This beginner’s guide to cryptocurrency investing was written by Bob Loukas, founder of Bitcoin.Live, an educational platform for aspiring cryptocurrency traders.
Trading in cryptocurrencies and awareness of the cryptocurrency market remains to be more widespread in mainstream media, with numbers that continue to rise on a daily basis. In the past few months, the cryptocurrency market has grown swiftly from $11 billion USD to the huge heights of $795 billion USD.
With around 1,400 cryptocurrencies currently available and more ICOs being made every day, the market is proving more difficult than originally anticipated, especially for traders. The purpose of our platform and our experts is to take away the uncertainty of crypto trading and provide traders with dependable advice that can help people at any level.
Kicking off with the basics, cryptocurrency is a form of digital currency that has been considered to be incredibly secure and anonymous, with every coin being inimitable – once a coin is spent, it is certified on a network which creates a public record of the transaction, which is called a smart contract. This prevents the same crypto from being used twice by the same person or organization. However, it is worth noting that not all currencies are anonymous. Although there are a handful of ‘privacy’ coins that offer anonymity, other currencies such as Bitcoin are not and therefore transactions can be traced back to an online identity.
Buying cryptos is also becoming increasingly easy. They are available online on many exchanges, however they do have to be purchased using a cryptocurrency wallet which is a program that will safely hold and record all your cryptocurrency. Every day more retailers begin to accept cryptos and currently they can be used both on and offline. This now includes retailers such as Apple who now accept at least 10 different cryptos as a form of payment source on the App Store.
If you are a beginner trader, a cryptocurrency exchange will no doubt be where you’ll spend most of your time. It is on there that crypto owners trade their cryptocurrency for other digital currencies, or for fiat money – GBP, USD, etc. However, it is important to find one that works for you and provides you with the insight you need to monitor, trade and buy your crypto.
Finding your preferred cryptocurrency is something that is something that is completely up to each trader. Often, consumers like to take their first tentative steps into the crypto market by purchasing a currency they have no doubt heard of before, such as Bitcoin or Ethereum. However, it is key to do your research and know what ICOs (Initial Coin Offering) are happening and whether the project is viable – if it’s not, then it’s not worth your money as you could end up with nothing. This is where we need to be mindful of crypto-scams.
When trading any commodity, including cryptocurrency it is important to be mindful of scams. There is no clear indicator for when a project or coin might be fraudulent but there are a few red flags to be mindful of. Any reputable ICO project will have a detailed whitepaper document which notes everything you need to know about the campaign. If this is not readily available then you should ask yourself why. To this effect, it is once more where research becomes a great tool. Look into who the team is behind the project, what is their experience and what are they hoping to achieve. Scams and crypto thefts are increasing and are becoming more widely documented, and so we are seeing crypto exchanges beginning to form self-regulating tightening their procedures to ensure continued growth of the market and give its users a sense of stability and trust.
That said, there are of course benefits to investing in cryptocurrency. Unlike fiat money (your regular currencies such as USD, GBP, Yen, etc.), cryptocurrencies are not regulated by a bank, governing body or financial authority. Instead, cryptocurrency relies on the power of the internet to guarantee its value and confirm transactions. Cryptocurrencies tend to have a lower inflation risk meaning there is less chance of the currency collapsing.
The key with all cryptocurrency and crypto investing is to do your research. Ensure you know the company behind the currency and that it is a legitimate means of making money, and not a get-rich-quick money making scheme.
Disclaimer: The views expressed in the article are solely that of the author and do not represent those of, nor should they be attributed to CCN.
Images from Shutterstock