Is this your first time hearing about cryptocurrency? I know it was for me. But guess what in 1983 David Chaum took privacy policies too seriously that he created an anonymous payment system “DigiCash” for the digital age. This was before the Internet was made for public use, fast forward 39 years and the world has crypto, so let’s dive into what you need to know.
What is Cryptocurrency?
In simple terms, cryptocurrency is a digital currency. It is not controlled by a specific organization or government, unlike the traditional currencies, we are used to. It is decentralized and works on the basis of cryptography. Cryptocurrency works through a technology known as the blockchain.
The most popular cryptocurrency exchange in the world is Bitcoin. Bitcoin was launched in 2009 and since then, it has been quite successful in the market. Bitcoin prices have risen significantly over the years and today, it has become one of the most popular cryptocurrencies in the world
In the simplest terms, cryptocurrency is money that only exists digitally or virtually. It’s like an online version of cash
How Does Crypto Work?
Cryptocurrency works exactly like any other form of currency. It can be used for transactions, and can also be traded.
Cryptocurrency trading is similar to Forex trading in that they both involve exchanging one currency for another. For example, you can exchange Bitcoin for Ethereum or Litecoin. Cryptocurrencies are often exchanged against fiat currencies (USD, GBP, EUR) but can also be exchanged against other cryptocurrencies.
Cryptocurrency markets are highly volatile and prices often fluctuate by 10–20% in a matter of minutes. This volatility makes cryptocurrency markets a prime target for day traders who seek to make money online through short-term trades on price fluctuations.
What Should You Look at When Choosing a Cryptocurrency Exchange?
The first thing that you should consider when choosing an exchange is how simple the registration and verification procedures are. If you need to jump through a lot of hoops just to get your account verified, it might be worth looking elsewhere. The cryptocurrency exchange that you go with should make it easy for you to start trading as soon as possible.
The second thing that you definitely want to look at is the number of cryptocurrencies that the exchange supports. If you want access to a wide variety of cryptocurrencies, then it makes sense for you to use an exchange that supports them all. This will allow you to diversify without having to open multiple accounts on different platforms.
The third consideration is whether or not the platform has an app or not. Cryptocurrencies are volatile and if you don’t have access to your account at a moment’s notice, then this could cause some serious problems for your trading strategy.
Crypto Exchange Fees
Crypto Exchange Fees refer to the cost of buying and selling cryptocurrencies. The fees can vary depending on the exchange, we’re going to take a look at the different types of fees you can expect to encounter when using a crypto trading platform.
These are the fees charged for depositing funds into your account. These vary from exchange to exchange and usually depend on the type of deposit method you choose and the volume of deposits made.
Like deposit fees, withdrawal fees also vary depending on the exchange and payment method. If you’re planning on making frequent withdrawals, it is important to keep an eye out for low withdrawal fees and other benefits like cashback that may offset these costs.
Most cryptocurrency exchanges charge a trading fee, which is calculated as a percentage of each transaction amount. For example, if you buy $100 worth of Bitcoin with an exchange that charges a 0.1% trading fee, you will pay $0.10 in fees.
How to Buy Crypto to Trade
The leading cryptocurrency exchanges of the world are Coinbase, Bittrex, Kraken, and Poloniex. These exchanges allow you to buy and sell cryptocurrencies like Etherium and others.
In order to trade on any of these exchanges, you will first need to open an account with them. It is easy to set up an account on any of these exchanges. The process is similar to opening a bank account. You will first have to register your name, email address, mobile phone number, country, and other details. Then you will have to upload some identity documents in order to verify your identity before you can proceed with trading.
Once you have an account on any of these exchanges and have verified your identity, you can start buying and trading cryptocurrencies supported by the exchange. A common trading strategy is to buy and hold — traders will buy a cryptocurrency asset and hold it for a period of time before selling it at a profit.
How Much Should You Invest in Crypto?
The amount that you should invest in crypto depends on how much risk capital are you willing to lose without affecting your personal finances or life. This amount may vary from person to person.
The general rule of thumb is that one should not invest more than 10% of their total investment capital into crypto trading. If you want lower risk then that percentage could be even lower than 10%.
Pros and Cons of Investing in Cryptocurrencies
Investing in cryptocurrencies is always risky, but the rate of cryptos’ growth is phenomenal. If you think it will continue to grow, you should try trading cryptocurrencies.
Cryptocurrency trading consists of buying and selling digital coins. You can buy them on exchanges and then store them in your Crypto wallet.
Try using more than one exchange to trade. To choose the best exchange for you, pay attention to the following features:
- Trading volume — As more people trade on an exchange, its fees are going to be lower and transactions will be faster
- Fees — all exchanges charge transaction fees. The fee is usually a percentage of the total amount you want to sell or buy
- Payment methods — some exchanges accept only bank transfers or credit card payments while others offer PayPal or other types of online payments
- User interface — if you’re a newbie, you might not want a complicated interface
- Security — check how secure is an exchange before you start trading on it
- Country availability — some exchanges don’t allow users from certain countries to register accounts on their platforms
Conclusion: Cryptocurrency trading steps
The first step is to define your investment goals and learn the rules of trading. You should decide whether you want to get some extra money or build a career as a professional trader. Next, find out the trading risks that may affect your crypto exchange.
Then, choose a cryptocurrency exchange and register on it. After creating an account, you must verify it and make a deposit on the platform. Now, you can start trading crypto coins.
The next step is to research tools and strategies for crypto trading. It is advisable to develop your unique methods so that they fit your financial goals and style of trading.
Finally, analyze your performance regularly to improve your skills and increase profits from a cryptocurrency exchange.