Do you feel like everyone’s talking about cryptocurrency all the time? It’s not just you. We’ve noticed it too!

If you want to join in on crypto and NFT conversations, we have good news for you: it’s not as complex as the boy’s club wants you to believe it is. 

This blog post covers everything you need to know to stop feeling like a fish out of water when this hot topic pops up. We’ll cover common FAQs around how to get started if you want to buy crypto or NFTs, like: 

• Which crypto coins are the best?
• What do the prices in crypto mean?
• What are NFTs? How do I know which NFTs are safe to buy?

And the big Q: how do you know if crypto or NFTs are the right investing move for you?

Ready? ;)

👀: 8min read

📸: Pinterest

Is cryptocurrency the future?

Cryptocurrency (or ‘crypto’) is, in essence, digital money. 

Like US dollars or Mexican pesos, but online. And not belonging to any country, political affiliation, etc. Like the internet. But global. In cash. 

Some people believe that crypto is the “digital future of finance”. 

Others, including leaders in the financial realm, are staunchly against it - and are very vocal about its dangers. Afterall, even the most “pro-crypto” investor can agree it’s famously volatile, and difficult to predict. (yikes!)

While business and world leaders have had plenty of negative things to say about crypto, trends in 2022 predict that it’s here to stay. 

In this year alone, Bitcoin has taken a 10% hit – but it’s also up 18% from this time last year. (Forbes) 

Predictions about the price (currently at $41,486.50, a low for 2022), estimate that it’ll reach between $50,000 and $75,000 in 2022. Some investors even predict that Bitcoin could even skyrocket to $100,000. Crazy, right?!

So, what does that mean for you? 

Should you invest in crypto? Should you buy NFTs? It’s a risky deal, but it’s almost like winning the lottery, so… What to do?! 

Well, to answer that… 

First, we need to cover your top frequently asked questions. 

PS. If you need more info about what crypto is and how it started, save this blog post for next. We have a great example using “PennyCoins” to shed some light on how it works in practice! ;)

Which crypto coins are best? 

It can be hard to know when you’re “supposed” to buy crypto, and it’s even more confusing to figure out which cryptocurrency you should buy. 

You’ve probably heard of the first crypto, Bitcoin – but there are over 4,500 different coins in circulation (and counting!). 

Unless you’re paying a lot of attention to the crypto market, this number is totally daunting! How do you know which one is the “right” one when there are so many?!

No need to panic! There’s a solution for that.

You don’t need to know them all. 

And you definitely don’t need to become a “crypto bro” to invest in crypto coins (i.e., someone who spends every waking moment researching up-and-coming trends lol). 

There are plenty of crypto ETFs, or exchange traded funds, that do this work for you – and are a much better option that you can put your money into. 

(Not to be confused with NFTs… we’ll get to those later!)

ETFs monitor the ups and downs of multiple coins, instead of one individual currency, and determine which ones are the most stable – aka, the safest bet for your money. 

Here’s why we recommend ETFs (vs. buying individual cryptocurrencies) if you want “in” on the crypto action:

• These funds do the tracking work for you, so you don’t need to become a “crypto bro” to do well (see “crypto bro” definition above)
• They look at multiple coins at once, which helps you avoid some of the crypto market’s unpredictability 

Beware, though. While crypto ETFs may mitigate some risk, they cannot eliminate ALL of the volatility of the crypto market. But it’s a great place to start!

What do the prices in crypto mean? 

Crypto is a type of digital currency (aka, money), so it’s also priced similar to how exchange rates work.

If you’re going to France to live your Emily in Paris dream-come-true, you’ll want to trade US Dollars for Euros before your trip. Crypto’s kind of like that.

For example, 1 Bitcoin = $35,000 USD

PS. The price flucuates majorly -- it was $35k when this post was written and $39k the day we published it.

The difference is: 
Crypto is priced by the full coin. But you don’t need to buy a full coin.

Good news, since most of us don’t have $35k to just drop on 1 coin!

When you buy crypto (or invest in crypto, same thing!), you can choose to buy a full coin or a portion. 

If you invest in Bitcoin, you can buy $50 worth of Bitcoin – even though a full coin is worth $35k – because you’re actually buying a small portion of 1 bitcoin. 

It’s like owning 20 cents of $1 US dollar. Except in online cash, in a currency called “bitcoin”.

📸: Coinbase

What are NFTs?

NFT stands for Non-Fungible Token. In true finance spirit, a complicated term to describe something simple. ;)

Remember how crypto is essentially digital money? 

NFTs are copies of items such as art, music, games, etc. But instead of getting the physical item in your home, you get a digital file instead. 

“Non-fungible” means that every token is unique; it cannot be replaced or copied. There’s only one like it in the world. This is also what distinguishes NFTs from crypto coins or traditional cryptocurrencies. 

