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4 Key Things to Know Before Investing in Cryptocurrencies

Investing in Cryptocurrencies

By now, you should know the term cryptocurrency. But investing in cryptocurrencies may seem like an overwhelming topic. 

Ten years ago, it was used for online transactions using blockchain technology. Although this is still the case, many cryptocurrencies have gone mainstream. 

From Bitcoin to Dogecoin, crypto is the new wave of investing for many individuals as well as large institutions and companies. In 2020 alone, Americans earned over $4 billion in Bitcoin gains. 

Although Bitcoin is the most popular cryptocurrency, there are many other opportunities for beginner investors to get a great return. Ethereum is up 728% this year, and Cardano is soaring at over 2000%. The entire combined market for crypto is over $2 trillion– and it’s not slowing down anytime soon. 

These statistics may get your heart racing. They probably have you ready to invest in the next Bitcoin, or ready to go all-in on the next cryptocurrency to explode, just like many other beginner crypto investors. 

There is a learning curve, however. That’s why—just like investing in the stock market—you must do your research.

What to Know Before Trading Cryptocurrencies

Here are the key things to know before investing in cryptocurrencies, and how to earn massive returns. 

1) Understand Your Reasoning for Investing in Crypto

Before spending a single penny on crypto, you should be aware of your reasoning for investing in cryptocurrency. Just like any other investment vehicle, there is a reason the investor chooses to invest in that specific way. 

For example– day traders love the thrill of quick money and fast returns. Passive investors would rather have some peace of mind knowing their money is safe, making a slight return every year. Some questions to ask yourself would be:

      • Am I in it for the huge returns?
      • Do I want to invest to be the first on a trend?
      • Am I only investing in crypto to seem smart?
      • Do I have a passion for crypto?

Answering these questions will give you a better understanding of your goals with cryptocurrencies, and therefore will allow your investments to make more sense within your investment journey.

2) Develop a Feel and Sense for the Crypto Market

As a new investor, it’s important to understand the market you’re entering. 

You should equate it to walking into a sophisticated art gallery. You wouldn’t see the first thing you like and throw money at it. 

Who painted it? Is it undervalued or overvalued? Or maybe you know something that others don’t. 

Cryptocurrencies go beyond the big names such as Bitcoin, Ethereum, or Ripple. It’s important to dive deeper and look at smaller names, as well as explore a little into Blockchain technology. This will give you a better understanding of how crypto works in general, allowing you to make more informed decisions about potential investments. 

Just like with stocks, there are massive players within the crypto industry. Cryptocurrency investors are very careful not to influence the price of cryptocurrencies, as they are notoriously volatile. 

This is why cryptocurrency investors wade into dark pools. They can sell or buy vast amounts of crypto without influencing price or letting others know of their investments. This allows big players to stay on top. This is just another reason why it’s so important to understand the market you are investing in. 

3) Immerse Yourself in the Culture

Just like learning a language, the fastest way to learn is to immerse yourself in the culture. 

If you feel like you aren’t gaining traction with the knowledge you’re reading or watching, you should be focused on joining groups on Discord or Facebook, for example. Not only are these resources free for the most part, but they are filled with like-minded enthusiasts that started just like you.

4) Always Check the White Papers

Before investing in a potentially massive cryptocurrency, make sure you read– and then re-read– the white papers. Every cryptocurrency should have its white papers. This allows investors to see what the developers and creators intend to do with their work, how the project will commence, including important aspects like timeframe and other specifics. Consider this the fundamental analysis of cryptocurrencies

You should be making sure to look out for these big no-no’s when looking at the white papers:

      • No data, numbers, or specifics. 
      • Confusing jargon. 
      • Hard to find white papers
      • No white papers at all 

Time to Make Your First Investment

After following the steps and advice above, and once you have done the proper research and feel comfortable, it is now time to invest in a cryptocurrency. 

The crypto market is known for being very volatile, which is why it can bring massive returns for investors. But there is a downside to investing with such high volatility, which is the risk of losing your investment altogether. This is why research is extremely critical. If you have given yourself time to get a feel for the market, you can make more informed decisions on how to invest, which will give you an edge over other investors. 

Cryptocurrency vs. Stocks

Although on the surface crypto and stocks can seem very similar (which they are in some aspects), there are key differences that make them unique in their own way. 

Stocks allow you to own a piece of the company you’re investing in, compared to crypto where not one single institution controls shares. Rather, the crypto itself is owned by the holders and investors. 

Stocks have been around a lot longer than crypto, so the statistics and rates of returns are more steady and proven to be true in the long run. Crypto can be a great investment, but it just hasn’t been around long enough to prove the long-term trends that traditional securities show. 

On the flip side, this allows crypto to not be influenced by events that would most likely affect stock market securities. This allows investors to diversify their portfolios and hedge against market declines and inflation. 

Cryptocurrencies to Buy Now

If you would like to get started investing in cryptocurrencies now rather than later, here are some potentially great investments to add to your portfolio: 

Binance Coin 

Binance Coin is the native currency for Binance, the largest crypto exchange. Binance continues to buy its own coin, reducing its supply. It has grown over 32,000% in the past four years. As more money pours into the markets, the price of Binance should continue to climb. 


Cardano, as mentioned at the beginning of this article, is up over 2000% for the year. Despite many investors believing it wouldn’t hold up to the giants of crypto due to its relatively small market cap, it is still going strong. Cardano developers are working in the space of NFTs, another potential project that is making waves in the industry. 


If you’re considering buying Ethereum, Ethereum hit a high of just over $4,300 in May of this year, proving its ability to move to new higher and higher with strong fundamentals. At the beginning of the summer, Ethereum saw a decline of almost 60%, not a great move for most investors to stomach. 

But since this decline, it has had a healthy run back up, and savvy investors are getting in again for the ride. At the time of this article, it is sitting around $2,900. If it can return to its previous highs, this is a potential 48+% return.

Featured Image: Megapixl

About the author: I am a writer and an editor with experience in publishing, research, and SEO strategies. I have an honors BSc in Social Work from the University of Benin, Nigeria.

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