Cryptocurrency has been around for more than ten years, and many people are still in the dark about how it works. As a result, individuals are often sceptical about its technicalities without trying to understand the basics. Moreover, learning about cryptocurrency is not a straightforward business; after all, nobody built Rome in a day.
There is a general belief that crypto investors always watch their money appreciate. While this notion may be true, it does not literally happen overnight. As a beginner in the crypto world, you need to know more about the history and concepts of cryptocurrency. By learning various crypto concepts, you are building your knowledge in the field. This new knowledge allows you to make informed decisions about when investing.
What You Need to Know About Cryptocurrency
As a beginner in the cryptocurrency market, you need to know the critical crypto concepts and how they affect your investment journey.
A cryptocurrency is also known as a digital currency, and it comprises two words, cryptography and currency. Cryptography is a means that developers create to guard against fraud. With its unique form, it is difficult to make counterfeit coins. Examples of cryptocurrencies include bitcoin, ethereum, litecoin, etc.
Cryptocurrency stands out from other regular currencies because it is decentralised. As a result, no one has absolute control over virtual money like traditional central banks. In addition, you cannot own or trade crypto coins physically or in the bank.
A crypto broker allows you to trade coins on the platform. The brokers act as an intermediary between buyers and sellers of the cryptocurrency. So when you want to make transactions, the broker links you up with another party who would be interested in dealing with you.
Just as you have a natural wallet that stores your hard currency, a cryptocurrency wallet is an app that allows you to keep your digital assets. Furthermore, you can only access your wallet with your private key—the key acts as a password to your wallet, allowing you to make transactions online. In addition, your wallet is connected to a blockchain.
A blockchain is an electronic ledger that stores every cryptocurrency-related transaction. The platform is an advanced database management model, unlike the average spreadsheet, which can be mostly inaccurate. Whenever a transaction takes place on the blockchain, the dealers’ information is concealed, but the blockchain shows the trade details.
Difference Between Cryptocurrency Investing and Cryptocurrency Trading
While both crypto investing and crypto trading aim to make a profit, they are both different from either other.
Cryptocurrency investing is primarily a medium to long-term action that allows investors to buy and hold digital assets for an extended period, usually from 6 months to more than a year. On the other hand, crypto trading is a short to medium-term action that allows buyers to purchase coins at a lower price and sell when it is high. Timing is crucial when trading because the asset’s value could quickly depreciate in a blink.
How to Make Cryptocurrency Transactions as a Beginner
As a new crypto trader, you need to make a couple of steps before trading cryptocurrency successfully. Without the right strategy, you would make wrong decisions, leading to loss. So, for you to exchange easily, follow the following steps.
For any investment you wish to make, research is vital. Unfortunately, it is not possible for you to have all the information about a big market, especially if you are a beginner. You should research heavily on the types of cryptocurrencies, trade platforms and crypto exchanges or brokers. Access the cost and benefits of investing in a particular market before deciding where to put your money.
Create a Crypto Brokerage Account
You cannot make transactions without a crypto broker or exchange. Therefore, you need to choose the best crypto brokerage that suits your needs, and as a beginner, you need a platform that is easy to use. You also need to submit your identification information to verify your identity when registering your account.
Fund Your Account
After creating an account with an exchange platform, you will need to fund your account for you to trade. You can do this with your bank card details at a small price.
Bitcoin and ethereum are the most popular coins in the crypto market because they are easy to predict, especially as a beginner. In addition, if you are a risk-tolerant investor, you can use a part of your capital to invest in smaller altcoins because they are highly volatile. Lastly, avoid trading with initial coin offerings because you would not be able to access their success rate.
Store Your Currency
While trading, you can also invest by keeping some of your assets in a cryptocurrency wallet for some time. Depending on the coin’s value, your assets could increase or reduce over time.
As a crypto investor, be prepared for anything. Do not include your savings when investing in cryptocurrency because investing does not guarantee immediate profit even if you abide by the steps carefully. In addition, you need to keep learning about the market through information from mentors and news articles to know when to make an investment or take a step back.