November
9 - 2018
cryptocurrency bitcoin

The Absolute Beginner’s Guide to Getting Started with Cryptocurrency

If you’re a follower of the stock market, you noticed that cryptocurrencies inhabit a volatile corner of the market. That does not mean, however, that cryptocurrencies will never succeed.

This only means that cryptocurrencies may not be the get-rich-quick scheme we all wish they were. Yes, they were for some.

cryptocurrency bitcoinEvery dip in the market comes with an inevitable rebound, so don’t give up hope yet.

If you do decide to invest in cryptocurrencies, you should definitely do your research and understand the market.

The cryptocurrency market has been getting a lot of attention. You may be thinking about getting started with cryptocurrency. Before you make the move, read this guide.

First, What is Cryptocurrency?

Cryptocurrencies are a form of digital exchange designed to be anonymous and secure. They eliminate the need to use one’s name and a bank.

For some, this level of privacy is appealing. This form of currency uses cryptography to track and record transactions. This allows for user information to be kept almost entirely secret.

All cryptocurrency transactions are stored in a decentralized ledger, called a blockchain. The information within the blockchain is regularly updated and reconciled.

This eliminates the fear that someone will spend money twice. It also eliminates the need for a centralized financial institution.

There is no single administrator to oversee transactions.

Some will shudder at this thought.

Exchanges occur on a peer-to-peer basis.

Although the first cryptocurrency appeared on the scene in 2009, it is now one of over 1,000 digital currencies. You’ve heard of Bitcoin, I’m sure.

Getting a Wallet

A wallet for cryptocurrencies is similar to a bank account. You need a wallet to store, access, and use your digital currencies.

Your wallet is essentially a computer program that stores keys used to interact with various blockchains. Your wallet acts as a window.

You use your wallet as a key to access information stored in the blockchain. This information includes your tokens, records, and transactions.

If you were to lose your wallet, you would lose access to this information altogether. However, the information would still exist in the blockchain.

You can acquire a wallet when you sign up for an exchange. When you do this, you will be assigned a wallet for each type of digital currency you buy, sell, and trade.

Each wallet comes with an address. This is currently a long stream of characters. In order to send and receive digital currencies, you need the address.

Each wallet comes with a public and private key associated with information in the blockchain.

When you send or receive currencies, be sure you are using the correct wallet. Wallets are currency specific. You could risk losing your money indefinitely.

Types of Wallets

Before you get started, there are a few different types of wallets that you should be aware of. Each comes with its own pros and cons, so choose carefully.

Online Wallets

In general, online wallets are considered the least secure. Almost all exchanges offer online wallets.

Online wallets are accessible anywhere with an internet connection. They are easy to access.

However, it is recommended that you store your tokens in an offline wallet. Although exchanges have security protocols, hacks are not unheard of.

Desktop Wallets

Desktop wallets can be downloaded from developers of the coins themselves. These will store your information locally on your desktop.

The information associated with these wallets can only be accessed from the computer on which the wallet is installed.

These wallets are much more secure than some others, but there is still the risk of hacking. For example, you could get a virus whose intention is to seek out your wallet.

Mobile Wallets

There’s an app for everything. You can even keep your cryptocurrencies stored in mobile wallets.

These come in the form of mobile phone apps. These wallets usually come with an easy-to-use interface and can be used anywhere.

This is the type of wallet you might use at a retail store.

Paper Wallets

But wait, aren’t cryptocurrencies digital? Yes.

Simply, a paper wallet is just a print out of your public and private keys. You can carry these around. Use them at retail shops or cryptocurrency ATMs.

The paper wallet will usually be a print out of a specific software wallet. A special address may be generated for your paper wallet to add extra security.

You can transfer funds between your software and paper wallets.

Hardware Wallets

Hardware wallets are often considered the most secure. They are kept completely offline. Public and private keys are stored on a USB drive or similar device.

They are compatible with different types of currencies. You just need to choose the right type of wallet.

You just need to plug the device into an internet-enabled device and make a transfer.

Maximize Security

You may choose to keep several different wallets. Keep only small amounts of money in your online, desktop, or mobile wallets. These are more vulnerable to hacks.

Keep large sums offline, such as in hardware wallets. Even still, a dedicated hacker will be able to get your money.

Be careful when you send and receive cryptocurrencies. Transactions cannot be reversed.

Don’t share your public and private keys with anyone. If you lose these, then you may lose all the money in that wallet for good.

Unlike traditional banking, this money is not insured and cannot be recovered.

Exchanges: Getting Started With Cryptocurrency

It’s possible to trade cryptocurrencies 24/7. Only some exchanges will allow you to make transactions using your domestic currency (called Fiat currency).

For most, you will already need a supported trading pair, such as Bitcoin or Ethereum. Trades will be made against either of these two popular coins.

Remember that cryptocurrency markets are not regulated. Any investments you make come with risks.

There are several different exchanges to choose from. You can automate your trading across different exchanges with one Binance Trading Bot.

You can set up targets. When a specific cryptocurrency reaches a certain amount, you can set the bot up to either buy or sell the currency.

Tools such as this allow you to step back and enjoy life while still maximizing your trading business.

You should get used to trading against Bitcoin, or in some cases Ethereum. Although some exchanges allow you to use your Fiat currency, use cryptocurrencies as your reference point.

When cryptocurrencies begin to really take over, you will be ahead of the game in understanding exchanges.

Diversify and Manage Your Portfolio

When you invest in cryptocurrencies, you are doing just that. You are investing in the future of a particular currency’s viability.

You may find that you are invested in many different coins across many different wallets. How do you keep track of all this information?

Keep your affairs in order. Manage your portfolio as though it were any other stock market investment.

Keep a spreadsheet of all your investments. Track how much you bought it at, when, and how much you plan to sell it at (if you plan to sell).

You can also look into different mobile and online platforms that allow you to manage your portfolio.

Most exchanges will only allow you to trade against Bitcoin or Ethereum. Because of this, you should make investments into both of these coins.

A good portion of your investments should go toward at least one of the two.

Learn to identify which coins are viable in the market. These will be coins that have potential to solve real-world problems.

Do your research. Has the company provided a detailed report about the goals and mechanics of the coin? What do other users have to say about it?

When you read the report, try not to get bogged down in the technical language. If you understand it, great! If you don’t, then don’t be discouraged.

Try to understand the best you can.

Check out online forums, like Reddit, to see what the community has to say. Public opinion matters in these affairs.

Invest in the Long-Term

You can make a short-term investment. Don’t expect cryptocurrencies to be a get-rich-quick scheme, though.

The potential for cryptocurrencies remains untapped. Still, values have skyrocketed in the last few years.

Allow some time for cryptocurrency technologies to take hold. It will take time for the market to level off.

Invest only the money you are willing to lose completely. The cryptocurrency market remains extremely volatile.

While this leaves room for exponential growth, it also leaves room for crashes. Focus on the long-term and allow your investments to grow with time.

Invest in the Future

The future of cryptocurrencies remains unclear. With so many different coins on the market, it’s not clear which one will come out on top.

As we move forward, we might notice a transition to these digital currencies. Trust and faith in the current financial system is running low, especially as the world becomes more and more connected.

Are you getting started with cryptocurrency?

Click here to find out more about how you can turn your trading hobby into a successful business. The future is now, and the world needs trustworthy investment advice.

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