How to Invest in Cryptocurrency for Beginners [2022]

Invest in Crypto for beginners

If you’re new to cryptocurrency investing and you’re not quite sure how to get started, I’ll help you out with that — I’ve been investing in cryptocurrency for years and live and breathe this world so you don’t have to — below is our hand-crafted guide on how to invest in cryptocurrency and the best tips that I’ve learned through experience.

We’ll briefly touch on the cryptocurrency markets as a whole before guiding you on establishing your game-plan for investing in cryptocurrency (what suits your risk tolerance and goals), important considerations when investing in cryptocurrencies, common mistakes to avoid when investing in cyryptomarkets.

Finally after all that we cover how to invest and what are the best options that are suited to your investing goals and risk tolerances. This may sound quite complicated but don’t worry — we’ll walk you through it all and explain it all to you.

It may look like a lot but we’ve kept things simple and easy to understand, for beginners who will be new to some of the terminology used. We have also used links to supporting materials, as references to some of our claims and also for further reading, for those who want to get even deeper into investing in cryptocurrencies.

Keep in mind none of the below is investment advice, but rather just meant to be an introduction for you to begin to understand the crypto market and investing in it.

You should likely supplement the below information with more educational resources on investing in crypto and NFT’s/Defi and the like before going all-in regarding investing. We’d recommend watching YouTube videos or taking a crypto-related investing course if you’re super new to investing.

Anyhow lets get into the content — now that you know what to expect from the rest of this guide, let’s start at the very beginning.

Table of Contents

Detailed Overview of the Cryptocurrency Market:

When Bitcoin first hit the internet, the whole idea of people becoming millionaires through digital money was absolutely unthinkable and ridiculous, now it’s not so far-fetched at all, and actually quite reasonable. Anyhow the first thing all beginners should learn about is the types of coins and cryptocurrency projects out there that are investable options (depending on your investment goals)

To get to the point — These are the various types of cryptocurrencies that are important to identify and know of before investing:

  • Monetary Asset Value Coins (Bitcoin, Monero, Dogecoin)
With the coins that function as value stores it helps if you look at them the way that people have always looked at gold and other precious metals – they’re a means of maintaining your purchasing power if the economy goes to hell in a handbasket — as well as hedge against such scenarios, as if such an event happens and say the US dollar declines in purchasing power in a big way, these coins due to their production/mining being directly tied to using energy, will maintain their purchasing power to a much stronger degree than most financial assets, much like gold, and if adopted as the ‘new money’ have extreme upside.

  • Smart Contract & Digital Economy Coins (Ethereum, Cardano, Polkodot, etc)

Smart contract & Digital Economy Coins are valued primarily because they can be used to facilitate new forms of payments and economic systems — that may seem obvious, but it goes deeper than you expect — there are entire decentralized exchanges hosting on these platforms that facilitate trading of hundreds of cryptocurrencies and even stocks and other financial assets. 

These coins have the second strongest fundamental base, just behind bitcoin, and have huge amounts of monetary value behind them — especially when you factor in that the entire meta-verse space and NFT’s are also entirely dependent on these smart contract platform coins to function.

  • Decentralised Finance Coins (Chainlink, Uniswap, Aave, MakerDao)
These coins usually have the biggest upside and hidden value, as while they’re certainly more volatile than the platform coins they’re built on (mentioned above) they have huge amounts of unlocked value depending on their adoption level and type. Many of these coins such as Chainlink and Tellor (Oracle-coins) give price-data feeds that supply both decentralized finance and centralized finance institutions and are essential to keep the whole system running
 

Other decentralized finance coins  provide synthetic derivatives (such as Synthetix) that allow trading of any asset on earth on the ethereum blockchain or others that are interoperable with it — while some other decentralized finance coins simply facilitate interoperability between various smart-contract coins. 

  • Meme coins & ‘Shitcoins’ (Dogecoin, ethereum classic, Hextoken, pancakeswap)
These coins are not necessarily bad short-term investments, but they generally hold little to no fundamental value and are entirely priced on hype and momentum, making them ultra-risky and dangerous to use. These type of coins don’t have any real substantial uses, so really it’s best for investors to avoid them — they’re good for short-term traders and speculators, but for investors and those who want moderate-risk or low-risk investing these have no place in one’s portfolio.
 
