Thinking about getting on the crypto hype? Here are some things to consider before parting with your cash…

Buying crypto is quick and easy nowadays. All you need to do is download an app, verify your identity, and spend freely… But that doesn’t necessarily mean everybody should do it. The cryptocurrency market is notoriously volatile and any blockchain-based investment comes with risks, as well as rewards. If you’re considering buying cryptocurrency of any kind for the first time, it’s worth asking yourself the following questions…

Buying cryptocurrency

1. Can I afford to lose money?

There’s no point in beating around the bush; cryptocurrency can lose you money. As much as we love the stories of early adopters who bought Bitcoin for pennies back in the day and are now millionaires, it’s not the case for everyone.

If you’re keen to buy crypto, make sure you only ever spend as much as you’re willing to lose. Hopefully, the tide will turn for the best and you’ll be in profit. However, there’s always the chance a coin or token’s market price will fall, leaving you out of pocket.

2. How will crypto fit into my overall financial plan?

What money have you decided to put into crypto? Are you using savings? You might want to decide early on what your goal is when it comes to buying cryptocurrency. 

Do you plan on buying and selling crypto with a short turnaround or would you prefer to buy and HODL long-term?

3. Do I enjoy roller coasters?

If there’s one thing you should know about buying cryptocurrency, it’s that the market isn’t very stable.

Coin market values can fluctuate to the extreme in a matter of hours, so it’s worth being aware that your overall profit or loss is likely to change from day to day.

It’s a good idea to stay up to date with an asset’s general trajectory. This can help you know where you stand, and also decide when to buy or sell.

Prefer stability? Perhaps the continuous market changes won’t be the most enjoyable experience for you…

Buying cryptocurrency can be a bit of a rollercoaster!

4. Do I want to buy one crypto or diversify my portfolio?

You may have one specific coin in mind that you’d like to purchase — Bitcoin, Ethereum or Cardano, for example. These three cryptocurrencies are the biggest in the sphere in terms of market cap. However, there are so many cryptocurrency coins and tokens in circulation (over 11,000!) that you may also like to explore different options and diversify your portfolio.

You may decide that putting “all your eggs in one basket” is a bit risky — if the asset you’ve decided on falls, then you could face big losses.

5. Do I want to keep up with the crypto market and latest news?

There’s a wealth of information about different cryptocurrencies online. With such a changeable market, you might want to keep an eye on how prices rise and fall so you can make informed decisions on when to buy and sell. On the other hand, there’s a lot of speculation online, too. How will you make sure the information you come across is accurate and verified?

6. Where will I store my cryptocurrency?

Security is vital when it comes to buying cryptocurrency. If your private key isn’t stored somewhere safe, you could completely lose access to your assets. 

Your three options for cryptocurrency storage are:

  • A cryptocurrency exchange

Third-party exchanges offer ease and usability, as somebody else does the technical part for you. However, their usability comes at a price. Ultimately, a third party has access to your crypt, compromising security and posing the risk of theft or loss.

In contrast, personal wallets tend to be more secure. However, they can be tricky to manage, leading to user error. Mistakes can also compromise security.

We like to think that Gridlock is far more than a cryptocurrency wallet. It brings together the usability of exchanges and the autonomy you get with a personal wallet.

You can find out more about Gridlock and how the platform works on our documentation pages or join our mailing list for all the latest news.

*Please note that this is not financial advice! If you’re thinking about adding cryptocurrency to your investment portfolio, speak to a financial advisor