The best way to investing in cryptocurrency

We at Go Cryptowise engage daily with the cryptocurrency community, and we are really passionate about this new emerging space. But we are aware of so many common mistakes that are being made. And risks that new users are exposed to. So we would like to help beginners navigate the cryptocurrency space, as we believe that will be beneficial to everyone. The complete guide to the best way to invest in cryptocurrencies.

In this guide on how to best invest in cryptocurrencies you will learn about:

  1. This is what you need to know before investing in cryptocurrencies
  2. The steps of getting started investing in cryptocurrencies
  3. The most popular exchanges where you can buy cryptocurrencies
  4. How taxes work for crypto
  5. Common mistakes and risks to avoid when investing in cryptocurrency

This is what you need to know before investing in cryptocurrencies

  1. Cryptocurrencies can drop in value at a much higher speed and volatility compared to stocks and funds. But the same applies to it increasing in value at a much higher speed.
  2. The Bitcoin and cryptocurrency market is still extremely young, that means there’s not much regulation in place. Government around the world are trying to figure out what cryptocurrencies are and what they can mean to their societies.
  3. No Bitcoin is not dead yet. The number of times that Bitcoin has been proclaimed as dead is countless. And you should question people that claims Bitcoin is soon going to be worthless. The same goes for people shouting that Bitcoin will be worth millions. What are their motives for saying so?

At the end of this guide you will know The best way to invest in cryptocurrencies

  1. Do your own research – DYOR
  2. The steps of getting started investing in cryptocurrency
  3. Find the best exchanges when investing in cryptocurrency
  4. Find out how taxes works for Bitcoin and cryptocurrencies
  5. Avoid these common mistakes and risks with cryptocurrencies

Is Bitcoin and Cryptocurrencies still a smart investment?

Yes! We definitely believe that is the case. Blockchain is a new and emerging technology, and the cryptocurrency space is still young and immature. Sure there are a lot of valid questions being asked, but those same questions and doubts were asked when the Internet was in its early days. But look where it is now. And there are tons of similarities with cryptocurrencies.

Since Bitcoin was created in 2009 by Satoshi Nakamoto it has had its ups and downs throughout time. But it’s still standing here today showing the enormous potential and resistance it has to withstand it all. You might think it’s too late to invest in Bitcoin and other cryptocurrencies? Those questions have been asked by so many people since the beginning of Bitcoin’s time. It was asked when Bitcoin was valued at $1 dollar. Next at $10 dollars, later at $200 dollars, then $1000, etc. And we believe the value cryptocurrencies can bring is still here. Stronger than ever.

Bitcoin physical coin - investing in cryptocurrency safety tips

Before you start – Do your own research – DYOR

Do your own research or DYOR is a common expression used in the cryptocurrency community. And we think it’s one of the better ones. Because it means that new users should before they jump straight in take their time to understand what cryptocurrencies are. What the steps are to investing in cryptocurrency and Bitcoin. And ultimately which cryptocurrency is worth their investment? This approach is important for any type of investment. It should apply to your thinking when buying stocks, funds, real estates, you name it.

Following this advice will mean that you will, educate yourself, be in control of your decisions, and less likely to be tricked/scammed. As there are people out there who might have some bad agendas for pushing their coins to you.

Investment screen -  investing in cryptocurrency safety tips

The steps of getting started investing in cryptocurrencies

  1. Decide which cryptocurrency you are interested in ‘investing’ in: There are plenty more than Bitcoin and Ethereum, so it’s important to research and decide which one you want to buy as step one when investing in cryptocurrency.
  2. Find the exchange that trades the crypto you want: When you have decided which cryptocurrency to invest in, then you need to figure out where you can buy it. The absolute most common way to buy cryptocurrencies is through an exchange. Some exchanges lets their users trade Fiat (what is Fiat) to crypto straight away, but definitely not all. So sometimes you need to use a service/exchange like CoinbaseLocalbitcoin, etc to buy Bitcoin, Ethereum, Litecoin, etc and then send them to the exchange that trades Example crypto.
    Use our exchange review and comparison tool to find the right exchange for you when investing in cryptocurrency.
  3. Store the cryptocurrency you bought somewhere safe: When you have managed to buy the cryptocurrency you want you need to store it somewhere safe. Remember in the world of cryptocurrencies you are your own bank. And therefore you need to make sure that you keep your crypto somewhere safe. A good hardware wallet is the way to go. Find out which hardware wallet that might suit your needs and crypto using our wallet reviewal and comparison tool.
  4. Don’t forget taxes: In most countries around the world we have to pay taxes on our crypto trades and purchases.  What is common is that you need to pay taxes on any capital gains made from a trade. For example if you bought 1 Bitcoin for $4000 dollars and later on sold it for $6000, then you need to pay taxes on that $2000 gains. So if you’ve made a lot of trades it gets difficult to compile them at correct prices and dates, we know. So thats’ why we put together this review of different – guide on how taxes for crypto works here

The most popular exchanges where you can buy cryptocurrencies

Now depending on which cryptocurrency you might want to buy it affects which exchange you can use to buy it. But these cryptocurrency exchanges that we have listed below are our personal favourites and the ones that we ‘trust’ the most. But that doesn’t mean you shouldn’t take all precautions to avoid the common risks that might come with cryptocurrency exchanges. So that you can find the best coins when investing in cryptocurrency.

