Invest in Cryptocurrencies step by step

In this guide we will see everything you need to know about investing in cryptocurrencies : from how they are bought and stored safely, to how to decide which cryptocurrency to buy.

Keep reading until the end and discover 5 keys that you should know when investing in cryptocurrencies successfully.

How to invest in Cryptocurrencies

If you want to invest in cryptocurrencies directly you can use a cryptocurrency exchange. Here is how to invest in cryptocurrency step by step:

First you must choose an exchange, create an account and send funds according to the allowed deposit methods. Next you must do some research to determine which cryptocurrencies you want to buy and send the purchase orders for the cryptocurrencies you have chosen to the exchange. Once purchased, you must store the cryptocurrencies securely, preferably in an off-exchange wallet or e-purse.

After this brief summary we will move on to see the process in detail.

How to Buy Cryptocurrencies (Safely)

As we have just seen, to buy cryptocurrencies you must use an exchange.

Exchanges are the platforms on which the purchase and sale of digital currencies are carried out, in addition to providing some other services related to investment in digital assets.

The process to buy cryptocurrencies through an exchange would be as follows:

1. Decide where you want to buy

There are different types of exchanges, but the easiest way for someone starting out is on a centralized exchange.

Some well-known examples are Binance, Coinbase, Kukoin or Bit2me.

The centralized exchanges or CEX, act as intermediaries and ensure that the transactions are carried out in a simple and correct way: that the user obtains the amount of cryptocurrencies for which he has paid in exchange for a commission that the exchange charges for its services.

Other options would be through a decentralized exchange (DEX) or through a traditional broker that has cryptocurrency buying and selling services.

I leave you an article in which I explain in more depth the different types of platforms that exist to invest in cryptocurrencies.

If you are just starting out, the best thing to do is to choose a well-known, reputable exchange with a large amount of cryptocurrency. Some examples would be Binance, Coinbase or Bit2me.

2. Open an account and deposit money

You will first need to provide your personal information and in most cases verify your identity to complete the registration process.

Finally you must transfer funds to the account in the currency of your country, generally Euros or Dollars. There are many payment methods such as bank transfer or credit card so it is a simple process.

3. Choose the cryptocurrency in which you are going to invest

Choosing which cryptocurrency or token you are going to invest in is the most complicated part of all, similar to if we want to invest in any other financial asset such as stocks. Because it is more complex, I will talk more extensively in the following sections.

4. Place purchase orders

Finally we would place the purchase order of the selected cryptocurrency.

In case you have doubts about the types of orders and how they are sent, I leave you to the following article in which I explain it. I use examples from the Binance exchange but it would be similar for the rest of the platforms.

What cryptocurrency should I buy

Perhaps the most important thing when it comes to investing in anything is to do your homework and study carefully where we are going to put our money.

In the investment in crypto it is even more important since it is a new market, whose projects are often in development and are technically more complex. In addition, there are thousands of different cryptocurrencies so choosing a few is a complicated task.

The options that we have are to hire an expert financial advisor in cryptocurrencies or otherwise train ourselves as much as we can and carry out our own investigation to determine what we should invest in.

What we should never do is buy a cryptocurrency simply because someone tells us or advises us without being a demonstrable expert in the matter.

To analyze and choose cryptocurrencies to invest we can use several types of analysis:
  • Fundamental analysis of cryptocurrencies: it focuses on analyzing the project to basically determine what it does, if it has the potential to appreciate in the future and if it is legitimate.
  • Technical analysis : consists of the analysis of graphs, patterns and the use of Cryptocurrency indicators .
  • Onchain Analysis : allows you to analyze a cryptocurrency through all the activity that happens in the chain of blocks.
Personally, when it comes to investing in cryptocurrencies, I like to carry out in-depth fundamental analysis and rely on technical analysis to determine entry levels and in general assess the market phase in which it is located.

Store cryptocurrencies safely

Once you have decided which cryptocurrencies to invest in and have bought them on an exchange, the next decision is how to store them.

It is an important question since one of the mottos of cryptocurrencies is "to be your own bank" so you should know how to safely store cryptos and how to send them to other platforms, to other people or pay for services with them.

