You decided to buy cryptocurrency because you’ve heard so much about it. Most likely, a sea of unknowns overwhelms you, and a never-ending list of questions blows your mind: How should I begin? What should I do next? Which are the most effective methods? How can one avoid mistakes and avoid being a victim of con artists? What should you remember? Breathe deeply and let go. Your quick route to the fascinating world of cryptocurrencies is this comprehensive guide. Adhere to the directions and fully enjoy your crypto adventure.

Step 1: Choose your coin

There are several options available to you when it comes to digital currencies. The most well-known and comprehensive list of virtual coins and tokens is CoinMarketCap, which is also where you should start building a solid cryptocurrency portfolio. It now has information on over 1,600 coins and tokens, including market value, average daily trading volume, and exchange rates against the US dollar.

Though the numbers may seem overwhelming, remember that they are just figures. One-third of the coins on the list are penny stock or worthless, while the other third is travelling down a dead end. Therefore, the best and safest option for you as a novice may be Bitcoin (BTC) or any other well-known coin like Ethereum (ETH), Ripple (XRP), or Litecoin (LTC). Strong development teams, active communities, a well-defined roadmap, and a clear strategic plan support them.

You can go on to altcoins once you gain more self-assurance and familiarity with cryptocurrency. Here, you can search for hidden gems and cherry-pick the cheap tokens of up-and-coming projects. Remember to keep your eyes peeled and heed what the communities say.

Warning when trading anything!

Take care when trading anything. Because of their low valuations and alleged high potential (often pushed by their creators), altcoins and so-called ICO tokens may seem alluring. However, a recent Wall Street Journal study revealed that 20% of all ICOs are outright scams, meaning their organizers intend to steal your money immediately.

Since 46% of last year’s efforts have already failed, there is minimal possibility that the ICO team’s coin will succeed in the long run, even if they are honest. Therefore, if you wish to trade small cryptocurrencies or tokens from initial coin offerings (ICOs), study the project’s White Paper carefully, learn about the team, cross-reference it with forums and social media, and avoid investing large sums of money in such endeavors.

Step 2: Choose where to store your coins

You need a wallet to keep your chosen coins once you decide which ones to buy.

A cryptocurrency wallet is a piece of hardware, software, or internet service that keeps your public and private keys and gives you access to your digital assets so you can interact with them.

The most important thing to remember is that wallets are meant to hold something other than actual storage. All your records and transactions are written on the blockchain, which is merely a tool to read. Think of it like your email login credentials; they don’t hold any information but let you access your stored communication. Whatever your assets may be, they are lost if you lose your credentials. Because they are currency-specific, wallets can only transfer and receive compatible coins and tokens. For instance, you risk losing your money permanently if you try to transfer Bitcoins to an Ethereum wallet.

See our comprehensive guide to learn more about the many kinds of cryptocurrency wallets, how they operate, and which one is ideal for you. Cryptocurrency wallets can be classified as either hot or cold based on whether they are online. For a thorough explanation of private keys, various wallet kinds, hot and cold wallets, and wallet security.

Step 3: Choose where to buy the coins

Now that our wallet is prepared, let’s acquire some coins.

P2P trading systems allow you to purchase bitcoin directly from other users or on a dedicated exchange; these platforms function precisely like any other online marketplace, except they let you buy and sell products and services to other users.

Crypto P2P platforms

Among these resources, LocalBitcoins is one of the most widely used. In essence, it’s a location where buyers and sellers may connect and complete the transaction. Users post online orders to purchase or sell Bitcoins for local fiat money, along with the desired exchange rate, mode of payment, and amount exchanged. That is the appearance of LocalBitcoins’ home page.

A drop-down box allows you to select the potential counter-party’s location. You can also filter the orders based on accepted fiat and the amount provided.

To complete the transaction, you must register with the service; fortunately, this is a quick and easy process that should only take a few minutes. The usual set of information will be requested from you: password, email address, and username. Remember to click the link in the confirmation letter to verify your email.

Before you search for the most excellent offers from the sellers in your area, the service will require you to confirm your identification and give your proper name.

P2P networks are the quickest and most straightforward way to purchase coins, but convenience comes with a cost: the conversion rate is typically higher, and there may be extra fees. The owners of the trading platforms frequently vanish with their clients’ money when the sites are hacked and cease to function. Put another way, P2P crypto networks are adaptable and easy to use, but you should always be on the lookout for fraud.

