Ready for your first cryptocurrency in 4 steps

Hundreds of millions of people around the world trade and invest in crypto. This number is expected to increase significantly in the coming years. According to some financial experts, we are even at the dawn of the crypto era. Do you think it is worth starting with cryptocurrency? In this article, we explain in 4 steps how to do this responsibly and safely.

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Step 1: Do your research before trading

Before buying your first cryptocurrency, it is important to learn the basics. You hear people talking about crypto all around you, but it's good to get a picture of this new world of bitcoins, Ethereum, and the smaller coins for yourself. Crypto is for everyone, but not for everyone. You must be aware of your responsibility and be resistant to price fluctuations.

If you know how buying and selling works, what blockchain is, and which cryptocurrencies there are, you can make responsible choices based on knowledge instead of feeling. A lot of information can be found online and there are countless courses.

In the case of the crypto market, your reading is extra important, because everything revolves around your responsibility. If you decide to invest all your money in a certain stock exchange or currency and it goes bankrupt, you cannot fall back on the De Nederlandsche Bank's deposit guarantee scheme. There are also crypto exchanges that offer account guarantees. This guarantees that users will be reimbursed up to € 100,000 if someone has gained unauthorized access to a user account and your crypto is stolen.

It is also good to think about the goals you want to achieve with crypto. Are you going to buy cryptocurrency for the long term to build wealth or a pension? Or do you want to earn money by trading in a short time (in other words: do you want to start trading)? Everything is possible, but each approach requires a specific strategy and specific knowledge.

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In short: it is up to you how you get into crypto, as long as you make that choice consciously based on knowledge and facts.

Step 2: Choose a professional place to buy crypto

Do you know the basics? Then you can take your first steps in crypto land. It is smart to start with small amounts. For example, leave 20 euros for a while to get a feel for digital coins. This increases the chance that you will start using crypto in a responsible manner. Two general tips: do not invest with borrowed money and only invest amounts that you can afford to lose.

You can buy crypto coins online from a professional provider. To do this, you must first create an account. The basis is that you exchange traditional money for digital money at the current crypto rate. Please note: never accept a proposal from people to invest in digital currencies with them. Always choose a party that has proven itself.

You usually buy cryptocurrency from a crypto exchange or through a broker. The two are often confused, but there is an important difference. An exchange is a trading exchange for buying and selling cryptocurrency. You do this directly, so without an intermediary.

A broker is a party between the buyer (you) and a cryptocurrency exchange. Of course, such a broker does not work for free. The transaction costs through a broker are therefore higher than when you trade directly on the exchange. The amount of the fee differs per broker.

There are a lot of exchanges and brokers. The question is: how do you find a reliable party? It is also important to do research beforehand. A few things to watch out for:

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See if an exchange or broker has good reviews.

How long has an exchange or broker existed? How many users are there?

What are the costs of transactions and is there a simple fee structure?

How user-friendly is the platform?

What are the payment options (for example, can you pay via iDeal)?

And last but not least: what about the security of your crypto?

Step 3: Choose a coin that suits you

As a beginner, you can consider choosing well-known cryptocurrencies such as bitcoin or Ethereum. The advantage of this is that these cryptocurrencies have proven themselves. That gives confidence. Bitcoin has been around since 2009 and over the years, bitcoins have held their value the best. Other cryptocurrencies – also known as altcoins or alternative coins – fluctuate more violently in price.

When you have more experience with cryptocurrencies and want to invest large amounts, it is good to diversify your portfolio (just like with shares). Then you don't bet on one horse, but you use the strength of the herd.

There are thousands of cryptos. Behind almost every currency is a company, a foundation, or a club of programmers. Every serious crypto has a website where you can see which people are behind the coin. When the founders have successful crypto projects to their name, there is a greater chance that this coin will also catch on.

Step 4: Make sure you keep your cryptocurrency safe

Serious amounts can be handled in crypto. That makes digital coins an attractive target for hackers and other cybercriminals. It is therefore crucial to store cryptocurrency securely so that no one can access your coins.

As mentioned, you can buy cryptocurrency on an exchange. Before investing, you need to create an account there. When choosing an exchange, take a good look at how security is arranged. As mentioned earlier, there are exchanges with a refund guarantee of up to 100,000 euros, if you fall victim to scammers.

You can also withdraw cryptocurrency from an exchange and keep it yourself. For that, you need a wallet, a digital wallet for crypto coins. With such a digital wallet you can receive, transfer and store cryptocurrency. You can store a digital wallet on your laptop, or phone or keep it online. Do you opt for a digital form of storage? Then make sure you have a well-secured password and two-factor authentication.

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When it comes to wallets, you have several options. There are warm wallets (as described above) and cold wallets. The main difference between hot wallets and cold wallets (also known as offline wallets) is that the cold wallet is not connected to the internet by default. It is a device that you can connect to your computer via a cable or Bluetooth. A lot safer, but not necessarily better. Each form of storage has advantages and disadvantages. Get well into that too.

Conclusion

When you start with cryptocurrency, a wonderful world opens up for you. As mentioned, you must know what you are doing, so that you start responsibly. Have you reviewed the steps above and think you're ready? Then it's time to get started with crypto.