Dear long-term investor, here you can read all about investing in crypto. From investing in crypto for beginners to the best crypto apps. Includes extensive tutorial (explanation) on how to invest in crypto coins online. With practical and concrete tips from our own experiences to investing in crypto (since 2017).
After our experiences with crypto investing, we mostly switched to stocks. Nevertheless, we follow the crypto market closely. It is possible to make high returns thanks to cryptocurrencies. But beware! Investing in crypto is extremely risky. Many novice investors lose money here. Also, it is still unclear whether crypto currencies are a good long-term investment.
Carefully read our tips and explanations for a better start!
Investing in crypto is kick-ass! It's cool, exciting, and unfortunately also extremely risky. Getting started in the right way is essential. After all, investing in crypto for beginners requires some attention for a proper start. The risk of losing money is immense. Much higher than with stocks. The importance of getting off to a good start is imperative.
In fact, this comes down to one thing: risk management.
Try to avoid loss as a beginning crypto investor. In this case, you will already do very well, because price return/profit is the reward.
Investing in crypto for beginners is done in 7 steps:
You can read a full elaboration of these steps for crypto investing for beginners in another article. Also read articles about cryptocurrencies for dummies
What is crypto currency anyway? Crypto currency can be seen as a "type" or "kind" of crypto currency. Actually, all crypto currencies are more or less designed as crypto currency in the basics. It serves as a medium of exchange, a currency. Crypto currency can be used to make payments. That's the essence: a digital payment currency.
Bitcoin is the first of the crypto currencies. After Bitcoin, variants of the crypto currency quickly emerged. For example, there is Ethereum. Ethereum, like Bitcoin and all crypto currencies, operates on blockchain technology. This can be seen as an "unbreakable" chain of (data) blocks that must be verified by multiple participants (decentralization).
Ethereum does not really function as a crypto currency. Yes, we can pay with it. But actually, Ethereum is much more. It is an open source platform that other crypto currencies can develop / build upon. Therefore, Ethereum is broader than Bitcoin. Also, this network becomes "indispensable" for crypto currencies that function on the Ethereum network.
In our opinion, it is best to start investing in crypto currencies like Ethereum. They represent something bigger than just a crypto currency. They have a stronger Use Case which makes them indispensable for innovation within the crypto world.
Investing in cryptocurrencies is more risky. Why would we need 5 digital payment coins, when 1 will also suffice? By now, there are thousands of crypto currencies. 99% of them are useless in our opinion. In this case, the best crypto currency has the highest chance of success. And the best in this context means: the cheapest and fastest cryptocurrency.
Do you want to successfully invest in crypto currencies (as a beginner)? Invest only in the best crypto currency.
Buying crypto coins and currency can be done through the best crypto apps. A crypto app is another name for a crypto broker. In other words, an investment platform like the one we know when buying stocks. Crypto apps are almost completely the same.
We recognize the best crypto apps by these points:
- Low cost to commission free buying of crypto coins
- Large supply of crypto coins (minimum 25)
- Safe and reliable
- Ease of use: desktop and mobile crypto app
- Service desk in case of emergencies
The best crypto apps for buying crypto are often the most popular brokers. Those that offer (1) many crypto coins at (2) low cost in a (3) secure manner.
Compared to stock brokers, there is one more difference, which is spreads. When buying crypto and stocks, transaction fees are charged. Some crypto apps offer, already, commission-free investing. This means 0% transaction fees. Something that has been known for some time with stocks. But with stocks, that's it. Whereas when investing in crypto, a spread is also often factored in.
A spread is the difference of buying and selling price. For example, we might sell our Bitcoin for $50,000 to a buyer who pays $50,005 for it. That $5 is the spread. The best crypto apps charge the lowest possible spread. Finally, there may be withdrawal costs from crypto due to blockchain congestion. These are normally marginal costs.
Want to know more about the best crypto apps to get started? We have researched and compiled a TOP 7 for inspiration.
Compare the best crypto brokers
Below you will find a complete tutorial (explanation) on how to invest in crypto. Before we do this, we would like to talk about an alternative: stocks. Crypto investing is similar to stock investing in many ways. I describe crypto as "stocks on anabolic" because crypto currencies have very extreme price movements. On the one hand, this volatility offers potentially high returns. On the other hand, it can also lead to lots of money loss.
Crypto currencies are much riskier than stocks. And this is for a specific reason.