Cryptocurrency Exchanges

Signing up with a cryptocurrency exchange or broker, such as Coinbase, Bitstamp, Kraken, or YoBit, is another option to obtain some cryptocurrency. There are dozens of exchanges accessible right now where you may buy and sell digital assets for fiat money, but not all of them are created equal when it comes to security, liquidity, reliability, and the variety of available instruments.

In technical terms, a cryptocurrency exchange is only an intermediary that develops and maintains a user-friendly platform for the purchase and sale of digital assets. Although they charge high transaction costs, they have better exchange rates. Remember to consider factors like spread, buy and withdrawal restrictions, trading volume, technical support, insurance, and interface usability while selecting an exchange. Additionally, look into the exchange’s history to discover if it was compromised or headed toward insolvency.

Step 4: Choose where to trade

Ideally, you have already purchased your first digital currencies and have been acquainted enough with the cryptocurrency landscape to consider trading as a means of generating income. First, let’s decide which exchange and exchange services are best.

Numerous exchanges offer a large selection of coin pairings and trading options. Most of them won’t let you deposit or withdraw cash, so having bitcoins will be helpful. They will purchase your tokens and altcoins, enabling you to diversify your trading holdings and seize possibilities presented by less well-known coins.

Smaller exchanges may entice you with better trading conditions. Still, larger, more established businesses have better liquidity, allowing you to buy and sell any quantity of coins for the least amount of money.

The general rules of speculative trading apply to cryptocurrency exchange trading as well: in order to profit, you must buy cheap and sell high. Trading cryptocurrencies may be done with ease using the same main tools and important trading goals that apply to trading stocks, FX, and commodities. You’ll feel right at home with cryptocurrencies if you understand the basic ideas behind trading on any financial market.

Trading cryptos with brokers

Trading bitcoins via a broker is an additional option. Brokers are those who have experience in trading, many of them in foreign exchange or forex, as opposed to crypto exchanges, which originate in the relatively new realm of digital currency.

Brokers streamline the onboarding process and increase trading sophistication, but they can have fewer coin options and fork opportunities. Brokers typically allow leverage, complex technical analysis, and stricter regulation. Both seasoned traders and novices who wish to concentrate on trading will find life easier with these companies’ extensive experience and charting tools. Trading cryptocurrency using forex brokers makes it simple to go short or bet against the price, which is a typical practice in forex trading.

So, which one should you pick—a broker or an exchange? First things first: are you interested in trading cryptocurrencies, or are you looking to buy them? Owning Bitcoin is not necessary for trading with brokers, nor is it essential to have a wallet. As previously said, it facilitates trading but prevents taking advantage of fork possibilities. You may occasionally choose to stick with the original cryptocurrency and other times switch to a new one. If you don’t own it, you can’t do this.

Brokers that have spreads and cryptocurrency exchanges that impose fees have quite distinct pricing structures. Although cost comparison can be challenging, it is well worth the effort. More than anything else, the response is contingent upon your wants.

A word to the wise

The anonymity and privacy qualities of cryptocurrencies and blockchain technology are frequently praised. However, there is a cost associated with these benefits. You can lose everything if your Bitcoin exchange is hacked, and no one will be held accountable or make up for your losses. It basically implies that you are fully responsible for your cash, so make sure you have taken all the necessary precautions to lessen the likelihood that a cunning hacker will steal from you.

The number of compromised accounts on cryptocurrency exchanges rose by 369% in 2017 compared to 2016, according to the most recent Group-IB statistics. The vast majority of those impacted either chose a weak password with fewer than eight characters or disregarded two-step authentication. They were an easy target for the criminals because of their lax attitude.

Useful information

In contrast to other financial markets, cryptocurrency trading is open around the clock, with no exceptions for public holidays or weekends. Since the majority of daily trading volumes occur in Asia, this area sees the highest levels of activity on the market during these hours. In comparison to European and American hours, it implies that the Asian session can be more erratic and unpredictable.

While most cryptocurrency exchanges require ID verification under AML or KYC, they do offer a straightforward signup process. It is preferable to start the process beforehand because the confirmation could take some time.

Customers of cryptocurrency exchanges frequently have to wait weeks or even months for technical support, and you run the risk of losing your money if the platform is hacked or has a technical problem. For this reason, you should always be cautious and pay close attention to security features.

Although the costs associated with trading cryptocurrencies are higher than those associated with forex, the astronomical market volatility can result in gains of thousands of dollars in a matter of hours. Marginal trading with a standard leverage of 1:5 is available on certain exchanges. Don’t let the advantages of marginal trading fool you, though. There’s an even greater chance of losing everything because of the volatility discussed above.

