How Much Should Beginners Invest in Crypto?

What Is the Best Crypto to Buy Right Now?

Contrary to the common sense and logic of finance of all previous centuries, cryptocurrencies continue to exist and develop. And only those who thoroughly know the whole kitchen, that is, 0.1% of the population, can win here. Cryptocurrency is not regulated and documented, as it has been with other assets for centuries. In the world of investments, it is necessary that each comma be clearly spelled out, approved, signed by the parties and secured, that is, guaranteed by assets. With crypto money, this is impossible, because it does not even exist in the physical world. It exists in people's minds. And yet this investment tool is quite popular in the world.

Investments in cryptocurrencies are now on everyone's lips, which is not surprising, given the growth shown by individual coins. But in general, this market is quite complex. And before entering it with money, experts recommend spending time studying the principles of operations with cryptocurrencies, as well as delving into the existing trends in the market. This is important in order to understand at least the basic market conditions and not act at random, but to build a strategy and stick to it. Let's figure out where to start.

Let’s start our cryptocurrency beginner guide from the key thought: investing in cryptocurrencies, like in any other type of asset, presupposes a clear understanding of your own investment strategy and an understanding of the investment instrument that the investor is going to include in his portfolio.

Without these basic points, investing is no different from playing in a casino. And it doesn’t matter if we are talking about crypto assets, real estate or securities.Next, it would be a good idea to ask yourself questions: what is my strength as an investor? What allows me to see what others cannot see? What is my risk tolerance in general?

What Crypto Should I Invest in as a Beginner?

Today, infrastructure crypto projects are the most attractive. Among them are Ethereum, Bitcoin, Solana, Polkadot, and the Graph. These are the cryptocurrencies that can be kept in a portfolio for a long time. Experts recommend investing only in a time-tested cryptocurrency and not trusting too attractive offers that promise big benefits.

For a crypto beginner, the key factor when choosing a cryptocurrency, apart from the attractiveness of the project itself, is the frequency of code updates by developers and the size of the community that uses this project and promotes it.

When the cryptocurrency for investment is selected, you can start buying it. Determine which exchange makes it possible to buy the necessary cryptocurrencies, and open an account on it. The account is created remotely. You need a passport and a code. But it is necessary to distinguish between "white" and "gray" platforms, and a crypto beginner should understand that the market is now dominated by "gray" players who are not regulated or controlled by anyone.

Accordingly, in case of problems, you are unlikely to be able to return your money. In the case of "white" solutions, you will usually be required to provide documents to identify and confirm the origin of funds. Among the exchanges, it is worth considering global (Binance, Bitfinex, Huobi, Whitebit) or local ones. There are also a large number of exchangers (BtcSale, Number1, BitBong, WorldChange, etc.). You can replenish your account on the exchange with a bank card or other cryptocurrencies.

How Much Will I Make If I Put 1000 in Bitcoin?

There are two sources of income when investing in cryptocurrencies: increasing the capitalization of digital currency (growth in price) and making a profit from crypto loans. Cryptocurrency mining can be singled out as a separate source, which is also divided into two types: using equipment (processors, boards, video cards) or storing a blockchain node (software that allows you to interact with the network) on the server and using it to confirm transactions.

For a crypto beginner, the simplest and most affordable source of profit from cryptocurrency is buying it on the stock exchange and keeping it in the portfolio. Typically, growth occurs quite quickly (up to a quarter), but it is better to count on an investment horizon of one year. The return on investment can be several hundred percent. According to estimates, by 2025 the cryptocurrency market will grow five times, so investing in infrastructure crypto projects will give such a return on average. If we are talking about how long a conditional thousand dollars invested in crypto assets will bring 5-7% that the bank is willing to pay for a year, then this can be a range from one day to infinity (if you bought tokens of a project that has ceased to exist ).

Of course, you can invest in the crypto asset itself, receiving income in it, and not in fiat currency. Different strategies bring from one to hundreds of percent per month. But a crypto beginner needs to remember that the higher the yield, the higher the risk of losing everything.

How Do You Get Crypto with Little Money?

What determines the price of a crypto and how to track this price? It is an important issue for a crypto beginner. Experts say that the price depends on the balance of supply and demand. The EU, US and China are racing to print money. No one wants to lose this hellish race. As a result, naturally, those who hold the currency will lose. In this situation, investing in crypto with an algorithmically defined emission limit, despite the huge risks of new technologies, does not seem like such an exotic tool.

It is necessary to track not the price, but the essence and development of the project itself, which is behind these coins. Read the news, follow all the changes, study their websites, whitepaper, etc.

Many experts advise crypto beginners considering cryptocurrencies as part of an investment portfolio (5-10%) and keep in mind that this asset is very unpredictable, and therefore risky. Invest in any high-risk assets only the amount that you are ready to lose painlessly. Or forget about it for a long time. Watch the news and TikTok less, read more books and cryptocurrency beginner guides, educate yourself about investments. Education is something that no one will ever take away from you.

Moreover, it is worth remembering that crypto assets remain such an area that is not sufficiently regulated by law. Not all countries recognize digital currency as legal tender. For the first time in history, Bitcoin became an official means of payment in El Salvador. This happened relatively recently – at the beginning of September 2021. In this Central American country, cryptocurrency is accepted as a means of payment on a par with the US dollar. In one form or another, digital currencies are legalized in countries such as the USA, Japan, Great Britain, Canada, Estonia, Australia, etc. In some countries, cryptocurrencies are generally prohibited at the legislative level (China, Nepal, Bolivia, Bangladesh, Vietnam, etc.)

Therefore, experts are still cautious about this investment tool. Cryptocurrencies are not only new technologies that sometimes fail. This is a new legal relationship. China, for example, banned the use of cryptocurrencies. Other governments, stunned by their own impunity for the past year and a half, may do the same. Consider, for example, the United States at the beginning of the 20th century. There, under the threat of a ten-year prison sentence, the government ordered citizens to hand over all the gold at a price several times lower than the market price, prohibiting its free circulation. Where is the guarantee that a similar scenario will not happen again with cryptocurrencies?

The high volatility of crypto prices creates an opportunity for speculative play both up and down. Trading digital coins is completely unpredictable and mostly depends not on the fundamental assessment of the technology offered by a particular digital coin, but on the ups and downs of demand for crypto assets. At this stage in the development of blockchain technologies, they often become a tool for creating a high capitalization of a particular digital coin without being tied to its possible use in economic reality.

However, in general, cryptocurrencies will be recognized as intangible assets, and you’ll be able to buy them in the same way as any security – on the stock exchange. At the same time, national central banks are already introducing electronic currency instead of cash, and they will be recognized as the main currency.

Cryptocurrencies are society's chance for a different organization, a fairer financial system. Therefore, owning cryptocurrencies is not about investments, but about whether a person feels like a part of this unfair system ruled by officials and bankers, or is ready to become a part of something new.

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Author
Maxim Katrich
11.10.2022
Crypto enthusiast, editor of BitOnfeed, expert on the NFT industry.
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