  • ‘Metaverse’ Tokens & Projects (Decentraland, Axie infinity, NFT’s)
Metaverse-type tokens are ones that generally are also built on smart contract platforms, just like decentralized finance tokens, and are used to facilitate transactions, voting rights in the metaverse, and claims to property in the metaverse. 
 
While speculative these coins have begun to prove their self, not only in their high price appreciation as of late but they’re also being purchased by huge investment firms such as Grayscale, as well as purchased by many ultra-wealthy individuals. Adoption is clearly happening with them, so while it’s unclear which will succeed if you have the time to research them and have the risk-tolerance to invest in them they can provide outsized value. 
 
 
  • Centralized Company Coins (Celsius Tokens, Nexo tokens, Binance tokens)

Company coins are the last big category you need to know about before investing in the cryptocurrency markets — They’re coins that give you benefits with the companies that introduced them such as lower fees, more interest on crypto savings accounts with them, and a variety of other things depending on the company coin in specific. They generally buy-back tokens to provide a price-increase to them and a ‘dividend’ of sorts to investors in the tokens.

These are good if you believe the company will grow in users in a big way in the near to long term, or if you’ll actually use the benefits they give you for holding the tokens, but are generally quite volatile due to their reliance on the centralized company doing well for them to do well. Keep in mind these tokens are NOT shares of the centralized company, but rather just something the companies released to users for them to gain premium benefits on the platforms. They are not stocks.

Wrapping the market overview up:

While there’s some other types of coins out there that don’t fit into any specific category as they’re wild cards generally 99% of coins can fit into these categories. If you understand them it’ll make investing in cryptocurrencies much easier and help you build a portfolio suited for your risk tolerance much easier.

Getting Your Cryptocurrency Investing Journey Started:

So you’ve taken a look at the cryptocurrency landscape and are now beginning to understand what it’s all about — what’s next?

As is the case with most financial endeavors, it all starts with leveling up your foundational knowledge about the subject or sector you’ll be investing in. When you’re putting money in the game, it’s not enough to have a general understanding of how it all works. You need to be able to stand toe to toe with the blockchain experts and cryptocurrency investors that are developing in the space and making bank through the cryptocurrency market.

Dive in deep into the cryptocurrency community:

Now that you understand the market from a high-level overview you should start to spend some time familiarizing yourself with details like the historic performance of the crypto market, the news and developments happening in the sector right now, and what’s up and coming. You may want to learn some trading or technical analysis information if you plan to trade rather than just buy and hold. 

The best place to start this knowledge-seeking endeavour is to Youtube and Reddit — it’s completely free and while there’s lots of bad information there’s lots of good information too, listen to tons but don’t take too much of it seriously or invest based on what’s being said, just feel the market out and pick up bits and pieces of information while at the gym or in the shower having videos play in the background.

Level up your Learning:

While we’re big YouTube fans when it comes to learning and recommend people spend some time soaking in knowledge through YouTube, it’s a sad reality that much of the information on YouTube is simplistic and click-bait nonsense when it comes to cryptocurrency and to get a real deep understanding on the space you’ll have to spend 1000+ hours in the space to really develop an understanding, or you’ll have to shell out some money on a good cryptocurrency course that teaches you more efficiently than YouTube as well as gets into the fundamentals and technical details of cryptocurrency.

You can also read more in-dept guides like this one on this site and others, which generally have more detailed information than YouTube does — but regardless the next step will be levelling up your learning so you can not only create a game-plan for cryptocurrency investing, but also be able to adapt your plan as time goes on and your knowledge about cryptocurrency grows.

Establish Your Game Plan

At this point, you’ve done you understand the crypto market in general and are on the path to learning more about cryptocurrency in general research — You’ve probably either already spent hours soaking in YouTube videos or are now planning to and maybe you’ve even signed up for a course to learn quicker and more detailed information. You’re on the right track.

