Bitcoin, Ethereum, Ripple, and Dogecoin all have something in common. They’re cryptocurrencies and they’re responsible for taking the world of finance in a new direction. That’s why crypto users are the next step in the world of finance.
You might be looking to join them and start trading crypto. But with loads of cryptocurrencies out there you might not know where to begin. If you’re completely new to this, then you can start with the basics. The crypto bubble has built up and burst a couple of times before so you don’t need to worry about it as when you have a grasp of the basics you’ll know what it’s all about.
We’ll start simply by defining cryptocurrencies.
The Definition of Cryptocurrencies
The thing about cryptocurrencies is that you can’t touch them. They don’t come in the form of fiat money so you won’t get any coins or banknotes. What makes them different from euros, dollars, and pounds is that these are digital assets. They exist only online and they have value.
What makes them work is a technology called blockchain. This technology serves as a ledger and keeps a record of all the transactions made. To make a transaction happen each user needs to share the public key which is one of two keys. This one serves as a mediator or a link between them.
Then there’s the second key which is a private one and it confirms the transaction and lets you access your assets. It’s called a private one because it needs to stay private if you share it with someone it’s like giving your regular wallet to a stranger.
There are several perks to using these digital assets and one of them is anonymity. No third party will have insight into your assets and charge you maintenance fees. You will be able to use these assets to make purchases and sell things and even trade.
But the thing that makes them unique is their volatility. It’s pretty high and when it rises it can increase the value of an asset significantly. It can also fall and decrease the value. That’s why most traders go for assets with a low value and when that value rises they tend to sell them. But if you’re looking to trade, then you’ll need a trading platform.
Picking a Crypto Trading Platform
There is a myriad of trading platforms available online. So, you might find some that focus on a single asset such as commodity trading software and others that encompass a variety of assets such as energy, gold, stocks, and cryptocurrencies. There are popular platforms that will get your attention, but you’ll need to research them.
You should go for the customer reviews and see how the platform treats its customers. If the treatment is good, then you’ll know the platform will take care of you. Then you should check what assets they cover and what sort of security measures are put in place to keep your account safe.
The vital thing to do is check out the platform’s history. Hackers have been known to breach the security of crypto trading platforms and steal lots of assets. If a platform has a history of hacker attacks then it’s time to move on and look for a different platform. Keep your own needs in mind as well, and don’t start trading without a wallet.
The Crypto Wallet Selection
You’ll need a place to store your crypto assets in. These assets are currencies after all and you’ll need a wallet to store them in. There are crypto wallets that are dedicated to this. These wallets come in all shapes and sizes and they can be divided into 2 sections. These are the hot and cold wallets.
The hot ones are online and this is what makes them hot. They are prone to bigger security risks as all the threats present online may affect your wallet if it doesn’t come with good security measures. But these wallets also are more convenient when it comes to trading online or making transactions happen.
The cold ones are safer as they don’t rely on the Internet because they can’t connect to it. These are external devices that keep your private key and a finite amount of assets. You’ll need to connect to the net online whenever you’re looking to trade.
You can decide which kind of wallet you’ll be looking for and in any case, you need to research the potential one. Look for the security measures, customer satisfaction, user interface, and any other additional conditions the wallet needs to fulfill.
With the basics covered, you’ll be able to dig deeper into the world of crypto trading. You might want to stick to one asset or diversify your portfolio. You can try different trading practices and see what works for you. By doing so you’ll become a better trader.