Investing in Crypto? 5 Things Everyone Should Know Today

Cryptocurrency is risky. Our guide can help you navigate the wildly volatile world of digital currency.

There's a red-hot tool quickly gaining traction for those looking for a new way to make money. It's cryptocurrency, and players ready to invest in digital coinage should keep in mind its risky, wildly volatile and controversial nature. 

To some, bitcoin, stablecoin and NFTs represent a step forward for investors -- a kind of "Money 2.0" that'll democratize finance and power the metaverse. To others, cryptocurrency is simply a new, digital form of an old con primed to swindle and scam. Still others consider the whole endeavor an empty bubble, destined to burst. 

In simple terms, cryptocurrency is a digital token whose ownership is recorded on a blockchain, a distributed software ledger that no one controls -- this is designed to make it more secure, in theory.

 Bitcoin and ethereum are the two most widely known flavors of crypto, but more than 18,000 tokens are traded under different names (dogecoin is one famous example). 

Despite the seesawing prices and lack of regulation, cryptocurrency is moving mainstream as the next financial frontier.

 Developments like President Joe Biden's desire to explore a digital US dollar to multimillion-dollar Super Bowl ads underscore a growing desire from powerful government and corporate institutions to quickly legitimize crypto in much the same way as stocks and bonds.

But does that make cryptocurrency a smart investment for you?

"Cryptocurrency is one of those categories of investing that doesn't have those traditional investor protections," said Gerri Walsh, senior vice president of Investor Education at the Financial Industry Regulatory Authority. "They're outside the realm of securities trading. It's an area that's in flux, as far as regulations go."

Professionals caution that investors shouldn't put more than they can lose into crypto, which offers few safeguards, plenty of pitfalls and a spotty track record . If you're thinking about adding crypto to your portfolio, here are five key considerations before you begin.

How do I start investing in cryptocurrency? The simplest way to get your feet wet with crypto investments is to use US dollars to buy a cryptocurrency using a popular exchange like Coinbase, Binance or FTX.

 A handful of well-known payment apps -- including Venmo, PayPal and Cash App -- will let you buy and sell cryptocurrency, though they generally have limited functionality and higher fees. 

Whether you're using Coinbase, Binance, Venmo or PayPal, you'll be required to provide some sensitive personal and financial information -- including an official form of identification. (So much for bitcoin's reputation for anonymous transactions.) 

Once your account is set up, it's dead simple to transfer money into it from your bank. And the barrier to entry is quite low: The minimum trade amount is $2 on Coinbase and $15 on Binance.

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