How to trade cryptocurrency?

Today cryptocurrencies became a universal phenomenon known to most people. Anyone interested in crypto can take part in some form of trading. As crypto gets more and more attention in the world, newer players want to enter the cryptocurrency market and become part of it. So, if you’re interested in learning how to trade cryptocurrency, this guideline would be beneficial. Sit tight and we will go over everything necessary to start investing in cryptocurrency. 

So, you decided to invest some money in cryptocurrency, but not sure where to start? Well, let’s go to the very beginning. The portals which connect traders to the cryptocurrencies are called “exchanges.” There are many crypto exchanges on the web; however, before you invest in one, there are several things you need to take into consideration. Let’s go over the “Exchange Checklist.”

Legal: Before you begin, make sure that the exchange is available in your area. Yes, area, as there are some states or regions in certain countries that have banned crypto trading. Different crypto exchanges do not service some countries. For example, Coinbase, one of the largest and most popular exchanges, is not available in Germany and Russia. So before you do anything, check that this exchange is available in your country.

Reputation: The next thing that you need to check is the reputation of the exchange. Are people happy with their services? How secure is it? Has it been hacked recently? Have people complained about it? Twitter and Reddit are sensible sources for checking this. The best feedback you can have is from users like you.

Exchange Rate is a crucial factor when choosing an exchange platform. It can take a noticeable portion of your investment, especially if your account isn’t significant. Different exchanges have their exchange rates which can be different from each other. Do your homework and research all top exchanges and their rates.

Security: Always choose exchanges that need some ID verification from you. Even though they may take some time, but they are a lot safer and secure compared to anonymous exchanges. It is your hard-earned money, and you better consider that extra step to keep it secure.

Ledger Nano X - The secure hardware wallet

Here are the most popular crypto exchanges (no particular order):

There are many more cryptocurrency exchanges around the world, but it is recommended to work with trusted and well-reviewed platforms. Besides, you can expect better customer support if you want to clarify something directly with the company. In the next section, we will go over the setup process using Coinbase as an example.    

Signing up and creating an account:

Signing up is a straightforward process. Once you land on Coinbase.com click on “Sign Up.” If you are creating your personal account, create an “Individual” account as opposed to a “Business” one.

Signing up is super fast and needs only the following fields: First Name, Last Name, Email, and Password.

After this, you have to agree to their Terms and Conditions and prove that you are not a robot, now you have an account ready.

Security and Account Addition

The next step is verification and payment setup. Coinbase will ask for the following steps before you can use your account. Other platforms have a very similar process.

Phone Verification is necessary to give your account a 2-step verification. Firstly, you will have to enter your phone number. Then you will get a text message with a verification code. Type that code in the appropriate field, and you are all set.

Adding a Payment Method: Coinbase can process payments via bank account, debit card, and wire transfer. 

Identity Verification: Finally, you will need to verify your identity. Since Coinbase is a regulated company, it will need to be compliant with KYC/AML regulations. Before you can use your debit card to purchase anything, you will need to verify your identity.

How to Start Trading?

You have now signed up and verified your account. Now, you are ready to trade cryptocurrency. In the main dashboard, you should see a list of all available cryptocurrencies on coinbase. Click on the desired coin, and it should take you to the next page with a chart, price, and a button called “Trade.” Once you click on it, it gives you trading options: Buy, Sell, and Convert. From there, you should be able to do your first trade. Note, if that is your first trade or one of the first trades it might place a pending period for some time. That’s completely fine, and you should have your first purchase in your e-wallet promptly. As you learn how to trade cryptocurrency on Coinbase you should move on to more advanced crypto exchanges.   

Protecting your Cryptocurrency:

You must have a wallet, to protect your cryptocurrency. The wallet saves your public address and private key, which helps you store, send, and receive cryptocurrencies. 

Public Address: Public address is the address where everyone will send you money.

Private Key: The private key gives you the right to access and send your money.

One thing to remember before we continue is that the public address is the one that you will give to others to send your money.

But DO NOT give out your private key. The private key is only for you. If you give out your private key to anyone, they can gain access to your money.

All crypto wallets fall into the following two categories:

· Hot Storage.

· Cold Storage.

Ledger Nano X - The secure hardware wallet

Before we go into detail, let’s try to understand the difference between hot storage and cold storage. The hot storage is the wallet accessible online and from any device. A few examples of hot storages would be exchange wallet and desktop/mobile wallet. It gives you easy access to your coins, but theoretically, it can be hacked. On the other hand, cold storage is offline and very secure. It requires a special device called “ledger.” To enter into the ledger and make a trade, you have to connect it by a cable. For the remaining time, it just sits in your safe or some other secured space. Not very practical for day-to-day use BUT it is incredibly secure compared to the online wallet.

Exchange Wallets:

It is the most convenient wallet that you can have. If you have been following our instructions and have created your Coinbase account, you already have an exchange wallet!

