Is Investing in Cryptocurrency a Good Idea for Beginners? A Complete 2025 Guide
Did you know that 83% of millennial millionaires now own cryptocurrency? Yet, despite this, 91% of beginners lose money in their first three months of trading.
I started getting asked about cryptocurrency more and more around 2017 when Bitcoin was the main topic in the industry. Like many, I didn't have a clue how it worked and I was skeptical of this relatively new concept to say the least.
I've just never been one to be at the forefront of something new and disruptive (don't ask me how long it took me to finally get a smart phone) and I prefer to see track records when making considerations.
Fast forward to now and I'm still not 100% clear on everything this new technology can do but I am a firm believer that it will be important to our daily lives going forward.
Cryptocurrency has taken the world by storm. With success stories of early adopters turning small investments into fortunes, it's no wonder beginners are eager to jump in.
But the question remains, is investing in cryptocurrency a good idea for newcomers?
The crypto market is known for its volatility, regulatory uncertainty, and the need for technical knowledge. In this guide, I’ll break down everything you need to know before you invest—covering risks, rewards, and beginner-friendly strategies.
Whether you’re looking to buy Bitcoin, explore altcoins, or just understand the basics, this guide has you covered.
Understanding Cryptocurrency Basics
Just like it comes to stocks, a lot of people are now familiar with cryptocurrency, but few actually understand what it is.
A cryptocurrency is a digital asset based on a network that is distributed across a large number of computer networks using blockchain technology. They're called cryptocurrencies because they are secured by cryptography - a method of storing and transmitting data securely (think encryption).
Blockchain technology works as a decentralized, public ledger that records and verifies cryptocurrency transactions.
Here's how block chain works in a nutshell:
- A transaction is requested
- A block representing the transaction is created
- The block is sent to every node in the network
- Nodes validate the transaction and receive a reward for proof of work
- The block is added to the existing blockchain and the transaction is complete
Each block consists of a list of transactions connected to the previous block in the chain and is protected by highly secure layers of encryption. This allows for a secure method to track ownership and movement of digital assets without a central authority.
This also enables users to transfer cryptocurrency directly between each other on a peer-to-peer network. Transactions can involve physical goods such as cash-based monetary value, car titles, land ownership, and much more.
Once the block is approved by enough nodes, consider it written in stone.
Common misconceptions about crypto
- Digital currencies are only used for illegal activity.
- Digital currencies don't have value
- Cryptocurrencies aren't secure
- Digital currencies are bad for the environment
- Crypto currencies are a scam
Cryptocurrency differs from traditional investments in a variety of ways including supply, regulation, and purpose. Some cryptocurrency are limited in supply, the most famous being Bitcoin, however others do not have a ceiling on how much can be mined.
Stocks on the other hand, tend to be less variable, as the amount of shares outstanding is controlled and ultimately backed by the operations of the issuing company.
The size of market is vastly different as well. In 2021 the global stock market was estimated to be $106 trillion while the total crypto market was only $2.6 trillion.
Stocks are generally scrutinized heavily by regulators and, for those that trade in an organized exchange, are subject to oversite of the companies and may be delisted should anything go wrong.
Cryptocurrency was built on the exact opposite philosophy and relies on peer-to-peer network, anonymity, and no intermediaries.
Lastly, the purpose of cryptocurrency were designed for transactional purposes. They can go up in value just like stocks but they are primarily intended to serve as a medium of exchange.
There are a variety of types of cryptocurrencies, breaking 13,000 total in 2024, and the number is still growing. Actually, the top 20 cryptocurrencies make up almost 90% of the total market. (Bitcoin, Ethereum, altcoins, stablecoins)
Many crypto currencies are no longer traded and will never be significant.
The Pros and Cons of Cryptocurrency Investment
There is no such thing as a perfect investment. What works for one person may not be a good fit for another. Here are a few things to consider when exploring cryptocurrency.
Pros:
The obvious attraction to cryptocurrency is the potential for high returns. Bitcoin has skyrocketed from $8,500 to over $95,000 a coin between 2020 to 2025.
Also, due to the blockchain infrastructure it's nearly impossible to counterfeit or double-spend. In addition to this, all you need access to is a computer or your crypto wallet so the currency remains portable, divisible, resistant to inflation.
Transferring funds between two parties is easy and secure with 24/7 market accessibility. Plus, once a transaction is complete it is now a permanent record within the blockchain. Transparency just got a whole lot easier and I like that a lot.
