A quick-start guide to investing in crypto
I could have saved money had I known these risks beforehand
I learnt about investing in crypto very recently from my workplace. I felt like I should look into it and give it a try. After all, I could lose my money. So why not give it a try, right?
I first heard about Bitcoin back in 2018 when my mom’s colleague had invested and was boasting about how he had made money. The way he said it, we literally thought he made his money from gambling. I discarded the idea.
Sigh :(
Second, I learnt about it in my master's degree in 2020 while I was studying a finance course — how companies raise money through IPOs, bonds, etc and a more hands-on approach on creating DCF models and analysing mergers. My professor was very knowledgeable and even had a full lecture explaining how hashing works and why blockchain could change the technologies we use.
I discarded the idea again after reading the horror stories on how people had lost money. I remember that my mom’s colleague had lost money later in 2018 because of the Bitcoin crash at the time. I only learnt more about blockchain and decentralised finance right before the March 2020 lockdowns. Well, the timing was perfect to get into investing due to the market-wide crash. I honestly couldn't and I had lost my part-time job and was a usual broke student at the time.
Why should I be saying all of this? These are the instances that shaped and influenced my decisions to start investing and build more wealth.
So let’s get into it.
These are the 6 things I wish I knew before I got into crypto.
You can get started with as little as $10 or equivalent currency!
Disclaimer: Please note that this article is for information purposes only. I am not endorsing or encouraging you into crypto. Sharing tips and information I wish I knew before I started investing in crypto.
1. Fees
There are several crypto apps, exchanges, wallets to start your crypto journey. Every platform charges you a fee to buy any type of crypto. There are quite a few out there offering these services. The best ones I use are Coinbase, Binance and Gemini. These are the largest, well-known and trusted crypto exchanges in the world and are relatively safe.
Here is an example of my first investment.
The first time I bought bitcoin was in Jan 2021 for £10. Yayy! Now I see £8.01 in my wallet. I was so excited and straight jumped into it. A £1.99 fee was charged from Coinbase during my purchase.
Every platform charges a certain fee on your transaction. Keep in mind the amount that you would like to invest, accounting for fees too. This was my example, but you would be charged accordingly in your equivalent currency depending on your investment size, time and place you live. Some platforms do provide the option to load your local currency through a bank transfer. This is a good option if you would like to invest a relatively large sum. Effectively, you won’t lose your money to fees for every transaction. Oh, the same applies to withdrawals as well.
2. Apps or Website?
There are so many out there. Go to the app store and type ‘crypto’ in the search bar. You'll find an endless number of apps if you keep scrolling down!
If it’s your first time investing in crypto, I would suggest signing up, experimenting, familiarise yourself and then start your investment. On a general note, crypto apps are a bit laggy and do take time to load information, might take longer if your internet connection isn't stable. Don’t make impulsive purchases thus repeating the same transaction twice.
3. Coin vs. Token
Both are different. The terms are used interchangeably but both mean different things.
Any cryptocurrency built on the original blockchain is a Coin. In other words, coins are native to their own blockchain. Some examples are Bitcoin (BTC) built on blockchain, Ethereum (ETH) built on Ethereum blockchain, Binance Coin (BNB) built on the Binance Chain.
On the other hand, any cryptocurrency built on top of an existing blockchain is a Token. Some examples are UniSwap (UNI), Chainlink (LINK), etc use the ethereum blockchain; a popular blockchain after Bitcoin and commonly known as ERC-20 tokens.
4. Volatility
The value of your investment can change drastically either during/after your purchase. This purely depends on the market conditions. If you started your investment with a medium to long-term duration, ignore the short term loss in value. Keep in mind it is never a loss until you sell it!
On a side note, to account for this volatility, crypto platforms ask to refresh purchase price data every few seconds, before you press ‘Confirm’. The value does change a few times before you click the confirm button, but don’t panic if you’re new. This is just normal across most legit crypto apps and websites.
5. Blockchain Types and addresses
There are various blockchain types to send and receive crypto across different platforms and wallets. If you plan to transfer your crypto assets, make sure you check to have the correct address and network type (the blockchain type used to send and receive — BTC, ETH, BSC, USDT, etc).
This again points back to my first point. FEES!
Yes, transferring different crypto assets across different networks has its own network fee (also known as Gas Fee). So check these details before you complete any transfer.
Say if you want to transfer $100 worth of ETH and the gas fee is $42, you’re losing essentially 42% of your investment. Not a good choice if you ask me!
6. Free Money
Yes, you read that right. Some platforms/apps give you free money to sign-up and use their services. Others offer discounts on trading fees and some even lock the referred amount into staking or other earning products. To meet the free money terms and conditions most crypto platforms ask you to invest ranging from $20 to $100 to receive your referral rewards. You should receive the reward straightaway if you meet the required terms and conditions.
I did not know anyone in my family or friends investing in crypto so had no referral invites/codes. If you don’t have any, ask your friends and family; else google them and plenty should appear in your search results.
In the end..
Simply put, I wish I had known these things before I started my investment journey into crypto. This might seem very basic, but missing out on these points that I’ve highlighted is important when starting off your investment in crypto. This still applies if you’re planning to invest for a longer time frame too. I lost about $60 from exchanging coins and transferring. This is how much I could have saved! Honestly, it might not seem a lot but when starting any investment, the said amount feels like a lot of money. I started with Bitcoin (BTC), Ethreum (ETH), Dogecoin (DOGE), Cardano (ADA) as my first investments. Always do your own research as a lot of crypto tokens exist which have no real use cases but are pure speculations. Any coin/token you choose is solely your choice.
Happy investing!
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