Your Next Step – Creating a plan on how you’ll invest in Cryptocurrency

The next thing you’re going to want to do is evaluate yourself and make a plan based on what type of investor you are, how much time you have on your hands, your risk-tolerance, and current financial situation. We’ll go over each of these factors below and help you evaluate yourself to help you establish a solid investing game plan that suits you.

#1 – Decide How Much Risk You Are Willing to Take

While many people think Cryptocurrencies are high-risk, this is not really the case — they have greater volatility due to the relatively small market size of cryptocurrencies in comparison to stocks, but to they do not really carry more risk in the long-term than other assets.

With that being said, some cryptocurrency investments genuinely are risky — investing in what we deemed “meme coins” earlier is insanely risky as they don’t serve any real fundamental purpose beyond a tool for traders and speculators to use to try to win the game that is trading. Unless you’re a trader, or just want to gamble it’s best to just avoid such coins altogether.

How much risk do most non-meme cryptos have?

Most non-meme cryptocurrencies, as long as they’re relatively established (top 200, preferably top 50) they’re reasonable investments depending on what you believe the future of the cryptomarket and general world is — if you think decentralized finance will take over, or the metaverse will be huge for example. That’s something you need to determine, what you’ll invest in, based off what you believe in.

The true way to figure out how much risk you’re willing to take is to ask yourself how much of your cryptocurrency portfolio you’re willing to risk-it-all with — if you have only a few hundred or thousand dollars you may want to risk all of it, but if you want to invest tens of thousands of dollars there’s no way you’ll want to risk more than a small portion of it — and that portion is what you likely should be willing to invest in projects other than Bitcoin & Ethereum.

Generally for most people they’ll want around 40-50% in bitcoin, another 30% in ethereum, and the rest in coins or projects they believe in long-term.

What else do I need to consider in terms of risk?

Other than what coins to invest in what Investing style you’re going to pursue is just as important when considering the risks in investing in cryptocurrency.

Let me explain — if you are willing to take higher risk you can take out loans against cryptocurrency or take out leveraged positions, neither of which are a good idea in our opinion as they provided outsized (large) risk for marginal (little) benefits. With that being said if you’re willing to take on more risk than simply holding bitcoin you can lend out your bitcoin (or other cryptocurrencies) on platforms such as Celsius or Blockfi and generate yield on your holdings — this is something we personally do as we think it provides a favorable risk-reward.

#2 – Decide how Much Time You Have to Dedicate to Cryptocurrency  

It’s a simple fact of life that many people in North America and around the world struggle to have a good work-life balance and for far too many of us, when work isn’t consuming our every thought, we’ve got errands to run, groceries to buy, and family obligations that take up our weekends. If you’ve already got a huge to-do list with a healthy side of “Things I’ve been meaning to do but never got around to.”, taking a few hours out of your day to follow crypto market trends may not be reasonable.

We all have things that we’d love to do if we had more time to do them. And while the highs and lows of crypto can make for some amazingly profitable trade opportunities, day trading doesn’t lend itself well to “I needed to pick up the kids, meet up with my friends, finish up this project at work, and then plan a PTA fundraiser.” If you have a family or a busy life in college with friends and outings, you simply don’t have the time to be a trader, or maybe even an active investor trying to find the newest low-cap crypto opportunity that might 100x.

Ultimately if you’re employed, have a side-gig, or simply have a family and want to keep some humanity in your life it’s best to avoid the day trading strategy, even if it can be highly profitable, and stick to a more longer-term strategy. The only question is do you even have time to research projects, or the time to learn how to, or would it be better to simply buy the top coins and wait?

 

#3 – Decide How Much Ongoing Research You’re Willing to Do

There’s an ugly secret about trading cryptocurrency that investors don’t always talk about — Your research doesn’t necessarily end when you’ve done your due diligence on a project and invested — You have to keep doing research in order to stay up to date on what’s happening with the projects you invested in and the cryptomarket in general if you’re going to outperform the big-caps like Bitcoin and Ethereum.

