Crypto for Beginners: What You Actually Need to Know Before You Buy

Have you been meaning to diversify your portfolio investment? Are you keen to invest in cryptocurrency but don’t know where to start?

If you said yes to both questions, then you’re in the right place. 

This article will help you understand the ins and outs of cryptocurrency. It will also highlight things you must know before you actually hold your very first cryptocurrency.

Truth be told, the world of cryptocurrency can be dizzying when viewed through an outside lens. It’s filled with a lot of buzzwords and jargon that can’t be found in any other realm, perhaps except for the fact that it shares some overlaps with the financial products industry. 

Regardless, cryptocurrency still remains a very potent technological asset with high earning potential. Just take a look at how much Bitcoin has grown over the past years—and you can see why this asset is sought after and invested in by millions of people around the globe.

So without further ado, let’s explore what you truly need to know before getting started with crypto. Let’s jump right into it!

What is Cryptocurrency and How Does it Work Exactly?

At the most basic level, cryptocurrency is a form of digital currency that people use to make or receive payments.

Unlike traditional money issued and controlled by governments or banks, most cryptocurrencies operate on decentralised peer-to-peer networks. These networks are powered by blockchain technology, which is a distributed digital ledger shared across thousands of computers.

This network confirms transactions through agreed-upon rules and cryptographic methods. Once a transaction has been verified, it’s made transparent and added to the ledger for anyone to see if they so desire.

This system allows transactions to happen without needing the supervision of institutional intermediaries, empowering individuals to execute transactions more conveniently and with less transfer expenses.

Moreover, different cryptocurrencies can also have different utilities beyond building wealth. Some power decentralised applications and smart contracts, for instance. In essence, crypto is a comprehensive technological system that empowers the digital economy while also serving multiple different functions across different industries with its unique set of functions.

Does Crypto Have Real-World Use?

As previously established, yes, crypto has real-world utility. Many people wrongfully assume that crypto is nothing more than a store of value that rises and falls with its own economic trends.

However, that’s not merely the case; many crypto tokens have their own inherent function that has real-world uses that serve various industries. Here are some specific use cases of crypto that can be spotted in a real-life setting:

• Cross-border payments: Cryptocurrencies enable fast and low-cost international transfers without relying on banks or remittance services—two services which often experience days-long delays.
• Decentralised finance (DeFi): Users can harness crypto to lend, borrow, trade, and earn interest on digital assets without traditional financial institutions.
• Smart contracts and automation: Platforms like Ethereum allow self-executing agreements used in industries such as real estate, insurance, and supply chain.
• Digital ownership and NFTs: Blockchain enables verifiable ownership of digital assets like art, music, and other forms of media.
• Payments and commerce: Some businesses accept crypto as payment for goods and services, both online and in physical stores.

As seen above, there are a variety of uses for crypto that make it a good alternative to fiat currency. 

The industry is also constantly evolving and taking on a new shape with each passing year, so there’s guaranteed to be future developments and innovations in this space for years to come.

How to Invest in Crypto?

Now that you’re aware of crypto’s use cases, you’re probably more confident in putting some of your personal wealth into the space. The good news is that there are multiple pathways you can consider to become an online crypto trader.

Here’s an established way of getting your first crypto investment sorted out:

1. Learn about the crypto world: Do your research beforehand and get an understanding of crypto instead of blindly trusting claims from one source.
2. Choose a crypto exchange platform: Pick a licensed crypto exchange platform where you can buy the crypto that you’re eyeing at a reasonable fee and with a user-friendly interface. For example, you can purchase Bitcoin from bitcoin.com.au.
3. Create and verify your account: In your chosen crypto exchange platform, create an account. When signing up, submit any required documents and identification. You should also complete any identity-verification measures that the platform may impose on you for the sake of regulation compliance.
4. Fund your account: Once you have met the registration requirements and received approval, the next step is to fund your crypto platform account. You can do so through various means, like via bank transfer, credit card, or e-wallet payment.
5. Buy your first crypto: Find the crypto you want to purchase and buy it through the platform. These platforms have hundreds of cryptocurrencies for trade, including all of the highest-volume ones as well. You can choose a crypto, set the price you’re willing to pay, and buy it through the market interface.
6. Store crypto: You could keep your purchased crypto in your platform wallet. But the safest way is to move it to a personal cold wallet or hot wallet.
7. Monitor and manage your investment: Keep managing and monitoring your crypto to see whether it remains in alignment with your broader financial goals.

5 Tips to Stay Safe While Investing in Crypto

The crypto space has its fair share of phishers, scammers, and malicious actors. It’s important to be one step ahead of these people to ensure that your crypto wallet remains tightly secured and uncompromised.

Here are some tips you should follow to ensure that your crypto remains safe and out of reach from bad actors:

• Use strong security practices: Enable security features like two-factor authentication (2FA) and use strong passwords to protect your account against unauthorised access. 
• Store assets in a private wallet: Keep the majority of your crypto in a private wallet for better control and avoidance of potential hacks. 
• Be wary of phishing scams: Avoid clicking suspicious links or falling for online scams that ask for your personal information. 
• Stick with regulated exchanges: Reduce your risk by sticking with crypto exchange platforms that have been vetted and approved by local regulatory authorities.
• Keep your system’s security measures up to date: Regularly update your wallet apps, devices, and antivirus software to protect against vulnerabilities and malware that could compromise your crypto holdings.

We hope that we’ve helped you understand cryptocurrency a little bit better. The crypto space can be confusing, but by learning it bit by bit through proper research, you can slowly get the hang of it and create a digital asset portfolio that will steadily grow your wealth. 

All the best in your journey in investing in your first crypto!

Disclaimer

This content was provided by the Bitcoin.com.au project team for Quantify Crypto