Cryptocurrency is a digital representation of value that functions as a Medium of Exchange, a unit of account, or a store of value. It does not have legal tender status due to its decentralized nature. Cryptocurrency is the first decentralized electronic currency, as the system works without a central repository or single administrator but instead through a peer-to-peer transaction network.
With cryptocurrency, people can make payments online without involving financial institutions like banks. That means cryptocurrency transactions are stored on different computers around the globe. Cryptocurrencies are not printed but are generated by users using special software.
Cryptocurrencies that are supported by an active development team usually have more potential to grow in value over time due to the work they put into them. This holds especially true for cryptocurrencies that are supported by enthusiasts with a personal interest in making sure their project succeeds.
Cryptocurrencies for trading
In order to start cryptocurrency trading, you will need a cryptocurrency wallet and a cryptocurrency exchange account.
There are thousands of cryptocurrency coins and tokens, and new ones appear every day. Before selecting which coins to trade, you should look at the coin market cap. You can easily sort coins by price, volume, change, market capitalization, and other parameters. The bitiq uk platform review can help you make a sound decision when it comes to the best bitcoin trading strategy.
A Cryptocurrency exchange is an online platform where you can buy, sell or exchange cryptocurrencies for other digital currency assets or traditional currency such as U.S. dollars or euros. Cryptocurrency exchanges allow investors to trade on the currency’s price movements without actually owning them. Exchanges also offer innovative Charting tools to analyze the price trends for various cryptocurrencies. There are many cryptocurrency exchanges; choose one that has a good reputation and is safe to use.
How to Start Trading Cryptocurrency
There are three steps you need to take in order to start trading cryptocurrencies: get a cryptocurrency wallet; select what coin you want to buy; create an account on the cryptocurrency exchange; verify your account; fund your account with the money you want to use for trading.
- Get A Cryptocurrency Wallet: Before starting any cryptocurrency trading, you need to get yourself a cryptocurrency wallet. It will be the place where your crypto coins will be stored, and it’s easy, convenient, and safe this way.
There are many different types of cryptocurrency wallets, but the most important thing to look for in a wallet is the security it provides. To have good security, you need a combination of features such as:
- Private keys that are stored in an encrypted digital environment.
- Anonymity and no possibility that a third party can block your account.
- Two-Factor Authentication from trusted providers such as Google Authenticator. This is an extra level of protection on top of your password and username, which is required every time you log in to your account from an unknown or untrusted location. Two-Factor Authentication adds a second ‘token’ to log in alongside your password – this could be a code that is sent to your phone or a key that is generated on the fly.
- Private keys that can never be accessed by anyone – not even the service itself – guarantees you do not lose your money if the provider goes bust or gets hacked.
- Select A Coin: Once you have a cryptocurrency wallet, you need to select a coin to buy. It’s always better to choose a coin with an active development team. Go on their website and check out their roadmap and whitepaper. It’s always better to know what you are investing in. Choose only the coin of your interest, Do not invest more than you can afford to lose.
- Create An Account On The Cryptocurrency Exchange: You will need some money for trading some coins, so firstly, it is important for you to create an account on some exchange. Make sure you choose the best quality exchanges that are secure and have some real users already. If you want to create your account first on the best cryptocurrency exchange Cryptopia where there are currently over 200 different altcoins available, feel free to check out my new article on how to create an account.
- Verify Your Account: Before you start cryptocurrency trading, you need to verify your account. The process is very similar for all exchanges, so if you have already verified your cryptocurrency exchange account, it will be easier for you to understand the verification process. Once you have an account with a cryptocurrency exchange, there are some rules that need to be followed.
Verification of your account is required by most cryptocurrency exchanges; this is usually due to KYC (Know Your Customer) policies which require an exchange to know their customers and collect relevant information on them in order to prevent money laundering and fraud. Presently, many small-time traders are facing more security barriers on their way up than professional traders.
How To Safely Store Cryptocurrency?
There are several ways to store cryptocurrency. Some of them carry a lot of risks, and I will not recommend using them. It’s safer to use a hardware wallet, a paper wallet, or cold storage.
If you own Bitcoin or any other cryptocurrency, you may want to know how to securely store your digital currency. It is extremely risky to leave your digital money on an exchange because exchanges could easily get hacked, and it’s natural that you don’t want to lose your tokens.
There are two categories of cryptocurrency wallets
Hot cryptocurrency wallets store the private keys that allow you to access your digital currency. These are the best type to use, as they offer a much higher level of security than a regular “dummy” wallet.
Cold cryptocurrency wallets do not store private keys; therefore, you will not be able to access your coins without a backup. There is no way for a hacker to take control of your account, as these wallets do not hold any personal information about you. However, they may not offer as much security as hardware or paper wallets. I would recommend using cold storage for large-scale investors only.
It is very important that you take some steps to close down your anonymous cryptocurrency exchange accounts, or else they will be hacked, and your tokens will be stolen. Some of the most popular cryptocurrency exchanges currently allow you to deactivate an account without email confirmation but remember that there is always a chance of losing what you do not have. If you want to know more about cryptocurrency exchange hacks, read this article.
Keep track of your trades and keep records for tax purposes
Once you’ve bought cryptocurrency, it’s important that you keep track of your trades and keep records for tax purposes. You can use a cryptocurrency wallet to carry out these transactions and monitor the value of your account at all times.
