The digital world never ceases to amaze with its innovations. The first digital coin that appeared in public in 2009 was Bitcoin, which still holds the title of the most popular. The whole cryptosystem operates within a blockchain platform. In the meantime, in addition to bitcoin, many other coins have developed. All 825 cryptocurrencies, as many as are in circulation today, have experienced exponential growth. This drew a lot of attention not only from users who saw cryptocurrencies as a potentially good source of income but also from established hardware manufacturers, who began making components and even entire computers optimized for “mining” digital money. That a market based on cryptocurrencies really exists is also shown by a research conducted by the University of Cambridge earlier this year – it turned out that between 2.9 and 5.8 million people already use them, and that more than 100,000 companies accept cryptocurrency as a means of payment for their goods or services.
Well, as you can see, there are many who support and join this digital commerce. Before you decide to become a part of it, you should first be well informed about how the whole system works. To help you, we have prepared some guidelines for you.
1. Choose an exchange
If you have decided that you want to start investing in cryptocurrencies to start earning well, first of all, you need to find the best place where you can trade and where you will find people like yourself, who follow the same goal. Such places are called exchanges and today there are many on the Internet, and some of the most popular are Coinbase, Bittrex, and Binance. The first step is to register and then put a certain amount of money into your account which will serve as the initial capital in buying and selling coins. Before you make a final decision on which exchange to register for, first get well informed.
Some research has shown that there are currently about 200 stock exchanges where the daily trading volume is about $ 3.25 billion. It’s very important to know that not all markets provide you with the same security. There have been many examples of abuse and hacking in the past, resulting in the loss of large amounts of money. Many investors have lost their funds due to the inexplicable closure of some stock exchanges. All of these reasons lead to only one conclusion, and that is that this first step is a key point to pay attention to once you decide to invest. Just in order to be calmer, it would be good to start with some reliable options.
2. Choose the right wallet
Once you have entered the exchange market, it’s time to think about storing your funds. Similar to fiat currencies, which you keep in your wallet, so in this case there is an option of digital wallets that have the same role. Wallets work as a tool that has the function of storing but also sending coins when needed. Only you have access to it, thanks to the key. The key is a password that is only available to the investor.
The cryptocurrencies themselves are never physically in that wallet, but the general ledger that stores all transactions is accessed through it. The wallet works similarly to PayPal, which uses your email as an address, except that a long random string of letters and numbers is used here. When you want someone to pay you a cryptocurrency, you need to pass that information to them. Some wallets provide an additional level of security in the form of generating multiple addresses, so you can send a different address to each person with whom you are conducting a transaction. Some of the digital wallets can be accessed online, and some are local, which is a better option if you own a larger amount of cryptocurrency, as this reduces the possibility of theft.
Many cryptocurrencies have their own official wallets such as Ethereum Wallet or Bitcoin Core Wallet. Those that allow transactions with multiple currencies are also available. Some of them are Coinomi which supports about 64 cryptocurrencies or Jaxx which enables transactions with Ethereum, Bitcoin, Litecoin, and many others.
3. Take advantage of the tools
Trading in digital money is quite risky due to its unpredictable nature. The value of coins varies in short periods and at one point during the day it can be high while in just a few hours this situation can change drastically and the value of the currency decreases. The reasons for this instability may be different, but it’s crucial to be prepared for such moments. The only way to anticipate such situations is through regular insight into market information, and the various tools available can help.
These tools include websites that contain information about all available tokens and coins. You can find all the data on the volume of trade, as well as information on supply and capitalization on these pages. Coinmarketcap stands out as one of the most reliable and best tools. In these places, you will also have an insight into the movement of the value of other digital money, so you can make a comparison.
Of course, don’t forget about other sources of information. Make an effort to occasionally take a look at publications and blogs that actively address these topics, as well as social networks.
4. Remember to take advantage of technology
You have chosen the exchange, the wallet, and the tools you will use, but that isn’t the end. You need to use all the means at your disposal to increase productivity and reduce risk. With the help of technology, you can perform a regular market analysis to help you make decisions at the right time.
These analyzes are performed through indexes that are automated and calculated by algorithms, and by looking at them, cryptocurrencies can be analyzed. This reduces the risk of instability and the occurrence of costs that can lead to poor results.
You can have an insight into the whole situation thanks to numerous applications made by developers for these purposes. All you need is a smartphone and you can check the situation at any time. Primeadvantage guarantees that you can’t go wrong with modern performances that immediately scan the main crypto exchanges.
As similar as it may seem, only digitized and modern, trading in traditional money and cryptocurrencies differs in many ways. Don’t embark on investments convinced that you know everything and that everything is very simple because that’s just the way it looks. The only way to succeed is to choose the right exchange and wallet, as well as tools and data sources thanks to which you will have an insight into the market situation at all times, make the right decisions and always be one step ahead.