Shares are issued by companies. Companies are subject to strict supervision, such as accountancy laws and regulations. Accountants can use clever tricks, but in the long run it is possible to find the best companies.
The best companies have a (1) sustainable competitive advantage, (2) good management, and (3) operate in a growing market.
If we buy the best companies at a (4) favorable stock price, we can get very high returns in the long run.
And the best part is: the risk is low. After all, if you know with 95% certainty that you are investing money in 30 of the best companies in the world, then the probability of positive returns is very high. Therefore, investing in stocks is the way to go for successful long-term investing.
Crypto does not have this. Crypto coins are not issued by (profitable) companies. The price is driven by speculation on supply and demand. This is different from stocks, where price is driven in the long run by profitability and economic value.
In summary, crypto tends to be more about gambling, while investing in stocks tends to be about making calculable risks. Therefore, it is smarter to learn how to invest in stocks. This gives a higher chance of success.
Read all about investing in stocks here.
If investing in crypto is so risky, is it wise to invest in it? We think not. When we compare crypto to alternatives, there are better ways to build wealth over the long term. Stocks, real estate and other assets offer (much) more certainty of profit.
Still, investing in crypto has something special. Right now we are experiencing a fledgling crypto market. There is also little regulation and price fluctuations are huge. Therefore, it is possible to make a lot of returns with crypto.
A profit of x50 within one year is not unusual. This means that a €500 will grow to €25,000 within one year.
That is the power of crypto investing: a (small) chance of very high returns.
Our tip is to think in terms of risk management. Invest only with money that you can lose 100%. Divide this money between shares, real estate, et cetera. Of which max. 3 - 5% in crypto currencies. And are you risk averse? Then it's wise not to invest in crypto.
In this tutorial give tips and explanations on how to invest online in crypto coins for beginners. Attention! Once again the mention that investing in crypto is very risky. Below we provide practical tips to reduce this risk. In doing so, the most important principle is to invest only with money that you can miss 100%.
To successfully start online investing in crypto currencies, it is helpful that you know what they are. The definition of crypto currency is found in its name. In English, it is called cryptocurrency. In fact, it is a type of currency. This currency is built on the revolutionary blockchain technology. The biggest advantage to crypto currencies, is that they no longer require financial institutions like banks. In fact, as a consumer, I can buy crypto coins and transfer them to you as payment. This is the promise of Bitcoin, among others. To become a digital currency without borders. And that fully traceable and secure.
We have, since 2017, been watching the total value of crypto coins every day. We do this through the Coinmarketcap.com website. On that website, you can look at all cryptocurrencies. It is not a platform where you can invest in crypto coins online. I'll tell you more about that below.
This website is useful to find new crypto coins. You can also see the total market value of the crypto world. This is good to follow so you understand how much money is flowing in or out of the crypto market. We can see this in the image below.
Soon I will take you through how to invest in crypto coins online through the best platforms. But for now, I'll first explain to you how it works in some basic steps. Online investing in crypto currencies is not difficult. And certainly not anno today, where crypto currency investment platforms have become more user-friendly. If you've done it once, you'll understand it automatically.
Online investing in crypto currencies is basically done by following these steps:
- Preparation: decide for yourself how much money you want to invest in crypto coins. Do this only with money you can spare, after all, it is very risky. Then determine which crypto currencies you want to invest in.
- Create an account on a crypto currency investment platform. Below I tell you what the better platforms are
- Log in to your investment account and transfer money from your bank to the platform
- Buy the desired crypto coins. After the purchase, receive them in your cryptowallet. This is another word for "wallet". From that moment on, it is your property
- Sell the purchased crypto coins at a time of your choice
In reality, you will only have to get used to step 4. Investing in crypto coins online basically works the same as buying stocks. This allows you to buy crypto coins in exchange for money. For example, 1 Ethereum = 1,000 euros (depending on the exchange rate). But the nice thing about crypto currencies is that they are currencies. So you can also use one crypto currency to buy another crypto currency. For example, I'll show you an example below from my own crypto investment account:
In this example, I can buy as much as 0.53952 Ethereum (ETH) with 4800 crypto currencies from Verge (XVG). What is noticeable here is that one crypto currency is worth much more than another. This is because of the price value. In this case, 4800 crypto coins of Verge are worth as much as 0.053952 crypto coin of Ethereum. And so 1 Bitcoin (BTC) is worth 25 Ethereum in turn.