In September of 2021, China made the news for its decision to make crypto transactions illegal. As an investor, it would have been important for you to sit down and understand what the implications of these measures would have meant for the global cryptocurrency scene — ultimately as China has done this many times in the past the ramifications weren’t that severe — but if you weren’t familiar with that history it would have likely seemed apocalyptic to you at the time.

With cryptocurrency, everything, from regulations to market conditions can change in the blink of an eye — but that doesn’t excuse not keeping up to date with the market and your coins — if you stop researching into your purchases there may be another competitor that comes out or some issue with the development progress that spells doom for smaller-cap investments you may have.

Basically you need to decide how much time you can commit to research after you invested in a project, if it’s a big-cap top 50 coin you may not need to spend much time but if not expect to spend a few hours a week keeping up with a handful of alt coin investments you may have. If you can’t handle that it’s probably best to stick with the bigger-cap coins for more of your portfolio.

#4 – Decide How Much You Can Invest on an Ongoing Basis

Now that you’ve got a good idea on your overall plan, if you’ll trade cryptocurrencies, invest in the big names, hold long-term, lend out your cryptocurrency, all depending on how much time and risk you’re willing to take, the last thing left is to figure out what you financial situation is today and to make.a plan for the long-term how you plan to invest in cryptocurrencies, as dollar-cost-averaging is historically one of the safest ways to invest into this space.

If you don’t have monthly funds you care to invest in cryptocurrency then that’s fine — if you want to dollar-cost-average into crypto without using outside funds you can always lend out your cryptocurrency on a platform such as Celsius and earn interest on it, this will effectively give you a DCA of 5% – 10% of your portfolio a year.

With that being said regardless of you decision of investing more over time to crypto or not remember you can always change that decision in the future, and remember to not get too greedy — it’s best to keep some cash on the sidelines to buy a dip or pay for unexpected living expenses. You don’t need to go all-in.

Common Mistakes To Avoid

For every coin that goes up in value and turns regular working folks into multimillionaires, there’s another project or token that never got off the ground — or worse did for just long enough to get thousands of people invested only to go straight to zero.

Here are some common, money-losing traps that crypto investors must avoid at all costs:

1. Investing Too Much of Your Networth into Cryptocurrency

Investing more of your money than you can afford to lose is generally a bad idea in a traditional investment portfolio. But in the world of cryptocurrencies, it can be downright disastrous.

If you are over-invested in cryptocurrency and experience volatility to the downside it may be too much for you to stomach, and if you need liquidity for something, say you have an unexpected expense in real life and need some cash, you may not be able to sell your holdings without taking a huge haircut in your networth.

We’d say it’s best for most people to limit their exposure to about 20% of their networth, or around 30% of their investment portfolio, and that’s at an absolute maximum.

Unless you’re a Zoomer who’s comfortable trading options and have a complete disconnection between your portfolio’s value and your well-being we wouldn’t dare go higher than that. With that being said, the majority of my investment portfolio is in the cryptomarket and I’m comfortable with that, if you are too then by all means it’s your decision.

2. Making Investing or Trading Decisions Based on Emotion Rather Than a Sound Plan and Strategy

While it’s natural to let emotion creep into your investing and trading decisions, bitcoin and other cryptocurrencies are notoriously volatile assets, and it’s incredibly easy to let emotions and fear in particular to take control of your portfolio as a result.

The most important thing to do when you’re deep in the red — or even just sitting on gains that you’re not sure if they’ll hold — is to keep your cool and stick to your strategy. If you fundamentally believe bitcoin should be at $100,000 and it’s at $40,000 then hold out even if you’re down 30% from all-time-highs. Don’t let the irrational fear take over.

In the same respects don’t let greed take over, if you thought bitoin should get up to $100,000 and it crossed that just last week and is now at $140,000 don’t become greedy and revalue it at $200,000 a coin – it’s above what you thought it was worth just a week ago, take some profits!

3. Diversifying Too Much (Buying Every Coin on the market)

Bitcoin is just one cryptocurrency, as is Ethereum, and while in most peoples portfolio these coins will make up the majority of their portfolios (including ours), there’s well over a hundred other good projects out there that are potentially worth investing in, with likely higher return potential than bitcoin and ethereum.

