Crypto trading, or cryptocurrency trading, is the exchange of cryptocurrencies. Like in Forex, you can also buy and sell a cryptocurrency like Bitcoin or altcoin for USD and Euro. This is one way of getting involved in the world of cryptocurrencies without having to mine it.
Anyone who is even slightly interested in learning about cryptocurrency has taken part in some form of trading. Therefore, here is a trading guide that will teach you all there is to cryptocurrency trading and get you ready. I will cover details of cryptocurrency trading and information you need about handling your crypto storage.
Fiat To Crypto
You decided to try yourself in some trading. First thing you want to do is to find a place where you can trade cryptocurrencies. These are called exchanges.
There are a lot of exchanges in the world of the internet, but if you are serious to invest your time and money into one, you need to consider some things before deciding.
For example, before you even consider going in those waters, you need to check is the exchange available in your country. Coinbase, one of the largest exchanges, is not available in India. So do your homework and check this.
Next step would be checking exchanges reputation. Are people that are using it happy? Do they have complaints? How secure is it? Has it been hacked recently? A good source for that information can be Twitter.
The verification process is an important step you need to consider. Exchanges that use ID verifications are usually a good choice. Even it may take some time to verify your account; it is worth to wait, rather than picking some anonymous exchange. After all, it is your money in stake, so make what you can to protect it and keep it secure.
And last, but not least, exchange rates. Different exchanges have their own exchange rates, and they may vary a lot.
One exchange I highly recommend is Coinbase. It is trusted and most popular exchange to buy cryptocurrencies with fiat.
Watch this video for step by step how to open a Coinbase account.
Managing Your Founds
Before we touch crypto to crypto exchange, you need a place to store your cryptocurrency. And just like storing your money, you store cryptocurrency in a wallet.
Your wallet consists of a private key and a public address. Private key gives you the right to send currency, and public address is where anyone will send you currency.
The public address is like your bank account number, where the private key is four digits on the back of your card and your signature. You NEVER want to give your private key to ANYONE! EVER!
There are two types of wallets: Hot Storage and Cold Storage. A wallet that is connected to the internet is hot storage, while cold storage wallet is not connected to the internet.
Although their purpose is the same: to store cryptocurrencies, their usage is different. I will explain each in simple steps and easy to understand.
Since it is connected to the internet, it is vulnerable to hacks and cyber attacks. And if the device on which your hot wallet is gets stolen (laptop or your phone), you could lose your founds, just like a physical wallet.
But hot storage has its benefits: quick, easy and instant access to all of your currencies, supported in different devices, user-friendly and ideal for beginners.
Most common examples of hot wallets are: exchange wallet and desktop and mobile wallet.
Exchange Wallet. If you watched video from earlier and followed instructions for creating a Coinbase account, you already have an exchange wallet. Kudos!
You have linked your account and have fast access for trading. But, don’t forget; this also means you are vulnerable to attacks. I highly recommend that you don’t keep all of your cryptocurrencies in an exchange wallet, but the only necessary amount for trading.
Desktop and Mobile Wallet. These type of wallets grow in popularity, and setting them up is rather simple and easy. Just download the client on your desktop or laptop, and you are done.
But in this simplicity lays the problem. You can’t access your wallet from other location than on which it was downloaded and installed.
That is why mobile wallets are a more convenient option. Setting it up as simple as with desktop version: download the app into your phone.
Pointing out the obvious again: since both of the devices are connected to the internet, they are vulnerable to viruses and attacks.
Hot wallets give you instant and easy access, but they still remain vulnerable and unsafe. For the safer option, you should consider using a cold storage wallet. A cold wallet is cut off from the internet, which makes it safe from viruses and attacks. It is a great place to store and hold your coins for a longer period of time.
But, it is impractical for daily transactions, it is not beginner friendly and vulnerable to physical damage (for example, it can break).
Example of cold storage wallets is a hardware wallet and a paper wallet.
Hardware wallets are physical devices where you store your cryptocurrencies — something like a regular USB stick. The most popular one is Ledger Nano X.
Since it is cold storage, your private key will be saved. The keys are stored in the protected area of microcontroller and can’t be transferred out of the device.
Because of their design and size, they are portable and easy to use. All you need to do is to plug in the wallet and follow the instructions to make a transaction. The user interface is user-friendly, and you won’t have a problem using it.
You can store several addresses on your wallet, however, only a limited amount. The ledger can store about 20 different cryptocurrencies.
Your wallet is protected with pin code, so if someone stole it from you, he wouldn’t be able to access your founds easily. Entering the wrong code three times will shut down the wallet. However, you can still recover your founds by following the restoration details.
One more thing that you should think about is that this is an actual object, which means it can be damaged. Example, if you misplaced it and stepped on it.
And finally, you have to trust that the company which is creating your hardware wallet is ethical and will not try to mess with the design of your hardware wallet.
Paper Wallet. The safest way to store your cryptocurrency is by far the paper wallet option. The idea is rather simple. You set up a wallet offline following simple instructions after which you print our the private and public key in a piece of paper. The keys will also be printed in a QR code, and you can also scan it to access your funds.
This may seem like the best option to choose, right? Well, it would depend on your needs. If you plan to use it regularly than no, it is not the best option. The paper wallet will be a pain to use it like that. You would be better off with a hardware wallet.
Crypto To Crypto
Now that you have an account with Coinbase and you understand the principle of wallets and how to use them, let’s dive into the world of trading.
You can use a different one if you feel comfortable. Just do your homework and do your research about security and credibility of the exchanges.
Most of the exchanges will only allow you to buy other cryptocurrencies with Bitcoins, so that will be your primary resource of trading.
Once you set up your account with the chosen exchange, everything is in your hands. How and where will you invest your currency is up to you.
Hopefully, you have learned something new. Purpose of this guide was to explain what is cryptocurrency trading and how do you get to that point.
Do you have any experience with cryptocurrency trading already? I would love to hear your story. Did you find this information useful? Do you know someone that would want to read it? Why not share it with your friends?
If you have any questions or you need more details about something, feel free to message me at firstname.lastname@example.org, and I will reply to you shortly.
Disclaimer: This is an informational article, and scamdebunk cannot be responsible for any damage caused by a 3rd party.