I have always been very skeptical about cryptocurrencies such as Bitcoin. However, now that printing money is considered a valid response to the corona crisis, and is likely here to stay, I like the idea of having a currency of which there is a fixed supply. Previously I considered cryptocurrencies too speculative, mostly because I did not, and still do not, fully understand how they work. I am investing a small amount into cryptocurrencies as an experiment, where I intend to learn about these instruments, and potentially make a small profit. I found Investopedia to be one of the best resources on getting started with cryptocurrencies in general.
Here I outline the process of buying my first crypto.
What to buy?
The first thing to look into when considering cryptocurrencies is what to buy. In this context, I intend to make a long-term investment as this is the investing strategy I most believe in, partially because I have better things to do than watch the markets all the time. When getting more specific on the composition of my portfolio, I found this article from cryptopotato quite useful. It explains some of the basic things to look at when making a crypto portfolio. The key criteria listed in this article are the market cap, utility, daily volume and transactions, ongoing development, and market news and sentiment. The key takeway I get is that bitcoin is still the most important contribution in a well balanced portfolio at ~50%.
I don't want to copy the suggested portfolio as part of the reason for me to do this is to learn about crypto currencies. One of the key recommendations I ran accross was to read the whitepapers of the different currencies I invest in. For now I'll start with Bitcoin and Ethereum as these are the most common names and will slowly expand my portfolio after that. I have added Litecoin and Ripple (XRP) as these are most suitable to use in actual payments.
How to buy it and how to store it?
There are a lot of discussions on security and trusting a company with your money in the crypto sphere. Most notably spurred by the story of Mt. Gox. However, for beginners pretty much all resources point me towards coinbase as both an exchange and one of the most reliable wallet holders. As both my investment is small, and I am a beginner, I am going with coinbase.