Investing in crypto for beginners australia - Investir en cryptomonnaie

If you are brand new or new to the world of cryptos, you may still have a little (or even a lot) of trouble understanding what exactly it is all about.

And even less how to put your money on it and invest in cryptocurrencies.

That's good: in this article, we cover the basics to learn what cryptocurrencies are and how they work.

Without jargon or technical details that no one understands.

Here is your step-by-step guide to cryptocurrency investing for beginners.

Cryptocurrency, what is it?

Before you start investing your hard-earned dollars in crypto (or anything, for that matter), you need to understand what you're investing in.

It's a bit like redoing the electricity at home: it's better to know about it before starting to avoid setting fire 🔥.

So, let's start with the basics: what is cryptocurrency?

Simply explained, cryptocurrencies are peer-to-peer electronic currencies. It is not a physical currency like the euro can be.

In theory, some cryptocurrencies can be used to purchase everyday goods and services. But today, the concrete use of cryptos as a means of payment is still far from being widely adopted.

Instead of using it as a day-to-day payment solution, most people invest in cryptocurrencies like they would stocks on the stock market, for example.

The particularity of cryptocurrencies is that they are digital currencies that are not controlled by a government authority or a central bank. Here too, it is a difference compared to other currencies such as the euro or the dollar, for example.

This is also the very goal of the crypto universe: to remove the intermediary to create a system that would work on IT rather than on trust in a third party (often, governments or banks).

Take the example of bitcoin, which is probably the most well-known cryptocurrency today.

Bitcoin was created in response to several flaws in the traditional banking and financial system. For example, transaction times (think how long some transfers take), centralized power in the hands of banks, fees, etc.

Basically, rather than trusting a bank to manage your transactions, we prefer to exchange this currency directly from one person to another by trusting a computer system.

And then you might be thinking:

"Great, but with all the viruses and computer hacks, I think I'd rather trust a bank to handle this than a PC."

This is where the blockchain comes into play.

Blockchain

It's hard to talk about crypto without talking about blockchain. It is also a term that you must have already seen.

This is a very important concept to understand since the blockchain is precisely the technology that allows the existence of cryptocurrencies. It's kind of the basis of the thing, the very heart of the crypto universe.

And its operation is both simple and complicated.

The blockchain... what?

To use the image most often used, the blockchain is like a large ledger. A bit like a big Excel table (only much more complicated).

It is a database that is formed from... 🥁  blocks, as the name suggests.

More specifically, it can be seen as a transaction history on which all transactions that take place on the network are recorded (in the form of blocks).

Block by block, we end up with a chain of all the transactions that have happened on the network. A block is just a collection of different modifications made to the list. A blockchain is just a group of blocks that are linked together.

The blockchain works in a decentralized way because it is not a person or an institution that takes care of this database or modifies it. It is not a bank that decides whether or not to validate your transaction.

Moreover, this chronological structure is irreversible. The purpose of the blockchain is to allow digital information to be recorded and distributed, but not edited.

The two major points of the blockchain are:

• It is decentralized. In simple terms, it just means that there is no data center where all transaction data is stored. Without going into the technical side, they are stored on hard drives and servers all over the world.
• There is no middleman. There is no bank or entity to oversee transactions. This implies several advantages, such as a reduction in costs or the fact that the power is no longer only held in the hands of the banks.

We're not going to dig too deep into the subject of decentralized finance in this article, but you can at least get an idea of ​​the objective behind it all.

In summary, in this new system, the blockchain is the ultimate authority on who owns what at any given time.

Once a transaction has been validated, there is no going back. Everyone has the same version of the registry, and everyone can view it. It is all the users who contribute to it and not a single institution such as a bank. No one can go back or change numbers.

Thanks to the blockchain, you can see every transaction that has been made, how much money is in each account, etc.

And then maybe that's when an alarm goes off and you tell yourself that the thing looks awful, since you don't want anyone to know how much you've got. money in your accounts.

Since here, everyone can have access to the list of transactions and how much each account has in its possession, not just the banks.

But rest assured: if you can have detailed information on an account, you do not necessarily know who is behind this account if the person behind does not reveal his identity. You cannot directly link an account to a single person.

How does crypto investing work?

Before going into how to invest in crypto technically (which we will see in the next and last part), here is a little more information on the overall functioning of investing in cryptocurrencies.

We are also going to take a little tour of the vocabulary in this part.

The different cryptos: in which crypto to invest?

The first question you ask yourself may be the basics: invest, ok, but in which crypto?

Today, there are over 18,000 different cryptos in existence (according to CoinMarketCap ). Suffice to say that for those who already have trouble choosing what to eat every lunchtime, you can quickly be overwhelmed.

But I also have another bad news: I can't tell you what the next cryptos will take off and make you rich.

Sad, I know.

No one can, but that's another discussion.

And above all, you should always invest in what you understand and according to your convictions, not because someone told you to (and even less your cousin Rémi at the family meal who promises you that he knows LA crypto that will explode in 2022 – that's wrong ).

On the other hand, what I can do is explain to you the different things you need to know to choose for yourself which cryptos to invest in and which risks taking.

What are the biggest cryptos?

Gone are the days when Bitcoin was the only player in the market. But it remains the biggest player today (i.e. the cryptocurrency with the biggest market cap ).

