Cryptocurrency: The basics of buying crypto

Revolut Australia

 · 07/08/2021  · 07/08/2021

This is our fifth instalment of crypto basics. In this series, you'll learn about what crypto is, altcoins, withdrawals, wallets and deposits.

We’ve gone through the theory, and now it’s time for the practical.

But first, a reminder

While we believe that crypto should be accessible to all, we also know that crypto trading isn’t for everyone. The prices of crypto can be very volatile, which means there are always going to be risks involved when buying or selling crypto. Past performance isn't an indicator of future performance, and cryptocurrencies are unregulated. Your capital is at risk, so please consider your personal circumstances and do plenty of research before getting involved.

Now, let's walk through the basics of buying crypto together.

Be aware of unit bias

With new tokens emerging every day, you may think you’re in early on the next Bitcoin or Ethereum when you buy an entire altcoin for as little as a few cents. But don’t get caught in 'unit bias' — the idea that it’s better to have an entire token of one currency instead of a fraction of another. For any token that you’re looking to buy, it’s important to do your research, understand what you’re investing in, and where its potential may lie. It's also important to consider your personal risk appetite.

Price is not necessarily an indicator of value, which is why it’s important to consider these other factors as well:

Market cap

Market cap, or market capitalisation, is calculated by multiplying the total number of mined coins by the price of a single coin in a given moment. This changes as the token prices fluctuate, sometimes considerably within a short period of time. It can give an indication as to how popular the cryptocurrency may be compared against others, and also whether any price target you may have picked for this coin is realistic.

Fixed versus unlimited supply

The concept of fixed versus unlimited supply of available crypto is a hot topic for debate in the crypto community. Some coins have a fixed supply, like Bitcoin with its 21 million coin cap. On the other hand, Ethereum doesn’t have a fixed supply, although the rate of issuance has been reducing over time.

Some people believe that the scarcity of fixed supply creates an “inflation proof” currency which they believe is a valuable characteristic, similar to gold. Others believe being able to issue more coins is important if a particular coin is to become a viable alternative to fiat currencies, if that is its goal.

Now, these are the two extremes of the argument, but there are pros and cons to both types of supply, and different coins and their associated characteristics make for different use cases.

Buy crypto with Revolut — starting from just $1

With Revolut, you can buy as much or as little of your chosen crypto as you like starting from just $1. We’re not the only platform to offer this, but every exchange has a different minimum amount they require you to purchase, so always check  that you’re getting the best bang for your buck.

Within our app, you can find a feature called ‘Recurring Buy’, which helps to automate dollar cost averaging. If you’re unfamiliar with this term, it’s the process of buying a fixed amount of your chosen asset (crypto, in this case) in regular intervals.

It’s important to remember that cryptocurrencies are highly volatile and the value of your investment may increase or decrease over time. If our crypto series has piqued your interest, take these basics and dive deep into more crypto learning. The internet is your oyster!

This article doesn't aim to provide financial advice. Please do your own research before committing to a purchase or sale. Nomics will give you updated data on all of our tokens. If you're unsure, please consult an independent financial advisor.