Digital asset owners use digital purses or wallets to store their assets, there are different options:
  • Storage on third-party platforms: An example is keeping your cryptocurrencies on the exchange where you bought them.
  • Using your own wallet: basically it is a software in which we store our cryptocurrencies in a personal way.
Therefore, the decision you have to make is to choose between storing the digital assets you have yourself or having another company or entity do it for you.

The best option is to store the cryptocurrencies ourselves in a hardware wallet since they are the most secure.

Advantages and disadvantages of investing in cryptocurrencies

Let's see some sales and drawbacks of investing in cryptocurrencies:

  • Diversification : cryptocurrencies, being a new financial asset, allow us to diversify our investment portfolio and not only have exposure to traditional assets.
  • Potential Returns – Cryptocurrencies have produced strong returns as their use has spread. For example bitcoin, it is the best performing asset in the last decade and it is possible that at some point it will continue its strong trajectory.
  • Profits : some cryptocurrencies provide profits while we are invested in them. Bitcoin, for example, can be used to pay for goods and services and other tokens allow access to the purchase of projects, loans or staking of cryptocurrencies to obtain passive income.
  • Understand and learn about an emerging technology with implications in many sectors.
  • Volatility : Cryptocurrencies have very strong and abrupt fluctuations.
  • Theft, fraud and scams : unfortunately it is a sector that is highly exposed to scams, fraud and theft, so it is an additional risk to take into account.
  • Learning Curve – The learning curve can be slow as you need to understand the technology and become familiar with the methods of storing and using cryptocurrency.

Cryptocurrency legality and taxes

Although some countries like China have banned its use [2] , investing in cryptocurrencies in most of the world is legal [3] .

Regardless of the above, when investing in cryptocurrencies you have to pay taxes on the profits made. That is, when our cryptocurrencies are sold, we must pay taxes on the difference between the purchase or sale price. Likewise, taxes are also charged if you do stacking or mining.

Being a subject that depends on the regulation of each country, it is best to consult the legislation of the place where you reside

What you need to know to invest in cryptocurrencies (5 keys)

Now we are going to see some considerations that you have to take into account before starting to invest in cryptocurrencies.

Risks of investing in cryptocurrencies

Investing in cryptocurrencies is considered a risky investment. The prices of cryptocurrencies, even the most established ones in the market, move quickly and have larger fluctuations than the prices of other investment assets such as commodities or shares.

Other types of risks are, for example, future regulatory changes or the prohibition of the use of cryptocurrencies in certain countries.

That is why it is important not to invest in cryptocurrencies more money than you are willing to lose.

training and learning

The world of cryptocurrencies evolves rapidly, so it is advisable to train. You have to know all the news in the sector and the most important crypto terms .

It is also necessary to have knowledge about investment and risk management in general.

investment strategy

Beyond doing your homework and studying the projects in which to invest, we have to have an investment plan.

We must know where we are going to enter and how (we will buy in strong corrections, in accumulation phases, we will do DCA…), what our plan will be to take profits or when we will exit the market if our investment goes against us.

And more generally, we have to determine what % of our total investments are going to occupy digital currencies.


One way to manage risk within our cryptocurrency portfolio is to diversify the range of cryptocurrencies in which we invest. Therefore, and according to our risk profile, we can select cryptocurrencies of different capitalization and in turn from different sectors.

Although all cryptocurrencies generally move in a correlated manner, especially in moments of great volatility, it is clear that their behavior is not the same.

For example, it is not the same how Bitcoin behaves as the cryptocurrency of a metaverse that is in position 500 by market capitalization.

Various ways to invest in Crypto

When you think about investing in cryptocurrencies, the first thing that comes to mind is buying one or more cryptocurrencies. But besides the direct purchase, there are other ways to invest in cryptocurrencies.

You can invest in stock exchange companies related to the sector such as Coinbase or in companies that have large amounts of cryptocurrencies on their balance sheets such as MicroSrategy. There is also the possibility of doing so through investment funds or ETFs.

Other ways to consider is to explore investing in non-fungible tokens (NFTs) or earn passive income through Decentralized Finance platforms .

If you have little experience, it is best not to complicate your life and invest in a simple way, but over time you can explore other ways to earn money with cryptocurrencies.

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