With the current state of things, it is pretty safe to say that cryptocurrency is the currency of the future. Anyone who has ever heard about this concept became interested in getting to know more about it almost instantly. Aside from getting familiar with cryptocurrencies and how they work, people also want to learn more about the way they can trade them.

As the popularity of cryptocurrencies rises, more and more people become interested in learning how to trade them. This comes as no surprise because managing to learn how to trade cryptos could potentially help you generate considerable wealth. With that in mind, here is a useful guide on how to become a crypto-trader and learn how to trade cryptocurrency successfully.

What is cryptocurrency?

Before we dive any deeper, we should first explain what cryptocurrency is. By definition, cryptocurrency is a cryptography-secured digital currency that is nearly impossible to counterfeit. The fact that they are decentralized means that they are not governed by any bank or government. Cryptocurrencies use blockchain technology which makes them virtually impossible to hack.

How is that possible?

To illustrate this a bit better, a cybercriminal would have to take control of the majority of nodes within the blockchain in order to be able to alter or infect it with malicious software. That’s simply unachievable because they lack both time and computing power to do so. In other words, as soon as a block of data – that is stored on a node – becomes a part of a blockchain, it becomes encrypted and virtually impossible to tap into.

Trading cryptocurrency: where to start?

In order to start trading cryptocurrency, you will need to have an initial capital. But how – or rather where – can you exchange fiat currency for cryptocurrency? The answer lies in the exchanges. The exchanges are marketplaces where currencies, commodities and other assets are being traded daily. Of course, when looking for a cryptocurrency exchange – just like with the traditional one – there are some key elements you will need to pay special attention to.

What to look for?

For instance, look for exchanges that reputable and that have favorable exchange rates. Furthermore, make sure that the exchange is available in your country or area, as not all of them are available worldwide. Finally, if the exchange requires no form of ID from you, chances are that it is not quite safe, so always make sure you go with validated ones. 

Who can create a trading account?

Basically, anyone can create a trading account. In most cases, you will have to provide your first and last name, as well as your email and password. After you do this, you can move onto additional security settings to ensure that your account is as safe as it can be.

Additional settings

Here, you will most likely be asked to provide your phone number to enable phone verification. Also, you will be asked to choose a payment method. Most commonly, you will be able to choose between debit card, bank account and wire transfer. In the end, you will have to just verify your identity and you will be good to go. Now, all that is left for you to do is decide on your trading strategy and get into a trading routine.

How to start?

As mentioned, once you join a trading platform and create an account, you can start trading. The way it goes is that you will need to purchase your initial cryptocurrency by using a preselected payment method. However, it is important to mention that not all cryptos are the same, so you should really do your research when deciding on which currency to go with. For instance, while Bitcoin is the first and the most popular cryptocurrency, there are actually so many others that potentially make more sense.

How to choose?

As an example, if you choose to buy Ripple, you will be able to do it far quicker and at significantly lower fees. Some financial institutions even predict that this cryptocurrency will boost the worldwide liquidity of money. However, it is also important to mention that every exchange is unique, so it would be best to follow the directions on the one you have chosen when buying cryptocurrencies for the first time. 

Storing your cryptocurrency

As soon as you manage to buy cryptocurrency, you will need to find a proper way to store it. One of the best and most secure ways to store cryptocurrency is in a wallet. A wallet that is made for storing cryptocurrency is a software solution. It is a program that stores private and public keys and any interactions with blockchains. This allows users to receive and send cryptocurrency while also keeping an eye on their balance at any given moment. 

Why is this important?

Simply put, in order to be able to make any transactions, you and the other party will have to exchange your keys. You will be able to make a transaction only once your private key matches the public key of the blockchain the cryptocurrency is being stored on. As mentioned, your private key allows you to access your funds. But your public address is the thing that will enable other people to send funds to you. So, while you can – and should – give people your public address, you should really try to keep your private key private. 

Crypto-to-crypto trading

Surprisingly, the majority of exchanges will only allow you fiat-to-crypto trades. However, there are exchanges that also offer the option to trade cryptocurrency for cryptocurrency. These platforms, on the other hand, will only ask you for your email and password, and you will have to prove that you are not a robot. Some of these exchanges, such as Binance, even have their own cryptocurrency which you can use to get a certain discount on certain offers.

How to do it?

In order to be successful with crypto-to-crypto trades, you will need to keep a close eye on various trading graphs. People who fail to do so usually end up spending their money on a currency that ends up flopping. Since the digital currency market is so volatile, you will need to keep your eyes wide open if you hope of reaching success.

What else can you do with cryptocurrency?

Finally, let’s discuss other practical uses of digital currency. Not many people are familiar with the fact that they can use cryptocurrency to pay for goods or services. Since this is a fairly new method of payment, businesses that already offer this opportunity are becoming more attractive than their competitors who don’t. In some industries, such as the iGaming industry, users are far more likely to pay with cryptocurrency if they have the option to choose. 

On a similar note, you can even opt for a digital IRA and reduce your retirement risk. For instance, by diversifying your investments to include cryptocurrencies as well, you will be significantly reducing the risk of losing a huge chunk of your investments in the end. 

 

Since cryptocurrency is such a new currency, it is safe to assume that it will only get more and more popular over time. That is why you should do your best to get familiar with it and learn how to trade it early on, to increase your chances of reaching success in the long run.

Author's Bio: 

Jessie Connor is a passionate writer and researcher from Brisbane, contributor at several business and lifestyle blogs, hooked on yoga and healthy living. She loves to spend her free time travelling, reading and of course – shopping!