Investing in Cryptocurrencies: The Basics
Many investors, including those new to the cryptocurrency field, have likely heard about Bitcoin and Ethereum. However, identifying promising emerging coins to invest in can be challenging.
The Risks of New Coins
According to Daniel Polotsky, co-founder and chairman of CoinFlip, investing in newer projects with lower market capitalizations tends to be riskier. He stated, “While they may offer greater upside, they also have a much higher chance of failing completely.”
Advice for New Investors
Experts recommend that novice investors focus on well-established assets like Bitcoin and Ethereum initially. A common mistake among beginners is feeling they’ve missed out on Bitcoin and instead investing in smaller, inexpensive coins, often associated with memes, which are cheap for a reason, as noted by Ben Weiss, CoinFlip’s co-founder and CEO.
Finding the Next Big Coin
For investors with some cryptocurrency experience, diving into newer coins can be appealing. With so many platforms offering information, it can be overwhelming to navigate the wealth of data available. Polotsky explained that, “For better or worse, crypto prices are often driven by both hype and substance.”
Researching New Cryptocurrencies
When looking for new investments, it’s wise to investigate the team behind the coins. Anonymous teams could pose higher risks since they face fewer consequences for failure. A transparent team adds credibility, as it shows accountability for the project.
Where to Find Information
Several reputable platforms, such as Messari, CoinGecko, and DeFi Llama, offer valuable insights into new crypto coins, including metrics like trading volume and fees. Attending crypto conferences and joining discussions on social media can also provide important insights into emerging trends and coins.
Final Steps on Your Investment Journey
After selecting a currency, it’s time to invest through a payment method of your choice—credit cards, bank transfers, or cash at Bitcoin ATMs each have their pros and cons. Once you’re set with an exchange platform, consider where to store your crypto, whether in a hot wallet (connected to the internet for convenience) or a cold wallet (offline for enhanced security). Be cautious with cold wallets; losing your wallet address means losing access to your investments permanently.