Coinbase

Coinbase is perhaps the most well known cryptocurrency exchange out there. It’s often the initial platform that many new users start with after getting interested in Bitcoin. And that’s because they have done it so extremely well in making it easy for new users to understand and get started. So if you want to get started easily with Bitcoin we highly recommend Coinbase.

Get started with Coinbase here

OKEx

OKEx is the second biggest exchange for cryptocurrencies when comparing trade volume (24h). OKEx has their headquarter in Hong Kong, but has recently joined Binance in moving parts of their business to blockchain and tax friendly Malta. OKEx offers fiat-to-crypto and crypto-to-crypto trading on more than 100 digital currencies. OKEx is a great exchange to use for Bitcoin, but also for its vast offering of many different cryptocurrencies. OKEx like Binance is one of those one shop places for investing in cryptocurrency.

Get started with OKEx here

LocalBitcoins

LocalBitcoins is different to your everyday crypto exchange, one of the early pioneers in the crypto space LocalBitcoins helped connecting people with each other via their platform. LocalBitcoins connects buyers and sellers together and they provide you with a wallet option on via their site. And they are one of the original places where most people got started buying Bitcoin.

Get started with LocalBitcoins here

Kucoin

Kucoin launched in 2017 and fairly quickly made a name for itself in the crypto world due to its early adoption of certain altcoins and their own coin called Kucoin Shares (KCS) which is a passive income coin. Overall Kucoin has proven to be a worthy exchange and a great competitor to Binance. Kucoin holds most of the popular coins, but of course they also have Bitcoin for you to buy. One of the best places for investing in cryptocurrency and when you’re looking for altcoins.

Get started with Kucoin here

eToro

eToro is very much part of the new wave of global Fintech companies that has helped to change the scene of finance, banking and much more. It is the world’s leading social trading network, with millions of registered users and an array of innovative trading and investment tools. And you can sign up quickly and easily with eToro to buy Bitcoin.

Get started with eToro here

Binance

Binance is right now the leading exchange in the world. They have been doing a lot of things right in the fairly short time they’ve been around. And at the forefront of all this is their well known and liked CEO Changpeng Zhao, or CZ. Binance for us is a great place to buy Bitcoin but also for you to use in the long run as it has such a wide selections of coins. So in our eyes one of the best places for investing in cryptocurrency.

Get started with Binance here

How taxes works for Bitcoin and cryptocurrencies

Depending on where you live in the world, you might need to pay taxes on your crypto trades, i.e. when you trade one crypto for another or use your crypto to buy something. So this is important that you are aware of this after investing in cryptocurrency. We are not financial or legal advisors, so please make sure you seek professional advice from a tax/financial/legal advisor if necessary.

Common scenarios when you might need to pay taxes on crypto

  1. You bought 1 cryptocurrency and traded it for another. In many countries this is considered a taxable event, for any capital gains or loss made on that trade.
  2. You bought something with your cryptocurrency, for example you paid for your morning coffee with some Bitcoin, or a car, or a pizza, etc.
  3. You have mined cryptocurrencies, this might be taxed as a hobby or professionally.

Recommended tools to help you do your taxes after investing in cryptocurrency

After investing in cryptocurrency you might need to pay taxes for the trades you’ve made and any capital gains. So we have gathered the most popular tax tools for cryptocurrencies here below.

  1. Cointracking
  2. Cointracker 
  3. Cryptotrader 

1 Cointracking is an online service that collects all your crypto trades via exchanges and helps you file tax returns based on your trades. CoinTracking analyses your trades and generates real-time reports on profit and loss, coin values, and realised and unrealised gains, tax reports and more. Simplifying your tax reports and your life.
Check out their website for more information www.cointracking.info

2 Cointracker is another service that can help you compile your trades, and automatically create your tax reports. It has 4 different pricing models, depending on how many trades you’ve made. It can automatically import your trades if you connect the exchanges you’ve used, or you can manually import trades, it also offers you the possibility to import trades from your wallets.
Check out their website for more information www.cointracker.io

3 Cryptotrader is another option promising to help you to do your crypto taxes in minutes. And save you all that headache and confusion. In three simple steps you can be tax ready: First you import your trades – secondly you add any crypto income and then you have your report ready to be downloaded.
Check out their website for more information www.cryptotrader.tax

Tax time photo for cryptocurrencies investing in cryptocurrency safety tips

Common mistakes and risks to avoid when investing in cryptocurrency

Here we have listed our best tips to help you stay clear from hacks, scams and common mistakes. So that you know the best way to investing in cryptocurrency.

