If you are just learning about cryptocurrency trading, this is the article for you. Sure, there are several resources out there but only a few make it as concise as this one. As an aspiring crypto-trader, you should also be vigilant with all the information you can find, as these can make or break your entire investment. Much like cryptocurrency fluctuations, keep an eye on differing news and steps on trading digital money. So without further ado, here is how to learn about cryptocurrency trading.
What Really Is Cryptocurrency?
One way to get the picture of a new idea is to break down the word itself. And from cryptocurrency, obviously, there are “crypto” and “currency.”
The conversion of comprehensible text into unintelligible code, and vice-versa for integrity, authentication, and confidentiality purposes.
A medium of exchange that lets people translate their work into tangible value as an exchange for goods or services.
Combining the two concepts, and you get the medium of exchange that is digital and uses encryption to secure transactions. This digital currency is more reliable and safer than ever.
Why Is Crypto Getting Popular?
Before we discuss all the tech-stuff surrounding cryptocurrencies, it is good to know why crypto is getting more and more popular. Here are some of that:
- Users, miners, and supporters see cryptocurrencies as the future’s currency. Like any other investment, they are racing to buy them now, probably before becoming more valuable.
- The technology behind cryptocurrencies, blockchain, is truly remarkable. It is a decentralized recording and processing system that is safer than the typical payment systems.
- On the other hand, some speculators like cryptocurrencies as they are blowing up in value. They have no interest in its widespread and long-term acceptance as a way for the economy.
- Some users love that cryptocurrency can oust central banks from managing the money supply. Over time, these banks tend to lessen money’s value via inflation.
How to Start Trading Cryptocurrency?
Make sure to have the following before you start trading:
- Any cryptocurrency wallet – paper, mobile, hardware, or software wallets
- Access to an ‘exchange’ that lets you buy, sell, or trade crypto
Some Reminders About Cryptocurrency Trading
- The cryptocurrency exchange is not part of stock exchange
- Beginners may opt and prefer to trade cryptocurrency stocks.
- Cryptocurrency trading is a 24-hour market
- The market is incredibly volatile.
Hot Wallet Vs. Cold Storage
We won’t go into depth on all the different wallets as we also have another article for that. But what you should know right off the top is the difference between a hot wallet and cold storage. Once you see the difference, you can watch our wallet guide and decide where you want to keep your funds.
A hot wallet is like the wallet you carry around with you day-to-day. It isn’t incredibly safe, but it’s convenient and gives you easy access to your money. Cold storage is a lot more like a savings account. The money isn’t on you at all times, so it’s more secure but impractical to use every day.
An example of a hot wallet is your cryptocurrency exchange. It’s a software wallet that’s always online and requires password input to access. This makes it vulnerable to attack but very easy to reach your funds. The cold storage wallet would look like a piece of hardware that’s separate from your computer. It is always offline except for when you plug it in to access it. This means that while it is offline, it is totally safe from attackers
Again we go much deeper into different types of wallets in our other videos. But you should decide whether you’ll be using your crypto frequently or locking it away. Then you can choose a hot wallet or cold storage solution that’s appropriate for you.
Public and Private Key
The Public Key
The public key is the electronic address that you will always use to receive funds. When you withdraw from an exchange, and they ask for an address, it’s your public key that is required. You’re free to share it and use it however you like.
Your Private Key
Your private key should never, under any circumstances, be shared. If your private key is leaked or discovered, your funds can be stolen and used without your permission. You will lose your funds, and you won’t be able to get them back. So write it down, keep it somewhere safe and secure, and do not share it.
Once you have your crypto stored in an appropriate place, you are ready to engage with crypto to crypto trades.
Some Beginner Mistakes You Should Avoid
- An excellent tip is to determine the reason behind the rise and fall of a particular cryptocurrency’s price before you invest. Buying a crypto coin in freefall and waiting for its value increase again may seem a wise option, but there is no formula saying that it’ll bounce back. Chasing profit by backing a currency that surged can also be tempting, but there’s always the danger of “pump and dump” schemes where the price crashes afterward. So, make sure to know fluctuation’s “why” before you buy.
- Avoid putting your entire investment in one basket. Just like good-old investing, it is better to have a diverse portfolio and spreading risk. In this way, if one cryptocurrency’s price drastically goes down, it won’t have a disastrous effect on your asset’s overall value.
- Lastly, always check while trading – a simple tip that even seasoned crypto holders seem to forget. When setting up buy or sell orders, ensure that your numbers add up, as even the smallest of nuances can make you lose a significant amount. When bargaining with an exchange, make sure you are sending crypto coins to the correct address.
We only what’s best for any investor out there. Although it is a tough market to beat, people in the cryptocurrency trading community help each other for the widespread acceptance of this tech wonder. And there is no better way but to get more individuals to start trading and investing.
Make sure to share this article on how to learn about cryptocurrency trading with everybody.