If you have looked at the finance section of any paper in a while, you will definitely have seen Bitcoin, quite possibly in the headlines too.
It recently hit an all-time high in April, 2021 at above $63,000. Since then it has devalued a little because no form of currency can keep breaking resistance consistently. You can find other blogs on crypto and Bitcoin here.
In this article I am going over the basics of crypto trading to serve as an introduction to anyone who might be looking to learn more about that.
What is cryptocurrency?
Cryptocurrency is a digital asset that can be bought on digital currency markets and stored in a digital currency wallet. Proof of ownership is stored on the blockchain which serves as a digital ledger of sorts.
It is a decentralized form of currency and is unregulated. This means that there is no government or bank behind it regulating its price, nor is it directly pinned to another asset such as gold.
There are multiple types of cryptocurrencies, the names of which you can read in the section below. Some of these are finite in number such as the Bitcoin, and this increases interest in the digital asset. Others are not finite but the number that can be minted each year is limited so that supply is always controlled.
Minting cryptocurrency means to create a new block in the blockchain and verify information. It is a way of verifying the authenticity of a unit of cryptocurrency and to assign ownership of it to the buyer or minter.
Mining cryptocurrency means to extract it from the void and make it a part of the circulation or pool of that particular cryptocurrency.
Types of Cryptocurrency
The most common cryptocurrencies are Bitcoin and Ethereum, but there are others besides these that you should also know of if you plan to trade.
Most popular cryptocurrencies include:
- Bitcoin (BTC)
- Bitcoin Cash
- Ethereum (ETH)
- Litecoin (LTC)
- Cardano (ADA)
- Polkadot (DOT)
- Stellar (XLM)
The trading principle with cryptocurrencies is the same as any other type of trading. You buy to sell at a higher price or, alternatively, you sell to buy back at a lower price.
You need a digital wallet or an account on a trading platform to be able buy and sell cryptocurrencies.
The most popular trading platforms and exchanges for crypto trading are:
You will need to create an account on one of these to access the crypto market. Some of these are easier to sign up to and others, such as Kraken, have a more rigorous identity verification process.
Just make sure that the platform you are using is an authentic one and that you are allowed to withdraw your balance into your bank account in your country. Sometimes transfer issues can arise and it can be tricky if you only find out about it later so I would advise you do thorough research into the platforms before you sign up to any.
It should also be kept in mind that crypto trading is the same as Forex in that you will not make millions overnight. So keep realistic expectations and be prepared to put in the work and research if you want to make consistent profits out of it.