Are you asking yourself ‘What Should I Know to Enter the Cryptocurrency Market?’ Well, you’re not alone and the answer is plenty! Crypto or cryptocurrency is an asset in digital form that you buy, sell or trade outside traditional monetary authorities or banks. The cryptocurrency market has been around since 2009 and is HUGE but it takes a bit of savvy investigation and management to actually come out with a profit.
- Cryptocurrency has been around since 2009
- Presently, there are over 18,000 cryptocurrencies
- Initially investors must use fiat currency to enter the crypto market
- The market size is mind-boggling. For example, May 2021, it was reported that the whole crypto trade volume was over 500 billion U.S. dollars for a 24 hour period.
How Long Has Cryptocurrency Been Around?
Since 2009 bitcoin has been puzzling, amazing, and exciting investors. It’s believed by many to be the original cryptocurrency. It began the age of blockchain technology and the use of digital currency outside the traditional currencies which helped to decentralize it.
What Exactly Does Cryptocurrency Mean?
Crypto or cryptocurrency is an asset in digital form. It can be bought and sold without the need for a bank and is not regulated by any monetary authority. Cryptography is the means, method, or technique that allows you to securely sell, buy, and trade.
The big shift that made cryptocurrency spread like wildfire was improved security.
What Should I Know About Keeping My Crypto Trading Safe?
Previously, crypto could be tampered with. People were making copies of cryptocurrency and spending them two times and sometimes more.
Now most crypto records, including Bitcoin, are ‘built’ in a way that makes them tamper-proof. The blockchain made this possible and was able to keep information like transactions and owner information secure. This was huge to the success of cryptocurrency.
What Form Does Cryptocurrency Come In?
Cryptocurrency comes as a digital token or coin and counts as one unit. Use these ‘coins’ in these 3 ways:
1. to pay for services or goods
2. to hold as a central store of value
3. to help run computer networks to compute complicated financial transactions
How Is Cryptocurrency Created?
Cryptocurrency is ‘mined’ in order to be created. The process of mining uses computers to crack calculation and that in turn verify that the data exists and is being stored within the network. As a result, mining creates new crypto and awards it to whoever solves the puzzles.
FYI: There are Huge Environmental Drawbacks to Mining Crypto With This Method
Mining for crypto using this method is a huge energy guzzler and has a very real and negative impact on the environment. There are other ways to mine crypto that don’t hurt our environment so severely and are worth checking out.
What Should I Know to Enter the Cryptocurrency Market…? Learn How to Enter the Cryptocurrency Market
First of all, it’s very easy to do. It’s similar to opening an account when you want to trade stock.
· First you decide what broker or exchange to use.
· Enter your details and then verify your account.
· Transfer money into the account for your future transactions
· Place an order for the cryptocurrency you’ve selected
· Decide which storage method you are going to use.
What Should I Learn to Protect My Crypto Investment?
There are ways to invest safely in crypto and they include:
· Centralized exchanges – 3rd-party intermediaries who sell Bitcoin at market rates. They make their money by charging fees and offering other chargeable services. One drawback is that due to their volume of crypto, hackers often target them
· Traditional online brokers who also offer stocks
· Crypto-only exchanges – these only offer crypto so no stocks and bonds but they generally have a broader offering of crypto as well enhanced storage solutions
· For the experienced user a decentralized exchange could be the way to go. Their fees can be lower but their service more complicated to use which inturn could offer more security.
· Peer-to-peer trading – Only use this option with known and trusted individuals.
How Do I Pay For My Cryptocurrency?
You pay for cryptocurrency with fiat currency. So, is Bitcoin is a Fiat Currency? Nope. Bitcoin is not a fiat currency. Fiat currency is legal tender that a government issued, like dollars and UK pounds. When starting out you are required to pay with a fiat currency. After you’ve traded for some time it’s possible you can use your crypto to purchase other currencies.
Topping Up Your Accounts
If you’re using fiat currency then you can use a traditional bank transfers or debit to put money into your account. You can use a credit card to top up your account but this can put you at risk for debt problems. As the crypto market is a volatile animal it can drop quickly leaving you without the funds to cover your credit card bill. That’s an invitation to spiraling debt.
Once you have established crypto accounts with others sources you can use those stores to fund new accounts. Just transfer them from your digital wallet or other platform to buy other currencies. .
Word of advice: Always check what’s allowed in terms of currency trading i.e. do the platforms you’re using allow you to trade from Ethereum to Dogecoin, etc.?
If you are looking to top up your crypto account but are short of funds, you may be thinking of taking out a loan. This should be your last choice because if your crypto investment goes south you’re left with debt you may not be able to payoff. But, if a loan is what you’re after you’ll want to know your credit score to know the likelihood of getting approval. Read how to How Can I Check My Credit Score for Free?
What Should I Know to Enter the Cryptocurrency Market…? Know What It Costs to Trade Cryptocurrency
Fees and charges differ from platform to platform and is something you need to check out before you commit. Fees vary depending on what you buy and sell as well. Don’t set yourself up for a nasty surprise.
There are Many Cryptocurrencies to Choose From
Before you make your decision, ask yourself some simple questions.
- What are my goals in terms of investing in crypto?
- Do I want to make money by investing in some that increase in value?
- Do I want to use my crypto to make transactions for goods and services?
- Am I just interested in learning more and taking part?
Some of the cryptocurrencies on offer are:
· Bitcoin – most valuable and the first-ever crypto.
· Cardano – a creation by one of the Ethereum co-founders
· Ethereum – if you are in need of financial transactions that are too complex for Bitcoin try Ethereum
· Litecoin – similar to Bitcoin lite for easy and fast payments
· Solan – cost-effective and speedy alternative to Ethereum
· Dogecoin – took awhile to gain market confidence but is now the most valuable
· Stablecoins – their value is tied to assets like U.S. Dollar but is a class or group of cryptocurrencies
Do I Need to Worry About Keeping My Crypto Safe?
The answer is Yes. You receive a private key when you acquire a crypto-asset. This key proves that you are the owner and have the right to do what you like with it. Loose the key and you cannot carry out trades therefore your crypto is gone. Game over!
Also, if someone gets ahold of your key they can do whatever they want with your crypto. Choosing a secure digital wallet is monumental in keeping your crypto safe.
Learn How to Keep Your Crypto Safe Before You Enter the Market Should Know How to Keep Your Crypto Safe
On-Platform Non-Custodial Wallets – Using an on platform storage means your crypto is open to hacking.
Local Storage – If you’re looking at local storage or storing crypto yourself you can go for hot or cold wallets If you want to look into storing your own crypto locally then there are many options on the market. Cold wallets would be a thumb drive – it’s offline and a physical device. A hot wallet has intermittent online connectivity so it’s less vulnerable to hacking.
On-Platform Storage – Gives easy access for buying, selling and trading but has a certain amount of vulnerability.
You may want to store your crypto across multiple places to reduce your risk level. Using a combination of storage methods could lessen overall vulnerability and/or the possibility of losing it all in one big hack.
It’s very simple to get into the cryptocurrency market BUT make sure you do your research first and like any investing know the safety measures you must take. Above all, only invest what you can afford to lose.