Cryptocurrency Trading for Beginners
When trading it is essential to know what you are doing. If you are a beginner, you will find this article helpful.
First, when trading, you need to have a trading platform like Coinbase to trade through and a wallet that holds your coins. There are many different types of wallets, including online and offline wallets.
Investing in cryptocurrency is done in different ways:
- One can invest in GBTC trust on the stock market
- Investing in a cryptocurrency IRA
- Buying coins through Coinbase, an online exchange that allows users to purchase the coins and store them in a wallet on the platform
- Buying the digital currencies trhough a exchange-broker like Coinbase/GDAX where coins can be purchased and stored n a hybrid wallet.
Coinbase/GDAX is good as a user/investor can trade using a single platform. Your wallet stores your encrypted passwords that represent coins. The exchange is much like a stock exchange where you trade fiat currencies for cryptocurrencies and vice a versa. However, a cryptocurrency exchange is not part of the regular stock exchange. Of the different ways to buy & trade digital currencies, an exchange like Coinbase is the most popular among beginners.
When getting started with cryptocurrencies, it is necessary to understand that digital currency is a form of money (digital) that is kept on software platforms. It is a new type of currency and one that can make appreciate or depreciate. It is like replacing your US Dollars with a digital currency like Bitcoin, Litecoin, or Ethereum. One can hold onto their investment until it appreciates to a value that they’d like to cash it in, or they can use it for online transactions through retailers that accept the coin, or they can send money to other cryptocurrency holders using their coin. It is a new technology and a new way of doing things.
As with anything before you start it is essential to learn (which is why you are here!) and for cryptocurrency trading and investing you must have an understanding of the risks. Again, cryptocurrency is software that is created by companies or people, and some may fail. Before in investing in any currency (or trading it), it is essential to research the cryptocurrency as there are many out there that are scams.
Technology is necessary, and knowledge of the technology is necessary. This isn’t saying that you have to be a tech geek, but it is necessary to understand the technology. If you are an absolute computer nerd, and one that cannot grasp the concept of cryptocurrency & trading you can still invest and trade through a broker, which is a way to invest and trade; however, it is essential that the broker is one that is reputable as there are many out there that are scammers and the risks involved increase.
The technology behind cryptocurrency is one that is advanced. For instance, the way the blockchain works. With a blockchain database (what cryptocurrencies use as a public ledger) the data is typically backed up on thousands of computers around the world. The information in the blockchains are heavily encrypted, and the information is “stored” in the blockchain. For instance, if a Bitcoin owner were to make a purchase using their Bitcoin, the information would go into the blockchain to verify the legitimacy of the Bitcoin and to record the transaction. For example, when a transaction is made such as sending Bitcoin or making a purchase with it the blockchain holds the record.
All cryptocurrencies are based on blockchain technology. And, while they may all be based on blockchain technology this does not mean that they are all created equally. There are differences, such as:
- The speed of transaction processing
- The supply of the currency available
- The limit of supply of the currency
- The need for the software/currency
- How the world will accept the currency
- The creators of the currency
- The sense of the software
In other words, you could find a cryptocurrency that is pennies a coin, and without creators with the knowledge to develop the software to be a gold mine like that of Bitcoin, Litecoin, and Ethereum, the currency will likely fail.
Now that you have a little idea of cryptocurrencies and trading let’s look at a few exchanges that allow you to invest/buy the different available currencies.
Most of the exchanges allow credit card as a payment process, which makes purchasing digital currencies quite simple.
*We would like to remind you that any content on the CryptoFactoid website should not be regarded as financial or legal advice. Please be mindful of any and all regulations regarding cryptocurrency in your particular jurisdiction. Never invest/gamble more than you are willing to lose and always safeguard any digital currencies you own by keeping them in a wallet whose private keys you control.