Check out these 3 must-have cryptocurrencies for a starter wallet.
the main points
- Cryptocurrency investments can be risky, so only invest money that you can afford to lose and be sure to research any investment carefully.
- Bigger cryptocurrencies are a better bet for novice crypto investors.
If you are among the 20% of Americans who are curious about cryptocurrency and want to buy their first cryptocurrency, you may feel a bit overwhelmed at first. Not only are there a large number of coins (more than 13,000 of them according to CoinMarketCap), but the logistics of opening a cryptocurrency account and depositing funds can also be daunting. With that in mind, let’s take a look at some tips to get you started, as well as three cryptocurrencies that could be a cornerstone of the market.
Reduce the risk
I don’t want to scare you by starting with the risks that are an integral part of investing in cryptocurrency, but you better be prepared. So before we get to the best cryptocurrencies for your starting wallet, let’s touch on some ways to protect yourself.
- Invest only money that you can afford to lose. Cryptocurrencies are very volatile, so your assets can easily gain or lose 20% or more in one week. Not only that, but many currencies will fail. If you only invest the money you can handle, you won’t be affected if the market crashes.
- Top up your emergency fund and retirement savings first. It’s easy to get caught up in the hype about cryptocurrency investments and feel like you’re going to miss the opportunity if you don’t invest now. But your emergency and retirement savings account should take priority. It’s what will sustain you, whether in old age or in any financial crisis you faced before that.
- Limit your crypto investment to 5% of your total portfolio. Another common mistake is getting into cryptocurrencies. Instead, make sure that your digital assets are a small part of a more balanced portfolio, so you don’t get overly exposed to volatility in the cryptocurrency market.
- use A good cryptocurrency exchange or app. Find a cryptocurrency platform that keeps your investment safe by storing assets offline in so-called cold storage. It’s a bonus if it also has third party insurance to provide additional protection against hacking.
- Don’t stop searching. You don’t have to become a blockchain expert, but you do need to know the basics. Otherwise, how do you pick viable investments out of a sea of hoaxes? It is crucial that you do your due diligence on any cryptocurrency before you invest.
- Invest for the long term. Instead of looking for quick wins, a long-term investing approach will help you avoid panic buying or selling. It makes it easy to ditch the volatility and focus on cryptocurrencies with real interest that will likely do well over time.
- Understand the tax implications. You need to keep track of all crypto transactions, as you will need to pay capital gains tax on any winnings. Crypto taxes can be complicated, so make sure you know what you need to report.
Without further ado, let’s take a look at the three best crypto for first-time investors.
1. Bitcoin (BTC)
Bitcoin is the greatest cryptocurrency – the world’s first digital currency and still the leader in terms of market capitalization. You may not get excited, but Bitcoin has already survived several market crashes. More established cryptocurrencies have a better chance of surviving any future crashes. In addition, the price of bitcoin is already affecting the prices of smaller cryptocurrencies, so it is a solid first purchase.
SEC President Gary Gensler wasn’t far off when he described crypto as the Wild West. This is a relatively new industry with very little regulation, so there is not much to stop people from manipulating the markets or to prevent outright lies. If you are investing in smaller cryptocurrencies, there is a higher risk of falling prey to shady actors, which is another reason to stick with the big boys.
If you’re worried, you don’t have to buy the whole bitcoin. All cryptocurrency exchanges allow you to buy parts of cryptocurrency. So if you just want $10 of BTC or any other major coin, that’s all you need to buy it. Although if you only invest $10, make sure you don’t swallow the trading fees for your investment.
2. Ethereum (ETH)
Ethereum is the second largest cryptocurrency, and its technology underpins much of the decentralized finance (DeFi) industry. It was the first to introduce smart contracts, which are small pieces of self-executing code that live on the blockchain. This is what developers use to program applications on the Ethereum network.
There is no perfect cryptocurrency, and Ethereum Do It has scalability issues – it suffers from network congestion and high fees. As a result, it is working on a major upgrade to Eth2, which is expected to be completed in 2022.
A number of so-called Ethereum killers have grown, many of which are faster and cheaper. But Ethereum still hosts the lion’s share of applications, and first mover status is still a huge advantage.
3. Cardano (ADA)
Cardano is the newest cryptocurrency on this list, making it the most dangerous of the three. However, it is a great way for new investors to learn more about what blockchain technology can do. It already has partnerships in several countries in Africa, such as a deal with the Ministry of Education in Ethiopia to put students’ academic records on the blockchain.
Cardano has taken a slow and steady approach to development. Its founders went back to the drawing board and built a new blockchain. The idea is that the solutions to the problems that Ethereum encounters are introduced from the start, so once the new system is done, it won’t need major upgrades.
The challenge facing Cardano is that a number of other cryptocurrencies that also solve Ethereum’s problems are already operational and attract developers and investors.
Don’t be drawn to articles on the latest cryptocurrencies to buy when investing for the first time. Take the time to understand the industry and get used to the volatility and other aspects of investing in cryptocurrencies. Cryptocurrency investments are already risky enough without getting burned right, so stick with big investments – at least until you feel confident forking out.
Buy and sell cryptocurrencies on an exchange chosen by experts
There are hundreds of platforms around the world waiting to give you access to thousands of cryptocurrencies. In order to find the right feature for you, you will need to decide which features are most important to you.
To help you get started, our independent experts have tested the options to bring you some of our best cryptocurrency exchanges for 2021. Check out the list here and start your crypto journey, today.