Last week a reporter asked me what one piece of advice would I give to someone thinking of investing in crypto. These types of questions drive me crazy because I don’t provide investment advise and crypto isn’t about making a quick buck. If you are ready to take the leap and invest in crypto there are a few things you should understand before you do.
- No one should buy crypto without researching why it exists in the first place. It’s far more important to understand that the global crypto movement is about decentralising financial control, design, and settlement of money. If you’ve ever been annoyed about an overdraft charge, frustrated your bank wasn’t open on a Sunday, or upset when you’ve had to pay large fees to move your money around, then it’s time to invest in understanding how crypto works. It’s time to test it yourself. Imagine money with wings. With crypto, you don’t ever need to rely on a bank again — you can be your own bank, with a free app right on your phone. Blockchain.com just launched the fastest and simplest way to buy crypto yet, sign up to give it a try.
- There are thousands of different cryptocurrencies now. It’s important to understand why some of them are more widely used than others. Similar to how national currencies have different prices, different denominations, and different rates of inflation, just because something is cheap doesn’t mean it’s a good deal. You need to do your research. For example, there will only ever be 21 million bitcoins that come into circulation, which might not sound like a lot, but the good news is, they are divisible into tiny bits. So you can own a fraction of one. Just like you can own $.01 penny, or you can collect 100 of them and have a whole dollar. Bitcoin can be denominated into tiny increments. A lot of bitcoin users talk about “stacking sats” which refers to the act of accumulating Bitcoin over a period of time, little by little.
- There are currently 1.7 billion people in the world that are unbanked, but with a smart phone they can download a crypto wallet that lets them transact with anyone, anywhere else in the world. If you care about financial inclusion, this is a great way to support an important cause and bring billions of people in the financial fabric of the world.
- Some people buy crypto because they want to invest in a new asset class. Other people use cryptocurrency every day, to make payments, usually across borders. This is because cryptocurrencies use peer-to-peer networks that immediately confirm and settle transactions, which is especially useful when buying things over the internet or from far away. It’s the digital equivalent of handing someone cash.
- People used to say that cash was king, but increasingly, some people think crypto is the king. Due to the health pandemic, from a purely hygienic perspective it is much safer to own and transact in digital dollars. No one wants to handle bills that have been circulating for years when doing so might be a risk factor. In fact, even if you think buying crypto isn’t your cup of tea, you can buy Stablecoins, which merge the features of crypto with national currencies like the U.S. Dollar. These Digital Dollars also use the same peer to peer networks to settle transactions.
- Not your keys, not your crypto. It’s really important to understand a simple concept when it comes to owning crypto. If you buy crypto and store it on an exchange, they probably hold custody of your assets. Everyone can choose how they want to store things, but unless you take custody of your crypto, it can be risky to leave it in a centralised crypto bank. We always recommend you use a non-custodial wallet, so you’re firmly in control of your money. When you sign up for this type of wallet, store the backup phrase in a safe place, so you can always be sure you can restore your funds in case you lose your login credentials or phone.
- It’s very important to always use strong passwords and whenever possible secure your wallet and all your web logins with 2 factor authentication. This helps keep hackers and online thieves from accessing your crypto.
With that, welcome to what we like to call the rabbit hole. Once you go down it you’ll join the millions and millions of other people all over the world that are now participating in a more efficient, more transparent, and fair financial system.
Finished researching and ready to purchase crypto? Sign up for a Wallet today.
7 Things to know before buying your first Bitcoin or other Crypto was originally published in @blockchain on Medium, where people are continuing the conversation by highlighting and responding to this story.