How To Store Cryptocurrencies
Alright, so you bought your cryptocurrencies, where exactly should you store them?
Centralized exchanges are much more reliable, secure, and insured today than they were a few short years ago. Most retail investors are more than comfortable trusting a centralized crypto currency exchange like Binance or Coinbase with custody of their holdings. And since mass adoption of crypto is still just beginning, this is the easiest and most straight forward option
If you are more risk averse, and less trusting of centralized methods of custody, there are a variety of crypto wallet options available with an array of features and trade offs. If you want to learn even more about what is available see our in depth Cryptocurrency Wallet Guide: A Step-By-Step Tutorial.
Pick A Crypto To Invest In
Most active cryptocurrency traders allocate most of their capital to Bitcoin and Ethereum. These cryptos move more predictably than smaller altcoins, so trading with technical indicators can be easier.
Many crypto traders allocate a portion of their capital to smaller altcoins. Although small mid-market cap cryptos are riskier than large-market cap cryptos, they offer higher upside potential. Many small altcoins have risen over 1,000% in a matter of months, making them attractive investments for risk-tolerant investors.
Be Ready For A Wild Ride
Bitcoin has had a lot of ups and downs over the years. This chart from CoinDesk shows the price performance of Bitcoin from 2013 to the present. At the beginning of the chart back in 2013, Bitcoin was trading below $130.00. But it skyrocketed to $17,060.55 on December 11, 2017, before crashing again a few months later. In 2021, it started to jump again, getting close to $64,000 on April 14th, 2021.
No matter where or how you decide to buy, sell and store your cryptocurrency, be prepared for instability. Cryptocurrencies are far less predictable than traditional investments. And with any investment, it’s key to remember that what goes up can come down again.
So You Want to Learn About Investing?
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Your Very First Encounter With Real Crypto
For starters, I wont get in-depth into mining operations, but Ill tell you this much: It is not the first path you consider when entering the crypto market as a newcomer.
Mining can be extremely complicated if your tech knowledge is limited to browsing Chrome, and it requires pre-planned geolocation, exessive electricity-consumption research, sophisticated machinery, software, and coding skills to perform successfully, so lets talk about the more pragmatic options you have.
First-hand crypto market
Buying crypto first-hand is probably the most efficient way to get hold of your favorite digital asset both from an economic and time x processing perspective. It can be as simple as asking a friend who already owns cryptos.
Usually, first-hand trades would be fast, and cheap based on a mutual agreement between the two parties. If you dont know anyone who owns cryptos at the moment, or they are not keen on parting their assets, you can consider portals such as locabitcoins, localcryptos, and Paxful which act similar to Tinder for crypto buyers/sellers across the world.
You can also use a first-hand broker to redeem your cryptos back to fiat currency or any other digital asset .
Trading live with another person would require you to have a setup cryptocurrency wallet associated with the digital asset youre about to purchase.
Second-hand crypto market
Invest What You Can Afford To Lose
Given the risks cited earlier, we want to reiterate that you only invest money that you can afford to lose or not need for a long while. The cryptocurrency market is still nascent and could be adversely affected by regulation and other adverse events such as project hack or failure.
Lastly, if you must spend your credit card on buying Bitcoin or other cryptocurrencies, ensure that it is an amount you can conveniently payback, even if prices stay down for a long-time.
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What Is Swing Trading
In swing trading, youre still trying to profit off market trends, but the time horizon is longer positions are typically held anywhere from a couple of days to a couple of months.
Often, your goal will be to identify an asset that looks undervalued and is likely to increase in value. You would purchase this asset, then sell it when the price rises to generate a profit. Or you can try to find overvalued assets that are likely to decrease in value. Then, you could sell some of them at a high price, hoping to buy them back for a lower price.
Swing trading tends to be a more beginner-friendly strategy. Mainly because it doesnt come with the stress of fast-paced day trading. Where the latter is characterized by rapid decision-making and a lot of screen time, swing trading allows you to take your time.
Crypto Wallet : How To Get Started
Do you have a favorite well-worn faded leather wallet?
Todays wallets have evolved. Like everything else, wallets have gone digital.
Welcome to the world of cryptocurrency wallets
Although crypto wallets may be new to some, the number of blockchain wallet users has increased 240% over the past three years, according to Wirex.
So what exactly are they?
A cryptocurrency wallet allows you to receive, send, and store cryptocurrencies by managing the secret codes that allow you to use digital currency.
There are two types of keys held in your wallet: Public and Private.
A public key is like your email address. Just like you need an email address to send and receive messages, a public key is required in order to send and receive cryptocurrency.
