Things to Know Before Investing in Cryptocurrency: Coin 411
Investing in cryptocurrency offers an important opportunity for those who want to invest but lack a great deal of funds to do so. Its opportunities range from the original Bitcoin to the latest altcoins. These fintech blockchains supported by coins or tokens offer a manner of entering the investment world and building wealth that any person can afford.
But how do you get started with cryptocurrency?
Things to Know Before Investing in Cryptocurrency: Coin 411
The easiest way to learn how to make money with crypto is to just jump in. You only need a few things to do that.
A bank account
Driver’s license or state identification or passport
An Internet-capable device
Internet connection
That probably sounds like a simple list, and it is. That completes the requirements though. As long as you have that, and you have reached the age of legal contracting, 18 years old, you can get started today.
Choosing Your Cryptocurrency Exchange
When you start investing in crypto, you purchase it on an exchange. A crypto exchange works a lot like a stock exchange. Many public companies offer their coin or token on an exchange, just as stocks get sold on the New York Stock Exchange or Nikkei. This lets consumers have a centralized hub for purchasing from many companies.
Exchanges must follow specific laws of the country in which they locate their corporate headquarters and servers. In the US, state laws also apply. Many foreign exchanges do not allow residents of other countries to use their exchange. This makes it simpler for them to comply with the law. If you live in the US, you need to use an exchange that serves the country. Coinbase offers the most accessible option. The international exchange Binance has a separate website and server set for the US, Binance.us. Even after registering with its US affiliate, a user cannot sign into the main website.
I recommend Coinbase which provides a desktop version, Android app, and iPhone/iPad app. This easy to install option walks you through the process of registration and identity verification. You must verify your identity via your banking information, your legal address, and your official photo identification. In the US, the latter requires both the ID and either a selfie taken at the time of submission or a biometric confirmation. This ensures that people do not create multiple accounts, nor do they account to share. The app periodically requires identification checks.
Every exchange uses this same process. Coinbase does it the best. Their technology works most effectively. People have had problems with Binance.us technology since its biometric option flakes out frequently, unable to recognize that the person’s face is in front of the camera.
Get a Coinbase Bonus
You cannot invest without this identification verification. Once you pass muster though, you can take advantage of Coinbase’s numerous bonus perks. Currently, it provides $5 in Bitcoin when you verify your identity. It also offers a bounty program that lets you earn up to $50 in various cryptocurrencies just for watching videos about the companies and their blockchain technologies, then completing a one or two-question quiz about the video. Other exchanges also offer similar programs, but these often include questions not covered in the video provided.
You need to have viewed or read other information about the blockchain to complete them. Coinbase provides all needed info and divides the information into multiple short videos and mini-quizzes.
Adding Cryptocurrency to Your Account
During the registration process, you add your bank account. This lets you purchase crypto with cash via your debit card or bank transfer. You can also purchase crypto with another crypto, but you would typically already have an account on an exchange to have done this. You would at least need a wallet for cryptocurrency, which exchanges like Coinbase include. You can transfer your currencies from one wallet to another. More on that later. Right now, you still need crypto to get started building your wealth.
In the Coinbase app (because I assume you listened to me and want free money), scroll down to the section titled “Rewards” and click on the lovely purple banner that reads, “Discover ways to earn crypto Start earning.” This moves you to the rewards section where you view videos and take quizzes. After completing all the ones on there at the press, you would earn $45 plus you would get your $5 Bitcoin gift for having verified yourself.
Coinbase gives you $50 in various coins and tokens. This lets you get started learning how to invest without spending one penny. You can then open the app each day and check the market. You instantly (okay, in two hours) have a portfolio. The bounty program mixes high dollar and startup coins. Each has a viable blockchain though and provides a valuable starting investment. There is no junk included.
Stay Up to Date with the Latest Developments
Each day, read at least one article under the “News” header on the Home screen of the app. This helps you learn about blockchains, the underlying technology behind each coin or token. This builds on your knowledge from the videos and quizzes.
Understanding the technology behind the buzzwords of cryptocurrency and blockchain helps you choose the best investments. Coinbase helps you get started, but eventually, you want to add to your starter portfolio.
You still do not need to spend much money to do this. What? Really, Carlie?
Yep. Really.
You can invite your friends to also get the free $50 and start investing in cryptocurrency with Coinbase. They have a referral program.
This is not complex either. You get a URL that points to your referral tracker. It looks like this:
coinbase.com/join/lawson_urj?src=android-link
Yes, I know that is not a live link. I am using my own referral link solely for illustrative purposes in this article. I needed one to show you what yours will look like.
You simply post the link to your Twitter or Facebook or text or email it to your friends. When they open an account, the exchange notes that you referred them. Once they spend a total of $100 on cryptocurrency, you get $10, and they get $10. Coinbase gives you each a present. They do not have to purchase $100 worth all at once. It can occur cumulatively within the first 180 days they have the account.