Another thing that stands out is that you don't have to buy round numbers. With shares, you have to buy a whole share (with the exception of fractional shares). So you can buy 1, 2 or 1000. But you can't buy 0.5, 1.5 or 0.0002 share. When investing in crypto currencies online, you can. For example, you can buy 0.00012 BTC. In practice, none of this matters much. Whether you have 0.00012 Bitcoin, 264 Verge or 0.0030 Ethereum, it all has the same value relative to each other.
All of this will be a bit fast now. It doesn't matter. You'll learn on your own after a few hours of research and "playing".
A good start is half the battle. Online investing is best done on larger investment platforms. Below are a number of crypto apps where you can invest in different crypto currencies. On these apps I have an account myself.
This is a top 3 best crypto apps for investing in crypto:
Below you will find useful tips for each platform!
PS: with some of these platforms, I get paid via the blue links when you create an account. Costs you nothing. Creating an account is and remains free. In exchange for my research and free tips to you I get a small fee from the provider. Win-win!
For your information only. 85% of all crypto investors lose money. Crypto investing is only suitable for advanced investors
A smart choice as a crypto app is eToro. They offer many features including commission-free investing in stocks and ETFs. You can copy other investors and find ready-made crypto portfolios. The latter is a valid reason for crypto investing at eToro. Thanks to these crypto portfolios, you can quickly diversify across multiple crypto currencies.
A unique advantage to eToro is its overall offering. A successful investor does not invest exclusively in crypto coins. In fact, as a tip I would like to give you to invest only a smaller portion in crypto currencies. It is much safer to have a lot of diversification. Think about stocks, ETFs, real estate and loans. Thus, you get a diversified investment portfolio where you invest in other assets besides crypto. At eToro, you can invest commission-free in stocks, ETFs and REITs (real estate funds). And in addition, you can invest in 30+ crypto currencies. So you can not only start with crypto currencies, but over time expand into lower-risk investments ;). The foreign exchange fees are slightly higher at 0.5%.
A strong reason to choose before eToro are the crypto portfolios. These are ready-made portfolios for quick and easy risk spreading within the crypto market. At eToro, they have several ready-made crypto portfolios.
Binance is one of the largest crypto apps worldwide for online crypto coin investing. They have the largest selection of all the crypto coins you can trade on it. And they even have their own crypto currency called Binance (BNB). If you're going to invest in crypto currencies online through Binance, it's best to do so with its own currency. If you use the BNB coin, you can actually have a chance to win high cash prizes. And that is the nice thing about Binance.
Creating an account is free. They have one of the lowest transaction fees in comparison. And you can win big cash prizes of up to $250,000. They also have a "Crypto Academy" where you can find many free trainings on how to best invest in crypto currencies online. Finally, there are many ways to secure your account, including two-step verification.
My first crypto app for crypto coins was on Coinbase.com. The tactic I used at the time was to use Coinbase.com as an account to which I could transfer euros. Back then, you couldn't transfer euros on every platform. Then I would buy some Ethereum on Coinbase and send it to my Binance account. Then I bought all kinds of crypto coins on Binance, because at that time Coinbase only offered Bitcoin, Ethereum and Litecoin. However, nowadays they have a larger selection with the most popular crypto coins.
A big advantage to Coinbase is that they are a very reliable platform for online crypto currency investing. Basically, you have enough of these popular crypto apps to get a good start on your first crypto investment.
When I started investing myself, the crypto currency Ethereum was my very first investment. I was young and naive. However, I saw the potential of blockchain technology. Unfortunately, I made the wrong conclusion that with it, crypto currencies can also be of economic value. Now, many years later, I have a better understanding of what are bad investments and what are the best investments.
My opinion on investing is that you should do so in things that create economic value. A growing business creates value. Renovating and renting out an apartment creates value. But a crypto currency does not create economic value. It acts more like gold. You take gold out of the ground (costs money), transport it to an expensive building (costs money) and then store it there (costs money). Gold costs money, and, like crypto currencies, does not create economic value. It is a game of supply and demand.
The biggest risk in investing in crypto currencies online is that you buy certain coins in a "hype" where the price rises dramatically. Then you buy the coins, and the hype subsides. The price collapses, you can't do anything with these coins and you have lost all your money. With a stock this can also happen, but here you have the essential difference that a company can recover itself in the long run and grow into a profitable multinational. If this happens, the price of this stock will recover. Therefore, the probability of loss is lower (less risk), than with crypto currencies that do not create economic value themselves and thrive purely on speculation.
