This guide will help you get started with cryptocurrency
Here’s everything you need to know to get started trading with cryptocurrency, from understanding what crypto is to making steps towards investment
Cryptocurrency has seen a massive surge in popularity, but where it used to attract a very niche audience just a few years ago, now everyone wants to learn how to invest. And cryptocurrency growth is not even close to being over. The global cryptocurrency market, which was valued at $332 million in 2017, has risen to $3.67 billion in 2020, and is projected to reach nearly $400 billion by 2028.
So, what does this all mean? Should you get involved and how do you get started investing in cryptocurrency? Before we jump right into navigating the digital space, let’s answer some FAQs you might have:
What is cryptocurrency?
A cryptocurrency is essentially a new form of digital money, and when cryptocurrencies become mainstream, you can use them to pay for things electronically, just like you do with traditional currency.
With cryptocurrency, there is also the possibility to get rid of banks and other centralised agencies—instead, all computers in the network can confirm any transactions made. Just like stock, cryptocurrency can also increase and decrease in value, making it a risky but potentially profitable income source.
What are the different types of cryptocurrency?
There are 10 popular types of cryptocurrencies currently on the market, the most well-known being Bitcoin and Ethereum while other smaller ones include Tether, USD Coin, Luna and Binance Coin.
So, what is Bitcoin? Bitcoin was the first product of the first blockchain developed by Satoshi Nakamoto, an anonymous entity. Established in 2008, it was not a new idea at the time—there had been more than a few attempts to create digital currency before.
Have you heard of Ethereum? Like Bitcoin, Ether operates on its own blockchain—but unlike Bitcoin, Ether is uncapped, meaning that an infinite number of coins can theoretically be created.
What is a blockchain?
Essentially, a blockchain is a system of recording information in a way that makes it impossible to hack. It is a digital ledger of transactions that is distributed across the entire network of computer systems using it and each block in the chain contains a number of transactions.
So how do you get started trading on the blockchain? We’ve broken it down for you, making the process effortless.
Step 1: Set up your digital wallet
It’s important to know how to choose a cryptocurrency wallet, as all your funds will reside within it. There are a few basic steps to go through when setting up a wallet for the first time, but the most important thing is to do your research.
Determine what kind of wallet you want to use. There are generally three options available; hardware, desktop and mobile wallets. We recommend a mobile wallet as it mostly uses downloadable software, and is one of the most common types of wallet available to keep records of your assets. They are generally easy to use and have good security.
Security should be at the top of your mind when choosing a crypto wallet because this piece of software can easily be accessed using your private keys. The private keys are basically the password to your funds and are given to you at the time of set up. In other words, control over the private keys equates to control over your money.
Step 2: Create an account on a brokerage platform
Different brokerage platforms offer different advantages/disadvantages, so read up on each one and choose the platform that suits you. Some recommendations of brokerage platforms include eToro, crypto.com or Alvexo. It can be overwhelming for a beginner trader to decide which platform to use so here is a checklist of what to look for when deciding:
- Choose a platform with more active years, as it is usually more reliable and resistant to scams and fraud.
- Knowing what currency you want to invest in and making sure the platform sells it, eg small exchanges usually offer trading on small cryptocurrency but if you’re after the big bucks go for a bigger platform.
- Find out what the transaction fees are for an exchange—the lower the better.
- Read reviews of the platform and find out its usability.
Step 3: Credit your account
After creating an account on a crypto brokerage, you can easily connect your bank account and fund your account through debit cards and wire transfers.
Step 4: Research
There are currently 7,000+ cryptocurrencies in circulation so research what is right for you and pick a cryptocurrency based on its performance. Some examples are Bitcoin, Ethreum or Litecon.
Step 5: Devise a trading strategy
Financial risk can be mitigated with an efficient trading strategy and will keep you from making impulsive judgments that can cost you a lot of money.
As a beginner, we recommend you consider trading on a test platform like “Binance Futures testnet” to become familiar with the world of highs and lows of cryptocurrency then move over to your chosen platform when you feel more confident.
Step 6: Diversify, diversify, diversify
"Do not put all your eggs in one basket" as the saying goes. Investing in digital assets can be lucrative but the possibility of losing your money can come in equal measure.
Diversifying across several cryptocurrencies helps you to cut your losses in case one cryptocurrency drops in price. You can then store your coins in your crypto wallet.
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