1) You need to be in control of your own crypto

You can’t completely trust that an exchange will always protect your cryptocurrencies. Remember it’s you that are in control of your own crypto, not the exchange, not a bank, or a government. Therefore you need to make sure that you also are storing your crypto somewhere safe, and an exchange isn’t the safest place for your crypto. A hardware wallet is the way to to go, find a good wallet for you in our wallet comparisons. So after you’ve found

Hardware wallet ledger nano s investing in cryptocurrency safety tips

2) Keep your passphrase / keys somewhere safe

When you are in charge of storing your cryptos in your own wallet, then that means that you are also the one that is in control of the keys. the private keys are what you need to access your wallet. So without those then you might lose your crypto. That means it’s super important that you store those keys (passphrase) somewhere safe, where you won’t lose them, or they are in the risk of getting stolen. You can also store your keys at several places (maybe even in several locations), password protected and other security methods to be sure that you’re crypto is in YOUR safe hands. 

3) Beware of spams, ads, emails and phishing sites

As with traditional money (USD, EUR, GBP, etc) and with traditional Internet banking, there are always bad people out there trying to steal your money. And that’s also a thing in the crypto world. And you can bet that the bad guys are creative when it comes to trying to steal your money. This could happen trough ads on social media sites, fake websites or emails asking you to login with your private keys, etc.

4) Use 2FA and secure passwords

2FA (Two-Factor Authentication / Multi-Factor Authentication) is an authentication method in which a computer user is granted access only after successfully presenting two or more pieces of evidence to an authentication mechanism: knowledge, possession, and inherence. You need to make sure that you setup a 2FA for the exchanges, online wallets and other sites connected to your crypto. Without this you’re adding unnecessary risks to your crypto. 

Image result for 2fa

5) Don’t invest in ICOs before researching them well

With the huge ICO boom that has taken place in the past years it has attracted plenty of people trying to get rich quick and take advantage of people who willingly ‘invest’ into dubious ICOs, also in hopes of getting rich as quick. During the 2016 & 2017s boom and bull market any ICO you invested in almost guaranteed you a 2x-200x return of investment. When this started spreading to even more people, of course your everyday investors wanted to get in of those ROIs. ICOs are highly speculative and a riskier option for investing in cryptocurrency.

6) Beware of the pump / FOMO / rush into a quick profit

At some point a friend at work, someone on Reddit/CC (CryptoCurrency subreddit), Twitter, Telegram or wherever might tell you about how this one coin is going to boom at any point. Your first reaction should be to put your money into it, but looking into what’s the benefits of the coin, and why would someone else want to share the great news about this coin increasing in price and then sharing all the profits with internet strangers? Follow this advice and investing in cryptocurrency will be much more controlled.

7) Not hodling and overhodling

After asking the crypto community about what were the most common mistakes they made as beginners? And not hodling, as in selling off a cryptocurrency too early was one. And another was overhodling, as in never selling that cryptocurrency, hoping it will one day rise in value again. For us you need as with any investment ask yourself why will this coin rise in value? And when you have an answer to that you should believe in your own decision. You need to give it and yourself patience. This advice works together well with the previous advice in avoiding the FOMO.

So if you decided to invest, give it time and patience to show its value. If you’re just holding the coin because of hope but you can’t answer the question to why it would rise in value again? Then maybe it’s time to sell it.

You can find the full guide on How to be safe with crypto here.

Final tips to make sure you’re investing in cryptocurrencies the correct way

  1. Ask yourself twice before jumping in. Take five minutes to cool yourself down. Ask: Is this a smart investment? Do I believe it will increase in value because X and Y reasons? How much am I willing to lose? When you can answers those questions then you are on your way of investing in cryptocurrency the right way.
  2. Try and learn something new every week about crypto. Hang out on Reddit, on cryptocurrencies subreddits, the biggest subreddit known as Crypto Currency, watch Youtube clips, read Quora questions, Medium posts and more. Be hungry to know more than everybody else.
  3. Have fun. Do you realise that you are still one of the early ones? You might not be the first, but you are still in the top percentile.

We hope you liked this guide with our tips on investing in cryptocurrency. If you have any questions or suggestions on please leave a comment below. Otherwise please share the article if you enjoyed it.

investing in cryptocurrency illustation

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Written by:

Per Englund – Founder of Go CryptoWise a cryptocurrency and tech fan that wants to see better and smarter products and services that makes our lives better and easier

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1 Comment
  1. Your review is very helpful.
    Do you have any insight regarding multi-altcoins wallet services for a startup to launch its own cryptocurrency exchange? Also do you have info about wallet services used by major exchanges?

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