What is Cryptocurrency? Are you interested in trading cryptocurrencies such as Bitcoin,ripple or Ethereum? If so, you may be asking questions such as, Can I make money with crypto? How and where do I begin? It is a good idea to gather as much information as you can before you make such a move. It is important to note that in this market, there are both losers and winners. The difference comes in based on the decision you make. With us here, is a well elaborated cryptocurrency trading for beginners’ guide that will guide you to begin trading cryptocurrency like a crypto star. Let us begin with a short description of Cryptocurrency and Blockchain.
Cryptocurrency is a digital currency that is built on the blockchain network. These coins are popular since they are decentralized. Governments and central financial institutions do not control these currencies. Bitcoin is the most popular cryptocurrency of the time. There are many bitcoin alternatives called altcoins. Digital coins such as Ripple and Ethereum have improved on the original model of Bitcoin and created different currencies that do fit different niche use.
What is blockchain?
Blockchain is the technology that gives cryptocurrency its uniqueness and value. Simply put, blockchain is a decentralized network of storing all the cryptocurrency transactions in the form of a ledger that is attached to every coin. From a technological perspective, blockchain is a programmable chain of blocks that store transaction details such as traders, dates, time, and amount. Cryptocurrency gets its structure from the blockchain. This network is encoded by cryptography such that it is immutable to hacking. It is also nearly impossible to forge coins.
So, how do you invest in Crypto?
There are two ways to invest in cryptocurrency. You can decide to do day trading, which involves buying and selling cryptocurrencies to make profits. You can also purchase coins and use them as a store of value, the way people use precious metals. In this method, you buy the cryptocurrencies and wait for their value to increase over time before converting them back to fiat currency.
There are several things you need before you begin trading cryptocurrency. Some of the necessary items include
- A digital wallet (Cryptocurrency wallet)
- Personal identification document
- A secure method of payment
- A secure connection to the internet
- An account with a cryptocurrency exchange.
Some of the valid payment methods available for crypto trading are bank accounts, credit cards, and debit cards. Here are the steps to beginning cryptocurrency trading:
Step 1: Get a Bitcoin Wallet
Cryptocurrencies do not exist in physical form so you cannot physically store them in a wallet. However, you need a digital wallet to secure the private keys. The private keys allows you to access your public crypto address and transaction signatures. Therefore, you must have a digital wallet to do any digital currency transaction.
You have two options when it comes to choosing a digital wallet: Hardware wallets and software wallets. Hardware wallets are more secure since they are protected against a phishing attack. They offer cold storage. They are also more expensive than software wallets, which offer hot storage. You can get your wallet through companies such as Coinbase and Bitcoin.com. Some top hardware wallet manufacturers are Trezor and Ledger.
Step 2: Connect a Bank Account
Your wallet has to be connected to a bank account, credit card, or debit card before you are able to buy a digital coin. Each of these methods of payment has its advantages and disadvantage though they perform the same function primarily – exchanging fiat currency to digital coin.
Step 3: Join a Crypto Exchange
A bitcoin exchange are online platforms where you can buy cryptocurrencies using fiat currencies. There is a vast range of cryptocurrency exchanges out there that offers the same service. However, there are slight differences in their services in areas such as security, reliability, processing fees, the available digital coin for trading, and reputation. Here is a list of some common exchanges:
- Coinbase – suitable for beginners
- Squash Cash – suitable for On the Go
- Robinhood – suitable for Bitcoin on a budget
- Coinbase Pro – Suitable for Big Spenders
- Peer-to-Peer – Suitable for buying digital coins in a cash
Step 4: Place your Order
You are now ready to buy your first cryptocurrency. Most cryptocurrencies including Bitcoin are divisible to smaller units. Therefore, you may buy a fraction of bitcoin that matches your expenditure plan. You may perform day trading by buying the digitals coins when the prices are low and selling them when the prices are high.
That is the guide on how to trade crypto for beginners. However, one more thing to note as you prepare to begin trading crypto. Cryptocurrency can be volatile. Therefore, you need to be careful if you want to carry out day trading. It can, either earn you quick money or drain your wallet very quickly. Some exchanges offer trading tools that can help you minimize your chances of losing while increasing your winning possibilities. Learn to use such tools to your advantage. Otherwise, cryptocurrency can be a good investment that can earn you a fortune. Good luck as you venture into crypto trading space.