So you’ve decided you want to put some money into crypto? Buying for the first time is exciting, but it can also feel scary.
You can buy your first cryptocurrency through an exchange. Some of the major exchanges include:
Not all exchanges are reliable, and some have been hacked. Research any exchange you’re considering using, and make sure it follows Know Your Customer (KYC) laws by asking you to provide proof of your identity. Consider using an exchange with a longer track record.
If you’ve decided you want to take the plunge into cryptocurrency investing, you’ll also need to choose from among thousands of available currencies.
Some investors may choose one of these strategies:
Option 1: Play it safe(r)
No cryptocurrency investment is safe or conservative, but you’ll generally be taking on less risk, comparatively, by going with one of the two largest and most established coins, Bitcoin and Ethereum.
Option 2: Swing for the fences
Less-established coins—such as Ripple, Tron, or Verge—may be even riskier than Bitcoin and Ethereum but could offer even bigger price gains if they succeed.
Option 3: Try to pick the next big innovator
Some crypto experts believe privacy coins—which offer additional layers of anonymity and privacy protection to buyers and sellers—represent the next big evolution in cryptocurrency. Privacy coins include Monero, ZCash, and Dash.
Since cryptocurrency is extremely risky, consider investing only an amount that you could live with losing. There’s no need to commit to a whole Bitcoin or Ether either—you can buy a portion of one coin.
Let’s say you want to buy $100 of Bitcoin when the price is $7,355:
100/7355 = .01359
That means you own 0.01359 Bitcoin or $100 worth.
If the price rises tomorrow to $8,000:
0.01359 x 8000 = $108.75 (yay, you made 8 bucks!)
Now, if you cash out that Bitcoin, you would get an $8 profit, but you’d also generally have to pay short-term capital gains taxes.