Crypto Beginners Guide: 5 Things Crypto Newbies Should Know

It is understandable how many people rush into the moving train of digital currencies, with the news of high returns on investment from individuals, low and high-income investors, and corporate businesses.

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Since digital currency surfaced, it has brought about a transformation in the financial system and wealth accumulation.

One thing about digital currency that attracts people to invest in it, apart from the high returns on investment, is that it is free from bank fees and monitoring. It is highly secured and private. People feel free to trade and invest without the fear of banks experiencing bankruptcy and doing away with their money or the government coming after their money.

But just like every phenomenon on earth, the digital currency has lots of pros as well as cons. This calls for some measures before going into the crypto world.

Cryptocurrencies are affected by so many market movements and changes, and the prices/values fluctuate so much at various intervals.

Many people don’t see it as a legal platform to invest funds; most see it as magic and don’t believe that such returns on investment are legal. Banks and threatened by this invention as many no longer keep their money in the bank. But it is without a doubt that digital currency is the way forward and one of the best places to invest.

Every single day, newbies from around the world key into adopting the idea of digital currency, and many people lack some vital information they need to know before venturing into investing their money.

Just as alluring as the crypto world sounds, truly investors can get a large percentage of returns on investment, but at the same, they can lose all the money invested as well within a few minutes. This is why the right information and mindset need to be gotten before venturing into investing real money into the system.

As regards that, this write-up will be serving as a guide for newbies who want to get into investing in cryptocurrencies. The write-up will be revealing 5 important things newbies in the crypto world needs to know.

  1. Newbies Should Engage In Lots Of Research: To be conscious of the happenings in the crypto world, they need to be well equipped with information and terminologies in the system. Just as it is called digital currencies, it has to do with technology. Understanding what blockchain is all about as it is the digital ledger for recording all information of transactions made in the digital space.

Blockchain is highly secured in order to protect transactions and avoid hacking, change, or cheating. It is duplicated and spread across a network that adjusts according to changes of any new block added. It is a specialized database that stores data in blocks which are then chained together.

This seems complicated but quite simple. Blockchain is like a database that assembles information stored electronically on a network of computers. Unlike using a spreadsheet meant for an individual, the database is designed to accommodate larger data sizes that can be filtered, accessed, or used by persons in the network.

Blockchain is slightly different from an ordinary database because it has a way its data is structured. Blockchain gathers information together in blocks. This information is then chained onto existing blocks. That is why it is called a blockchain.

This revolution in technology called blockchain is something anyone going into the digital currency world needs to know because blockchain is the technology that makes the existence and transactions of cryptocurrencies possible. The best way of learning about this is through reading blog posts like this one, visiting online forums that engage in crypto discussion, and watching videos on vlogs.

The purpose of cryptocurrencies is to give everyone the power to control their money and have actual ownership. For this reason, it is not advisable to trust someone else with money. Fraudsters and scammers tend to take advantage of newbies in the system. This is why getting more informed before investing is important.

  1. The Kind of Fund to Invest

This is one of the most important pieces of information that newbies should know. The kind of money that should be invested into the cryptocurrency system is the money that the investor will be willing to lose.

The crypto market is volatile and extremely dynamic. In order to avoid high blood pressure or suicide perse due to loss of important funds, investors are advised to invest only money they are willing to lose and not money meant for important functions.

It is not advisable to take loans from the bank or any other place to invest in digital currency or sell a property with the hope of replacing it when the returns come, there is no guarantee, and one can lose everything.

The market goes up and goes down as well, and it is usually affected by market changes and economic factors. When it goes up, there is a high tendency for profit to be high, and when it goes down, it leads to a major loss.

The crypto market is highly risky, people can make a lot of money, and they can lose a lot of money. But those who are willing to risk more than making more money in the digital currency market should be guided that it is not a Ponzi scheme.

There have been cases where people took out huge amounts of loans from banks to trade cryptocurrency and end up losing everything when the market experienced a major setback.

Cryptocurrency has experienced a drastic crash at various times, but the hope is that most crashes come with even greater risk, but it is not a guarantee for investing funds meant for important and urgent needs because the rebound can take years for it to happen.

The only thing required by investors is to monitor the market, watch activities and movements and get quality information before investing in it.

  1. It Is Not a Get Rich Quick Scheme

Just as written above, it is not a get-rich-quick scheme, neither is it a Ponzi scheme. Rather it is a market where investors should focus on what they stand to gain in the long-run.

Investors, especially newbies, should not go into the market just for short-term returns, so many people make these mistakes and end up regretting them. There are some scenarios where people notice a little rise in the currency compared to what they invested, and they quickly withdraw it thinking they have made it again.

Days or weeks later, as the cryptocurrency continues to skyrocket and multiplies a hundred times more than what they impatiently withdrew, they start regretting withdrawing in the first place.

This has thrown more light on the need to exercise patience when investing. People who bought some coins at the beginning of 2020 and left it up until now, April 2021, have gained 500% returns on their initial amount invested.

Long-term should be what any investor hoping to make it big in the digital currency should be thinking about. This is another reason why the funds invested in cryptocurrencies should not be the one needed as a matter of urgency or needed for something else.

One great tip newbies should know is that the value of cryptocurrency increases as more people invest in the system, and seeing that it is a system many people are going into, innovations keep coming up, new digital currencies keep emerging, and people keep joining.

Investing in the cryptocurrency platform will yield more fruits if patience is applied. To get a fair share of those joining the system by the day, investment needs to be done on a long-run basis.

Some investors know about this because of their expertise. Long-term investments pay the best return. That is why rather than selling off their gains quickly, they plunge in more money to make more investment as the cryptocurrency keeps on rising.