A public key in your wallet is a long combination of letters and numbers, both uppercase and lowercase, or a QR code. An example of a Public Key is: 1DgCB7xnTfBKmVYaNowu3DoS7sGk9C27kV
To simplify lengthy and messy wallet addresses, CoinPayments allows you to give your public key a name via its unique $PayByNameTM feature.
2. Private Keys
A private key is like your email password. Just as you access your email with a password, a private key enables you to access your crypto. You need to protect your private key in order to keep your crypto safe. You can think of it like your debit pin number, but more complex and secure. An example of a Private Key is: L1dDphCueYwPipVth72P9AjdbvgHaFVMDUzRvTPzU9vvg8u8Yqfs
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Linking A Bank Account Or Debit/credit Card
Click your profile picture in the upper-right.
Click Settings in the popup.
Click Payment Methods on the next screen.
If you havent set up any banks yet, you wont see any yet, so just click the Add a payment method button.
A popup like this will appear:
You can use your bank account, debit card, PayPal, or wire transfer.
In order for Coinbase to verify that youre actually using an authorized account, theyll do two small verification transactions . This may be instant if you used your card, or it may take a couple of days for your bank account, but if you have online banking, they will generally show up under pending transactions.
Note: Your bank or credit card may deny your transaction from Coinbase initially and place a freeze on your account. Its a toss-up. Before you proceed to buy anything, Id recommend calling them up and letting them know that youll be making a purchase on Coinbase with that bank account or card. Save yourself that headache of a canceled transaction.
What Is Crypto Trading
Interest in crypto trading has been increased over the past few years because cryptocurrencies are extremely volatile assets, and they can give you much higher returns than traditional investments.
We can define Cryptocurrency trading as the act of speculating on cryptocurrency price via buying and selling the underlying coins through an exchange.
As crypto trading gets more mainstream attention, newer players have entered the market and are looking to learn trading techniques.
If you are one of those, who want to learn about trading and the crypto market, you can enroll in a cryptocurrency certification course and become a Certified Cryptocurrency Trader.
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How It Differs From Forex Trading
Forex trading is the exchange of currency into another currency for multiple reasons. It is also known as Forex or foreign exchange. In other words, it is a network that allows buyers and sellers to transfer currency with one another at an agreed value.
The major difference between these two trading approaches is that Crypto trading is more volatile as the markets can fluctuate enormously. Moreover, compared to the cryptocurrency market, forex markets have higher liquidity as a result of a long history of activity.
How Do Cryptocurrencies Work
When a new cryptocurrency transaction occurs, it gets added to a digital ledger of all other transactions on a decentralized network of computers called the blockchain. Computers or nodes of blockchain can have varying degrees of centralization and decentralization, and can be spread all across the world. Before a new transaction can be added to the blockchain, these nodes check the new data to be added or block, against each others records to verify it.
This makes the blockchain incredibly secure and virtually impossible to hack. If someone wanted to fake a transaction, theyd essentially need to hack 51% of the nodes in a network, which would be incredibly time consuming and expensive to ever be worth it.
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What Mistakes Should I Avoid As A Beginner
- Dont rush. Educate yourself.
- Dont leverage trade.
- Dont pick projects and investments based on hype.
- Dont overlook security use 2FA, use strong passwords.
- Dont forget to have backups of your wallet seed phrases.
If you are further along in your crypto journey stay tuned. I will soon publish a detailed article about my crypto investment mindset, methodology and strategy. I will go into the criterea I use for assessing projects, preferred passive income strategies and more advanced resources and tools.
S For Investing In Cryptocurrency
First things first, if youre looking to invest in crypto, you need to have all your finances in order. That means having an emergency fund in place, a manageable level of debt and ideally a diversified portfolio of investments. Your crypto investments can become one more part of your portfolio, one that helps raise your total returns, hopefully.
Pay attention to these five other things as youre starting to invest in cryptocurrencies.
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Allocate Only A Small Percentage Of Your Portfolio To Cryptocurrencies
You’ll have to decide in advance how much of your portfolio you want to allocate to cryptocurrency. With recent advances, particularly in the price of Bitcoin, it can be difficult to make a rational decision. All investing is ruled by a combination of greed and fear, and it may be hard to keep the greed part under control given the advances cryptos have shown in recent years.
Up to this point, both the current uses and the future of cryptocurrencies are uncertain.
All Roads Lead To Crypto
Now youve probably heard from your friends and/or colleagues that you can start mining your own cryptocurrencies, or that you should invest into Bitcoin before its too late, but the truth is, you should first consider what youre going to do with your crypto?
