There are three main ways you can get started investing in cryptocurrency. These are “mining”, buying cryptocurrency itself, and buying cryptocurrency-related stocks and EFTs. Here is a quick guide to what you need to know about each option.
Mining cryptocurrency
In simple terms, “mining cryptocurrency” essentially means renting your IT resources to a cryptocurrency network. It will use your computer and internet connection to run its services and pay you in its cryptocurrency. The more resources you provide, the more cryptocurrency you can earn.
Mining cryptocurrency used to require a certain level of technical skill. Now, however, there are marketplaces that connect sellers and buyers of IT resources. You can just sign up for one of them, set your parameters, and let them take care of the technicalities.
When cryptocurrency first started, mining it could actually be very profitable. These days, the situation is rather different. If you want to try mining cryptocurrency, you need to invest upfront in a powerful computer. This will use a lot of electricity plus you will need a superfast internet connection.
These are all fixed expenses but the fees offered by the cryptocurrency networks will vary depending on market conditions. This includes the number of other people also offering mining services. Overall, therefore, mining cryptocurrency is probably best treated as a potential, ad hoc sideline rather than a serious way to start investing in cryptocurrency.
Buying cryptocurrency itself
At present, buying cryptocurrency is actually likely to work out more cost-effective than mining it. If you’re new to investing in cryptocurrency, then it’s probably best to start by choosing one of the major exchange platforms. Then choose one of the currencies they offer there to start your cryptocurrency portfolio.
As you gain experience, you can broaden out into other cryptocurrencies. This may involve setting up an account with more niche exchanges. Make sure that you research any niche exchange thoroughly before putting any money in it. Remember that, currently, cryptocurrency holdings are outside the scope of the FDIC insurance scheme.
Once you have your cryptocurrency, you need to decide how you’re going to secure it. You can choose to store your access credentials online. This makes access easier for you but also makes you more vulnerable to hackers. Alternatively, you can store it offline. This is definitely the safe option and if you’re planning on “buying and holding”, it’s still fairly convenient.
Even if you keep your private key offline, you’ll still be able to track the progress of your cryptocurrency. You’ll also be able to follow the news in the sector.
Buying cryptocurrency-related stocks and ETFs
This could be an interesting option for many people regardless of whether or not you hold cryptocurrency itself. The development of cryptocurrency has brought about (or accelerated) several developments in technology. Probably the most famous of these is the concept of a blockchain as used by Bitcoin.
Buying cryptocurrency-related stocks and EFTs works in exactly the same way as buying any other kind of stocks and EFTs. It can therefore be a relatively easy point of entry to the cryptocurrency sector.