To skip to the point — you don’t need to own every token on the market or every single one that may return good returns. You just need some diversification to protect yourself from one project not being successful or one particular crypto-sector (such as DeFi) not performing as well as your expected.

You don’t need to diversify into 100s of projects, or even dozens and dozens, you just need a handful or two solid projects you can keep track of and believe in, generally most long-term successful crypto investors keep between 10 and 20 projects in their portfolio, and no more than that. Usually about half are big-caps and best-in-class coins, such as Chainlink for oracles, Polygon for scaling/layer-2, Polkodot/Cosmos/Cardano/Ethereum for smart contracts, and then they’ll have the other half of coins in smaller chains or projects built on top of those core ‘best-in-class’ projects that they believe in.

That’s all the diversification you need for a cryptocurrency portfolio, that’s all you’ll have time to keep track of and keep up with the development progress of, beyond that is needless and only makes you complacent and not keep up with your positions.

4. Not Having a Cryptocurrency Plan for Securing Your Investment Holdings

While it’s not particularly important to think about securing your first few hundred dollars invested in cryptocurrency, it is crucial as your portfolio grows that you have a plan for securing your holdings.

This could be as simple as having a majority of your holdings in a hardware wallet or set of trusted exchanges that you have set up good passwords and 2FA enabled on. You may want to use a service like Coinbase Vault or Celsius’s HODL mode to protect against your accounts being compromised, or take out insurance for your holdings on exchanges.

Regardless of what you choose you need to think about these things as your portfolio grows, once you have thousands in investments you have to be more careful and considerate. Failing to do so, and continuing to use a hot-wallet like metamask for holding thousands of dollars could, and often does, result in you losing everything you have invested.

What we do is use a hardware wallet that we connect to metamask and DeFi applications, and otherwise keep the majority of our cryptocurrency on crypto lending platforms such as Celsius, BlockFi, Nexo, and Voyager, wh.o have good security and provide yield/interest on crypto deposits

Ways to Begin Investing When You Feel You're Ready:

Having covered what you should avoid doing in most cases, let’s dive into more detail about ways you can actually begin investing. We touched on exchanges briefly before, but we didn’t really dive into the topic, nor the other ways you can invest in cryptocurrency and blockchain-based applications. We’ll also include information about investing in tax-advantaged accounts and ways to maximize your returns when investing (Lending, Leverage, Interest Accounts, etc).

Cryptocurrency Exchanges

The easiest and most obvious way to get involved in cryptocurrency is opening an account at one of the many cryptocurrency exchanges available and just directly investing in cryptocurrencies, which is obvious — but we have more to say on it than that.

There are thousands of cryptocurrency exchanges, some better than others and each has different pros and cons, while you can pick any exchange, or simply go with the biggest most popular one for newbies called Coinbase, there’s significantly better options out there including for new investors.

Our favorite all-in-one cryptocurrency exchange is Voyager as they have an exceptionally simple interface like Coinbase does, a great mobile app, all while having way lower fees than most exchanges. They offer a $25 sign-up bonus if you sign up with a voyager reward code, but you can also just sign up through our link here and it’ll give you the highest-available sign up bonus they offer currently automatically (no code needed!).

We’d also say it’s worth checking out other cryptocurrency exchanges, or some of the comparisons we’ve done on them (such as Voyager vs Coinbase or Voyager vs Gemini), before deciding which exchange you’d prefer to invest through. Binance, Voyager, Gemini, Kraken, Coinsmart, and Coinbase are all trustworthy options for you to look into.

Traditional Brokerage Accounts

While we used to be strongly against investing in crypto via traditional brokerages that generally focus on buying and selling individual stocks and securities in the last year traditional stock brokerages have really stepped up their game and cut the fees involved in investing in cryptos on their platforms.

