If you are someone who has investments in different stocks, you might want to consider cryptocurrency trading. Cryptocurrencies are a form of digital currencies that have seen massive amounts of growth.
In fact, if you invested just $100 in Bitcoin in 2009, you’d have over $48 million in profit today.
However, becoming a cryptocurrency trader isn’t as simple as just investing and watching your money skyrocket. In most cases, there’s a lot more that goes on behind the scenes.
So what do you need to know?
Keep reading to learn all about how you can become a cryptocurrency trader.
What Are Cryptocurrencies?
As mentioned, cryptocurrencies are a form of digital currencies that have become popular in recent years.
Unlike regular currencies that rely on banks and other centralized institutions, cryptocurrencies are decentralized, putting the power into the hand of the individual.
This means that you get to avoid many of the fees that go along with traditional banks. You also get to sidestep many international trading fees, as well as avoid dealing with other institutions, like the Financial Reserve.
The decentralized nature of Bitcoin and other cryptos comes from blockchain technology. This system also helps ensures that all of your transactions are safe and secure.
Know What the Top Cryptos Are
At the moment, the most popular cryptocurrency by far is Bitcoin. Yet despite having the largest market share and the most recognition, there are thousands of other cryptocurrencies that you can choose from.
Some of these, like Ethereum, might not be as well-known as Bitcoin but are still growing at a rapid pace. In some cases, they can give you an excellent return on investment since they’re growing so fast.
Other cryptocurrency developers underdeliver on promises and end up creating currencies that fail to meet consumer expectations. These are risky to invest in as you never know whether or not people will just stop trading them.
Be Aware of What Goes on Behind the Scenes
When you buy tokens for Ethereum, Bitcoin, or some other cryptocurrency, it might seem like magic, but it’s not. Having an understanding of what’s happening behind the scenes can make you a smarter investor.
As mentioned, cryptocurrencies rely on blockchain technology. Each time a transaction occurs, this technology stores a ledger of it on a crypto-powered node. These connect to servers where people mine coins.
If a miner enters incorrect information or tries to input false transitions, the system will catch it by checking it against the ledger. This is why Ethereum and other cryptos are so secure.
Get started With Cryptocurrency Trading
Many people might think that cryptocurrency trading is hard to get into. The reality couldn’t be further from the truth.
In a matter of minutes, you can buy tokens for Bitcoin, Ethereum, or some other crypto.
Here’s how to do it.
Find the Right Platform
To start trading crypto, you’re going to need to use a platform that lets you buy tokens. Coinbase, eToro, and Gemini are some of the most popular ones. Just make sure to do your research to ensure that you use a reputable program.
Once you download the app or are on the program website, you’ll need to make an account and enter some personal information. If you’ve ever invested in stocks, you’ll find the setup to be similar.
After you’ve entered all of the necessary information and have your account, you’re ready to get started buying Ethereum, Bitcoin, or any other currency!
After creating your account, it’s time to connect your bank account. This will provide you with an easy way to convert your money to tokens and vice versa.
Most of the major trading platforms make it easy to add funds through debit cards or wire transfers. If you have the option, go for a wire transfer as it should be free on apps like Gemini and Coinbase.
Choose a Crypto
Now comes the difficult part—choosing which cryptocurrency to invest in.
As mentioned, there are thousands of different options, and all are at least worth learning more about. That being said, Bitcoin, Ethereum, and Litecoin are some of the safest options that most beginners choose to invest in.
Keep in mind that you can always diversify your portfolio. Having investments spread across different cryptos can allow you to generate higher profits. You can choose some that are riskier and others that are more stable.
If you’re apprehensive about putting a lot in, start with a small amount, or consider investing incrementally over a period of time.
Watch Your Profits Multiply
If you’re investing for the long-term, you should see your profits grow over time. There will be hiccups along the way, but the larger and more stable currencies almost always experience growth.
If you are in it for the long haul, you might want to consider getting a cryptocurrency wallet. These are digital wallets that hold your funds in extra secure locations. Most of these are free to use.
Once you’re happy with the profit that you’ve made, you can sell your crypto for money. The platform or wallet will then deposit the funds into your bank account.
Becoming a Cryptocurrency Trader Is Easy
Cryptocurrencies may seem like something out of a science fiction novel, and to some extent, they are. However, the reality is that investing and trading in them is far easier than most people realize.
If you’re interested in getting started with cryptocurrencies, make sure to use the tips mentioned in this guide to help you become a successful cryptocurrency trader.
Interested in learning more about how to trade cryptocurrency? If so, make sure to check out some of the other posts on our site.