Jasmine Birtles
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Getting Started in Crypto: A Complete Guide
Ruby Layram
1st Nov 2024
Getting started in crypto can seem like entering a completely different world. From navigating blockchain technology to understanding altcoins, the crypto market certainly comes with a lot of new things to wrap your head around.
To assist the process of investing in crypto, we wanted to share a complete guide for beginners on getting started in crypto.
Despite popular belief, getting started in cryptocurrency is not too different from getting started in the stock market! In fact, it is possible to get started using your mobile phone with less than £10.
In this guide, we will explore what cryptocurrency is, what investors need to get started and how to invest in crypto today.
What is Crypto?
In simple terms, cryptocurrency (or ‘crypto’) is a digital currency that is built on blockchain technology. This means that the currency is not owned or controlled by any third-party entity. Instead, the value of crypto is determined primarily by supply and demand (a bit like gold!).
Cryptocurrency relies on cryptography (a fancy word for coding) to protect its transactions. Unlike fiat money—dollars, pounds, or euros—cryptocurrency doesn’t come in the form of physical notes or coins. You won’t find it in your wallet or purse, and there’s no bank or government issuing it. It exists entirely online!
Cryptocurrency allows people to send money to one another, buy things, or invest without needing to get traditional banks involved. This is particularly appealing in developing countries where inflation is at an all-time high.
It also gives you a lot more control over what you can do with your wealth – there is no third party telling you what you can and cannot do. Note that while crypto lacks central bank control, exchanges and stablecoins may still be subject to certain regulations, especially in the UK.
From an investment perspective, cryptocurrencies present an opportunity to invest in exciting new technology and blockchain companies. These are companies that are growing the blockchain space and propelling the future of finance and the web.
How Does Crypto Work?
As we mentioned above, crypto is built on something called ‘blockchain technology’. A blockchain is like a digital ledger that keeps track of all cryptocurrency transactions. When you send or receive crypto, that transaction is added to the blockchain.
Once something is added to the chain, it’s there permanently, and it can’t be tampered with or deleted. This transparency is what makes cryptocurrency trustworthy (although it is not risk-free!).
Transactions are checked by computers on the network. When enough computers agree the transaction is valid, it’s added to the blockchain. This checking process is called ‘mining’ for some cryptocurrencies and ‘validating’ for others.
You can use crypto as a payment method, to send money to people around the world or as an investment.
3 Things That You Need to Get Started in Crypto
Now that you know what cryptocurrency is, let’s get into how investors can get started in 2024.
Here are 3 things that investors will need before buying cryptocurrency.
A cryptocurrency exchange
Firstly, investors will need to sign up to a reputable cryptocurrency exchange or investing platform. These are online platforms that connect investors with the cryptocurrency market.
Crypto exchanges are similar to online stock brokers – investors can browse through different assets and buy or sell cryptos with their chosen payment method.
There are two main types of cryptocurrency exchange: Centralised and decentralised. New investors might want to opt for a centralised exchange as these platforms provide good usability and an extra layer of user support and protection.
Ideally, look for a platform that has a low minimum deposit, competitive trading fees and a user-friendly interface. If you are based in the UK, you should also look for FCA registration. Some good examples include CoinJar, and Archax.
A crypto wallet
A cryptocurrency wallet is like a digital vault for cryptocurrency. These wallets are protected with encryption and can only be accessed by people who know the passphrase.
Some cryptocurrency exchanges offer native wallets that can be accessed directly through the platform. However, in other cases, investors should set up their own third-party wallet which can be used to keep their crypto.
Some popular options include MetaMask and Trust Wallet.
If setting up a wallet seems a bit overwhelming, don’t worry! Investors can use an exchange such as CoinJar, where cryptocurrencies are sent straight into user accounts. This removes the worry that comes with sending crypto back and forth.
A word of caution about crypto wallets
Cryptocurrency wallets are considered to be less risky in relation to protecting your investment, because they can only be accessed with the passphrase (a long string of words). Therefore, if an investor loses access to the passphrase, they lose access to the wallet and everything in it.
For this reason, using a wallet that is connected to an exchange can be advantageous. In this case, the exchange may be able to recover a wallet if the passphrase is lost.
For example, CoinJar users can contact customer support if their password is lost. As long as users are able to prove who they are, the team can then retrieve access to their accounts.
A strategy
Investing in cryptocurrency without any kind of strategy is like throwing spaghetti at the wall.
Before investing in crypto, investors should take time to research the market and develop a strategy that aligns with their long-term goals. One example of a strategy is dollar cost averaging, which involves investing little and often.
Another common practice is to stick to the two main players: Bitcoin and Ethereum. Both of these coins have a US ETF which means that investors can gain exposure to them through the US stock exchange. For this reason, these coins are more likely to stand the test of time.
Some cryptocurrency exchanges offer educational resources and expert insight, which can be useful for developing a well-informed strategy.
How to Start Investing in Cryptocurrency
Investing in cryptocurrency is not as alien as people may think. Taking the above into account, here’s how to start building a cryptocurrency investment portfolio in 2024.
- Conduct research: Spend time researching the market to understand which cryptocurrencies have potential. Most investors conduct a mixture of sentiment, technical and fundamental analysis to find investment opportunities.
- Sign up to an exchange: Find a crypto exchange that offers competitive fees, a low minimum deposit and is registered by the FCA. Then, follow the signup process to create an account. This will often involve submitting proof of ID, completing an assessment test and waiting for 24 hours.
