How to Choose Cryptocurrency for Investment: A Step-by-Step Guide for Beginners

Check any coin against 4 criteria: market cap, clear purpose, exchange availability, and project reputation.

If you have 15 minutes right now:

• Open CoinMarketCap.com 

• Filter the top 50 by market cap

• Choose 2-3 familiar coins

• Check each one against the criteria below

• If you want to understand more thoroughly — keep reading

Overview

Cryptocurrency is a token of a specific project, like a company's stock. When you choose a coin, you evaluate: what the project is for, who uses it, and how reliable it is.

Think of it like choosing a phone app — you check reviews, user numbers, and who the developer is. For your first purchase, checking 3-4 criteria is enough. You don't need to become an expert.

Key takeaway: you're buying a stake in a project, not just numbers on a screen.

Criteria

A 4-parameter selection system will help you choose a suitable coin in 20 minutes.

Criterion 1: Market cap and ranking position — an indicator of project reliability.

Criterion 2: Clear purpose — what the coin was created for and whether you can explain it to a friend.

Criterion 3: Exchange availability — how easy it is to buy.

Criterion 4: History and reputation — how long it has existed and whether there have been scandals.

These 4 criteria provide a balance of simplicity and safety for your first choice.

Key takeaway: check all 4 criteria in sequence — skipping one increases the risk of losses.

Market Cap

Step 1: Find the coin

Open CoinMarketCap.com → enter the coin name in search → go to the coin's page.

Step 2: Check the ranking

Look at "Market Cap Rank" in the top left corner — this shows the coin's position among all cryptocurrencies.

Step 3: Assess the size

Find "Market Cap" — the total value of all coins in the project. For beginners, a safe threshold is over €1 billion (average daily volatility of such assets is 40% lower than coins with market cap <€500 million, according to Messari Research, March 2024).

Step 4: Compare with leaders

Bitcoin holds €1.86 trillion in market cap (rank #1), Ethereum — €310 billion (rank #2).

Safety rule: top 30 = low risk, top 100 = moderate risk, below rank 100 = high risk of losing money.

Key takeaway: the higher the ranking, the lower the chance of a sudden project collapse.

Purpose

A good coin solves a clear problem that you can explain in 10 seconds.

Where to find information: the "About" section on CoinMarketCap or the project's official website.

Examples of clear coins:

• Bitcoin (BTC) — digital gold for storing value

• Ethereum (ETH) — platform for applications and smart contracts (processes ≈70% of all smart contracts, Alchemy report, Q1 2024)

• XRP — fast transfers between banks

Red flags: description is full of confusing words ("revolutionary AI-powered ecosystem"), no specifics about real-world use.

Test: can you explain the purpose to a friend in one sentence? If not — don't buy it.

Key takeaway: unclear project = high risk for beginners.

Availability

The coin should be available on familiar exchanges where you can buy it with euros.

Where to check: Go to the "Markets" section on CoinMarketCap → look at the exchange list in the table.

Look for these exchanges:

• Coinbase — beginner-friendly, MiCA regulated

• Kraken — low fees, operates throughout Europe

• Binance — wide selection of coins

If you prefer cash — check out our offline exchange directory.

Good sign: The coin trades on 3+ major exchanges with EUR or USDT pairs.

Red flag: Only available on obscure platforms or exclusively on decentralized exchanges.

Key takeaway: Not on Coinbase/Kraken — signals higher risk.

Reputation

Projects older than 3 years have survived multiple market cycles and proven their viability.

Where to check age: CoinMarketCap → coin page → "About" section → "Launch date" line.

Age of top projects:

• Bitcoin launched in 2009 (16 years)

• Ethereum started in 2015 (10 years)

• XRP has existed since 2012 (13 years)

Scandal check: Google "[coin name] scam" or "[name] hack" — read the first 5 news results.

Red flags: exchange hacks, lawsuits against creators, regulatory fraud accusations.

Key takeaway: new projects (<1 year) carry high risk, even with attractive ideas.

Selection

Universal rule: for your first time, choose from the top 10; for your second purchase, you can consider the top 30.

Key takeaway: start with Bitcoin or Ethereum — they're time-tested and regulated in the EU.

Step-by-Step Plan by Amount

• <€500 — buy on Coinbase, store on exchange (minimal movements)

• €500–5,000 — buy + withdraw to hot wallet (MetaMask). Read our secure storage guide.

• €5,000 — hardware wallet (Ledger or Trezor) + portfolio diversification BTC/ETH 70/30.

Common Mistakes

Key takeaway: most beginners lose money due to rushing and ignoring basic checks.

Next Steps

After choosing a coin, proceed with the purchase using this simple plan:

Step 1: Write down the coin name and ticker (for example, Bitcoin = BTC).

Step 2: Register on Coinbase (for simplicity) or Kraken (for lower fees).

Step 3: Complete identity verification — you'll need a passport, takes 10-60 minutes.

Step 4: Fund your account: SEPA transfer (1-2 days, 0-0.15 € fee, European Payments Council data) or card (instant, 2-3% fee). ⚠️ Cards are convenient, but your bank might decline the payment or request confirmation; check limits and potential chargebacks.

Step 5: Buy your chosen coin for €50-200 — only what you can afford to lose.

Next step: learn about secure cryptocurrency storage — exchange wallets are convenient, but your own wallet is safer. Start with our secure storage guide.

Choose one coin from the top 30 using simple criteria — this beats spending months studying theory without practice.

*Disclaimer: This article is for informational purposes only and is not a financial recommendation. Cryptocurrency investments carry high risks. Always conduct your own research and consult with financial advisors before making investment decisions.