Are you thinking about buying cryptocurrencies? If so, you’re part of a rapidly growing segment of the population that sees digital assets as attractive investments.
Buying cryptocurrencies today is already possible through many different avenues – whether it’s Bitcoin, Ethereum or any other of the thousands of coins on the crypto market.
Be it through crypto exchanges, crypto funds or even direct investments in crypto companies, buying crypto today is often already as easy as investing in the stock market.
In this detailed guide, we’ll show you everything you need to know about trading cryptocurrencies, how to expand your portfolio, and everything you need to consider along the way.
Step 1: Understanding cryptocurrencies
Cryptocurrencies, and the underlying blockchain technology, have become an influential concept in the financial and technology worlds over the past decade.
Cryptocurrencies are digital assets that use cryptography to secure and verify transactions and control the creation of new entities, allowing them to function independently of central banks and governments.
They can be used for a variety of purposes, including as a medium of exchange, store of value, and speculative investment. The last point, in particular, is a big contributor to the popularity of cryptocurrencies.
No matter what reason you decide to buy cryptocurrencies, in this article you will find all the necessary steps to complete your first purchase.
Step 2: Which cryptocurrency should you buy?
Since the launch of Bitcoin over a decade ago, several thousand other cryptocurrencies have entered the market (and many have also disappeared.) Finding the right cryptocurrency to buy quickly becomes a challenge.
We don’t offer investment advice, but we can give you a brief overview of some popular projects and concepts. For more information on the best cryptocurrencies and how to properly evaluate crypto investments, check out our article: Best Cryptocurrencies 2024
Bitcoin
Bitcoin is the oldest and arguably the most popular cryptocurrency. The first Bitcoin block was “mined” on January 3, 2009 and the coin has seen an absurd growth in value since then.
The value of a Bitcoin is just around 45.000€ at the beginning of 2024, while it was still almost 64.000€ at the end of 2021.
Even though the fluctuations in value can be enormous in some cases, cryptocurrencies like Bitcoin still come closest to traditional FIAT money in their application.
Ethereum
The Ethereum network is a more advanced application of blockchain technology that enables so-called smart contracts and decentralized applications (dApps). These are programmable processes that can be executed entirely without a central authority between two parties, laying the foundation for the Web3 ecosystem.
The cryptocurrency of the Ethereum network is called Ether and has, after Bitcoin, the second largest market capitalization of all cryptocurrencies.
Altcoins
“Altcoins” is a collective term for all cryptocurrencies besides Bitcoin. These altcoins differ among themselves, sometimes greatly, in their applications. Many altcoin projects have great ambitions, but only a few stand the test of time. Especially for beginners:in trading cryptocurrencies, caution is advised here.
NFTs
The acronym NFT stands for Non-Fungible Token. Unlike other cryptocurrencies, each NFT is unique and uniquely attributable, allowing it to be used as proof of ownership and authenticity. So far, NFTs have been used to tokenize digital artwork, ownership certificates, or even sneakers, for example.
DeFi
DeFi (Decentralized Finance) enables traditional financial applications without a central party on the blockchain. For example, it enables lending without a bank or functioning as a proof-of-stake blockchain using crypto staking.
