The Ultimate Guide to Crypto Investing for Under 18s | doshi
If you're a young investor and want a crash course on cryptocurrencies, this is your guide. We'll cover everything from what they are to how to invest in them safely. Let's get started!
Cryptocurrencies are all the rage right now, and if you're like most teenagers, you're probably wondering how you can get in on the action. In this guide, we'll teach you everything you need to know about crypto investing to make educated decisions about your investment strategy. We'll cover everything from cryptocurrencies to how to buy them and store them safely. So let’s get started!
What is a cryptocurrency?
Cryptocurrencies are digital tokens which run on a decentralized system (called the blockchain) and use cryptography to secure their transactions. Cryptocurrencies are bought and sold on exchanges and can also be used to purchase goods and services.
Cryptos Vs Fiat
Cryptocurrencies are often compared to traditional fiat currencies, such as dollars or euros, but there are several key differences. Some cryptocurrencies, like Bitcoin, Litecoin, or Ripple, act like digital money and seek to replace traditional fiat currencies to pay for goods and services in the real economy. Other cryptocurrencies, like Ethereum and Solana, act more like a support system for a new internet, providing tools in finance and gaming. Cryptocurrencies come in all shapes in forms, which makes them so exciting.
No one person controls everything
One common crypto property is decentralization. Decentralization makes cryptocurrencies much less subject to government or financial institution control, which can appeal to those looking for an alternative to traditional systems.
In addition, decentralization provides greater security against hacks and other potential threats, as there is no central point of attack. For these reasons, decentralization is one of the most appealing aspects of cryptocurrencies for many investors.
Cryptocurrencies and Teens
If you are reading this article, you are one of the early adopters of this exciting technology. And you are not alone; 9% of teens in the US indicate that they already own crypto. Therefore, it is important to understand the benefits and drawbacks of investing in cryptocurrency as a teenager before making any decisions.
The benefits of investing in cryptos for teens
We talked earlier about how governments and banks cannot control cryptos - so why do we care?
Imagine your country has done a poor job managing its finances. It starts printing lots of money to pay off its debt to other countries. The value of the currency decreases, and consumers lose trust and start to withdraw their money from banks - which further reduces the value of money.
Banks can sometimes freeze accounts or prevent transactions, but this is impossible with cryptocurrencies.
This is because cryptocurrencies are owned by multiple computers (called nodes) worldwide, and no single entity can control them. Anyone who wants to freeze the cryptos will have to do so on every node, which is practically impossible.
Another benefit of cryptocurrencies is that the blockchain records that your cryptos are of your ownership, and anyone can see it. Unless you give away your private keys, nobody can take away your cryptos. They are yours to do with as you please.
In addition, cryptocurrency transactions are irreversible, which means that there is no way for a hacker to reverse a transaction and steal your money.
Interesting use cases
Cryptocurrencies have a wide range of potential use cases, which can appeal to teenagers looking for an investment with growth potential. Ethereum, for example, is a cryptocurrency that is often used to create decentralized applications (DApps). These are applications that run on a blockchain, and they have the potential to change the way we interact with the internet.
Some other exciting use cases for cryptocurrencies include:
- Decentralized storage
- Identity management
- Supply chain management
This makes cryptocurrencies much more than just a speculative investment and gives them the potential to revolutionize many industries.
The drawbacks of investing in cryptos for teens
While there are several benefits of investing in cryptocurrencies for teenagers, there are also some drawbacks that should be considered.
High risk and volatility
One of the biggest drawbacks of investing in cryptocurrency is the high risk associated with these investments. The prices of cryptocurrencies are constantly changing, and they can often experience extreme price swings, called volatility. This means that there is a chance that you could lose all of your investment if the price of the cryptocurrency you invest in crashes.
This is why it is important only to invest an amount of money you are comfortable losing - which also applies to any other investment.
In addition, the cryptocurrency market is still relatively new and immature, which means that it is subject to much speculation. This can make it difficult to find accurate information about specific projects, and it also means that there is a greater chance of scams.
Many cryptocurrency projects can be compared to tech start-ups, where they start with an idea of how they can generate something exciting for consumers. The real value of these investments often depends on whether the founding project team can deliver the value it promises. And just like start-ups, some crypto projects fail to deliver something useful long-term.
Another drawback of cryptocurrencies is the amount of energy that they consume. Bitcoin, for example, is estimated to use around as much electricity as the country of Denmark.
This is because mining bitcoins ( verifying transactions and adding them to the blockchain) requires a lot of computing power. This is what is called "proof-of-work" mining, and it is the most common type of mining in the cryptocurrency space. The high energy usage of some cryptocurrencies is often criticised; to improve this, 57% of crypto mining is already based on renewable energy.
In addition, many cryptocurrencies are switching to a different type of mining called "proof-of-stake". This doesn't require as much energy and is seen as a more sustainable way to mine cryptocurrencies.
If this is important to you, you should research the different mining methods used by different cryptocurrencies before investing.
How to buy your first cryptocurrency (as a teen!)
Now that we've covered some of the basics of cryptocurrencies, let's explore how you can purchase them. Unfortunately, buying crypto can not be as straightforward as buying other investments, like stocks or bonds, and it's even more complicated as a teen.
Know-Your-Customer (KYC) Requirements
Many crypto exchanges have strict know-your-customer (KYC) requirements, typically providing a government-issued ID. This can be a major obstacle for teenagers who are not yet old enough to have a driver's license or passport. However, there are still some ways to work around this issue.
Option 1: Parents’ Credit Card
One option is to use your parents' credit card or KYC data to buy crypto on an exchange. This can be tricky, as you must get your parents' permission and find an exchange willing to accept their information. However, by doing this, you are not legally owning cryptos by yourself but instead investing on your parents’ behalf.
