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Wondering how to get involved in the crypto market? You’re not alone. Lately, big money has been steadily flowing into cryptoassets, highlighting growing interest among the masses. Currently, the global market cap of all cryptocurrencies sits above $2 trillion, a milestone first captured in April of 2021.
And we’re not just talking Bitcoin, either. According to TradingView, at the end of July 2021, Bitcoin's market share sunk to 48% (from 70% in January), with altcoins like Ethereum and Binance Coin taking considerable market share away from the industry pioneer.
What to expect from this article
What follows is a general guide to all things crypto investing. Keep in mind that when we mention a particular cryptocurrency, exchange, or industry website, it is not a promotion.
This is not investment advice. Ultimately, it is up to you to do your own due diligence before getting involved in any investment, including crypto, as it’s highly risky. As such, there is a significant risk you will lose some or all of your principal.
What attracts investors to cryptocurrencies?
From the start, the principles of blockchain technology created a kind of digital counterculture among those who were fed up with the status quo of traditional finance. Since then, the reasons for people diving into crypto investing have been seemingly endless—ranging from the rational, based on purpose—to the emotional, based on hype.
Here are some of the main attractions.
Blockchain technology is based on the notion of cutting out the middleman
Cryptocurrency is exchanged via blockchain technology on a peer-to-peer network, which stores data in encrypted blocks that are then chained together, making the data virtually impossible to overwrite.
Before blockchain technology, transactions were tracked in written ledgers and stored in financial institutions. With the advent of blockchain technology, there now exists the potential to remove intermediaries from these transactions, which can facilitate new types of economic activity in various industries.
Ease of use
Today, cryptocurrencies can be bought and sold in hundreds of places. Not that long ago, investors’ options weren't as plentiful. Surprisingly, even big banks like J.P. Morgan and Bank of America (and a few small nations) have recently jumped on the bandwagon, marking the widespread adoption of digital currencies.
Crypto never sleeps
In a world of deadlines, there is no opening and closing bell in the crypto world. Time is merely a construct; the market is always open.
This is exciting for many, especially in a time where instant gratification is readily available (expected, even), and the non-traditional schedule is lauded.
The downside, of course, is the increased volatility of an “always-on” market.
The potential for significant upside (and downside)
Cryptocurrencies fluctuate a lot—sometimes wildly—and without reason. What some would consider a “no-go” zone, crypto enthusiasts see as a virtual playground.
For some investors, crypto investing has completely changed their lives for the better. For others, it has been their ruin. Nevertheless, the potential exists, and people love a chance to win big.
Volatility isn’t necessarily a bad thing, either. In fact, a healthy market always involves some level of volatility. It’s the extreme swings that cause panic, leading investors to speculate on market movements, which in turn causes more price volatility.
*Crypto scams are everywhere. Do your diligence and keep your credentials safe.
The community
Just recently we watched the crypto community hold up a behemoth piece of legislature—the infrastructure bill—where blockchain communities from around the world banded together in an effort to influence the proposal in its final hour.
While the outcome of the bill wasn’t ideal, the reality that crypto is here to stay and can influence governments at the highest levels can no longer be ignored.
How much should I invest in cryptocurrencies?
Cryptocurrencies are highly volatile—even Bitcoin, the “Coinfather,” fluctuates frequently—so it's important to invest only what you are willing to lose.
Most “how-to” articles will recommend what percentage of your portfolio you should allocate to crypto. We're not here to do that.
Every investor has a different risk tolerance, so we’ll leave that up to you. However, if you're just getting started, it’s best to not go crazy right out of the gate. Dip a toe before diving in.
How to choose what crypto to invest in
Again, we don’t give investment advice, so we’re not going to recommend what cryptocurrency you should invest in—because, let’s be honest—it’s anyone’s guess.
However, when buying and selling crypto, what’s most important is to understand the asset class first, and then move on to analyzing each one individually.
Think of crypto as the "long shot" in a horse race, where the odds are high, and winning bets result in big money payouts. The horse may have tremendous speed, but there's always a chance it might run in the opposite direction—at a moment's notice. Cryptocurrencies can be unpredictable, so be prepared for bumps (or sinkholes) in the road.