Is it gonna be a speculative investment based solely on price fluctuations and you dont really care what youre going to do with your cryptos? Would you rather invest in a cryptocurrency you can use in your every-day life? Or maybe youre an experienced physical asset broker, and you see similar potentiality in some digital assets that are screaming arbitrary opportunities?
Well, as Socucius Ergalla* would say: The choice is yours, and it directly reflects your approach, as well as your vision when it comes to this new, still booming industry.
Regardless of your end goal with cryptos, there is some basic stuff you should figure out first, including where do you get your crypto from? Which wallet youre going to use? How you redeem your cryptos to fiat in case you want out?
*The quote refers to Ergallas first words when encountering him in TESIII: Morrowind: Ahh yes, weve been expecting you. Youll have to be recorded before youre officially released. There are a few ways we can do this, and the choice is yours.
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Get A Ledger Hardware Wallet
Protect yourself with a hardware wallet. I recommend Ledger because theyre the simplest to use, in my opinion.
What makes a hardware wallet so secure? On the Ledger, you are given a random list of 24 words in a specific order. With your hardware wallet, youll get a sheet of paper where you can write them down in order. These are not generated on your computer and will be generated directly on your advice. So even if your computer was compromised, your recovery seed would be safe.
Youll be required to create a pin, and you also have the option of an optional passphrase, which adds an extra layer of security. For the long-term holder, you need a hardware wallet. Not only are they easy to use, but theyre also about as secure as you can get.
The Different Forms Of Cryptocurrencies
When most people think of a cryptocurrency, chances are that theyâre thinking of Bitcoin . Bitcoin is considered the cryptocurrency flagship â the coin that launched thousands of coins.
As seen on popular cryptocurrency price tracker CoinMarketCap.com, there are over 2,500 cryptocurrencies, many of which use their own custom blockchain designed to their specifications.
Donât worry you donât need to learn every single cryptocurrency to understand the cryptocurrency basics. Letâs go over a few of the most popular types to give you an idea.
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What Is Asset Allocation And Diversification
Ideally, you want to spread your wealth across multiple classes. That way, if one is performing poorly, it has no knock-on effect on the rest of your portfolio. Nobel Prize winner Harry Markowitz introduced this idea with the Modern Portfolio Theory . In essence, the theory makes the case for reducing the volatility and risk associated with investments in a portfolio by combining uncorrelated assets.
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Getting Started: Choosing A Crypto Sector
The first step of getting a job in the crypto industry is to identify your niche. With every job title comes a different set of qualifications, roles and requirements. Here are some of the most popular sectors under the umbrella of cryptocurrency and some of the skills that typically accompany roles that are relevant to those areas.
Section : Crypto Fundamentals
There is an overwhelming amount of information out there and starting out as a new investor can be a daunting task. To help structure your learning, here are a list of fundamental questions your should be able to answer before you start investing:
- What are cryptocurrencies?
- How are they different from fiat currencies?
- What are the key problems the top crypto projects are solving?
- Are cryptocurrencies safe? How do I spot the scams?
- How volatile are the crypto markets?
Coin Bureaus 20-min video guide will cover all these bases. But dont stop there, dive into the linked resources the more you know the better decisions youll make.
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Read The Projects Whitepaper
When youve found a cryptocurrency you like, the first thing you need to do is read the whitepaper.
A white paper is an authoritative report or guide that informs readers concisely about a complex issue and presents the issuing bodys philosophy on the matter. It is meant to help readers understand an issue, solve a problem, or make a decision.
Reading the whitepaper will give you two tremendous benefits:
How Much Do I Need To Get Started With Crypto
You can start out with as little as $10, $1,000, $100,000 or more! As a rule of thumb, always do your research and only invest what you are comfortable with. Cryptocurrencies are often volatile, meaning the price can fluctuate frequently, so it is important you understand what you are getting into.
A common misconception people have when it comes to cryptocurrencies is that they have to buy one entire coin. But this isnt true. The beautiful thing about cryptocurrencies is that you can buy them in fractions . You dont need a lot of money to get started with crypto.
In a traditional stock market, you can only buy an entire share. For example, you can buy 1 share of Amazon, but not half a share of Amazon if you wish. This prevents some people from investing in Amazon because they cant pay $3,000+ USD for 1 Amazon share .
Some people are turned away from crypto and bitcoin , specifically, because they look at the price of 1 bitcoin and think I cant afford that! But that isnt true, because you can buy a fraction of bitcoin.
You dont have to buy a full bitcoin. You can buy half of a bitcoin , 1/10th of a bitcoin , even one hundred millionth of a bitcoin the smallest unit of bitcoin is called a satoshi.
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