Buying Crypto

What You Should Do After Buying Crypto: A Beginner’s Guide

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If you’re still new to crypto, you have much to learn before buying or investing in cryptocurrency. When you decide to take the plunge and buy digital currency, new challenges arise as you’re faced with the decision to hold onto your cryptocurrency or to spend it. 

Many newcomers to the crypto scene struggle to make a choice between the two. It seems wasteful to spend it all since you’ll be spending the money you used to buy that crypto without making any more but it’s also quite risky to keep it because if anything goes wrong and the crypto’s value changes, there’ll be no chance for redemption there.

This beginner’s guide explores both spending and holding crypto as well as their pros and cons.

Spending Your Cryptocurrency

Spending your cryptocurrency can be beneficial, not just to you but to others who are making investments in that crypto. Spending a cryptocurrency increases its chances of real-world adoption because when a cryptocurrency is being used, it solves existing problems and fills a gap that pre-existing currency – crypto or otherwise – had left unfilled. Over time, your crypto of choice will increase in demand and value, allowing you to buy more and try more risky strategies.

In recent years, more and more merchants have readily accepted cryptocurrency as a legitimate currency, allowing you many more spending opportunities than you would have had a few years ago. There are a lot more options and you can choose what works best for you.

Among them are:

Online Entertainment 

Online gaming has brought with it a vast new world of spending. You can play any variety of games online and make in-game purchases using cryptocurrency. Among these are crypto casinos which offer an opportunity to spend your crypto enjoyably. They also offer anonymity while playing for those who would rather not be visible online for security or privacy reasons. In fact, Crypto Casino LTD says you don’t even need to worry about ID verification or KYC requirements when registering – you can enjoy complete anonymity even from the game developers. 

Besides crypto gambling, digital currencies can also be used to play blockchain games online and some streaming platforms are even starting to accept crypto as a payment method. This means that crypto holders who wish to spend their digital assets can purchase online entertainment experiences, like gaming, gambling, and movies, in exchange for their crypto. 

E-Commerce and Retail 

Some merchants are making room for crypto gift cards allowing you access to your favourite services even if they don’t directly accept crypto payment. You can use your gift cards online as a voucher or in-store with ease. 

Others are welcoming the use of crypto debit cards. They work much the same as traditional debit cards except that they are centered on cryptocurrency. You load the card with your cryptocurrency which converts your crypto to fiat currency when you’re making a purchase. Instead of having to find a crypto merchant and pay service fees, this is a more direct approach and it decreases the overall cost.

Spending your cryptocurrency lets you make the most of it while it is of high value. In fact, some crypto holders will wait for their digital currency assets to increase in value as the market fluctuates, and then spend when their holdings have skyrocketed in value to get more for their money. 

Holding Your Crypto (HODL)

Many people who invest in cryptocurrency do it so that they “hold on to it for dear life”. The idea behind this is that the value of the currency will increase over time and it will be worth more than it was when they acquired it. This is a smart idea of course but it can be risky even if you’re a veteran. What you need to do to ensure a high return on investment in a cryptocurrency is to conduct thorough research before making a purchase. A well-researched strategy has a higher chance of success than a hastily made decision. Take your time to understand the market and determine the best way for you to maximize. 

Find out which cryptocurrency has the strongest supporting project and the strongest potential for adoption. Of course, the stronger your crypto is though, the more expensive it’s bound to be so you’ll need to pick a strong candidate that doesn’t break the bank. Investing in crypto in this way isn’t a short-term process. You need to be prepared to keep that cryptocurrency even for years to come. Over the years, you’ll have to keep your eye on the ball, paying attention to crypto market news while always staying ready to sell.

Here are a couple of strategies you can implement:

Dollar-Cost Averaging

The wise thing to do is to invest a fixed amount of money into the cryptocurrency of your choice – the one you hope to HODL. You can make this fixed investment weekly, monthly, or annually depending on your well-informed research. This will help to bring the purchase price down over time – making your investment worthwhile –  and it will reduce your chances of being affected by market volatility.

Cold-Storage

If you’re holding your crypto for some time, you might want to consider investing in more enhanced security like a cold wallet. A cold-wallet means you’re keeping your crypto offline, safe from the internet, the opposite being a hot-wallet which is very much connected to the web where hackers can get to it.

Keep In Mind

While holding, remember that the crypto market is volatile and value can increase or decrease at any point. Since cryptocurrencies are only just gaining popularity comparatively, regulations governing the cryptocurrency market are still a work in progress with many aspects remaining unclear. Some cryptocurrencies find themselves failing to meet regulations that didn’t exist when they were first established and the situation is very dynamic, shifting constantly. These are risky conditions and if you intend to see a return on investment in less than 2 to 5 years, you might be better off making purchases or selling your coins promptly.

How About Both

You don’t always have to make hard choices. When working with cryptocurrency, you can have your cake and eat it too by combining the two – spend and HODL. You can take some elements of the spending strategy and some of the HODL elements. Investors who have chosen to do this have been able to make good long-term growth while enjoying the benefits of using crypto for their day-to-day purchases. The core principle to take from the HODL model is dollar-cost averaging. This time, your DCA is divided into two portions, the HODL and the spending. You can invest a bit into both and, with well-planned goals and adequate risk assessment, you can realize big returns here. The hybrid model is more flexible than just going for either one. You have one foot in one basket and the other in a very different basket with equal potential.

Using the dollar-cost averaging method reduces the risks that come with buying crypto quite significantly. Having some money invested in a cold wallet isn’t only comforting, it’s a smart move but you might not want to lose it all if things go wrong, and employing the spending method for the other half of your crypto means you don’t lose out entirely.

The spend and HODL hybrid can be a powerful strategy for investors who want to participate in the crypto market while still having some control over their crypto’s utility. Remember to carefully research cryptocurrencies before investing and tailor your allocation strategy to your individual financial goals and risk tolerance.

Conclusion

The world of cryptocurrency offers a unique proposition: the potential for high returns alongside the ability to use your digital assets for real-world purchases. Whether you choose to spend, HODL, or utilize a spend and HODL hybrid approach, careful planning and a deep understanding of the market are very important. 

By considering your financial goals, risk tolerance, and the dynamic nature of the crypto world, you can make informed decisions and enjoy your new venture in cryptocurrency. Remember, cryptocurrencies are a relatively new asset class, so stay informed and always research so that you invest responsibly. As the technology matures and adoption grows, both spending and holding crypto have the potential to play a significant role in your financial future.

Also Read: A Guide for Buying Your First Cryptocurrency

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