What is Cryptocurrency & How does Cryptocurrency Work?
If you haven’t been living under a rock, then you’ve most likely come across the term cryptocurrency or crypto. Cryptocurrency is a decentralized digital currency that can be used to purchase goods and services online. Still, it relies on a public ledger and strong cryptography to keep track of all transactions. Speculators often drive up the price of these uncontrolled currencies because of their desire to trade for profit. Some of the most popular cryptos in use are Bitcoin and Ethereum, but there are hundreds of options out there for traders to choose from.
So then, how do we start reaping the benefits of this new-gen investment medium? Here’s your all-encompassing guide to begin crypto trading!
Basics of Cryptocurrency Trading
● Learn About the Different Types of Cryptos
Although you’re free to invest in as many cryptos as you want, the sea of alternatives in the market can leave you perplexed about where to start. Some of the most common cryptocurrencies, to begin with, are Bitcoin and Ethereum, as mentioned above. Trading bitcoins for beginners is the easiest since there is plenty of legitimate information available regarding it online, but Ethereum comes at a close second with a market capitalization of over $74 billion. Of course, Ether is much cheaper than bitcoin, but they’re both an equally good place to start.
If you’re trying to invest in smaller crypto alternatives known as Altcoins because of the sudden money-making hearsay, keep in mind that the risks run just as high.
● Choose A Crypto Trading Service
The first step in purchasing bitcoin is to select a crypto trading service or venue. Cryptocurrency exchanges, payment services, and brokerages are popular trading services and venues for obtaining cryptocurrencies. By registering with a cryptocurrency exchange, you will be able to purchase, sell, and hold cryptocurrency. It is generally recommended that consumers utilise an exchange that allows them to withdraw cryptocurrency to their own personal online wallet for protection. When opening a bitcoin exchange account, it is critical to follow safe internet practices. This involves employing two-factor authentication and creating a password that is both unique and lengthy.
● Link Your Exchange to a Payment Service
You’ll need to assemble your personal paperwork once you’ve decided on an exchange. These may include government-issued identification cards such as your driver’s licence, depending on the exchange. Following this, you’ll be asked to connect to a payment option through which you can convert your fiat money to cryptocurrency. Finally, you can use your debit or credit card to connect your choice of a bank account with your exchange platform.
● Make a Purchase
You’re now all ready to make your first crypto purchase. Due to recent hype surrounding cryptocurrencies, they have developed almost every feature associated with traditional brokerages. Market, limit, and stop-loss orders have become a norm at most exchanges, so use these tools to keep your investments from tanking in case the times get rough.
● Store the Commodity
Bitcoin and cryptocurrency wallets provide a secure location to store digital assets. Keeping your cryptocurrency separate from the exchange and in your personal wallet means that only you have access to the private key to your funds. It also allows you to store funds apart from an exchange, reducing the chance of your assets being stolen if your exchange is hacked.
You can mainly store your crypto in two kinds of wallets -hot and cold. Hot wallets run on devices connected to the internet, such as PCs, smartphones, and laptops. They’re ideal only for short-term holding or low to mid-value purchases. Cold wallets, on the other hand, are not connected to the internet, so the chances of them being hacked are quite low. They do make regular trading of assets difficult but can be treated like a safety deposit.
● Selling Cryptocurrency
Trade calls for selling just as much as it calls for buying. If you’ve made the desired amount of profit on your crypto and are looking to let go of your holdings, you can sell them at the same exchange platforms where you bought them. Depending on the market composition and demand at your exchange, the offering price may vary, but the changes are never too drastic. Your exchange platform will charge you a percentage of the overall transaction amount as a processing fee, and voila! You’ve got your money in your account again.
These tips can make cryptocurrency trading for beginners much more accessible, but always remember that the market is still unregulated by the government in most countries, so crypto isn’t a legal tender. Hence, using trustworthy platforms to trade is one of the greatest priorities to make secure transactions.
GoDoFX strictly adheres to trading regulations and allows you to invest across a variety of industries. Whether you’re a novice or a seasoned trader, efficiency and reliability remain at peak with GoDoFX, so start trading now!