The best thing about this referral system is that while you help your friends make money, you also make money. Coinbase does not limit the number of referrals you can earn. You cannot buy ads to get signups, but you can have as many friends, acquaintances, random folks you meet at school or the park, etc. sign up.
Learn about Building Wealth. Use the Right Tools. Meet Wealthry.
Buy Yourself Some Crypto
The friends you refer can do what I recommend for everyone who just started to invest in crypto. Invest $5 to $10 per week, then add a little extra when you have the money. This method lets you track which cryptos grow quickly or slowly. You can spread out your investments over many cryptocurrencies. This helps you develop your portfolio diversity.
Every financial advisor and certified public accountant will tell you that you need a diverse portfolio. They are right!
Portfolio diversity protects you. If one investment does badly, the others keep your portfolio in the black. That phrase refers to when CPAs kept financial records by hand in hardbound books called ledgers. Ledgers color-coded the columns using black for money in and red for money out. If a person or a business had more money going out, then they had more entries in the red column than the black one. This is how the phrase, “You ran your business into the red.” came about. It referred to a business owner who had caused their business to fail by spending more money than they made.
So, which ones should you buy first?
Without playing favorites too much (like Elon Musk and his Bitcoin and Doge love), I vote you start with the coins and tokens that earn you interest. Yep. Interest-bearing tokens exist.
These cryptocurrencies let you earn money in two ways. First, just like stocks, the price at which you buy a crypto does not remain the price of that coin or token forever. Most fluctuate. So, let us say you purchased Stellar Lumens (XLM) when it cost 39 cents per coin/token. At press, one XLM holds a value of 45 cents, so you made six cents on each token you had purchased. The price fluctuation which hopefully increases the value accounts for the first earning method.
If you purchase a coin or token such as Tezos (YTZ), it earns you money through interest as long as you stake the coin. Staking refers to purchasing the token and holding onto it in your portfolio. Rather than selling it, you do what is called “buy and hold” or hold, pronounced ha-dal. Currently, you can earn interest on Tezos at 4.63 percent, Dai (DAI) at 2 percent, USD Coin (USDC) at 0.15 percent, and Cosmos (ATOM) at 5 percent.
Because you can earn two ways with each of these coins or tokens, they make the best starting investments for you. My expectation of those reading this article is you do not have Musk’s money nor the Winklevoss twins’ savvy. The latter brothers ignored the calls of folly in investing in Bitcoin early on and volleyed a small early purchase into billions of dollars. Many people aware of their fortuitous investment now attempt to replicate it by investing in altcoins. In what, Carlie?
Keep Learning About Cryptocurrency
You need to learn the history and the lingo of cryptocurrency before you invest too much money in it. This means you need to know the meaning of the types of coins and tokens before you delve too far into investing.
Essentially, five types of tokens or coins exist. This could grow as the fintech behind it does, but for now, you could purchase any of the following:
A token or coin tied to a physical asset such as real estate, money, art, energy assets, etc. that has a “residual, fractional value.”
A token or coin tied to raising funds for the public launch of a company. Referred to as an initial coin offering (ICO), the launch of these tokens bears a close resemblance to an initial public offering (IPO).
A token or coin tied to equity or stock. These are exceedingly rare, as are security tokens, due to the murky legal waters in the US and the requirements of the Securities Exchange Commission (SEC).
A token of coin used as a value for purchasing a service or good.
A token or coin, typically with a large market cap, which holds a steady value making it a reliable way to pay for the products offered on the blockchain. These also get referred to as application tokens.
So, how does that fit into the larger scheme of things?
Some blockchains offer both. For example, the Maker blockchain offers (MKR) and Dai (DAI). It uses a system common to stock. Think of MKER as preferred stock and DAI as common stock. You obtain more voting rights in the company by owning preferred stock and common stock. In the case of the Maker blockchain, its preferred coin fluctuates in value as you would expect a stock to do.
However, DAI was crafted as a utility/payment token. It holds a stable value, indexed to the US dollar. That should not be confused with the coin US Dollar Coin (USDC) which also ties its value to the US dollar. Both USDC and DAI are what are referred to as stable coins. A stable coin holds value steadily. You might purchase it for use as a utility coin/token or as a means of investing in a blockchain which you believe will add value to e-commerce or commerce.
Asset tokens have become relatively common since entities like Lloyd’s and Sotheby’s discovered the inherent value of blockchain technology as a guarantee of veracity. Since the blockchain activity cannot be altered once written and transactions can only occur on an up-to-date copy of the blockchain, this proves the veracity of each transaction. That is handy for those in art sales and auctions.
Final Thoughts
There is much more to learn about blockchain and cryptocurrency, so I hope you will register for a Member Key with Goalry.com. You get access to all the financial management tools it offers and to financial education. You can access future articles like this one that explains step-by-step how to earn money, save it, build wealth, and become financially savvy. Its writers, like me, actually went through the processes described. In fact, I created a Coinbase account and use the exact method described in this article to grow money. Using the Goalry branded sites gets you real-world experience explained in understandable terms, so you can build wealth and enjoy a brighter future.