Getting started with cryptocurrency

TL;DR

For those who are new to cryptocurrency, a good way to start is by first deciding on the following: how much one is willing to invest, which cryptocurrencies to invest in, and which platform to use. 

Investing in cryptocurrency can sound like a daunting and complicated venture, and for the uninitiated or a newbie trader,  it’s all too easy to get caught up in the hype over a new coin or to panic every time the market takes a downturn. Fortunately, however, there are a few simple things that beginners can keep in mind which may lead to a fulfilling trading adventure, and may prove very helpful in avoiding mistakes and getting “rekt”.  

Cryptocurrencies have a reputation for volatility and do not behave exactly the same as fiat money and other financial instruments. Not all commercial establishments or vendors accept crypto as a viable form of payment just yet, which is why many crypto users use it as an investment vehicle given that the value of certain cryptocurrencies behave like company stocks on the stock market.

There are also thousands of different tokens and coins, some of which have better utilities and technology behind them, all of which should be considered when deciding to invest. 

If you’re thinking about investing in crypto, how much to invest is the first question that you have to decide on. Though others will recommend formulated percentages of one’s income based on “risk appetite” (or how adventurous one feels about investing) as a general rule, you should never invest more money than you can afford to lose. 

Money that you have already budgeted for the month’s expenses or which you have saved up for paying off loans or tuition fees should not be used for purchasing crypto. To be able to get a good night’s sleep, you should only invest an appropriate amount that you would not miss–and which you weren’t planning to spend anytime soon. 

If you’re hesitant about putting your hard-earned cash in crypto, keep in mind that you don’t need to commit a large amount right away. You can start really small and just gradually find your own pace. 

In crypto, you hear names like Bitcoin, Ethereum, or XRP being frequently attested to by both seasoned traders and even by social media comments. Though there are certain cryptocurrencies that are considered relatively “safe” bets in the sense that they have been around for a while and have well-established market caps, you should always keep in mind that you should never invest based on someone else’s word alone. 

In fact, a well-respected saying in crypto which has earned its own acronym is “Do your own research” or DYOR. 

To invest in crypto, you should dedicate the time to researching these digital assets as you would do a background check on the companies on the stock market. Make sure you understand the utility of a token so that you can figure out for yourself if it has the potential to be actually useful for people–instead of just being all name or hype. To do this, you can read a cryptocurrency’s official whitepaper and cross-reference different sources and public forums on the internet. 

You can also see if developers are following through with their plans by checking the token’s roadmap and official online community channels. A good cryptocurrency project should constantly update its community on its progress and respond to community concerns. 

Make sure to also pay attention to trends and patterns in a cryptocurrency’s historical trading performance, though keep in mind that past trends are not always guaranteed to continue in the future.

There are various crypto exchange platforms that you can find on the internet which serve as marketplaces for different kinds of cryptocurrencies. Users only need to sign up for an account to immediately start investing. But what should you consider when picking a platform to start trading on?

First, you might want to consider the coins that are available for trading on the platform. A good cryptocurrency exchange should have a wide range of tokens to choose from so that you can easily diversify your holdings and have more options to trade with.

You can also compare rates such as trading and withdrawal fees so that you can maximize your potential earnings. There are platforms that may offer low trading fees but may charge high withdrawal fees when the time comes that you decide to spend your money. 

Available liquidity is also one thing you might want to consider. Liquidity simply means the ease by which you can convert your assets into spendable cash. 

To assess the liquidity available on an exchange, a simple way to find out is to check the exchange's trading volume for a particular asset. You can also check the “depth” of the order book–to see if there are a lot of buyers and sellers keeping the market active. The ”spread” must also be reasonable–in other words, the buy and sell prices must not be too far apart. 

Make sure as well that there are many channels available for cashing in and cashing out your assets as you don’t want to have your assets stuck on the exchange just because you realize later on that the platform doesn’t allow for withdrawals to be made with your bank account.

And lastly, a good exchange must value your security. Make sure that they make the effort to validate your identity and that they have stringent security measures such as two-factor authentication. 

With time, you'll eventually develop your own investment strategies off of these few basic guidelines. The more you trade and learn, the more you’ll realize the potential of cryptocurrency and how it can open up opportunities that are not found in traditional financial institutions.

Here at PDAX, we understand getting started with cryptocurrency may not be that simple right away–but we’re here to help and to make it easier to get started. 

This is why PDAX is available in web-based and mobile app versions for your convenience, and caters specifically to the Filipino market as it allows for direct conversion of Philippine peso (PHP) to crypto. You can even start trading with as little as PHP 200–even less than what you would spend watching a movie or eating at a restaurant.

PDAX also has the widest coin offerings with 26 cryptocurrencies that you can trade with, and with over 30 cashout channels. PDAX is also licensed by the Banko Sentral ng Pilipinas, so you can be sure that we only have the best interests of the Filipino investor in mind. 

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DISCLAIMER: The statements in this article do not constitute financial advice. PDAX does not guarantee the technical and financial integrity of the digital asset and its ecosystem. Any and all trading involving the digital asset is subject to the user’s risk and discretion and must be done after adequate and in-depth research and analysis.