There’s also many crypto-related stocks that you can invest in on traditional brokerages like Riot Blockchain (NASDAQ:RIOT) which is the first U.S. listed cryptocurrency focused company, while there’s some risk in investing in stocks as they’ll often be more highly correlated with traditional financial markets, it’s still a very valid option for gaining exposure to crypto, and way easier tax-wise than investing in cryptocurrency through regular cryptocurrency exchanges.

The best brokerages for investing in cryptocurrency is probably tied between Etoro and Tastyworks, as both allow you to buy/sell cryptocurrencies, real cryptocurrencies, for around a 1% transaction fee, which is lower than some crypto-exchanges charge (such as Coinbase). At the same time you can invest in some of the crypto-related stocks, like Voyager Digital, Riot Blockchain, Microstrategy, Coinbase, or one of the crypto-related funds like GBTC.

Retirement Accounts & Specialized Investment Accounts

While we personally don’t invest in cryptocurrency via a retirement account there are plenty of options to do so now — including through specialized crypto-specific retirement accounts such as those that Bitcoin IRA and ITrustCapital offer, which allow you to buy a variety of coins, including small altcoins, in a tax-advantaged account.

However if you aren’t interested in the hassle of opening a crypto-specific tax-advantaged account you can still invest in it through traditional retirement accounts, specifically self-directed ones, as just like we mentioned above regarding investing via a stock brokerage you can invest in the same funds (such as GBTC) and stocks (such as Microstrategy and Riot Blockchain) that you can in a traditional stock account, thereby gaining crypto-exposure.

Cryptocurrency Mining

Cryptocurrency mining is an excellent way to invest in cryptocurrency, especially if you have low electricity costs, or simply refuse to invest in ‘unproductive non-cash generating’ assets.

You can start mining cryptos such as Bitcoin directly and buy expensive hardware to do it yourself, however this requires maintence and know-how, so to be honest it’s generally better for most people to invest in companies that do the mining their self, such as Bitfarms ($BITF) stocks or via buying managed-rigs or hashing power via a platform such as Nicehash.

Generally you can expect returns similar to simply investing in cryptocurrency directly, but with less volatility and a slight premium due to having less liquidity in your investment than by directly investing in coins their self, but instead mining them over time.

Lending, Staking, and Earning Yield

This isn’t so much of a unique way to get into the market or get exposure, but a popular strategy (and my favorite one) to boost returns when investing in cryptocurrency. We personally have accounts with Celsius Network, BlockFi, Nexo, Voyager, Ledn, and a few other smaller lending platforms and keep funds on each of them.

Essentially these platforms give you the option to lend cryptocurrencies to others, generally to large exchanges and institutions, but also certain decentralized finance protocols such as Compound Finance, and allow you to earn interest on your holdings which is a great way for generating extra passive income.

You’ll generally need to buy from an exchange first, as these platforms rarely have fiat onramps that allow you to buy crypto on them, and when they do they’re generally quite high-fee for that service — because of this we’d say it’s best to buy on an exchange them transfer to such a platform after buying if you do want to invest in this way.

Currently the best platforms (biggest, regulated, trusted) for this are Celsius Network, which offers a good sign-up bonus for new users, and BlockFi which also offers a sign-up bonus for new users. We’d recommend checking our comparison between the two platforms before deciding on which to go with, as sometimes one is offering better rates than the other.

We’d also say it’s worth checking out other crypto-lending platforms such as Ledn and Nexo as while they’re not quite as big and trusted they are gaining in popularity and offer good rates too. As we mentioned before we use all the platforms, as we like. to diversify our risk in any one platform

Factors to Consider Regarding Investing:

To finish off this guide, here are some other factors that you should consider before investing. With these and the other information covered above, you should know the basics of the crypto markets and how to get started investing in it.

You likely have picked on the above, or multiple, ways to invest, but are there any tips and tricks that you should know before truly starting to invest? Below are some final things we think you should know and consider before investing in cryptomarkets, be them NFT’s, cryptocurrencies, or in stocks related to crypto.

1. The Commissions and Fees

You should know that there are fees involved with investing regardless of how you invest. If you were planning to buy a crypto-related stock you may not have to worry about fees as most brokers are commission-free now for stocks, but funds like Grayscale offer charge high fees.

