Bitcoin, Ethereum & XRP: Five Rules to Buy These Cryptocurrencies

Investing in cryptocurrencies should be done cautiously and smartly. 

So, is all the hype around cryptocurrencies and the zillionth headline it made making you give in? If you are considering investing in cryptocurrencies, there are many digital tokens to choose from. Some of the most reliable digital coins are Bitcoin, Ethereum, Ripple, and Litecoin. They've shown great growth potential, Bitcoin and Ethereum being two of the biggest cryptocurrencies in the market, and investors trust them to grow in value and serve greater purposes. You can start your crypto investments with these cryptocurrencies, keeping in mind these rules.

1. Research about the digital coin 

There are more than 7,000 cryptocurrencies in the market and the exhaustive list might make you feel overwhelmed while creating your portfolio. CoinMarketCap is a popular cryptocurrency information website that has all the information, from market value, average trading value, etc. Once you are confident with enough research, you can pick the cryptocurrencies with your own knowledge. 

2. Pick your cryptocurrency wallet 

A cryptocurrency wallet is a platform that stores your private and public keys and allows you to access your assets and make transactions. At present, wallets have just one purpose, they can send and receive only compatible crypto coins. This means you cannot send Bitcoins to Ethereum wallet or your fund will be lost forever. Analytics Insight has made a complete guide on choosing the right cryptocurrency wallet, read it here. 

3. Choose a buying platform 

Once you are set with your crypto wallet, choose a platform or an exchange to buy cryptocurrencies. Popular choices in this category are Coinbase, Kraken, and Binance. Pick an exchange that has plenty of features like buying and selling cryptocurrencies for fiat currencies, being reliable, liquid, and secure. Another thing to keep in mind while picking an exchange is learning about its parameters like spread, purchase, and withdrawal limits. Having good technical support, insurance, and a user-friendly interface is an added bonus. 

4. Outline where do you want to trade?

Here's the general rule of trading, to make a profit you have to make a purchase when the prices are low and sell when they are high. It is mostly the same principles that you would apply for forex, stocks, and commodities. Apart from cryptocurrency exchanges, you can also choose to trade with brokers. Brokers are experienced in trading, so their insights might be of some help. If you have to choose between an exchange and a broker, think about what do you want to do with your cryptocurrency? Own it or trade it? Trading with brokers doesn't require a crypto wallet which makes things a little easier, but with an exchange, you have most of the control of your assets. If you are just buying to own it, a good crypto exchange will do the job. 

5. Be mindful 

Security should be your number one priority. Remember, cryptocurrency exchanges are not regulated entirely. This might invite manipulations and malpractices. Only invest the amount that you can afford to lose. Cryptocurrency is relatively a new market and it is subjected to extreme volatility. Invest some of your money in other solid assets and then go ahead by buying cryptocurrencies with fewer amounts, to begin with. One last thing to remember, don't invest all your money into one digital coin, diversify your portfolio to minimize risks.