Option 2: No KYC exchanges
Another option is to find a crypto exchange that doesn't have stringent KYC requirements. These exchanges are often called "decentralized" or "peer-to-peer" exchanges, and they usually allow you to trade crypto without going through a lengthy verification process. To do so, you will need to set up a wallet to receive crypto to get started. However, it's essential to be aware that these exchanges can be less reliable and secure than more traditional exchanges, so it's important to research before using one.
Option 3: Ask Your Parents to Buy
The next option is to ask your parents to buy crypto on your behalf on an exchange and hold it for you. This can work well if your parents are comfortable handling crypto and willing to take on the responsibility of holding it for you.
Option 4: Crypto Wallet for Teens
Finally, you can also set up your crypto wallet and receive crypto from your parents or legal guardians. This option allows you to control your crypto, but it's important to remember that you are also responsible for keeping it safe. Crypto wallets typically require you to set up a strong password and take other security measures to protect your coins.
No matter which option you choose, buying crypto can be a complex process. All of the options above are not perfect, so it's essential to do your research and decide which one is right for you.
What are crypto wallets?
Now that you know how to buy crypto, you need to know how to store it. But where you may ask? The answer is: in a crypto wallet.
Why do you need one? Wallets are great because, unlike exchanges, you can simply sign up for one as you do not need to be 18 to own crypto!
Crypto wallets are software programs that store your public and private keys and interact with the blockchain to allow you to send and receive digital currency. You can do many things with your crypto wallet, including sending and receiving cryptocurrency, checking your balance, and even buying goods and services with crypto.
Crypto wallets are also the gateway to web 3.0, as they connect you to different web 3.0 platforms and dApps, such as NFT marketplaces, decentralized exchanges, and much more.
How do crypto wallets work?
A crypto wallet does not hold any actual currency but rather your private and public keys. These keys are what you use to access your coins on the blockchain.
Your public key is like your bank account number, and it's what you give to people when you want to receive crypto from them. Your private key is like your PIN number, and it's what you use to send crypto to other people.
Crypto wallets also usually have a built-in exchange that allows you to convert your crypto into other digital currencies or even traditional fiat currencies like dollars or euros.
Let's say you want to send your friend Bob 0.05 BTC. To do this is very simple. You just log into your crypto wallet, enter Bob's public key, and select how much you want to send. Your wallet will then automatically send the crypto to Bob's wallet.
This transaction would also be recorded on the blockchain, a public ledger of all crypto transactions and would be viewable by anyone.
What are the different types of crypto wallets?
There are two main types of crypto wallets: hot and cold.
Hot wallets are connected to the internet and can be accessed from any computer or mobile device. These wallets are convenient because they allow you to send and receive crypto quickly. However, because they are connected to the internet, hot wallets are also more vulnerable to hacks.
Cold wallets are not connected to the internet and can only be accessed from a physical device like a USB drive or a piece of paper. Cold wallets are much more secure than hot wallets because they are less vulnerable to hacks. However, they are less convenient because you cannot access them from anywhere, and you must connect them to your computer to use them physically.
How doshi can help!
A good wallet is essential when it comes to buying, selling, and holding crypto. But for first-time crypto buyers - especially those under 18 - wallets can be confusing. That's where Doshi comes in!
doshi is a crypto/NFT hot wallet for teens that make it easy to buy, sell, and hold crypto. With doshi, teens can simply sign up without their parents and access a Learning Academy and a faucet feature that allows teens to learn about the technology behind all this and earn NFTs. Your parents can sponsor the account if you want to start investing in cryptos. They can set up an angel wallet and create multiple sub-wallets for you and your siblings. This way, parents can monitor your activity and support you in your crypto journey.
What's more, doshi offers a safe and secure way for teens to store their crypto. With doshi, you can be sure that your coins are always safe and sound. In addition, doshi makes it easy to track your portfolio and see how your investments are doing. So whether you're just getting started with crypto or a seasoned pro, doshi is the perfect place to manage your coins.
On top of that, doshi's Learning Academy offers a range of videos and quizzes to help you learn about crypto with a Learn to Earn system that allows you to earn NFTs for completing levels!
If you are under 18 and looking for a way to get started with crypto, doshi is the perfect solution. With its user-friendly interface and range of features, doshi makes it easy for anyone to buy, sell, and hold crypto and NFTs. Sign up for doshi's waitlist here to become one of the first to experience the future of crypto!
Tips for young investors
If you are super motivated to become a young crypto investor, here are our tips for you:
- Start small - Crypto is a volatile market, and it's important to start small, so you don't risk losing all your money.
- Make sure you're informed - Crypto is a complex asset, and it's critical to fully comprehend all risks before making investment decisions.
- Create a diversified portfolio - Crypto is just one piece of your overall investment portfolio. Be sure to diversify your investments, so you're not putting all your eggs in one basket.
Have fun! - Crypto investing can be exciting and rewarding. Be sure to enjoy the ride!
For more, check out our blog on "Investing 101 for Teens: How To Get Started?"
The bottom line
So you want to buy your first cryptocurrency? Congratulations! This is an exciting and important step in becoming a part of the web 3.0 revolution.
But with so many different types of cryptocurrencies and investment options, it can be difficult to know where to start. That’s why we’ve put together this comprehensive guide on how to buy your first cryptocurrency. We also answer some common questions about crypto investments and storage and give tips for young investors.
If you have questions, join our Discord to meet other young crypto investors like yourself!
Also, don't forget to sign up to doshi's waitlist to be the first to know when we launch our app. There will be exciting bonuses for early sign-ups and the Learn to Earn program!
Coming soon to an app store near you!
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