Thinking Of Investing In Cryptocurrency? Here Are 5 Beginner Basics To Know

Investing in crypto is fast becoming a measurable competition to more traditional, tangible securities. As the internet gains precedence over other means of communication, it is ushering in newer means of financial exchange. And the crypto-blockchain technology ranks near the top.

For all its convenience and popularity, however, it is a market shrouded in questions. What exactly is cryptocurrency, if a layperson were to ask?

Digital Asset?

"It is a digital asset. Digital money," Lakshika Kothari of Dfyn Network tells SheThePeople in an interview. "Understand it as a decentralised, open system that is high in transparency. There is little to no counterfeiting here and you can track your money."

Crypto is a medium of exchange that takes down wealth ownership in computerised database form. The money exists only electronically, not on paper. Just like paper money, crypto too works in currencies; think Bitcoin, Ether, Tether, Cardano.

In the past year, a crypto boom, so to speak, has occurred, contributed to in large part by the extensive participation of women in trading and investment. Data shows that in India alone, the share of women investors in crypto increased by a whopping 1400 percent. A sign of positive times riding on the back of increased financial independence?

Hopefully. Crypto founders have noted a turning of the space in recent times, where younger women users have been described as more "bullish" and generous with investments than men. They have shown "great potential in leading this industry forward," Shivam Thakral, CEO BuyUcoin, has said to the press.

New Spotlight?

It seems to be a big up-and-coming space to explore (albeit with a lot to regulatory elements yet to be closed out) and there is vividly a surge in the interest towards investing in cryptocurrency. Experts believe it is an exchange system that's here to stay. So if you're looking for tips to begin, here are some things to make note of.

Investing In Crypto Beginner Tips To Help You Forward:

1. Quick trades and transfers

The USP of cryptocurrency is the lack of intermediaries transferring your money from one address to another. No central banks or administrators interfere in the process, which is simply peer-to-peer. The user remains anonymous, with money linked to addresses rather than persons.

Transaction fees deducted basis the exchange amount and market congestion, however, do apply in cryptocurrency.

2. What is your 'risk appetite'?

Kothari says knowledge of this is key to investing in the crypto space. 10 percent of one's net worth is usually the fail-safe margin. "Even if you lose that investment, it is fine for most people. Crypto's nature of being an early market means fluctuation is bound to happen. Coding keeps changing. Asset values can increase or decrease," she says.

How much one should invest in crypto should be a simultaneous balance between how much one is willing to lose and earn.

3. Secure your stash in a wallet

Like you would physical coins or cash, it is best to stow your crypto money into a digital wallet. Though largely a safe system, leaving it lying around in the open could tentatively invite hackers. Store the location of your crypto "keys" safely in a ledger device (hardware wallet). This ledger device is like a wallet for your digital cash. So if you lose the wallet, you lose the money.

For maximum security, keeping this ledger in a bank locker or safety deposit box is a good idea. Crypto wallet apps are also a popular option.

4. Buy wisely, buy safely

Jincy Samuel, Coinsecure co-founder told SheThePeople that people entering into the blockchain-crypto space should be informed about its volatility. With crypto, she said "it is important not to put all your eggs into one basket. Spread them out wisely."

For beginners, taking inspiration from veteran traders is a good idea. UK-based Heloïse Greeff, who trades on eToro, says she prefers keeping away from high-risk investments and puts her trust in more long-term technology. "I tend to have moderate returns and just keep compounding that over time," she told Insider. 

5. Research, research, research

Prior to beginning investing in cryptocurrency, Kothari said she read a variety of whitepapers on the subject for better knowledge of what she was putting her money into.

Bitcoin and Ethereum remain top choices for crypto investors, especially beginners, around the world given their blockchain technology and reliable reputation. Kothari tells us these are not companies and hence there is no cash flow associated with them. "People believe in them and put money."

In 2021, Bitcoin is the dominant cryptocurrency in the market.