Over the past decade, cryptocurrency has grown from being a niche financial concept to an increasingly mainstream investment option, with many people wondering about investing in cryptocurrency.

An estimated 16.7 million adults in the United States, or 7% of the population, owned cryptocurrency in 2022, according to a study by the Pew Research Center.

As more people venture into the new world of digital assets, it's important to understand cryptocurrency, the different investment opportunities it provides, and how to get started safely.

This guide covers everything you need to know to begin your crypto investment journey. Let’s start by exploring what cryptocurrency is in simple terms!

What is cryptocurrency?

Cryptocurrency is a type of digital currency that uses cryptography to secure transactions and generate units of currency. Unlike traditional currencies like dollars, euros, or yen, which exist physically or digitally, cryptocurrency exists solely as digital information.

Crypto assets operate on blockchain technology—a shared public ledger that records all transactions in a verifiable and permanent way. Each individual unit of cryptocurrency, whether it is Bitcoin or another altcoin or stablecoin, represents digital data stored in this blockchain.

Due to the transparency of the blockchain, every user can see the digital unit when someone sells or buys cryptocurrency, effectively transferring ownership. This transparency factor enhances security.

What are the types of cryptocurrencies?

Within the expanding cryptocurrency space, there are a few key categories that digital assets fall under.

Here are some types of cryptocurrencies:

Store of value coins

Cryptocurrencies like Bitcoin aim to be a long-term store of value rather than a pure medium of exchange. They have a limited and finite supply that can theoretically increase in value over time.

Smart contract platforms

Ethereum pioneered the ability to build applications on top of blockchain technology through the use of smart contracts. Other platforms also support decentralized applications.

Stablecoins

Pegged to real-world assets like the euro, stablecoins aim for price stability. Popular examples include the stablecoin EURK issued by Cryptobunq.

Meme coins

Cryptocurrencies that gain popularity through online communities rather than real utility, which was listed as a joke but became hugely popular.

Centralized exchange tokens

Tokens like KuCoin Shares (KCS) are used for processing transactions and fees on their affiliated centralized exchanges.

What should you consider before investing in cryptocurrency?

While investing in cryptocurrency can be lucrative, it is also highly speculative and volatile.

Before investing, carefully weigh the risks of investing in cryptocurrency.

Price volatility

Due to their nascency, digital currencies experience wild price swings. In a single day, the value of Bitcoin can fluctuate by thousands of dollars. This level of unpredictability means you must only invest amounts you can afford to lose.

Regulatory uncertainty

Cryptocurrency regulation varies by country and remains loosely defined. New laws or tax rules could significantly impact prices, though decentralized finance aims to avoid such influence by eliminating intermediaries.

Security risks

Much like physical wallets, cryptocurrency holdings can be lost, stolen, or hacked if not properly secured. Use reputable crypto trading platforms and protect your personal crypto wallets to store funds safely. Additionally, you can check out “How to Secure Your Crypto Assets?” for more information.

Tech vulnerabilities

Similar to how software bugs affect traditional technology, blockchain networks are not impervious to hacking and exploits. Research projects thoroughly before investing in cryptocurrency.

Liquidity concerns

Due to low trading volumes on some cryptocurrency exchanges, it may be difficult to convert cryptocurrency back into fiat currency quickly during flash crashes. This limits its short-term usability as an investment vehicle for most people.

With these factors in mind, only allocate up to 5% of investable assets to cryptocurrency as a high-risk speculative investment. Avoid relying on crypto profits for expenses or selling during downturns if your timeframe is short. Remain prudent.

What are the pros of investing in cryptocurrency?

Despite the risks, investing in crypto offers certain unique advantages that are fueling its ascent.

Here are the pros of investing in cryptocurrency:

High long-term rewards

Digital currencies with fundamental value like Bitcoin have produced outsized returns for long-term holders, averaging over 200% per year over the past decade. Future adoption could mean further gains.

Portfolio diversification

Due to its low correlation with traditional markets, cryptocurrency provides diversification benefits. Even a small exposure can help hedge macroeconomic shocks.

