How to Buy Your First Crypto

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If you’re looking for ways to diversify your investment portfolio, cryptocurrency could be an excellent opportunity to get in on this booming digital economy. New crypto investors today have to choose between over nineteen thousand different cryptocurrencies. Entering the market for the first time can seem overwhelming, but here are a few tips to help you navigate the crypto economy and find the best crypto for your first investment.

Look at the Whitepaper

All new cryptocurrencies are designed uniquely to incentivize users to invest in, hold, and exchange using that coin. Tokenomics has to do with those rules, regulations, and benefits built into each token’s design. Some crypto tokens will have more beneficial characteristics, such as deflationary burn mechanisms, airdrops of free tokens, and much more. You can learn more about the goals and motivations behind the creation of each new cryptocurrency through its whitepaper. This is also where you will find information about other benefits and long-term goals of the currency, which can offer insight into the sustainability of that particular token.

Select Your Exchange

The exchange you select to trade through will significantly impact your investment and how you manage and buy crypto. Most popular exchanges are centralized exchanges, meaning they act as third-party intermediaries verifying transactions and collecting fees for each exchange. Centralized exchanges are regulated in many ways but are more frequently targeted by attackers wishing to compromise the system. Centralized exchanges often offer great knowledge bases to their users and other resources that assist beginner investors. On the other hand, decentralized exchanges (DEXs) use smart contracts to complete transactions between peers and do not collect fees for trading. The trade-off here is that DEXs are generally less user-friendly and do not have centralized exchanges’ additional resources and services. That said, if you are planning on making daily trades, you may want to consider the security and cost-effectiveness of utilizing a DEX.

Consider Your Long-Term Investment Options

Your long-term investment options are essential when selecting the best cryptocurrency for your financial goals. Some cryptos built on proof-of-stake blockchains allow users to act as nodes on the blockchain network that put up their coins as collateral in return for the opportunity to verify transactions on the network. The more user’s coins staked with a specific node, the more likely that node will be selected to verify transactions. For each successful verification, all users in the pool receive a percentage of the reward. Yield-farming or liquidity-farming is another great long-term investment option. Users will lock their crypto into a liquidity pool for a specific period during which their coins are lent out to borrowers in exchange for rewards in the form of fees, interest, or new coins. Both of these investment options come with their own levels of risk, as a borrower could default or a node operator could fail a verification. Be sure to research before selecting the stake pool or liquidity pool you’d like to enter.

Entering the Marketplace

Once you’ve found the best cryptocurrency for your financial goals, you can open a digital wallet through the exchange or app of your choosing and fund it with that crypto. Be sure the exchange you select is compatible with the currency you wish to purchase, and you can begin to invest in crypto. Once you’ve purchased crypto, you can invest it in one of the long-term options discussed above, hold it to trade at a higher price, or spend it on various goods and services, including the NFT marketplace.

These are a few things to consider when selecting your first cryptocurrency to invest in. You can learn more about investing in cryptocurrency by joining an online crypto community like FTX, where you can access a broad crypto knowledge base, exchange the most popular crypto tokens, and access the NFT marketplace. 

 

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