The Chain logo

A Beginners Guide to Cryptocurrency

Jump into the crypto market today

By Liam M Published 2 years ago 6 min read
A Beginners Guide to Cryptocurrency
Photo by Art Rachen on Unsplash

With the current market cap at more than $1 trillion, it's important to understand how to invest in cryptocurrency. The beginner's guide to investing in cryptocurrency can show you how to choose the right digital currencies and make your first investment in under five minutes. This article covers the basics of cryptocurrencies and provides information about the risks involved.

Choosing a cryptocurrency

The first step in investing in crypto should be choosing a currency. There are thousands of cryptocurrencies to choose from. Like stocks, these coins vary in popularity, growth, security, and environmental impact. While many new investors may be tempted to get involved in a coin that is relatively unknown or less established, beginners should avoid such investments. Large-cap projects like Bitcoin and Ethereum are a good choice for beginners because they are stable and less volatile than other cryptocurrencies, and their upside potential is limited.

Investing in cryptocurrencies

Before starting your first cryptocurrency investment, it's important to understand the business case. While buying stocks involves a complex analysis of the prospectus, cryptocurrencies require the same level of research. There are thousands of cryptocurrencies available, and new ones are launched daily. It's crucial to understand how they work and how you can best invest your money. Read the fine print and avoid making any hasty decisions. It's not a get rich quick scheme, and you should only invest money that you can afford to lose.

Before you begin investing in cryptocurrency, make sure you have your financial situation in order. You should have a substantial emergency fund, manageable debts, and a portfolio diversified. Then, you can incorporate crypto investments into your portfolio to raise your total returns. Here are five other things you should focus on:

Before you begin investing in cryptocurrency, decide on what type of cryptocurrency you want to invest in. Whether you want to increase the value of your digital assets or use the technology to build decentralized applications, it's important to consider the pros and cons of each one. Listed below are some popular cryptocurrencies to consider: Bitcoin, Ethereum, Dogecoin, and Binance Coin. Each one offers unique features and benefits.

Risks of investing in cryptocurrencies

Investing in cryptocurrency comes with many risks. The market is highly volatile and prices can change very quickly. Because of this, you must study the assets before you invest. There are also a lot of rug-pull scams, where fraudulent cryptocurrency projects create false information to attract investors. One such project was Squid Coin, which caused investors to lose millions of dollars. Cryptocurrencies are also favoured by hackers, and a hack can take out all of your crypto balance in a matter of seconds.

Investing in cryptocurrency can be risky, but the limited supply of the largest coins means there is a high upside potential for cryptocurrencies. Many large companies, such as Tesla, are already accepting Bitcoin, and the company has plans to invest another $1.5 billion in Bitcoin by 2021. This could cause the stock price of Tesla to skyrocket, and vice versa. Investing in cryptocurrency isn't for everyone, but it's a smart way to make money in the open market.

The first and most obvious risk of investing in cryptocurrency is volatility. Although you could make a fortune with this type of investment, you can also lose it in a matter of days. One Times Money mentor reported making over $16,600 by investing in bitcoin instead of going out on nights out. While Santander UK reported a PS1 million scam in November 2021, the real scale is likely much higher. Furthermore, a hacker can freeze your account. Even more serious risks are associated with fraudulent firms that overstate the returns.


If you are a beginner in the world of cryptocurrencies, you may be wondering how to start investing. The good news is that there is an easy way to get started: A beginner's guide to investing in cryptocurrency can help you learn the ins and outs of the market. You will learn how to pick the best cryptocurrencies, which are the ones that are most likely to grow in value over time. However, you should keep in mind that you should always understand the risks involved in this type of investment.

While the process of investing in crypto is extremely simple and easy, there are some steps you must take. First, make sure that you do not invest any money you aren't willing to lose. This is because investing in crypto can lead to serious financial problems, including bankruptcy. Furthermore, you may end up losing all your money if you are not careful. As a beginner, you should only invest in cryptocurrency when you are confident that you can afford to lose all of your money.

If you are unsure about which currency to invest in, a beginner's guide to investing in cryptocurrency suggests that you read the white paper of any cryptocurrency before investing. The white paper is the guide to the crypto project and explains how it works and its philosophy. Read it thoroughly so you can understand how cryptocurrency works. If the white paper is badly written, it is probably not worth investing in. The prospectus should also provide you with peace of mind as you make an informed decision.


For investors looking for a more stable and secure investment, cryptocurrencies may be the right choice. These are non-banking currencies, and the value proposition of each coin varies widely. A beginner's guide to investing in cryptocurrency explains some of the most important factors to consider. Listed below are the main features to look for in a cryptocurrency. While there are several options, you should stick to a few to avoid wasting money.

First, you should understand what cryptocurrency is and how it works. The value of most cryptocurrencies has risen dramatically over the past decade, and if you are new to cryptocurrency, this beginners guide will help you get started. Cryptocurrencies are virtual currencies that are stored and distributed online, and they may gain or lose value in a similar way to stocks and bonds. To start investing, you should understand how each cryptocurrency exchange works and which coins are worth investing in.

Second, it's important to understand that cryptocurrency has zero intrinsic value. Rather, it represents ownership of a digital asset, and its price is determined by what the public thinks of them are worth. Before investing, you should make your research and read white papers to determine which coins are likely to gain value. And, of course, don't forget to invest in the best ones. Listed below are the most popular cryptocurrencies and how they compare to each other.

Tax implications of investing in cryptocurrencies

While cryptocurrency trading is legal, the IRS wants to know how your investments are being reported to the Internal Revenue Service. This means keeping track of your taxable activities and your currency's fair market value. The Biden administration passed a $1.2 trillion infrastructure bill last November that will mandate that brokers issue Form 1099-B to their customers. Unless you are using a regulated exchange, it is your responsibility to file tax returns on cryptocurrencies.

The tax implications of cryptocurrency investments vary depending on how they were obtained. Generally, cryptocurrency profits are long-term capital gains and taxed according to long-term capital gains rates. The table below illustrates the long-term capital gains rates for various cryptocurrencies. Once you start to make a profit, you should consider reporting your cryptocurrency investments as ordinary income. This means you will pay tax at your marginal rate, which could be anywhere from 10 to 37%.

If you decide to sell your Bitcoins, you will need to sell your older coins. The longer you hold them, the lower your tax rate will be. If you sell within a year, you will only be subject to short-term capital gains taxes. For long-term investments, however, there is another option. By setting up a crypto IRA, you can make tax-deductible contributions and pay tax only when you withdraw the funds.

Not financial advice. Do your research before buying anything, only invest what you are willing to lose.


About the Creator

Liam M

** I am trash **

Brit living in Germany, living the sober life. I grew up as a trash bag, but now I associate as a human.

Writing about life, sobriety, money and all things in between

Reader insights

Be the first to share your insights about this piece.

How does it work?

Add your insights


There are no comments for this story

Be the first to respond and start the conversation.

Sign in to comment

    Find us on social media

    Miscellaneous links

    • Explore
    • Contact
    • Privacy Policy
    • Terms of Use
    • Support

    © 2024 Creatd, Inc. All Rights Reserved.