Accessible investments

Most major cryptocurrency exchanges let you start investing with as little as $10. This makes crypto accessible to more modest budgets compared to real estate tokenization or private equity.

Censorship resistance

Through decentralization, cryptocurrency transactions operate independently of third parties and cannot be frozen or reversed, empowering individuals across the globe.

Deflationary supply schemes

Like gold, cryptocurrencies have controlled monetary policies, ensuring that new tokens are minted at slower rates over time or have a strictly limited supply cap. This scarcity is designed to boost values.

Innovation engine

The blossoming of decentralized finance applications like yield farming, NFTs, and crypto payment networks shows blockchain's potential to revolutionize traditional industries. Pioneering projects in this $1 trillion ecosystem could generate substantial gains.

How do beginners buy cryptocurrency?

Once you've assessed the basics and decided to begin, the process of purchasing your first cryptocurrency is straightforward.

Here are a few typical options recommended for beginners to buy cryptocurrency:

Use a crypto exchange platform

Register, pass KYC and AML checks, deposit funds, and purchase your chosen coins conveniently in one place. CBQ is an expert you can trust as a one-stop-shop crypto service provider.

You can benefit from exchange APIs, custody and wallets, tokenization, and more solutions that can lead to prospective individual and business growth in terms of finance.

Purchase directly from vending platforms

Buy Bitcoin or major types of cryptocurrencies directly using a debit card on platforms or local cryptocurrency ATMs.

Use peer-to-peer exchange

Arrange direct transactions with other users on platforms to purchase cryptocurrencies locally using cash. But be careful.

No matter the option, make sure to store your new cryptos securely by withdrawing them to a non-custodial mobile or hardware wallet rather than keeping them on long-term exchanges. Also, consider dollar cost averaging by purchasing regularly to average out market volatility.

Larger crypto investors may prefer more established types of cryptocurrency that have shown resilience over time, as well as secure custodial services to properly manage their portfolio of crypto investments.

How do you keep your cryptocurrency secure?

Given that crypto transactions cannot be reversed if credentials are stolen, security should be the top priority of any holder. A few essential precautions include:

• Enable 2-factor authentication wherever possible for logins.
• Use a hardware wallet for long-term, secure storage, especially for larger holdings.
• For frequent transactions, reputable custodial services with high security, like Cryptobunq, offer added protections compared to personal crypto wallets.
• Ensure all devices holding crypto are protected with strong passwords, PINs, and updated antivirus software to reduce the risk of hacking or malware attacks.
• Never share or disclose private keys granting access to your holdings with anyone, not even exchanges or companies like Cryptobunq, which securely manage keys for customers.

Benefits of choosing Cryptobunq for your crypto investments

As the original multisignature wallet service provider, Cryptobunq offers a premier solution for those seeking the highest levels of security while seamlessly accessing crypto services. Some of its key benefits include:

• Insurance protection of up to $100 million for stored digital assets.
• Institutional-grade security with cold storage and multisignature technology protects nearly $15 billion in digital assets.
• Support for major cryptocurrencies, including BTC, ETH, and EURK, which allows diverse crypto or stablecoin investment options.
• Flexible access through mobile and API integrations, such as API in a crypto wallet or API access for crypto exchange, developed to enterprise standards for quality and reliability.
• Risk-averse Crypto investors and those who use crypto for payments and e-commerce can find the stability they need with audited reserves backing EURK purchases.
• With advanced security, insurance, and a broad suite of investment and spending tools, Cryptobunq is a one-stop shop for secure crypto management suitable for all levels of holders.

Cryptocurrency offers exciting opportunities for technological and financial innovation but requires diligent research, careful risk assessment, and security-focused tools.

As more people venture into investing in crypto, it's important to understand the different types of cryptocurrency and how to safely buy cryptocurrency.

By understanding the basics, assessing your risk tolerance, and selecting a premier service like Cryptobunq, enthusiasts of all experience levels can confidently navigate the evolving world of digital assets.

With growing mainstream adoption, now is an ideal time to begin exploring investments in cutting-edge technologies revolutionizing global finance. CBQ is here to help you in your quest in the crypto ecosystem. Contact us and start to explore our expert crypto solutions!