How to invest in Cryptocurrencies?

[Cy-Fy]

Hey guys, I am completely new to the world of cryptocurrencies but for some time now I have wanted to learn more about trading and honestly just buying and holding for a while to see if I can make some money.

 

My question is that very often I see online a list of the coins that are going up the fastest, like for example today XPM has been going up ~160% in the past 24 hours. So I guess what I am thinking is, surely if everyone is seeing that why would't it be recommended to put say £1000 on XPM first thing in the morning and sell in the evening. Surely you would more than double your money in almost no time. So is this stupid or would that make sense? Because I see everywhere that this market is very volatile and that you can loose money very quickly but for something like XPM which had been pretty much level for a while would it be silly to try and make that much money in a day?

 

I am just trying to understand why doing something that seems relatively easy may be deceptive.

 

Thanks a lot for your help!

[tikker]

Never looked into it, but that is the general idea, like in real life. Buy when it's cheap and sell when it's expensive. The problem is that everyone with you wants  to sell when it's high, so I think the first "deceptive" part is that you'll have to balance your profits with the price at which people will still buy them from you.

[RoyalGamer1]

how to invest, make an account at cryptoexchange and buy it like you buy anything else. 

 

and yes thats exaclty how people make money, buy it then sell it when it goes up. you only make like $10-$20 a sale unless you put in like 10k. but crypto doest always bounce back as much, a ton of people bought it at $19k and now its only at 9k. so thats a hefty loss to anyone who did that. and there is a fee so say you invest $100 and make $105 when you withdraw you'll only have $102 so you never make as much as you think your making unless you do the math of course 

[Cy-Fy]

20 minutes ago, tikker said:

Never looked into it, but that is the general idea, like in real life. Buy when it's cheap and sell when it's expensive. The problem is that everyone with you wants  to sell when it's high, so I think the first "deceptive" part is that you'll have to balance your profits with the price at which people will still buy them from you.

 

14 minutes ago, RoyalGamer1 said:

how to invest, make an account at cryptoexchange and buy it like you buy anything else. 

 

and yes thats exaclty how people make money, buy it then sell it when it goes up. you only make like $10-$20 a sale unless you put in like 10k. but crypto doest always bounce back as much, a ton of people bought it at $19k and now its only at 9k. so thats a hefty loss to anyone who did that. and there is a fee so say you invest $100 and make $105 when you withdraw you'll only have $102 so you never make as much as you think your making unless you do the math of course 

 

Yeah I guess you are both right and that is the way it works it's just that it seems so tempting when you see a specific coin going up like that to put money in it but I guess you never know if that was its peak and will now just go down.

 

Also I was thinking and looking online but I can't seem to find a clear answer, are you supposed to report your gains for every single transaction in order to pay tax? Because imagine you do a couple transactions a day then it starts to add up pretty quickly so do you need to report every single sale and the price you bought/sold at?

I guess my way of looking at it just comparing it to when you go to the store to buy some foreign currency. Like say you go with $100 and buy £60. If the next day the pound went down a bit you could use the same £60 to buy $110 for example. It's basically the same thing but no one is expecting you to report this gain an pay taxes on it right?

 

Thanks again!

[RoyalGamer1]

1 minute ago, Cy-Fy said:

 

 

Yeah I guess you are both right and that is the way it works it's just that it seems so tempting when you see a specific coin going up like that to put money in it but I guess you never know if that was its peak and will now just go down.

 

Also I was thinking and looking online but I can't seem to find a clear answer, are you supposed to report your gains for every single transaction in order to pay tax? Because imagine you do a couple transactions a day then it starts to add up pretty quickly so do you need to report every single sale and the price you bought/sold at?

I guess my way of looking at it just comparing it to when you go to the store to buy some foreign currency. Like say you go with $100 and buy £60. If the next day the pound went down a bit you could use the same £60 to buy $110 for example. It's basically the same thing but no one is expecting you to report this gain an pay taxes on it right?

 

Thanks again!

the exchange you use will most likely ask for a picture of your government issued ID and your SSN for tax reasons before they let you buy any coins

 

after you make $600 on coinbase I think the tax thing kicks in. not sure about other exchanges  

[Cy-Fy]

1 hour ago, Fooshi said:

Find an exchange open to your country, sign up with the proper documents in order (usually passport, tax statements, etc.), do your research on which currency you want to invest in and you're good to go. (In very simple terms).

 

https://chainoperator.com/best-cryptocurrency-exchanges/

Chainoperator has a nice list of the most popular and trusted exchanges. Personally I use Bitstamp as they offer XRP is open to Norwegian citizens. Signing up to several is a good idea, as verification can take everything from a day up to several weeks. 

 

Things to keep in mind:
- There's going to be a lot of fees. Trading a few 100 dollars here and there won't net you much in return. Direct credit card purchases / deposits are usually the biggest transaction fees, but pretty much instant. If you're patient, you can wire transfer, which has less fees, but can take on average up to 2 days. If you're within the EU and your exchange is within the EU, SEPA transactions are pretty cheap (if not free in some cases) depending on how much your bank wants to gouge you for money.

- ONLY INVEST WHAT YOU ARE WILLING TO LOSE. You will most likely lose money in the beginning. Same old "buy low, sell high" goes.

- Get yourself an app to keep track of prices. Blockfolio is my favourite, as you can enter your purchases and keep track of the current value of your holdings. Can also set notifications for specific price points and prices between different exchanges. 

- Get to know your governments' stance on crypto and if they want to tax your earnings. Some show no mercy, some are pretty lax.

- At last, keep in mind crypto is only valuable if it can be used for something, otherwise it's just "internet funbux".

 

Good luck, have fun and remember to not jump off a bridge if your choice of currency loses half its value in a day.

Hey thanks a lot for all this information. This is all really good advice for someone who is just starting out!