Some consider cryptocurrencies to be one of the most lucrative investments, and they have only increased in popularity and value over the years. But if you’re only 16 years old, can you invest in these digital currencies?
You can invest in cryptocurrencies at 16, as there is no age requirement for any person who wishes to do so. However, some sites that support cryptocurrencies require users to be 18 years old and above to be able to register.
This article will explore the appropriate age for a person to invest in cryptocurrencies and whether or not you can invest in crypto at 16!
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At What Age Can You Invest in Crypto?
Anyone can invest in cryptocurrency, regardless of age or background. However, some sites that support crypto, such as PayPal, have a policy that only people aged 18 years old and above can register on their website and use their services for buying or trading Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies.
Coinbase used to allow people between the ages of 13 and 18 to open accounts with them, providing them secure parental consent. However, they changed their policy in 2017, making anyone below 18 ineligible to open an account, and existing accounts for those below 18 were removed.
These policies have been put in place by these platforms to comply with the relevant know-your-customer rules in a bid to prevent money laundering and fraud.
Therefore, if you want to invest in crypto and you’re below 18, you may have to seek the help of an adult to set up an account for you and guide you through the whole process of trading and acquiring crypto.
Alternatively, you can sign up for a crypto exchange like Kucoin that requires partial know-your-customer (KYC) verification.
How To Invest in Crypto if You’re Under 16
Since you don’t have to be 18 years old to invest in crypto, you will not need a Social Security Number to open a cryptocurrency account. Here are the steps that you can take to invest in crypto:
1. Choose the Right Crypto Exchange for You
Nowadays, there are numerous websites that facilitate crypto trading, including:
- Kucoin (Partial know your customer – KYC verification) ***
According to an online article published by the Wall Street Journal, here are the things you should consider when choosing a crypto exchange:
- You may want to check the number of crypto coins you can trade and ensure the exchange offers the type of crypto you want.
- Look for a crypto exchange with a higher trading volume and the ability to convert your cash into crypto and sell your crypto quickly.
- You should consider the fees being charged to facilitate crypto trading.
- The crypto exchange should have enough security measures to fend off cyberattacks and hacking.
- Search for a crypto exchange with robust security measures and financial reporting policies.
- A crypto exchange should have an insurance policy to prevent unexpected losses.
- Choose a crypto exchange that can give you relevant IRS forms to accurately report your earnings and losses from trading your crypto.
Once you have selected the crypto exchange, you can get started by creating an account with them.
2. Fund Your Crypto Account
Since you’re below 18, you can ask your parents to give or lend you money to invest in crypto. This is probably the most complicated option to fund your account because your parents might hesitate to provide you with cash for something too risky to invest in.
You can also buy gift cards that you can use to fund your crypto account. Many exchanges accept these when buying your crypto.
You can also consider mining your crypto to fund your account if you’re tech-savvy. Here’s a helpful YouTube video you can watch to learn more about mining crypto:
3. Buy Crypto Using Your Crypto Account
Before buying crypto for your account, you must extensively research the crypto you plan to buy. We will discuss the risks associated with investing in crypto in the latter part of this article.
You can follow your crypto exchange’s instructions to acquire your crypto. There is no specific minimum amount for anyone to buy crypto. Coinbase account holders can purchase crypto for as low as $2.00.
In a recently published article, we discussed the exact step-by-step process of buying the XRP coin in the USA. You can follow the same process for acquiring any cryptocurrency you like!
4. Get a Wallet Where You Can Store Your Crypto
Cryptocurrencies are stored on devices called wallets. These devices hold the keys or passwords to your crypto, keeping them safe and accessible. Wallets can either be digital or physical. Most crypto exchanges provide digital wallets for you to access your account safely.
If you’re looking for a physical wallet, you can try Ledger Nano S Plus. It has a large memory that can manage over 5,500 digital assets. You can also use this device to trade your crypto through their Ledger Live app, and its chip will keep your transactions safe.
It’s not recommended to purchase cold wallets from places like Amazon or eBay because you might not get an authentic wallet. As a result, your assets could be stolen once you send them to your fake wallet.
Risks of Investing in Cryptocurrencies
While investing in crypto can potentially bring a high return on your investment, there are risks that you’ll have to take. These include:
- Volatility: The prices of cryptocurrencies like Bitcoin, Ethereum, and Dogecoin can be significantly affected by market sentiment and any political or social event that can suddenly bring their prices up or down. You may even lose all your money in one snap if the value of your crypto goes down tremendously or a glitch occurs in the system.
- Transaction fees: Like any other investment, there are costs associated with making transactions to buy crypto. And these fees can be exorbitant, depending on the crypto you’re trying to buy.
- Prone to fraud or hacking: If you lack experience buying or selling crypto, you may be exposed to fraud and scams that can potentially result in substantial financial losses. Crypto is also a target of hackers trying to steal someone’s money.
- Blockchain forks can impact cryptos: Several cryptos are based on blockchains. Whenever someone changes the rules that define those blockchains, a new blockchain is created and heads in a different direction. That’s where a fork occurs, affecting your crypto’s value.
- Lack of regulation: Currently, there is no government or financial law regarding investing in crypto and protecting those who buy crypto from any losses. However, moves are now being made to regulate cryptocurrencies like any other financial tool or investment to safeguard the interests of those investing in them.
- Changing tax rules: With a lack of government or financial regulation, cryptocurrencies may not be taxed in the country where you reside, especially if you’re just holding it. Other countries have placed exorbitant taxes on cryptos. In the United States, though, the Internal Revenue Service considers cryptocurrency as property and is subject to capital gains tax when people report their profits in their annual reports.
Legally speaking, there is no age requirement to invest in crypto, and a 16-year-old can technically invest in it. However, some platforms and crypto exchanges have a minimum age requirement to create an account with them in compliance with their home country’s know-your-customer rules.
As previously suggested in this article, you can sign up for crypto exchanges like Kucoin that require partial know-your-customer (KYC) verification.
Investing in crypto is straightforward, but there are significant risks involved. So, you must conduct your research first before doing so.
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