  1. Spreading Cryptocurrency Investment

In the cryptocurrency market, there are lots of digital coins and tokens to buy and sell. The transactions are not limited to just one. Bitcoin was no doubt the first digital coin and is now very high and can be purchased by those with high funds to invest.

Bitcoin was created in 2009, with many people skeptical about it then only a few bought and invested their money into it. As time kept on moving, many people continued, and trust was built due to the security and safety of the blockchain.

As of the 14th of April 2020, 1 Bitcoin is worth $62,932.60 USD compared to when it started in 2009 when it was worth $0; then grew to $0.0008, in 2010 it increased to $0.08, and so it kept on moving.

People started transacting, buying, and selling bitcoin, and their returns kept on rising. Cutting a long story short, the digital coin became so desired by many that it paved the way for other digital coins as the price became relatively high.

There are different digital currencies now, like Ethereum, which became highly valuable and relatively high recently towards the end of 2020. Just like its predecessor, people were skeptical about buying Etherum when it first came and kept on trading in Bitcoin they were already familiar with.

Just as the saying goes, only those willing to take the risk will get the gold. Few people invested in Ethereum as it began to grow, many people keyed into booking their slot, and the value rose drastically. It became an alternative for those that were unable to pull out a huge fund to acquire bitcoin.

Ethereum was launched in 2014 without much value attached to it. As people invested in it, the price and value rose. In January 2021, the price of Ethereum rose to $138.3 billion USD.

Bitcoin and Ethereum are now known to be the oldest cryptocurrencies and the biggest digital coin in the digital currency market. They are now stable compared to other upcoming coins and tokens.

Good investors in the digital currency market take time to money the market, search for new coins that have great potential, and identify valuable alternatives to the top cryptocurrency, so they invest, and as the value of the coins rises, they earn more returns.

It is highly recommended that investors spread their tentacles for many reasons, such as – ranging from earning more from lesser coins and tokens and bouncing back when another coin crashes.

Other digital coins following the base coins i.e., Bitcoin (BTC) and Ethereum (ETH), are coins like Litecoin (LTC) which were launched in 2011. This coin is based on an open-source universal payment network. This coin is like Bitcoin, but its transaction time is faster than that of Bitcoin. Many merchants have bought into the Litecoin system, and it is now valued at $10.1 billion USD as of the earlier months of 2021.

Cardano (ADA) is another cryptocurrency. One of the co-founders is Charles Hoskinson, who was one of the five founders of Ethereum. Cardano is still in its early stages and is worth $9.8 billion USD.

Bitcoin Cash (BCH) is another. Unlike Bitcoin that is limited to one megabyte, Bitcoin Cash increased its block size to 8 megabytes.

It came up with this idea because it is perceived that a larger block size can increase the speed of transactions and lots more, and the BCH value was $8.9 billion as of January 2021.

The list is endless. There are Stellar (XLM), Chainlink, Binance coin (BNB), Tether (USDT), Monero (XMR), and the rest of them.

Investors can buy coins or tokens in the digital currency world or both depending on the funds available at their disposal.

The tokens are cheaper to get than the actual coins. Some list of tokens compared to the price of coins are:

  • Ethereum (ETH) coin worth $138.3 billion USD with per token value being $1,218.59 USD
  • Litecoin (LTC) coin worth $10.1 billion USD, with the per token value being $158.88
  • Cardano (ADA) coin worth $9.8 billion USD with ADA trading at $0.31 USD
  • Polkadot (DOT) coin worth $11.2 billion USD with DOT of $12.54
  • Bitcoin Cash (BCH) worth $8.9 billion with per token value worth $513.45 etc.

It is advised that investors diversify their portfolio; investment in cryptocurrencies should be spread across the market. There are more than 1,600 coins and tokens people can invest in when they come into the cryptocurrency market. It is not advised to put all eggs in a single basket so that all eggs will not be lost when it falls. Diversification in the cryptocurrency market is a wise decision investor should make.

  1. Attention Should be on Profit and Loss

As newbies, many might not understand how the figures rise and fall. It is noteworthy to state that the numbers determine the value of each coin and should be monitored at all times. Just like in the commodity market, money market, and other markets where transactions are made, the aim in the cryptocurrency market should be to invest money and get higher returns more than the initial money invested.

Buying at a low price and eventually selling at a higher price is what shows the level of profitability in the investment. Much attention should be paid to the numbers before buying. At the beginning of this article, it was stated that newbies need to understand some terminologies in order for them to flow well in the marketplace.

Bullish and Bearish movements are common terminologies that newbies need to get acquainted with as it is used to signify the movement in the market price.

Newbies should know that there are times when investing should not be considered, and they need to know when the value of their investment is rising or falling in order for them to ascertain if they are making a profit or if they are losing.

It is important to have knowledge of market movements. The bearish movement signifies that prices are coming down, and this is the exact time when investors are meant to buy and make an investment at that fallen price.

Bullish movement is the upward trend of the market when prices are constantly increasing. This is the period when investors should consider not buying at all. Rather they should be monitoring their gains on the investment made during the bearish movement.

The cryptocurrency world is a place of complexity and should be threaded upon with caution, the right information, awareness, and knowledge.

Some other terminologies and phrases newbies should research apart from blockchain, bearish or bullish movements are cryptography, DDoS attack, escrow, Fiat Currencies, FOMO, fork, hard fork, initial coin offering, market cap, mining, mining incentive, moon/mooning, noob, POW, POS, private key, whale, pump and dump, ROI, short, token, long and so on.

Newbies should always be on the outlook for cryptocurrency news and publications. This will keep them informed on the activities going on in the digital currency marketplace so they will not be left out.

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