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The Rookie's Guide to Buying, Owning, and Selling Crypto

Written by Erik Larson, Community Blogger | Jan 26, 2018 3:47 AM

A recent article published in Forbes said the market price of Cryptocurrencies soared in 2017 causing an uproar in the industry. The latest investing fad gained the attention of many people from neophyte entrepreneurs to top business executives. Many speculators diverted their funds to so-called cryptocurrency Initial Coin Offerings or ICOs as banking rates dropped to record depths. Unregulated virtual asset crowd sales generated almost US#2 billion during the same year.

Familiarity with the Technology

Before beginners try to trade any virtual token, they must understand the concept of the Blockchain platform the majority of these currencies follow. This technology refers to records or blocks that interact with each other. The process of cryptography or encryption secures each block. It serves as a public ledger or record of transactions between two individuals or entities. Cyber thieves cannot breach said system making it an ideal solution for investors. If a hacker compromises a single block, the network can just ignore the breach rendering it a futile effort.

Volatility Concern

The price of cryptocurrencies specifically Bitcoin remain very unstable. Potential traders need to understand this situation. In fact, BTC remains more unpredictable than the stock markets and precious metals. From June until September of last year, Bitcoin's price swung between US$3,000 and US$2,000 before rising to nearly US$5,000. Greenhorns must learn to trade wisely and observe the volatility of the digital exchange.

Where and How to Start?

Purchase your first crypto coin only from reputable services listed on the Internet. Some of the preferred exchanges include Kucoin, Coinbase, Local Bitcoin, ShapeShift, and Circle. Make sure to understand the policies of each facility regarding anonymity, requirements for identifications, and payment methods. The terms and conditions vary so choose a provider that will suit your needs.

Get a Bitcoin or cryptocurrency wallet from credible sources. Most exchanges contain built-in software wallets. However, consumers who do not feel comfortable with these facilities can opt for hardware purses or paper wallet services for keeping their digital assets. These two platforms eliminate or reduce risks such as hacking and malware. The initial step involves sending some of your coins to the preferred exchange allowing you to make purchases.

Following this step, a hot wallet will store the tokens and make them available for spending. Hot refers to the online Bitcoin storage application connected to the Internet. BTC-related services as well as exchanges that make instant payouts use this app. On the other hand, cold wallet means an offline physical device plugged into a desktop computer if necessary. Many users consider this invention safer for transactions since it asks for confirmation by pressing a particular button on the gadget.

Almost all electronic exchanges monitor your Bitcoin balance provided it stays under their watch. These platforms also offer services like margin trading and charts. Buyers and sellers can use traditional fiat currencies for trading. One particular exchange that suits rookies would be Coinbase because of its user-friendly interface along with 100% insurance for the cryptocurrency. For practical reasons, look at the factors of dependability, performance, liquidity, fees, security, and trading volume of the enterprise.

Enter your Bids

Once you have purchased your coins and formally own them, the next step involves selling to potential buyers although you need to conduct some checks on their legitimacy. Find out the current market price of your desired currency in the Order Book. You can expect a prompt response by setting your bid or purchase order to a higher rate compared to the lower or seller's price. Otherwise, you have to wait longer for acceptance from possible buyers.

You can look at two options. The cryptocurrency's price goes up to the point you are willing to sell, or it drops which may prevent you from making a sale. Fix the price at a level you want to execute. Once the buyer agrees with that rate, the trade will go on as completed and your Bitcoins will move to the buyer's crypto wallet.

Buying, owning, and selling virtual currencies may not turn out as easy as you think. Understand this guide carefully before you jump on the bandwagon of crypto investing.

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