- Explore the exchange: If possible, investors should use a demo account to explore the exchange without putting any real money on the line. If this option isn’t available, investors should spend time getting used to the platform by watching video tutorials and contacting the support team.
- Deposit funds: To reduce risk, investors should start with the minimum deposit before depositing any more funds. Most centralised exchanges accept payment methods such as debit cards and bank transfers. It might also be possible to deposit cryptocurrency from an external crypto wallet.
- Find a crypto: Investors can use the search feature to explore the different cryptos that are available through the exchange. The best way to find a crypto is to search for the ticker symbol.
- Place an order: To buy crypto, investors must select the coin that they want to purchase and then fill out the order form. It is important to double-check the details of the order before verifying the transaction.
- Move crypto to a wallet: If the exchange offers a native wallet, investors will be able to move their cryptocurrency from their account into their wallet with just a few clicks. If no native wallet is available, investors should send their coins to an external wallet with their wallet address (a long string of numbers and letters that is unique to each crypto wallet). If investors choose to use an app such as CoinJar, the crypto will appear automatically in their accounts.
How to Minimise The Risks of Investing in Crypto
It is no secret that investing in cryptocurrencies comes with inherent risk. Luckily, there are several steps that you can take to minimise the risks of buying crypto in 2024.
Stick to reputable platforms
When choosing a cryptocurrency exchange, stick to platforms that have acquired a positive reputation from the wider crypto community. You can find reviews on websites such as TrustPilot and even Reddit.
It is also wise to research the exchange’s protection and regulatory status. Cryptocurrency regulation is a bit of a grey area however, some exchanges have managed to acquire registration from financial authorities.
UK investors should check to see if a crypto exchange is registered with the FCA. You can find a list of registered exchanges on the official FCA website.
Don’t chase quick wins
Cryptocurrency projects are known for providing investors with monumental returns in very short time periods. However, chasing these kinds of returns isn’t always sustainable.
The price of a coin can go down just as quickly as it can go up. New investors should stick to fundamentally strong projects that have long-term potential.
Only invest money that you can afford to lose
The crypto market is volatile and unpredictable. Therefore, you should only invest with money that you can afford to lose. Start with the minimum deposit accepted by the exchange of your choice then gradually build your portfolio over time.
Also, remember the importance of diversification. Spreading investments across different coins can reduce the risk of being wiped out if one coin drops.
Getting started in crypto is more convenient than it might seem. To start, investors must open an account with a crypto exchange, conduct a bit of market research and develop an investing strategy that aligns with their goals and experience.
For more information about the wonderful world of investing, head to our MoneyMagpie Investing Section and search for our crypto guides.
Are you interested in learning more about investing? Why not sign up to the MoneyMagpie bi-weekly Investing Newsletter? It’s free and you can unsubscribe at any time if you find it isn’t for you.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
| Disclosure |
| Don’t invest unless you’re prepared to lose all the money you invest. This is a high‑risk investment and you should not expect to be protected if something goes wrong. Take 2 minutes to learn more: www.coinjar.com/uk/risk-summary. |
| Cryptoassets traded on CoinJar UK Limited are largely unregulated in the UK, and you are unable to access the Financial Service Compensation Scheme or the Financial Ombudsman Service. |
| We use third party banking, safekeeping and payment providers, and the failure of any of these providers could also lead to a loss of your assets. We recommend you obtain financial advice before making a decision to use your credit card to purchase cryptoassets or to invest in cryptoassets. Capital Gains Tax may be payable on profits. |
| CoinJar’s digital currency exchange services are operated in the UK by CoinJar UK Limited (company number 8905988), registered by the Financial Conduct Authority as a Cryptoasset Exchange Provider and Custodian Wallet Provider in the United Kingdom under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, as amended (Firm Reference No. 928767). |
| Standard Risk Statement |
| The above article is not to be read as investment, legal or tax advice and it takes no account of particular personal or market circumstances; all readers should seek independent investment advice before investing in cryptocurrencies. The article is provided for general information and educational purposes only, no responsibility or liability is accepted for any errors of fact or omission expressed therein. Past performance is not a reliable indicator of future results. |
| UK residents are required (in accordance with local legislation) to complete an appropriateness assessment to show they understand the risks associated with what crypto/investment they are about to buy and enabling CoinJar to categorize them as an investor. New customers are also required under local regulations to wait 24-hours as a “cooling off” period (from account creation), before their account is active (i.e. to deposit, trade, withdraw etc.). |
| Cryptocurrency is currently not regulated in the UK. It’s vital to understand that once your money is in the crypto ecosystem, there are no rules to protect it, unlike with regular investments. You should not expect to be protected if something goes wrong. So, if you make any crypto-related investments, you’re unlikely to have recourse to the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS) if something goes wrong. |
| Remember: |
| Don’t invest unless you’re prepared to lose all the money you invest. This is a high‑risk investment and you should not expect to be protected if something goes wrong. Take 2 minutes to learn more: www.coinjar.com/uk/risk-summary. |
| If you use a credit card to buy cryptocurrency, you would be putting borrowed money at a risk of loss. We recommend you obtain financial advice before making a decision to use your credit card to purchase cryptoassets or to invest in cryptoassets. |
| Note the standard risk warning from the CoinJar website. |
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