Buying cryptocurrency has been a hot topic for several years now, ever since currency exchanges have stepped out of the shadows and onto business channels like CNBC, Bloomberg, and Fox Business. Now cryptocurrencies have blown up becoming a phenomenon that is taking over the world. Cryptocurrency trading has piqued my interest lately as I have seen endless ads touting how a small investment in cryptocurrency can turn into a fortune overnight. Early bitcoin investors have reaped a windfall and I am always in search of investments that possess the potential to multiply my money.
Different Types Of Cryptocurrency
All of a sudden everyone wants to own cryptocurrency, invest in cryptocurrency, and even create new forms of cryptocurrency. Cryptocurrencies are so hot right now that popular social media sites like Facebook are about to offer their own. Cryptocurrencies are the new disruptors in the currency marketplace seeking to become a rival to the physical currency market. However, the majority of global banks and financial institutions around the world continue to resist using cryptocurrencies. Despite the resistance, more people are becoming interested in cryptocurrencies and are making moves to learn more about cryptocurrency investing.
Bitcoin is the most popular cryptocurrency and highest priced but there are other widely purchased ones as well.
The most popular types of cryptocurrency include:
- Bitcoin Cash
It’s pretty simple to purchase cryptocurrency. Let’s check out the best ways for you to invest in cryptocurrency below.
How To Invest In Cryptocurrency
1. Buy cryptocurrency on exchanges.
Cryptocurrency exchanges allow investors to buy, sell, and trade cryptocurrency. The easiest way to get cryptocurrencies is to simply buy them on one of the major exchanges.
Coinbase is the most popular cryptocurrency exchange with cryptocurrency buyers. Binance, is another popular exchange but has temporarily closed to new investors in the United States as the company is unveiling a Binance US exchange with 30 different cryptocurrency tokens specifically for US investors. Trezor is an app based exchange for cryptocurrency investors looking for a safe place to store their digital wallet. BitMEX is another quality exchange but investors can only trade Bitcoin. (Read this post to learn more about a digital wallet).
The major exchanges have downloadable apps which allow you to make cryptocurrency purchased from your iPhone or Android device. Coinbase is my favorite exchange for its ease of use so I will walk you through how to buy cryptocurrency using Coinbase.
All you need to do is:
- Create an account on the Coinbase exchange by entering your personal information.
- Determine how you will fund your account. Your account can be funded using an electronic transfer, credit, or debit card. Credit and debit card payment methods will require additional verification through submission of a photo id and confirmation of two small pending account charges.
- Once your account is open, you are ready to purchase your cryptocurrency of choice.
- Go to the Buy/Sell/Digital Currency page.
- Enter the amount of cryptocurrency you wish to purchase.
- Select your payment method.
- Confirm your order is right and click Complete Buy.
- Your digital currency will be delivered to your digital wallet.
There are other ways to invest in cryptocurrency besides purchasing on exchanges.
2. Invest through Initial Coin Offerings (ICO) and token sales.
If you wish to buy cryptocurrency and get the greatest upside potential, investing through an ICO or token sale might be your best bet. Initial coin offerings and token sales are ways of selling a new cryptocurrency to new investors. An initial coin offering is like an initial public offering for a stock. A token sale is a type of crowdfunding campaign where investors purchase coins and hope that they will bring them greater profits once their price increases. Cryptocurrency purchases at token sales are popular because of the possibility of a price rise due to interest, functionality, and other reasons. Sometimes the best time to purchase a cryptocurrency is to get it as soon as it becomes available at an ICO or token sale.
Be careful with token sales however as they are often fraught with scams. Investors have been fleeced out of millions by fake token sales. Always be sure to investigate the track record of the management team and read the whitepaper as well. A cryptocurrency whitepaper explains the implementation strategy, states the long-term goals, and lists the corporate management team. This will give you a clue as to whether you are investing in a legitimate ICO or not.
3. Accept cryptocurrency as payment.
Another method of acquiring cryptocurrencies is to offer your services and skills to an online employer willing to pay in cryptocurrency. This primarily includes online freelance work, as digital currencies are not yet a widely accepted payment option when it comes to traditional jobs. Certain cryptocurrencies like Bitcoin are becoming more socially acceptable as payment options for freelance workers. You will find that there are many people and small businesses who are willing to pay you for online work in digital currency. You just need to create a digital wallet on a cryptocurrency exchange to start accepting payment from businesses.
4. Start mining for cryptocurrency.
Crypto mining is definitely the most complicated way of getting cryptocurrencies. It is also the most expensive one, since you must have the proper equipment and skills to do it. Let me be clear, I do not recommend becoming a crypto miner! Cryptocurrency miners are auditors who do the work of verifying transactions. For example, a Bitcoin miner has to verify at least 1MB worth of transactions and you have to be he first miner to provide the 64 digit hexadecimal number that is less than or equal to the target has. In order to do this, you would need a homemade mining machine consisting of a Graphics Processing Unit or by buying individual graphic cards. Creating the necessary computing power can easily cost thousands of dollars, not to mention using massive amounts of electricity, which will bring back a huge electric bill. Miners are rewarded for their efforts however with Bitcoin deposited in their wallets for verified transactions.
There are other ways to obtain cryptocurrency, such as watching ads, playing games, gambling in decentralized applications, and alike but they are not recommended. When purchasing cryptocurrencies, place safety first by only taking calculated risks. Also, never invest more than you can afford to lose and remember that deals that sound too good to be true usually are.
Read What is Cryptocurrency? to learn exactly what this asset is.