Anyone who wants to know how to send stellar lumens first needs to understand the basics of owning, trading, and using cryptocurrency. Terms like “blockchain” and “crypto wallet” might be new to you but do not be confused by the terms. The basics of trading cryptocurrency are the same as investing in anything – buy low and sell high. Anyone who understands those underlying principles can understand everything else.
What Else Is There Besides Bitcoin?
There are many cryptocurrencies, but which are the most reputable? Bitcoin is the best-known and most valuable cryptocurrency on the market, but countless others are worth traders’ attention. Coins like Ethereum, Litecoin, and Chainlink are also quite valuable. Many investors are tempted to invest in one coin, but it is never a good idea to place all one’s eggs in a single basket. The number one rule of investing is diversification, and cryptocurrency trading is no different. Even if one coin’s price falls, the others in the portfolio could still retain considerable value.
Tools Needed for Investing
The three main things needed to own cryptocurrency are an exchange account, wallet, and access to a steady stream of news in the industry. An exchange is a place where investors go to trade cryptocurrency. There are several exchanges in business, including Coinbase, Kraken, and many more.
In addition to getting an exchange account, it is also necessary to find a wallet. A wallet is where crypto owners keep their coins and the information necessary to use them. Many types are out there, but they come in two categories: hot and cold wallets. Hot wallets are always connected to the internet and are in high demand. Examples are apps for phones. Cold wallets work independently of the internet. Often, they are flash-drive-sized devices.
Hot wallets are easier to use than cold wallets. They are more suited for people who plan on using their coins to cover daily expenses. The only disadvantage is that they are magnets for cybercriminals. Cold wallets are more secure because they are not connected to the internet and are useful for those who plan to keep their coins for a long period. Some coin storage drives are Bluetooth compatible, which makes them easier to use on the go.
Traders need to constantly monitor the news because current events can influence the prices of cryptocurrencies. Like stock traders, crypto traders can be frightened into selling or emboldened into buying by certain events. Several news outlets cover cryptocurrencies, such as CoinDesk and CoinTelegraph, with charts for prices, trading volume, and other important details.
When to Invest and When Not To
The best time to invest is when the price of a cryptocurrency falls. Since their inception, prices have fluctuated wildly. For example, Bitcoin recently has a $3,000 decrease in price before it reached the $20,000 mark. If prices continue to fall, buying would be a good choice because the value will increase over the next several weeks to months.
The recent fall of Bitcoin’s price is an excellent example of why it is essential to pay attention to the news. Anyone paying attention could have had a fairly good idea of when prices would fall and would have sold a few days or weeks ago. Trump’s decision to start the transition process and other events around the world likely played a part in the decisions of traders over the last several days.
How to Avoid Trouble
There are several ways to encounter trouble when trading cryptocurrency. One common problem is hackers and scammers. God alone knows how many millions of cryptocurrencies have been stolen. Make sure all accounts are secured with two-factor authentication and are password-protected. The passwords for the exchange account and wallet should contain several different characters and symbols to make it harder to crack. It is also important to never share private keys. Private keys are alphanumeric symbols needed to access one’s cryptocurrency. If they are compromised, the funds can be stolen easily.
Another way to get into a mess is not to know what the law says about trading. Trading and owning cryptocurrency is illegal in some countries. In others, it is regulated. Before investing, read all existing statutes and regulations on cryptocurrency. In common law countries like the United States, Great Britain, and Canada, it is also a good idea to read about any precedent-setting court cases related to cryptocurrency.
Is Crypto Worth It?
The short answer is yes. Cryptocurrencies offer people an alternative to fiat currency and a quick way to generate wealth. However, they are high-risk, high-reward investments. They are not suitable for people about to retire. People in that category would be better off investing in commodities like gold or stocks in stable and profitable companies. Younger people and those who not afraid of the risks should not be afraid to try it. The key things to remember when trading are to secure all funds, diversify, and pay attention to the news.