The advantages are obvious. It is already linked to your account and gives you quick and easy access to trading. However, this also means that you are vulnerable to attacks. 

Some exchanges are constant targets for hackers. We would highly recommend that you don’t keep a significant portion of your cryptos in exchange wallets, keep only as much as you need for trading.

Desktop and Mobile Wallets:

Desktop and mobile wallets have grown in popularity. Desktop wallets offer more security than exchange wallets. Setting them up is very simple and easy as well. All you need to do is download the client on your laptop/desktop, and you are done! For example, MultiBit provides an amazing desktop wallet to store Bitcoins.

However, there is a problem with desktop wallets. They are not the most flexible options. After all, you can’t access your desktop wallets from any other desktop apart from the one that you have downloaded it in.

That is why, for users who want flexibility, a mobile wallet is a more convenient option. Setting up is as simple as downloading an app onto your phone. MyCelium is a pretty popular mobile wallet for both Android and iOS. As we stated above, both options are vulnerable and can be hacked as they both use the internet. 

Cold Storage:

While hot wallets give you great accessibility, but not 100 percent secure, it is much better to save the majority of your portfolio in a cold storage wallet. A cold wallet is wholly cut off from the internet, which automatically keeps it safe from being attacked or stolen. Hardware and paper wallets are great for cold storages.

Hardware Wallets:

Hardware wallets are devices where you can store your cryptocurrency. The most common form of hardware wallets is the USB style which has been championed by the French company “Ledger.” These hardware wallets have become very popular because they give you the storage and security capabilities of a cold wallet while making transactions simple and straightforward. It works around and negates the most significant disadvantage of cold wallets.

Ledger Nano X - The secure hardware wallet

Paper Wallets:

A paper wallet is the safest way to store your cryptocurrency. The idea of a paper wallet is straightforward. You can set up a wallet offline and simply print out the private and public keys on a piece of paper. The keys will also be printed in the form of a QR code which you can scan to get access to your funds.

Let’s say you purchased a Bitcoin and some altcoins. If you are planning to use your funds reasonably often for trading, then cold wallets would be inconvenient. However, if you are planning to store your funds for a long time, then without a doubt, a cold wallet is the way to go.

Crypto-to-Crypto Trading:

Now, we can go even deeper and discuss how we can use cryptocurrencies to exchange for other crypto coins.

For that, we will need to create an account in another exchange, an exchange that enables crypto-to-crypto trading. Most exchanges will let you trade altcoins with Bitcoin or other top coins like Etherium or XRP. For example, you won’t be able to trade XRP with fiat. You have to have Bitcoin to buy other coins. To achieve that you can send Bitcoin or another base coin from Coinbase. More advanced traders prefer to use Gemini to purchase a base coin. It has higher spending limits, and transaction fees are close to nothing compared to Coinbase. Since Binance is the top crypto-exchange in the world, we will be using it as a reference. However, there are many more options you can put your hands on. So, let’s get started by creating an account on Binance!

Signing Up:

First, go to binance.com and click on the register option.

Here, you need to enter your Email and type in a password. Next, you will need to prove that you are a human by solving a puzzle. It is nothing complicated, all that you have to do is to drag your slider towards the right.

After that, you will be sent an email. Just click on it to be redirected to Binance. Now, you will have to go through the Safety Risk Notice.

When you have gone through all that, you will be redirected to your dashboard. 

How to Trade Cryptocurrency on Binance?

Binance provides a very simple and easy to use interface. Another advantage of Binance is that it has its own tokens called BNB (Binance Coin). BNB allows you to pay for the following at discounted rates:

· Trading commissions (the fees) that you have to pay for trading on the platform.

· Withdrawal fees.

· Commission lists.

Using BNB, you will get a 50% discount on the first year which will gradually decrease over time.

The most popular crypto exchanges?

Binance

Now that we know where to get started to trade crypto let’s take a look at the largest exchanges by the user base. 

Binance: Led by the enigmatic Changpeng “CZ” Zhao, the Malta-based crypto exchange offers more than 200 crypto trading pairs. As explained above, Binance is the most popular crypto exchange in the world.

Bittrex: The US-based exchange has been active since 2013. Providing top-grade security, Bittrex is a good starting platform if you want to venture into crypto-to-crypto trading.

Bitfinex: Bitfinex is headquartered in Hong Kong and started back in 2012. Along with a massive variety of crypto, they also offer trading pairs in USD, EUR, and GBP.

BitMEX: If you are an experienced and advanced trader, then BitMEX is the best place for you. Run by skilled algo-traders, developers, and economists, it is one of the busiest exchanges you will find in the space.

Coinbase: Coinbase is the most popular cryptocurrency trading exchange for beginners. It is very beginner-friendly and allows you to buy your crypto with USD.

Now as we’ve covered all the steps, you should have an idea about how to trade cryptocurrency. I hope that this guide will be helpful to get you started on your crypto investing journey. Feel free to share your experience with crypto in the comment section below.