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1. Become Familiar with Blockchain
Blockchain is difficult to fully comprehend, even for experts on the subject. To get the basic understanding of Blockchain, it is an ever-growing list of records (called blocks), which interact with one another and are secured through cryptography. These serve as a public ledger for recording transactions between two parties. Blockchain is great for investors, because it is almost impossible to hack. Essentially, if a hacker compromised one block the network would effectively ignore it. To fully hack a Blockchain, every computer associated with it would have to be compromised at the same time. With more popular coins, like Bitcoin, this would mean millions of computers hacked at the exact same time. Now that we have a small understanding of Blockchain, it is time to understand the top currencies.
2. Familiarize Yourself with what is Growing
As we have already discussed, the current top three coins are Bitcoin, Ethereum, and Litecoin. For all intents and purposes, do not overburden yourself will learning about every coin, as there are over 100 that trade upwards of a dollar, and more that can be compared to penny stocks. For the beginning trader, the three that have been listed are safer bets, with proven track records. If you are interested in trading smaller currencies of coin, researching what the coin is used for in the marketplace and potential volatility is recommended. As stated, some coins will end up exploding while others fizzle out.
3. Accept Volatility
The volatility of the top traded coin, Bitcoin, can be simply seen by looking at trading prices from March 2017 until now. It is more volatile than either gold or the stock market. From June 2017 to September 2017 the price of Bitcoin fluctuated from roughly $3,000 down to approximately $2,000 before jumping to almost $5,000. Though the long-term outlook for all three of the major coins is bullish, it will most likely be a long and arduous road to get there. Accept that you may lose money before you learn to day trade effectively and start going green.
It is also important to note the volatility of the exchange you decide to use for your day trading. There are many choices that a trader may decide upon, but for the purposes of this article, we will discuss Coinbase. Currently, Coinbase supports the buying and selling of our top three rated coins. Do your research and choose the best exchange for your needs and one that will support the coin you decide to trade.
4. Setting Up an Exchange Account
Once you have read up on the basics of Cryptocurrency and feel comfortable making informed decisions concerning trends in the market, it is time to open an exchange account. As described above, there are many to choose from dependent on country, currency, and general preference. Exchanges such as Coinbase include mobile apps as well as more in-depth trading platforms, such as their Global Digital Asset Exchange (GDAX). No matter the exchange you decide to go with, ensure that security is in the forefront of your mind and always remember your credentials. Remember, if a hacker makes it into your account and transfers out your coins, they are gone forever. Keep this in mind when you set up your password, as the more complicated it is, the harder it will be for a hacker to force it.
5. Funding Your Account
Once your account is fully set up and secured, it is time to add money for purchasing Crypto. If you are using Coinbase, this may be done by going to your user settings, payment methods, and adding your preferred method of choice. You have the ability to fund your account with a debit card, credit card, or bank account. If you decide to fund with debit/credit, be aware that there is a 3.99% charge. Using a bank account will incur a 1.5% charge. Unless you have an amazing rewards program with your current CC, linking a bank directly will be the most cost effective option for most.
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