cryptocurrency with a real blockchain and it was nothing more than an Excel spreadsheet or database of information that can be manipulated and altered. A real blockchain is designed to be a permanent ledger that cannot be edited or changed.

The reality is, if you know how to properly research a coin, you can quickly identify fraudulent cryptocurrency products.

You can learn to spot what a real project with an actual development team looks like, vs. a fly-by-night money scheme.

Couple quick warning signs and red flags that immediately indicate a scam.

Multipliers and doublers: There have been dozens of these operations that claim to be able to double or triple the value of your Bitcoin with their “proprietary” trading software.

To this day, they have a 100% fail rate yet their bank account says otherwise. Weird how that works.

Either way, the crypto market is no different and just like the real world, it has some shady characters that try to take advantage of people who are not experts in the Bitcoin and blockchain space.

The best thing you can do is try to keep learning and not get too far behind as this space evolves. We all know what happened to the people that didn’t keep up with computers and the internet.  This is how fast the crypto space is evolving and the wild west is turning into a metropolis with the largest financial institutions and governments getting involved. 

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CryptoWhat was created in 2015 and has become one of the most trusted and well-respected sources of information on all things crypto. The blog's authors are dedicated to providing clear, concise, and jargon-free explanations of this complex technology, so that everyone can understand it.