Step 5: Pave your way to success

Before you begin trading cryptocurrencies, there are a few things to think about in order to secure your money, keep sane, and prevent issues.

• Your first concern is security. An exchange for cryptocurrencies is not subject to regulations. This indicates that they lack an oversight body to regulate their activities and shield traders against dishonest individuals, deceptions, and misconduct. When selecting a Bitcoin trading platform, a trader needs to exercise extreme caution.
• Take no chances with money you can’t afford to lose. Any speculative trading is subject to this rule; bitcoin trading is not an exemption. Because of the tremendous volatility of this market, trading Bitcoin or a lesser-known altcoin can result in crushed hopes and complete failure instead of a brief period of financial triumph.
• Financial literacy is essential. Create a trading plan, then follow it through to the end. You may avoid making snap decisions and finally help to protect your wealth by using a sound trading strategy and exercising self-control.
• Don’t put all your eggs in one basket; think about diversifying your investments. This guidance is applicable to a variety of trading platforms that you use in addition to your investment portfolio. It is not a good idea to deposit all of your money in one coin or to trust one exchange with all of your coins, given the increasing risks of exit scams and cyber attacks. You’ll get fresh investing alternatives and an extra layer of safety from diversification.

Even in situations where the market moves against you, if you adhere to these four golden guidelines, you might make a healthy profit in addition to avoiding losing all of your wealth.

Five distinguishing features of a crypto loser

1. They don’t have a trading plan. These traders initiate haphazard trades based on their gut feelings or suggestions from other cryptocurrency experts. They wind up making impulsive purchases and sales without knowing why.

2. They are unable to tolerate defeat. These traders are unaware that a necessary part of the process is losing money. All you need to do is gain perspective, acknowledge your errors, and move on.

3. Everything was on the line. The general guideline for all investments, including cryptocurrency, is never to invest money you cannot afford to lose.

4. They take rumors of any kind seriously. There is a ton of false and inconsistent information in the cryptocurrency world. This market is rife with FOMO and FUD, which means you can’t believe everything you hear.

5. Their standards are higher. Some traders think that trading cryptocurrencies will provide them with a regular income, but given how unpredictable the crypto market is by nature, they can be sorely disappointed.

Roundup

When you know what to do and what to anticipate, trading cryptocurrency doesn’t have to be a laborious and confusing procedure. Here’s a summary of the main conclusions—five simple steps to buying and trading cryptocurrencies.

First step: Select the coin that you want. Start with Bitcoin, Ethereum, Litecoin, or other well-known cryptocurrencies if you’re new to cryptocurrencies. They are less volatile and more liquid.

Step two: Make a wallet. Registering with an internet service is the simplest way to accomplish this. Remember that wallets are designed for certain currencies. It implies that only compatible tokens and coins may be sent and received. You can omit this step if your preference is to trade only and not possess cryptocurrency.

Step three: Use P2P trading networks to purchase bitcoin, or go to a cryptocurrency exchange that allows you to buy cryptocurrency using fiat money. Details are required in order to register with the exchanges. To pay for your Bitcoins, some of them want you to link your credit card or bank account. You can skip this step if you would instead trade cryptocurrency rather than possess any.

Step four: Create an account with a forex broker or a cryptocurrency trading platform that offers a wide variety of marketable cryptocurrency pairs and strong liquidity. To improve security, certain brokers and exchanges may request that you authenticate yourself and activate two-step authentication—step Five. To prevent making rash trading judgments, create a sound trading plan and practice severe self-discipline. Learn about the principles of trading as well as difficulties related to trade psychology; these apply to cryptocurrency markets.

Happy trading with cryptocurrencies!

Conclusion

Investing in cryptocurrencies requires serious consideration and a commitment to understanding the market. By familiarizing yourself with the factors outlined in this guide — from market dynamics and selecting the right cryptocurrency to secure storage — you can start your cryptocurrency investment journey on the right foot. While the potential returns from cryptocurrencies can be significant, the market’s risks are equally high. Remember to invest only what you can afford to lose and to seek advice from financial advisors if uncertain.

As the cryptocurrency space continues to evolve, so will the landscape for buying and investing in digital assets. Keeping abreast of these changes and continuously educating yourself will empower you to make the most of the opportunities presented by cryptocurrencies. So, whether you’re looking to diversify your investment portfolio or are captivated by the promise of blockchain technology, take the time to understand the nuances of the crypto market. With the proper knowledge and tools, you can turn the seemingly complex world of cryptocurrencies into a sound and rewarding investment venture.