List Of Best Cryptocurrency Exchanges
- Coinbase: Coinbase is one of the best exchanges in the market right now and offers a wide variety of cryptocurrencies. Coinbase offers three different types of accounts: 1. A free account to get started – with limits on how much currency you can purchase and trade 2. A “pay with debit/credit card” option allows you to buy currency using a bank transfer. 3. A “pay with bank account” option allows you to purchase bitcoins using a bank transfer.
Coinbase’s Fees: Coinbase’s fees are already included in the spread, so you do not have to pay anything extra besides what you see on screen. In addition, Coinbase charges a 0.1% fee for selling BTC and ETH after a transaction has been made, whereas for purchasing BTC and ETH using your USD wallet, coinbase charges 1.49% for credit/debit card purchases via instant payment methods or 4–5% for bank transfer purchases 4.
Coinbase has one of the most user-friendly interfaces in the cryptocurrency exchange market right now. However, there is no two-factor authentication available on Coinbase yet.
Coinbase is one of the best cryptocurrency exchanges for beginners. It’s always better to trade only a few altcoins at a time, as most traders lose money when they try to trade too many cryptocurrencies at once.
The Coinbase interface is very user-friendly and can be used by anyone. You can buy different cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and Bitcoin Cash, with a debit or credit card. With this Exchange, you can pay with a Visa or MasterCard card directly without a fee for your first purchase of $100 worth of currency, or with no limit on how much currency you spend each month if you use the debit card option.
Coinbase is one of the most user-friendly cryptocurrency exchanges out there; it even allows you to buy Bitcoin instantly with a credit card without any fees! However, it is not as secure as some other exchanges.
2. Bitstamp offers both deposit and withdrawal without any fees. It is a very easy-to-use, secure, and reliable Exchange. Bitstamp has high liquidity and has been on the top list on CryptoCompare for several years now.
3. KuCoin is a newer cryptocurrency exchange founded in 2017. KuCoin prides itself on the wide range of altcoins available for users. KuCoin provides access to hundreds of cryptocurrencies and has a very easy-to-use interface for beginners. But still, you need extra information when you want to make an account because Kucoin is in its early stages and still in beta.
Upon opening an account, you must go through a “KYC” (Know Your Customer) process in order to verify your identity and prevent money laundering activities. To complete this process, you will need two valid forms of I.D., such as a driver’s license or passport, along with scanning them into your Coinbase wallet.
- Pros: Good trading fees. Easy to trade. Good customer service.
- Cons: Limited range of altcoins available for trading.
CEX is another good option, and it has a bitcoin exchange and a fiat currency exchange where you can trade bitcoins and euros with each other, providing that you’re willing to buy bitcoins with your national currency, and then bitcoin will be sent to your wallet at CEX.
Some of the best platforms for beginners include Coinbase, Kraken, LocalBitcoins, WallofCoins, Bitstamp.
Do not overextend yourself by investing more than you can afford to lose
Spread the risk with some good cryptocurrency trading strategies
The highs of cryptocurrencies are typically more amplified by social media, which makes it easier for people to get involved in the trading. However, this also means that it’s very easy to get overwhelmed and addicted by all of these “get rich quick” schemes.
When you enter the cryptocurrency market, you will quickly realize that there is a lot of hype and a lot of bad traders out there, both in-person and online. The best advice I can give you is not to get “caught up” in this.
So many people make their living day trading cryptocurrencies and hoping for a quick buck. I strongly advise you not to consider this an option if you are not willing to develop the skills needed to deal with high-risk volumes of transactions at any time.
Always research before investing in a new coin or token
There are so many new coins on the market right now, so it is difficult to find an actual “good” coin that will be worth more in the future. My advice is to do your research before you invest in a cryptocurrency.
Once you have decided which projects you are going to buy into, it is very important that you get involved with the communities surrounding these coins. A cryptocurrency is only as valuable as its community.
The best way to get more information on a project before investing is to read their whitepaper. Knowing more about a coin can often help you to invest in it with confidence.
Talk to people who have bought into the coin and ask them for their opinion. You may find that they will be more realistic than the people selling them on Reddit or Telegram.
When trading cryptocurrencies, always make sure you are aware of any fees involved in your transaction. These fees can add up very quickly and make a big difference for a small operation.
The risk associated with cryptocurrency trading
Fraud in cryptocurrency is also high due to people’s lack of knowledge about the industry, which makes them more susceptible to scams than traditional exchanges where people know what they are doing. Another risk that you must take into account is that exchanges can “hack” and steal all your funds. That is why it’s good that you have several backups of your coins stored in different places, stored offline, or stored on a cold wallet.
Always examine the features of each Exchange before you use them.
Investing in the cryptocurrency market is still a high-risk activity, regardless of how reliable the Exchange is. Always exercise caution when investing an amount that you can afford to lose. Cryptocurrencies are a very interesting investment vehicle, but they can also be extremely risky. Only invest in what you can afford to lose.
You should be prepared to lose it all. The success stories may make you think everything is easy, but there are still no guarantees of success.
Investing in cryptocurrencies is currently best done through peer-to-peer trading or through an ICO (Initial Coin Offering). If you decide that an ICO looks like the right investment opportunity for you, then invest only what you can afford to lose.