The first question you need to ask yourself before you start your crypto adventure is whether you want to be a HODLer or a trader.
HODLing is internet slang for someone who buys crypto and stores it in anticipation of price rises over the longer term.
You can store your crypto on an exchange, a wallet app on their mobile phone, a hardware wallet or even a paper or metal wallet.
A crypto trader is someone who wishes to try to play the markets and profit from the large price swings often shown by cryptos.
Am I a HODLer or a trader?
HODLing is easy. You go to an exchange buy the crypto you’re interested in, such as Bitcoin or Ethereum, and store it.
If you’ve got ‘diamond hands’, you’ll weather the volatility and keep hold of your crypto through thick and thin, hoping for long term gains.
But if you’re a ‘paper hands’ type of person, you’ll dump your crypto at the first sign of a downward turn.
Either way, you’re not sat glued to a screen all day long, constantly buying and selling to eke out a profit, which is exactly what traders do.
Trading can be a time-consuming pursuit and is not for the faint hearted.
To be a successful trader, you’ll need to educate yourself thoroughly about how to trade and the fundamentals of the cryptos you plan to buy and sell.
I’m a HODLer, how do I get started and buy some crypto?
Great, you’ve found yourself! Next you need to pick an exchange through which to buy your crypto.
Note: there are Bitcoin wallets that enable you to buy crypto directly but it’s a more complex process and this guide is aimed at beginners.
So, for now, we’re going to focus on the simplest way to buy your first coins.
First, you need to pick and exchange. There are a number of large exchanges that you can use, with Coinbase being the simplest our opinion.
The fees are higher than other exchanges, but for beginners it offers a straightforward, user-friendly way to buy and hold Bitcoin and many other digital coins.
Binance is another popular exchange and is cheaper to use.
The buying process is slightly more complicated than Coinbase, but Binance offers access to a wider range of cryptos.
Both these exchanges require a sign-up with ID, and must comply with Know Your Customer (KYI) and Anti-Money Laundering (AML) legislation, as do the other major exchanges accessible to UK investors.
Can I earn interest on my crypto savings while I HODL?
If you’re planning to HODL your coins, you might want to put them in a crypto interest account an earn a high yield, although there is some risk to this.
Both offer attractive rates of interest and are available to people in the UK.
It’s potentially a great way to earn a passive income on your crypto if you’re keeping it for the longer term.
I want the excitement of trading, where do I start?
Long term investing is boring, right?
If you’d rather hone your trading skills and attempt to beat the market than there are a number of options available.
Coinbase Pro, Binance, eToro and many other platforms offer fully functional trading systems that anyone can tap into. (eToro is primarily a share trading platform but offers access to a growing number of cryptos as well).
Navigating the trading screens can be daunting at first but there is a huge amount of information available online, together with tutorials and tips.
Be wary of the latter – like anything on the internet that hasn’t come from an official source, you need to take it with a pinch of salt.
Likewise with the people selling what are known as ‘signals’, ie market movement predicters. I’m not saying they’re all bad, but there’s a lot of duff information out there.
It’ll pay to familiarise yourself with all the trading options available and the cryptos you want to trade before you dive in.
A good starting point is to watch the markets on a daily basis to look for patterns. Also, read all the crypto news you can find and try to identify stories that may cause a price movement.
Do your own research
The platforms we’ve covered are just the tip of the iceberg, and there are dozens of options to choose from.
Like anything that you’re planning to spend money on, do as much research as you can to ensure you’re comfortable with the product or service.
Trawl review sites and sign up for demo accounts if you can to get a feel for how a platform works and whether it suits you or not before committing to it.
It’s important to keep in mind that the crypto world is still mostly unregulated, although companies operating in the UK have to be registered with the Financial Conduct Authority (FCA) to trade.
Crypto investments are not covered by the Financial Services Compensation Scheme (FSCS) so you could potentially lose all your money.
- Is Bitcoin and cryptocurrency legal to buy and sell in the UK?
- Is Bitcoin and a good investment?
- Are my cryptoassets covered by the Financial Services Compensation Scheme?
Also, there are many bad actors in the crypto world who are out to scam you so be cautious and make sure you’re engaging with a legitimate company.
Most importantly though, enjoy your crypto journey!
*This article is for informational purposes only and does not constitute financial or investment advice.
Adam is the founder of The Crypto Adviser which offers experts guides and reviews on all things related to Bitcoin and cryptocurrency.
Adam is Diploma for Financial Advisers (DipFA) Level 4 qualified, a Member of the London Institute of Banking and Finance (MLIBF), and has worked for many years as a journalist and PR consultant, having studied with the National Council for the Training of Journalists (NCTJ).