It is of course still the most popular cryptocurrency even today. It is in a way “the market leader”.

The second-largest cryptocurrency today is ether, the coin of the Ethereum platform.

Both bitcoin and ether, are by far the two biggest current cryptos, but also the most popular.

Of course, as we said earlier, no one can tell you what to invest in (except possibly discussing it with a dedicated investment advisor open to the crypto world).

But overall, many experts recommend sticking with the biggest cryptos (especially bitcoin and ether) when starting and getting into crypto investing for the first time.

How to make money investing in crypto?

There are two great ways to make money investing in cryptocurrency:

The added value 📈 . Here, nothing complicated: it is simply a question of investing in crypto in the hope that it will increase in value, and of receiving a capital gain on resale (i.e. reselling it for more expensive than you bought it). Warning: in this article, I am not talking about trading (buying and reselling often to make quick gains), but rather investing in cryptos over the long term.

Staking 💰 . To put it simply, you will immobilize part of your cryptocurrencies in exchange for remuneration (which will also be in cryptos). It's a fairly passive form of investing: you "lend" your cryptos, and you don't have much to do from there. Sometimes you will be able to withdraw your money at any time, and other times it will be locked for a certain period (depending on what you choose). Of course, you will necessarily have to buy crypto (see the previous point) to be able to stake it.

Is investing in cryptocurrency risky?

Compared to other types of investment, investing in crypto is considered very risky.

This does not mean that it is to be avoided completely, only that you have to understand that the investment is risky and invest your money accordingly.

Already, cryptos are quite unstable investments: their value can rise and fall very significantly over very short periods. It is said to be a volatile investment.

Then, we cannot talk about cryptos without mentioning the fact that a lot of scams are flourishing in this universe, and that you must therefore be very careful when you start investing.

Finally, it is also a new ecosystem, still quite unregulated (which was the basic goal of cryptos, but that is a discussion for another day). Knowing that States are increasingly focusing on the world of cryptos, we do not yet know the regulations to come and their impact on the world of cryptocurrencies.

Is investing in crypto a good idea?

As we saw earlier: it all depends!

It all depends on you, your situation, etc. In summary, if you can afford it.

Two things to consider:

• Integrate cryptos into your investment strategy, diversifying with other investments: stock market, real estate, etc. (and not going 100% crypto).
• Be in a personal and financial situation that allows you to invest in the first place. If you're in dire financial straits but just lured by the potential for quick wins, it's probably not a good idea to start now. Invest only the money you can afford to lose.

How to invest in cryptocurrency?

Let's attack the last part, the sinews of war: how to do, concretely, invest in crypto?

Before we begin, a few reminders:

• Do not invest all your savings in cryptos (and even less on only one or two cryptos). Or at least it's at your own risk. Experts tend to only recommend placing between 1 and 10% of your wealth in this type of investment, and everything will depend on your specific situation.
• Have a precautionary saving, which is an amount of money set aside to help you get back on your feet (instead of just eating pasta) in case of a financial emergency. This sum is generally best placed in a secure and easily accessible investment.
• Define your strategy in advance: how much you plan to spend each month, on what, etc. Investing a regular amount each month is often a strategy that works better than trying to figure out whether or not it's time to invest depending on how the markets are doing.

Choose how you want to buy your cryptos

You should know that there are several different ways to buy cryptos. It all depends on how you want to invest.

Overall, there are several ways to invest in crypto:

• From certain online banks (such as Revolut) or specialized platforms
• Since what is called an Exchange
• From online wallets (so-called hot wallets )
• From offline wallets (so-called cold wallets )

Specialized platforms

In this category, I mainly wanted to introduce you to Coinhouse.

It was the first platform I used when I first started investing in crypto, simply because it seemed the least intimidating.

And having tested several today, it is also (really) very far the easiest that I have had the opportunity to use.

It will certainly be too simple (and expensive) for those who want to trade or have advanced options, but if your goal is to start investing in crypto easily for the long term, it can be a good way to get started.

Coinhouse is an investment platform made in France 🇫🇷 which aims to make investing in crypto accessible to everyone.

And their motto is precisely simplicity, especially for beginners. The platform is super intuitive (without all the incomprehensible graphics for many that can be found on other platforms) and very reassuring when you start. That's why I think it can be a good way for those who want to expose themselves little by little.

They also have an Academy on their site with very interesting educational content.

Exchanges

Binance

It is also a platform that I use regularly, very popular in France but also all over the world.

Created in 2017, Binance allows investing in more than 600 cryptocurrencies. It is one of the world leaders in crypto investing, with fees that are quite competitive. It offers two versions: a lite (simplified) or pro (more advanced) version.

It also offers several interesting services (staking, etc.).

On the other hand, it is a much more complete platform than Coinhouse, but also much more complex (including its “lite” version). You will therefore certainly need a little learning time before you are perfectly comfortable.

Coinbase

Coinbase is a well-known cryptocurrency exchange for buying, selling, and trading cryptos. It now offers more than 100 cryptos to invest in.

It is probably a bit more beginner-friendly than Binance (and less so than Coinhouse). Knowing that for those looking for more advanced features, it is possible to use their Coinbase Pro version.

I've never used it personally so I can't give you my feedback on it, but it's a very used platform. On the downside, the negative feedback mostly focuses on customer service and the fees charged, as well as the limited analysis of our investment performance.