It’s like comparing a t-shirt to a dollar bill. 

A crypto coin is like a dollar bill. It’s just money. It’s in your hands right now, and you can use it to buy and sell other stuff – including other types of money, like exchanging USD for Euros. 

But a token or NFT is like a t-shirt. 

You can find it in several different retail stores, in different styles and colors. Sometimes they’re mass-produced, sometimes they’re one-of-a-kind. And once you buy the t-shirt, it’s your t-shirt. Others can’t have it, unless you re-sell it. 

Similarly, each token is unique, whereas one Bitcoin is indistinguishable from another.

How do I know which NFTs are legit?

NFTs operate with the same foundational process as crypto, a method called blockchain. 

Blockchain is the reason why crypto and NFTs are 100% digitally secure – it allows users to encrypt and exchange data in a completely secure and decentralized way (i.e., no governments).

However, like anything on the internet, that doesn’t mean it’s always safe from scammers or hackers. 

Before you buy or invest in NFTs, this article covers 6 key questions you should answer to avoid any potentially dubious NFT transactions. 

If you’re curious on where you can search, learn about, and/or buy NFTs – OpenSea is a great place to start. They’re the 1st and largest NFT marketplace, and have become an all-stop-shop, including if you want to create your own NFT.

Should I buy crypto or NFTs? 

The answer is simpler than you think. 

Would you be upset if the money you invested went to $0? Poof, gone? 

If your answer is “I don’t care, I can do it!” → then go ahead, get in the game! 

Even if you’re just curious, you can buy a cryptocoin that costs you 25 cents. It’s likely everyone is OK with losing 25 cents, so there’s no need to overthink it. 

Start small, watch the coin, and go from there. 

If it goes up, great! If it plummets, at least you’re only down 25 cents. And you got to learn about crypto. Have fun in the process!

The same is true for NFTs. 

If there’s a token that interests you, start small. 

Some NFTs are $100 or less. If you are cool with losing $100 if nothing ever comes of the NFT, then whatever, go for it! 

Keep in mind, since each NFT is unique, determining the future value of each token is even more tricky than trying to predict the growth of any particular cryptocoin.

If you’re casually dipping your toes into the crypto-world, we wouldn’t recommend you dive straight into NFTs – especially if you:

1. don’t have a ton of extra spending money (aka not a millionaire) or 
2. have no time to research it (in case it’s a scam). 

But if you have the money and the time to invest, it could be a good choice for you. This last section will make it crystal-clear.

How do I know if it’s the right move for me?

Even with its risks, investing in crypto and NFTs can be rewarding. And even fun, once you get the hang of it! ;) 

So if you’re into this trend, great! We’d never stop you from investing in crypto, Bitcoin, or NFTs. Your money, and your decisions, are yours.

Our only REAL warning is this: 

Never put more than 1-5% of your net worth into crypto or NFTs (aka 1-5% of all your dough).

Why? 

You can’t bank on this money for your future. It’s truly a gamble. 

It’s true investing in crypto has the potential to double or triple, and make you A LOT of money. 

Risky assets do have a place in your investment line-up, crypto included. 

But you wouldn’t want too much of your total bank account tied up in something that could go down 20% in a second. 

Remember what we said earlier? Poof, gone.

That doesn’t mean you need to avoid NFTs and crypto coins forever. Before you invest any serious cash in it, make sure you’re cleared on these 3 things:

1. Emergency savings: do you have at least 6 months of must-pay expenses? (more if you plan to switch jobs this year)
2. 401k / IRA: are you contributing at least $325 per month (if you're in your 20s), and investing it in the stock market with available low-risk options?
3. Debt: are you paying a little bit more than your minimum payments? (if not, start now; otherwise you are growing your debt vs. clearing it)

These smart money moves will set you up for success (and safety) so that you can buy crypto, tokens, and other high-risk investments without losing sleep over the highs and lows. 

Afterall, we want you to make money…and have fun doing so! Not lose your sanity over crypto coins, or any “$10k digital gorilla art prints” that claim they are going to the moon. 

If you want to learn how you can invest the “risk-free” way, sign up for Penny. Our Investing 101 course is jargon-free, and 100% applicable to all walks of life, no matter how much money you have in your pocket.

If you’re unsure of what amount of cash you have to play around, start with Penny’s Mini Budget Calculator!

Ready to invest and make smart money moves with Penny? Start with our free money maker quiz.

Have additional crypto Q’s? Send us a DM at @startwithapenny

Disclosure: At Penny Finance, we do not recommend individual investments. We are strictly financial education. Our role is to empower you with the tools and knowledge to make informed decisions for yourself and your own financial future.

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• investing