A quick Internet search of “crypto” will bring up several options. It seems like every day. There’s another altcoin promising things like better security and faster transaction times.
Several critical pieces of information before trading
Crypto trading is unregulated.
First off, it’s important to remember that cryptocurrency trading is currently unregulated. With other asset classes, such as the stock market, traders are regulated by the SEC in the US or ASIC in Australia.
Cryptocurrency exchanges are privately run businesses that set their terms for trading – while some exchanges do have rules against certain types of trading activity (such as insider trading), these rules are not supported by law. This lack of regulation also means that your cryptocurrency is at risk from hackers – many exchanges have fallen victim to large-scale attacks, resulting in the loss of customer funds. It’s up to you as an investor (or trader) to ensure that you choose an exchange that has robust security measures in place before signing up, accessing your account and depositing any currency.
There are multiple types of crypto.
Secondly, remember that there are multiple types of cryptocurrencies out there on the market today. While Bitcoin is still the largest cryptocurrency by market cap, it is estimated that almost half of all altcoins have no material value whatsoever. Before deciding on a particular altcoin for consideration, it’s essential to understand why it exists, what problems it’s trying to solve and whether the token has any real-world use cases which will affect its demand as a tradable commodity.
Understanding what makes one altcoin different from another is key to avoiding scams – many altcoins are sold through initial coin offerings (ICOs), which promise unreasonable returns for investors who back the project early on. Unfortunately, most of these projects end up being little more than a money grab by a small group of people with no intention of actually developing anything that benefits society or disrupts an existing business model.
Understand how crypto trading works
Lastly, make sure you understand how cryptocurrency trading works before you sign up for an exchange. Crypto exchanges let users buy and sell cryptocurrencies at a set price point determined by supply and demand in the market – this is called “market order” trading.
Alternatively, traders can place “limit orders,” which set a specific price point for buying or selling currency – this is where the currency will be snapped up by whichever exchange user places their order first. While limit orders are often called “buy” or “sell” orders, it’s important not to get these terms mixed up. When you click on a buy/sell button in your account, you’re putting through a market order – so if you choose to buy 1BTC at a rate of $9000, you’ll be purchasing all available BTC at that price point before the market corrects itself and allows other users to fill your order.
If you still think trading cryptocurrency is right for you, don’t forget that you’ll need a wallet to store the currency in! Many exchanges offer some form of wallet with their service, but it’s generally recommended that you use a third-party wallet app such as Bitcoin Core or Jaxx Wallet if you can. These wallets can be downloaded for free from the App Store and Google Play, respectively.
Remember: cryptocurrency is a risky business, so get educated before signing up to an exchange and depositing any of your hard-earned cash into digital tokens. If this sounds like too much of a headache or you just want to stick with investing in Bitcoin, for the time being, don’t forget that there are Bitcoin IRA options available which allow individuals to buy Bitcoin without going through a cumbersome signup process. And finally, make sure you get your finances in order before making any significant financial decisions.