Both novice and expert traders are drawn towards cryptocurrency due to its high volatility and profitable market position. But how can you actually start trading it? Follow this guide to start trading Bitcoin and earn profits:
Understand the Basics of Cryptocurrency
First things first, understand what cryptocurrency is. Unlike the cash in your wallet or the balance in your bank account, crypto is digital money and only exists online. But here’s the catch: Cryptocurrency works on a decentralised system, which means it’s not controlled by financial institutions, banks, or even governments.
All cryptocurrency transactions are recorded in a digital ledger called blockchain. This ensures transparency and develops a relationship between users and traders.
Learn Bitcoin vs. Altcoin
If you’re planning to invest in cryptocurrency, chances are you’ve heard about Bitcoin. It is the world’s first digital currency created by a person or group of persons under the pseudonym of Satoshi Nakamoto. Given how the digital economy markets are evolving, knowing what is Bitcoin is not enough; you need to familiarise yourself with alternative coins. Any digital currency other than the original Bitcoin is called an altcoin, such as:
- Litecoin
- Solana
- Dogecoin
- Ethereum
Altcoins are largely created to attempt to fill any perceived inefficiencies and loopholes left by Bitcoin. They are often considered the upgraded versions of Bitcoin. Make sure you understand the pros and cons of investing in Bitcoin and altcoins before moving forward.
Choose a Reliable Cryptocurrency Exchange
Next, choose a reliable cryptocurrency exchange platform. Many beginners start with user-friendly apps like Robinhood, which even offers bonuses when you sign up using a Robinhood referral code. Consider factors like:
- The trading volume
- Track record
- Certifications from financial institutions
- Asset security and safety protocols
Set up your secure account using your Social Security Number (for U.S. citizens), an email address, and other personal information.
Deposit Fiat Currency into Your Account
Once you’ve successfully registered with a cryptocurrency exchange platform, deposit some funds into your account. Fiat currency, such as U.S. dollars, is government-issued money used for day-to-day transactions. Fiat money is needed to begin buying and selling coins in the cryptocurrency exchange platform.
Create a Secure Wallet
Wallets are software applications that store your coins and allow you to access them on computers or mobile devices. Wallets keep your cryptocurrencies secure.
Wallets can be hot (with an online connection) or cold (without an online connection). For regular crypto transactions, hot wallets can be beneficial. In comparison, cold wallets ensure long-term savings and can store large sums of cryptocurrency. They can be useful for saving for long-term investment or planning goals.
Make Your First Purchase
Once you’ve set up your wallet, you can make your first purchase. Look at the ticker symbol of each coin, such as “BTC” for Bitcoin and “ETH” for Ethereum. Depending on the coin you’re interested in, a fraction of a coin can cost anywhere from a few cents to thousands of dollars.
Create a robust trading strategy depending on market conditions. Buy and sell coins, and keep track of your account to make adjustments as needed.
