A Beginner’s Guide to Start Trading Crypto
Cryptocurrency has become an unavoidable trend. You may be called a weirdo if you are ignorant of the movement. The truth is, cryptocurrency has come to stay. It is a digital currency that has gone mainstream and many are diving into it right now. So you don’t feel left out, here are some basics to help bring you up to speed.
What are Cryptocurrencies?
Cryptocurrencies are like regular currencies except they are entirely digital. You can't touch them, however, you can use them just the way you use your regular cash —Naira, Dollars, Euro, etc. And because it is a digital asset, cryptocurrency can be sent to friends and family anywhere in the world. Cryptocurrencies are decentralized which means, unlike the traditional banking systems that are issued by a central authority, cryptocurrency is not controlled by anybody. They exist outside the control of the government and operate through distributed ledger technology known as a blockchain. They are secured by cryptography which makes cryptocurrencies more trustworthy. Hence, you can maintain anonymity while trading inside the blockchain.
Are Blockchain and Cryptocurrency the Same?
Blockchain and cryptocurrency are not the same. A blockchain is like the normal leger used in conventional banks but this leger is exclusively digital. A blockchain is used for storing data on decentralized networks which a cryptocurrency is, while a cryptocurrency is a medium of exchange like the popular US dollars and pounds. Blockchain acts as the witness for every transaction that goes on the internet and remains uncompromised.
What Other Types of Cryptocurrencies Exist?
Aside from Bitcoin which rose to attention in 2008, there are millions of cryptocurrencies that are in existence today. They are called Altcoins, meaning alternative coins other than Bitcoin. The most popular altcoin is Ethereum, it has an impressive track record making it trustworthy among others. Its blockchain goes beyond recording financial transactions. It records agreements in the form of smart contracts. Other most popular altcoins or cryptocurrencies aside from Bitcoin and Ethereum include XRP, Tether, Cardano, Polkadot, Stellar, USD Coin, Dogecoin, Chainlink, Uniswap.
What are Crypto Exchanges?
Crypto exchanges are platforms where you can trade your Bitcoins and other cryptocurrencies. They allow you to buy and sell cryptocurrencies of various types. Normally, you can't buy crypto from your bank or investment firm once you've decided to buy some bitcoins or other cryptocurrencies. A crypto exchange allows you to trade one crypto, buy crypto using regular cash like the naira and also convert cryptos back into naira and leave it as cash in your account. Examples of crypto exchanges include Binance, Gemini, Coinbase, and Kraken. There are many more but these are the most recognized platforms worldwide.
What are Crypto Wallets?
Do you have a bank account? I’m sure you do. A bank account is synonymous with a crypto wallet. A crypto wallet is simply an app or digital storage that permits crypto users to store their digital assets such as Bitcoin and other cryptos.
What is a Crypto Address?
A crypto address is akin to a bank account number. However, this type is called a crypto address and has unique features. It is a long thread of letters and numbers that is anonymous because it is not usually associated with the owner's name, unlike the conventional account number. A crypto address is unique and difficult for humans to read. It indicates the location of a wallet on the blockchain which is why at every point, the sender would ask you the location to which they are sending the fund.
Are Cryptocurrencies a Good Investment?
Cryptocurrencies are a good long-term investment. However, it is highly speculative and volatile, but in turn, can pay off in the long run. For the past decades, Bitcoin has proved to be the best-performing asset so far. And by historical standards, it is a profitable venture that has enriched many lives. For example, If you had bought $1000 worth of bitcoins 10 years ago, by now, you would have hundreds of millions of dollars today.
How Do I Buy Cryptocurrency?
Buying cryptocurrency is a walk in the park. As long as you know your money goals, have your emergency funds reserved and you're ready to stick to instructions then you're good to go. To buy cryptocurrency,
Create an account with an exchange. There are two types of exchanges, centralized and decentralized exchanges. Centralized exchanges are less technical and easy to access and are mostly recommended for newbies. However, you can't compare the security levels to decentralized exchanges. Some of these exchanges ensure you get the best service ranging from security, fees, accessibility, liquidity, coins offered, and more. You might have to look out for these factors while you scout for exchange platforms. If you have no idea which to pick, then you can check out these four most popular exchanges grossly used across the globe: Coinbase, Binance, Gemini, and Kraken.
Fund your wallet: now you have your account ready, move on to fund it. As a first-time buyer, you will likely use fiat to purchase your cryptocurrencies. Decide how you want to buy, either through peer-to-peer or through your bank card. Whichever you choose, once your account gets funded, you can go on to buy your preferred coin(s).
Selecting your coins: buying coins might seem easy but it is sensitive. Buying a coin is like investing your money and very importantly you would have to review your investment goals, would the asset you're buying appreciate with time? What kind of trader do you want to be? These and more are questions you must ask before venturing into buying cryptocurrency.
Crypto Terms and Their Meanings
Here are some of the crypto jargons you must have come across or would likely meet as you journey on as a trader.
Airdrop: A marketing campaign in which a specific cryptocurrency or token is distributed to a certain audience.
All-Time-High (ATH): The highest point in history for a cryptocurrency (in terms of price and market capitalization).
Altcoin: this is used to refer to all other coins aside from Bitcoin
Bear market: A bear market occurs when the values of assets in a market decline from recent highs. As a result, investor confidence has dropped, and the economy and market have become hopeless.
Bull market: In the crypto and stock markets, a bull market is defined as a period in which the prices of assets rise dramatically. For both investors and buyers, these markets provide a source of inspiration.
Date of lunch: A word used to describe when ICOs will sell their tokens.
Day trading: Day trading is the activity of purchasing and selling assets repeatedly in order to profit from intraday price swings.
DeFi: A movement that promotes alternatives to traditional, centralized financial services.
Dip: When markets experience a short or long-term downturn, this is referred to as a dip.
Dump: A sudden drop in the value of digital assets.
Fiat: Money that is backed by the government and released into circulation.
Fish: Someone with a little cryptocurrency holding.
Flipping: An investing technique in which you purchase something to resell it for a profit later, usually within a limited time frame.
FOMO: an abbreviation for Fear Of Missing Out
Gas: The cost paid on the Ethereum network in exchange for using the platform's processing capacity is referred to as gas.
HODL: A form of passive investment technique in which you keep an investment for a long time independent of price or market fluctuations.
Invest: Investing means putting money into a financial system with the goal of making a profit.
P2P (Peer-to-Peer): The splitting of duties or workloads between peers through decentralized interactions between parties in a distributed network.
Phishing: When a scammer poses as a reputable organization or individual to deceive individuals into disclosing personal information such as Social Security numbers, passwords, banking information, and so on. Frequently through a malicious link that appears to be authentic.
Cryptocurrency is for everyone. Just like your regular money, it is more valuable and promising. You might want to give it a whirl and see for yourself. Are you looking to start investing in cryptocurrencies?
Then this is your chance to start right and get the required knowledge to get you going. This free live webinar with Chris Ani is the right event for you. Register Here.