Cryptocurrency trading is becoming increasingly popular as more people become aware of the potential of digital assets. But getting started in this new and exciting industry can be daunting. To help you get started, here are five simple steps to follow.
Choose a broker or cryptocurrency exchange.
To buy cryptocurrencies, you must first choose a broker or cryptocurrency exchange. There are many options available, so it's important to do your research and find one that meets your needs. Bankrate has a long history of helping people make smart financial decisions, so it's worth checking out their cryptocurrency investment starter kit and tips on investing and trading cryptocurrencies.
Understand the different types of cryptocurrencies.
While Bitcoin is still the largest cryptocurrency by market cap, it is no longer as dominant as it was in the early days of cryptocurrency. Other altcoins such as Ethereum and Solana have grown in popularity, making the term altcoin somewhat old-fashioned. Now, with the existence of 15,000 or more cryptocurrencies, it makes less sense than ever to define the industry as “Bitcoin and then everything else.” Learn about crypto trading platforms. With ShapeShift, you can trade commission-free on their powerful platform while controlling your cryptocurrency private keys.
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Consider investing in crypto-related companies. As cryptocurrencies grow, so do companies that provide hardware and other backend services. Investors may consider investing in companies that perform large-scale crypto mining, cryptocurrency exchanges, or companies that use crypto as part of their business model or payments.
Like emerging crypto-based ETFs, crypto stocks are likely to provide investors with an increasing number of opportunities as this space expands.
Understand the rules and regulations. While cryptocurrency has become much easier to buy and sell thanks to the broad interest in it from the general public, the rules and regulations of cryptocurrencies are less established than for other types of assets or currencies, such as stocks or dollars.
Buy and hold cryptocurrencies.
If you think that the value of a cryptocurrency will grow in the long term and you don't want the stress of actively trading, then this could be your style, and a good first step may be to learn how to buy and hold cryptocurrencies safely. The average investor will want to exchange USD for cryptocurrency on an exchange and avoid the complexities and investments of mining.
Choose a cryptocurrency trading platform. When choosing a cryptocurrency trading platform, consider factors such as whether it offers derivatives or leverage, what type of orders it allows, and how easily it can be integrated with cryptocurrency trading bots.
Connect your wallet. Connect the wallet that contains the cryptocurrencies you want to sell and make sure that the exchange you have chosen is compatible with both that wallet and the asset in question.
In other words, start trading dollars for major currencies like BTC and ETH on an exchange like Coinbase, and then, when you're ready, try trading BTC and ETH for other currencies on an exchange like Binance or Coinbase Pro.
Understand security concerns. One of the biggest concerns of investing in cryptocurrencies is how secure cryptocurrency is, as well as how the changing world of regulations can affect different platforms and opportunities around the world.
Explore other options. A CFD is a contract in which you agree to exchange the difference in the price of a cryptocurrency from the time you first open your position until you close it.
Buy from another user.
For most people, the easiest way to get cryptocurrencies is to buy them, either on an exchange or another user. Cryptocurrencies are fungible, so any unit of a specific cryptocurrency is basically the same as any other.
Understand centralized exchanges. A centralized cryptocurrency exchange is a platform on which crypto is bought and sold, with the help of a third party to carry out these transactions.
Cryptocurrency trading can be an exciting way to invest in digital assets. With these five simple steps, you can get started on your journey into this new industry. Do your research carefully before investing any money into cryptocurrencies and always remember to keep your private keys safe! Andrew Munro was the global cryptocurrency editor at Finder, covering all aspects of cryptocurrency and blockchain.