There are hundreds of cryptocurrencies available on the market today. And with hordes of office chair jockeys shouting “to the moon!” it can be quite overwhelming to know where to turn for sound advice.
The best method is to educate yourself and follow a core set of principles.
Consider these to start:
What is the value proposition?
Many cryptocurrencies have a unique value proposition that differentiates one from another. While conducting your research, look to see what (if any) market need is served.
Does it have a following?
A lot of price movements in crypto are subjective, based on herd mentality and FOMO. Strong communities of loyal followers can help to bolster the underlying value of an asset—that is, to a certain extent.
It’s important to be cautious when seeking advice. A lot of what you hear is just noise from unscrupulous “pumpers.” Look for credible sources that know what they are talking about. A good place to start is to find innovators in the space who have dedicated their careers to the industry.
How strong is the team?
One of the easiest ways you can research a cryptocurrency is to look at the team behind it.
Things to look for:
Background: How deep is their experience?
Noteworthiness: Do they appear in major publications (other than their own)?
Community-minded: Are they socially engaged with their followers? Do they have a following?
Track record: Past wins may indicate future success (but not always).
What not to do
Don’t invest more than you can afford to lose. On the risk spectrum, crypto falls in the “extremely high” category. Be prepared to lose whatever you invest.
Don't try to time the market. Just like stock investing, trying to game the crypto market is dumb. Any expert will tell you that the best method is to invest through market cycles. There are lessons to be learned at market tops, bottoms, and in-betweens (#HODL).
Don’t forget to do your research. The more time you spend on research before making a move, the better your experience will be. And don’t take financial advice from self-proclaimed “gurus.” They are generally new to the space as well.
Where to buy cryptocurrencies
Most investors buy cryptocurrencies through an exchange. When deciding which one is best for you, consider the following:
Selection: Different cryptocurrency exchanges offer different currencies. Most offer the big ones like Bitcoin and Ethereum; others offer way more. If you have your heart set on a specific crypto asset, make sure it’s available on the exchange you choose.
Safety: Look for security features like two-factor authentication (2FA), encryption, and cold storage (offline storage to protect against theft and hacking).
Fees: These vary widely from exchange to exchange, so it’s important to compare how much they charge for transactions.
Trading options: What forms of payment do they accept? Debit, credit cards, outside crypto?
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Wallet options: This is the secure place where your private keys live. Not all platforms offer a wallet. For those that do, they can be “hot” and live online, or “cold” and live offline.
Cold wallets typically provide a higher level of security and are used by investors with large positions.
Hot wallets are typically offered by the bigger crypto exchanges.
User-friendly: The preferences of investors vary when it comes to how they manage their assets, so it’s important to find an exchange that suits your needs. If you only plan to trade on your phone, make sure the platform you choose has a mobile app. If you prefer the big screen, check to see if they have a quality desktop version.
*Keep in mind that many exchanges are not regulated by US Governmental bodies, and should be viewed with extreme suspicion. Why? They could be total scams. Be careful. Do your research.
How do I stay in the know?
Crypto is all about community, so getting involved in different forums is a good move. Join Discord groups, follow thought leaders on Twitter, and pay close attention to trends through social listening. Keep in mind that there are many unscrupulous actors on Discord, so never share your credentials on that platform or otherwise.
These crypto communities are active, engaged, and can serve as a wealth of information if you use them correctly. But bear in mind: people are more likely to post their gains than their losses, so stay skeptical and be wary of those who go silent when the going gets tough.
Since 2017 Republic Crypto has been at the forefront of the U.S. regulated securities fundraising in the blockchain space.
To learn more about blockchain technology and the startups that are building on top of it, check out our Crypto Blog.
Nothing herein should be construed as investment advice. Investors should verify any issuer information they consider important before making an investment. Investments in private companies and cryptocurrencies are particularly risky and may result in total loss of invested capital. Past performance of a security or a company does not guarantee future results or returns. Do your own diligence.