 In the case of cryptos, exchanges will charge a fee for any trades made, but not simply for holding the asset like funds charge. It would be wise to learn about fees and the exchange you use before investing, and finding a low-fee exchange and stick with them.

But if you aren’t going to invest via crypto stocks or cryptos directly, but rather invest in cryptocurrency mining you need to understand that often times the platforms that facilitate such services charge high fees, often as hidden fees — this is why we prefer Nicehash as they have some of the lowest fees for mining/hashrate rentals.

2. Crypto-Market Volatility

In a perfect world, we’d all be able to throw money at cryptocurrency, watch the coin’s value go to the moon, and retire to our islands as billionaires. But in reality, very few investments will go up in a straight line. And in cryptocurrency, even coins that are notable for their incredible rises have often taken a roller coaster ride of a journey to become more valuable.

The harsh truth about investing in cryptocurrency is that even when all the fundamentals look like they should work, sometimes the price will drop to shocking lows for no discernable reason, or just because the overall market dropped. And as such, you need to be prepared to live with the extreme highs and lows that come with it.

Could you wake up tomorrow and be okay with your bank account suddenly losing 20 percent of its value? Are you alright with watching your coins go from $10 to $2 and then $15 over the course of a year?

That’s what you can expect in any given year in the cryptocurrency market. And if you’re not prepared to deal with that kind of volatility, you may have to tweak your investment strategy until the losses are something you can live with — generally the best way to do this is to limit your exposure to a small portion of your investment capital, as mentioned earlier in this article

3. Your Storage Options

For those who are looking at holding crypto through their traditional brokers, you may find that you have more protection for your investments. However, the downside is that with many of these firms, you might not have control over the wallet or the crypto — if the exchange goes bankrupt or the government decides to impose harsh regulations you may have no choice but to comply, which may be selling your cryptocurrency to the government for a discounted price, like happened with gold after the US government banned private citizens from owning gold.

Basically if you’re just looking at crypto as a way to make money, the whole “I don’t have the keys to the wallet.” thing might not be a problem. But if you’re committed to the whole “Be your own bank.” mantra, then you may have to think about investing in third-party hardware solutions or in browser-based wallets that place an emphasis on security.

4. Your Investment Diversification Strategy

As we mentioned earlier in the article it’s important not to overdiversify your crypto-portfolio, but something we never touched on is how important it is to diversify your investments overall — for most people it’s not wise to keep the majority of the networth in cryptocurrency, nor wise to keep the majority in stock investments.

Generally for most people they feel most at ease when they have a wide range of investments and a good chunk of money in savings — so we’d like to remind you to consider diversifying your overall investment portfolio if it isn’t already. Pick an allocation and stick to it — maybe it’s 20% real estate through online REIT platforms like DiversyFund and Fundrise, 30% in various cryptocurrency investments, and 50% in traditional stocks and equities, maybe it’s different. 

But it’s important to create an investment strategy and learn about the different types of investments you can make to truly have a sustainable profitable journey in investing not only in cryptocurrency, but generally throughout the rest of your life.

Summary & Closing Thoughts

No matter which way you slice it, the crypto market has a lot going for it. It’s getting a lot of mainstream adoption, it’s generating jaw-droppingly massive returns for crypto holders, and it’s putting more and more money into the pockets of regular people who don’t necessarily have ties to Wall Street.

With that being said this brings us to the final part  of our guide on investing in crypto. While we can’t hand you a blueprint on how to succeed in your investments on a silver platter, and it would be irresponsible to do so, we can give you all the info you need to get started — and that’s what we did today.

You should now know what cryptocurrencies are, and what to watch out for when investing in them now, as well as begin developing an investment plan for yourself. Keep in mind what we told you what not to do, which is often more important than what you should do when money is at-risk like it is with investing. Once you’re established with a brokerage, or your chosen method to invest in this market, remember that you should research your crypto coin picks and continue keeping up with the news, as at any time these markets can change, and if you do not adapt you can suffer great losses.