News | March 04, 2021, 14:17 PM | Brought to you by a Guest author
So, you are considering trading cryptocurrency but you’re not sure how to get started. Although many of us have heard about cryptocurrencies, lots of us have been reluctant to trade them. People worry about the risks involved with trading the world’s most recent currency, however, with constant reports in the media of Bitcoin and other major cryptocurrencies doing so well, many have decided to hop on the bandwagon.
There is a lot of money to earn in Crypto trading, however, there are risks involved. A lot of folks will remember everybody in the late nineties talking about the dot com craze, and how everyone should invest in it. People lost their entire savings investing in some of these companies, and traders do expect to make serious losses investing in cryptocurrencies too, however, there is still obviously a lot of cash to be made currently. Just like any other type of trading, it is a gamble. The technology industry has always worked in this way.
For many people, trading cryptocurrency might seem overwhelming. However, you don’t need to be a Harvard graduate to be able to figure it out. This article will explain how the average person can easily trade cryptocurrencies.
What is CryptoCurrency?
First things first, let’s explain exactly what cryptocurrency actually is! Instead of using all the technical terms, let’s make this as easy as possible:
Cryptocurrency is money on a software platform.
You must remember that there are people working behind the scenes on each cryptocurrency that help create the currency and the platform as well. To show you how this works, let’s take a look at some different software platforms to help you understand.
Here are a few software platforms you have probably seen or heard of online:
- Spotify: A software platform that allows you to stream music
- Google Images: A software platform that allows you to store images and videos
To use these platforms, money is exchanged to allow you access (for both these platforms there is free limited access but we are explaining the paid versions).
- Spotify: You pay in your local regulated currency every month or annually to buy a subscription to allow Spotify to run on your computer.
- Google Images: You pay with your local currency to allow you to store images and videos. Depending on your plan, determines how much space you get.
Both these systems have a database connected to them. Google Images database is stored on Google servers, and Spotify’s database is stored on specific Spotify servers.
Cryptocurrencies don’t use local currencies but replace them with their own currency to allow users to purchase these software platforms. The database that these modern currencies give users access to is primarily based on blockchain technology.
Is Cryptocurrency the same as normal Currency like US Dollars?
One of the main aims of cryptocurrencies is often to improve on some network or software systems that already exist. If you are sending money online using Western Union or PayPal, this is an electronic method of sending currency, similar to how cryptocurrencies work.
However, using platforms like PayPal and Western Union to wire cash electronically is often limited. They do not allow users to send and receive money to certain countries. Cryptocurrencies, like Bitcoin, aim to make financial transactions easier, and open throughout the globe, while other Cryptocurrencies are developed to attempt to solve other problems.
How do you Purchase Cryptocurrencies?
To start purchasing cryptocurrencies, the first thing you must do is go to an exchange service online that helps you to purchase them. Here are a few examples of some of the leading cryptocurrency exchange companies:
Most of these services allow you to purchase cryptocurrencies using a credit card or a bank transaction. Avoid storing your cryptocurrencies with these exchange companies, as there have been many reports that they have been victims of cyberattacks.
For more details on cryptocurrencies, visit this list of exchanges for beginners.
How does someone Store Cryptocurrencies?
Everybody knows how to store traditional fiat currencies. Most people store large amounts in the bank, and for smaller amounts in their wallets. Storing cryptocurrencies is slightly different. Cryptocurrencies need to be stored in a blockchain inside a digital “wallet”. The “wallet” is an address on the blockchain. Every wallet has its own public and private address. The public address allows others to send funds to it, and the private address is known as the password, allows the owner to send and access their funds.
It is vital that you keep your private key secure and never expose it until you want to send funds. If you don’t be careful, you could easily lose some funds in your wallet.
What are the different Wallet options?
Now that you have the basics of how cryptocurrency wallets function, let’s take a closer look at some of the wallet options that are available:
- Online wallet: One of the most commonly used methods to store cryptocurrency is using an online wallet. Although it is not recommended to use this as a long term solution to storing your currency, it makes buying things and funding your trading account easy.
- Mobile wallet: There are plenty of mobile apps available that allow you to store spending money. As long as nobody hacks into your phone, your mobile wallet is a safe option.
- Desktop wallet: Just like a mobile wallet, this too is a safe option as long as your computer does not get attacked.
- Hardware device wallet: One of the safest options that people like to use are these hardware devices that help store cryptocurrency keys, as long as the electronic device doesn’t get damaged.
- Paper wallet: If you are a careful person, saving your key by writing it down somewhere might be your best option. Instead of writing on a small piece of paper that could easily get mistaken for trash, perhaps writing it on the back of a picture that is framed in your room might be best.
If you are considering using a mobile wallet or a desktop wallet, make sure you are using the best antivirus and malware available. Cyberattacks are extremely common nowadays, so be very careful when you are connected to the web. Also, running a VPN from a reputable tech company will add to your security.
There has been a lot of hype in recent years surrounding cryptocurrencies. The world’s most famous cryptocurrency Bitcoin has reached new heights and has been involved with business giants, Tesla. But, over the years, even Bitcoin has proved to be extremely volatile. It seems like those who invest either make huge profits or staggering losses. Many feel like the bubble will burst, however, others are confident it will be the future of currencies and is a great long term investment. Only time will tell, but currently, it seems most cryptocurrencies are looking good.
Don’t assume this is a get rich quick scheme. It is a risky currency to be involved with, one of the reasons being, it is not regulated by the central bank or government.
Although cryptocurrencies are built to be theft-proof, people all around the world have fallen victim to cybercrime and other types of fraud and lost vast sums of money.