Crypto for Teenagers

• Bitcoin (BTC-USD): As mentioned above, Bitcoin was first launched in 2009 and has grown to become the most valuable cryptocurrency in the world.

• Ether (ETH-USD): After Bitcoin, Ether, or the cryptocurrency offered through the Ethereum blockchain, is the second most valuable cryptocurrency, which launched in 2015.

• Solana (SOL-USD): Launched in 2020, Solana uses a unique set of technologies to process transactions quickly and cheaply. This makes it attractive for developers building decentralized applications (dApps) and other digital tools on the blockchain.

• Tether (USDT-USD): Tether is a cryptocurrency pegged to the US dollar, meaning its value is always equal to $1. This makes it a safe option for first-time investors but it’s not a wise long-term investment since it only grows with the USD. These currencies pegged to the dollar are sometimes called “stablecoins”.

• Binance Coin (BNB-USD): Binance Coin was originally marketed as a high-performing cryptocurrency for advanced traders. Since it was first launched in 2017, it’s grown by nearly 6,000%, placing it within the top crypto options.

• Cardano (ADA-USD): Although smaller than the other options on this list, Cardano is still within the top 10 largest cryptocurrencies in the world with a market cap of over $15 billion. It was originally designed to be used by governments and financial institutions, adding legitimacy to the brand.

• Dogecoin (DOGE-USD): Dogecoin is an open-source meme cryptocurrency that Jackson Palmer and Billy Markus created as a joke in 2013. Despite its humble beginnings, it has since grown to have a market capitalization of over $8.4 billion.

 Along with these top options, there is an overabundance of altcoins, such as XRP, USD Coin, Polkadot, Uniswap, and more. As a teen investor, however, you should probably stick to the top 3 coins on the list above in order to stay out of harm’s way as much as possible when it comes to crypto investing. 

The Risks of Investing in Cryptocurrency

Cryptocurrency is just like any other investment. Whether the investment is stock or cryptocurrency, kids and teenagers should be cautious about where they put their money. A young investor should even be more cautious when it comes to crypto because of how wildly its value can swing.

Although it is probably the most well-known option, Bitcoin (symbol: BTC) is extremely volatile. For example, the value of Bitcoin was $68,000 in November 2021. By September 2022, its value declined to about $20,000—about a 70% loss of value. Bitcoin has since rebounded to about $67,000 in May 2024.

The biggest issue that caused big swings in Bitcoin is that there have been several instances where leading crypto platforms and investors, such as FTX, Voyager Digital, Celsius, and Three-Arrows Capital filed for bankruptcy, with some of the founders landing in federal prison. These companies left millions of customers stranded without access or hope of ever seeing their crypto deposits again. (This is another reason why cold wallets are the best choice for investors if they have a considerable amount in digital assets).

So, while crypto investing may seem rebellious and exciting, it’s more of a gamble at this point unless you know what you’re doing and you have money you can lose without putting yourself in financial jeopardy. 

How Much Teens Should Invest in Crypto?

Chances are that you don’t have much money to invest, so the current size of your savings can probably answer this question. Nevertheless, if you want to get your foot into the crypto world, you may consider just buying a tiny fraction of Bitcoin or Ethereum – an investment in the order of no more than $300-$500 if you have it.  

How to Buy and Sell Crypto Through a Cryptocurrency Exchange

If you’re interested in investing directly in cryptocurrency, it is easiest to go through a cryptocurrency exchange. These exchanges act as middlemen between buyers and sellers and usually charge a small fee for each transaction. The most popular and perhaps the safest exchange for US investors is Coinbase. But there are many other exchanges like Crypto.com, Gemini, and Kraken. However, none of these services accept members under the age of 18. And they don’t offer custodial accounts, so parents can buy crypto for their kids through them. You can find a complete list of the top crypto exchanges on the Coinmarketcap.com website.

We will assume that your parents will buy the crypto since you can’t do it on your own.

Once they’ve selected a crypto exchange, they will need to create an account and deposit money into it. After that, they can start buying crypto directly from a vendor.

When buying through these exchanges, it’s best to use a cold wallet to store the information they would need to transact with the crypto – namely the public and private keys. We recommend they choose a crypto hardware wallet for the purchase, which is the safest way to secure cryptos so no one can hack it and steal it. If the amount you are investing in crypto is small, it’s probably fine to leave your digital assets on the exchange in a hot wallet.

With a hardware wallet (cold wallet), your parents can easily transfer the cryptocurrency directly to you when you are no longer a minor. In the meantime, you can buy and sell more crypto with their permission and supervision using the established hardware wallet.

When selling crypto, you can do so (under parental supervision) through the same exchange used to buy the crypto or, if you’d prefer, find an exchange with better rates. Once you’ve found a buyer and agreed on a price, you’ll need to send the crypto to the buyer’s digital wallet and, once they’ve accepted it, the funds will be deposited into your account.

It’s important to emphasize that if your parent purchases crypto through a crypto exchange and then stores it on a cold wallet, they don’t ever have to interact with that exchange again if they choose not to do so. The cold wallet carries all the information necessary to buy or sell cryptocurrency at any platform that handles the blockchain associated with the purchased crypto. 

Your Crypto Investments Through Exchanges are Not Protected

It is essential to note the difference between investing in stocks and crypto from a regulatory point of view. If you invest in stocks and the online broker you use goes bankrupt, your investment is protected by the Securities Investor Protection Corporation (SIPC) for up to $500,000. It does not cover the stock investor from making a bad investment. According to the SIPC’s website:

“SIPC does not protect against the decline in value of your securities. SIPC does not protect individuals who are sold worthless stocks and other securities. SIPC does not protect against losses due to a broker’s bad investment advice, or for recommending inappropriate investments.”

Cryptocurrency purchased through exchanges such as Coinbase, on the other hand, is not protected by any of the regulatory bodies such as the SIPC or the Federal Deposit Insurance Corporation (FDIC) which covers bank deposits.

To protect yourself, you should always find out whether SIPC or FDIC covers your investment on any platform you choose.

Crypto Exchange-Traded Funds for Teens

While investors can buy crypto through an exchange like Coinbase, it is much easier to buy crypto exchange traded funds (ETFs). Crypto ETFs were just approved by the US Securities and Exchange Commission (SEC) in 2024. The beauty of these ETFs is that they trade just like stocks.

And you don’t have to worry about hot wallets, cold wallets, and the security of the trading platforms because there are strong regulations around the companies that offer these ETFs. What’s even better, as we explain further in another section, your crypto ETFs are protected by the SIPC since they are treated just like stocks. Once again, this protection is only if the platform goes bankrupt, not for making bad investment decisions.

Here is a list of some of the prominent crypto ETFs you can explore:

• Grayscale Bitcoin Trust ETF (GBTC) – the is the first and, by far, the largest Bitcoin ETF

• iShares Bitcoin Trust (IBIT)

• Bitwise Bitcoin ETF (BITB)

• ARK 21Shares Bitcoin ETF (ARKB)

For more information about crypto ETFs, see our article here.