Cryptocurrency can also add diversification benefits to your existing portfolio. A good investment strategy is centered around managing risk through asset allocation. Adding assets that are not correlated to one another will help reduce wild swings in your portfolio.
Lastly, a growing mainstream adoption is helping to make the use of cryptocurrency a part of normal life. There are a lot of opportunities that are still developing and even changing our established infrastructure on a global scale.
Cons:
High market volatility is in my opinion one of the biggest concerns. A cryptocurrency's value can change constantly and dramatically. An investment that may be worth thousands of dollars today could be worth only hundreds tomorrow.
For beginners there can be a steep learning curve to overcome. I'm not talking about just buying a coin and praying that it goes up in value. The serious investor needs to know how to establish positions that don't negatively impact their risk profiles and need for liquidity.
The ongoing risk of cybersecurity threats (hacks, phishing scams) is something to be mindful of with all aspects of our daily life. Phishing is one of the most common types. These scams often involve fraudsters impersonating legitimate entities through fake websites or emails that appear genuine, making it easy for unsuspecting users to fall victim.
With all of the regulatory uncertainty it's difficult to predict with certainty which coins to invest in. Regulatory changes and government crackdowns can change suddenly.
Be mindful of investing in unknown or low-market cap coins. Many coins may become useless and other's may be considered the new primary currency that affect our daily life and business but right now it's hard to know.
How to Start Investing in Cryptocurrency Safely
Start by getting your infrastructure setup correctly. This means choosing a secure and beginner-friendly exchange for buying and selling cryptocurrencies. Coinbase, Binance, Kraken are known for providing a user-friendly interface and responsive customer support.
Setting up a secure digital wallet will be your next step. A crypto wallet's primary function is to keep your crypto safe and allow you to make trades. Wallets also offer more control over your digital currency than you'll get using a standard account at an exchange or broker.
Understand the main differences between different hot and cold wallets and the features they offer. Hot wallets are connected to the internet and cold wallets are physical devices. There are several providers and manufacturers to choose from that all vary in function, ease of use, and accessibility.
Focusing on diversifying your crypto portfolio to reduce risks will help you stay on track for your long-term goals. Smaller crypto projects have a much greater risk of failure but they can also be extremely profitable if they take off.
The bulk of your crypto portfolio should be in the top 25 to 50 cryptocurrencies. Many established investment principles still apply such as rebalancing on a regular basis. Make sure to set a schedule to rebalance quarterly or annually to keep your portfolio performing at it's best.
Alternative Ways to Invest in Crypto Without Buying Coins
Instead of investing directly in cryptocurrency you could invest in crypto stocks (companies involved in blockchain). Personally I am more interested in how blockchain itself will disrupt our economy in how businesses operate. There is a vast opportunity for how this technology will change our way of life going forward.
Do you like the idea of adding cryptocurrency to your portfolio but perhaps not comfortable investing directly in the coin due to the risk or high cost? Crypto ETFs and index funds can be a nice addition to still get exposure to numerous companies and currencies while investing in fractional shares.
You can even earn crypto through staking. Staking is the process of locking digital tokens into a blockchain network to earn rewards or even earn passive income from cryptocurrency.
Some people like to own gold while others would rather own the gold mine. Mining and cloud mining opportunities are still a route to consider to whether you're a small operation or part of a larger mining pool community.
Is Cryptocurrency a Good Investment for Beginners in 2025?
Cryptocurrency ownership is growing worldwide with 27% of US adults owning it as of January 2025. Current trends in crypto adoption and regulation are showing to be positive whether it's being used as a store of value or strategic investment or dollar hedge.
Here are my final thoughts on crypto as a beginner-friendly investment.
Beginners should start with small investments and focus on consistency. Leverage the same investment principles used with any other type of asset like dollar cost averaging to maximize your performance and spread your risk.
Treat it as an addition to a well diversified portfolio with a maximum of 5% of your capital invested in a single coin. If your focus is on the return of a single asset in your portfolio rather than the whole you've got readjust your priorities.
Hope is not a solid investment strategy.
While crypto can be a great investment opportunity, it’s not for everyone, and that's okay!
Investing in cryptocurrency can be exciting and rewarding, but like any other asset class it comes with risks.
In the end, it all boils down to your personal preferences, overall objectives, and risk tolerance. Beginners should take time to educate themselves, start small, and use secure platforms.
Are you ready to dive in, or do you need more research?
Drop your thoughts in the comments below!
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