Moreover, there are many scams and frauds. There are over 10,000 crypto-currencies. Only a fraction of these, even less than 3%, have any potential use in the future. The rest is hot air. They are nice stories that are never going to be realized. You are being deceived.
I think it is now clear that I am not a fan of investing in crypto coins. However, this is not to say that you can't make money from it. With speculation, there is always a small group that wins a lot of money, with the other 99% losing a lot of money. So investing online in crypto currencies is mostly speculative and unnecessarily risky.
My best tip to you is not to start with crypto coins.
Instead, start investing in stocks, ETFs and real estate. Real estate investing is also an excellent good long term investment.
Have you been working on probability and still want to take a shot at being among those 15% crypto winners? Herewith tips to help:
- Follow social media platforms like Reddit, Robinhood and Facebook groups to get a feel for which crypto currencies are becoming the next hype. However, be very critical to the information!
- Invest with small amounts that you can lose 100%. Do this in the new hypes. In doing so, set up automatic sell orders that automatically sell after X percentage. This way you avoid the trap of holding on too long and not cashing in your profits ("the sky is the limit", I speak from experience)
- Look for crypto coins whose number is finite. Think of Bitcoin, fewer and fewer new Bitcoins are added and at some point that stops. This decreases the supply, which could potentially increase the demand (collectibles)
- Look at the dominance of crypto coins in relation to the overall market value. If a particular coin is lagging, it may be the case that it is catching up. See the image below
So what is the best way to start investing in crypto currencies online? In this article I've gone through the steps with you. It's pretty simple to get started. But whether you are successful, that is, positive returns, depends on your choices. Personally, I am of the opinion that crypto currencies are not interesting anymore. I personally don't invest anything in this market anymore, but if I were to do it at all, my preference is for Bitcoin. This is because Bitcoin is the symbol of the crypto market, which many people still believe in. It is also the case that the supply of Bitcoin is constantly decreasing, while the demand can increase due to new hypes. As a result, the value will also increase. In addition to Bitcoin, Ethereum also has a chance of rising in value. This is because Ethereum is the figurehead for the revolutionary blockchain technology.
In addition to these two "superpowers," there are other small crypto currencies. One speculative strategy is to invest small amounts in the new hype crypto currency. To find out what the next hype will be, you will have to be very active on Social Media platforms like Reddit and Robinhood. At some point, a particular crypto currency will gain momentum, and then be bought en masse. Just take a look at the examples below.
Please note that by small amounts we mean no more than 0.2 - 0.5% of your total investment portfolio. Only money that you can miss 100%!
When I had boarded in 2017, Verge was a popular topic on crypto currency forums. The fact that Verge is a totally worthless crypto currency was apparently irrelevant. I had put 100 euros on it at the time, actually by pure chance. I had no idea what I was doing. And then the hype came on Verge. After 2 weeks, my investment of 100 euros had grown to 5,000 euros. That's a huge return. But what did I do? I held on because I thought this currency would rise even more. I was so inexperienced that I did not realize what a huge return I had made. Not much later the coin collapsed, and my 5,000 euros had shrunk to under 100 euros.
Moral of the story: don't get greedy and don't forget to cash in your profits
Dogecoin is a crypto currency that is worth absolutely nothing. It is what they call a meme. And yet this coin is rising bizarrely fast. This is because Dogecoin is popular on forums and so it creates hype. Dogecoin is the perfect world of the irrational crypto market where online crypto currency investing is completely based on speculation and has nothing to do with investing. At its lowest point in 2014, Dogecoin was worth $0.000505. After the past hype, see image, Dogecoin is worth $0.02759. Just to put this in perspective, we are talking about a growth factor of 54. If you had invested 1,000 euros in 2014, it would be worth 54,000 euros today. And that while you really can't do anything with Dogecoin!
A final example of online cryptocurrency investing is the fairly new coin called Polkadot. Sometime at its lowest point in Oct 2020, the value of this crypto currency stood at $3.7. In less than three months, the value has risen to $16.55. This is a factor of 4.5, or a 550% return increase in less than three months.
Investing in crypto can go very well or very badly. Know what you are getting into!