What you need to know before buying a cryptocurrency
Things have settled down since the end of 2017 and the beginning of 2018 when almost everyone from Hype Peak was interested in joining Crypto. But still new enthusiasts buy cryptocurrency – Bitcoin, mostly – every day. It can be risky for newcomers if they dive in without proper knowledge. Before you Buy Bitcoin Or other crypto, define the reasons why you want to get involved in the industry, explore the basic rules and potential risks.
Simply put, cryptocurrency is a database of math-secured entries. It only exists in digital form and requires internet access. There are lots of cryptocurrencies on the market, you can check their statistics Coinmarketcap. Each coin has unique features and, more importantly, its own purpose. Some cryptocurrencies, such as Bitcoin, have become part of the globally recognized payment system, while others, like Ether, serve as fuel for the development of decentralized applications.
Most crypto projects are based on blockchain technology, a decentralized system that stores information in separate blocks, Each block contains data from the entire chain. The process of adding transactions to a chain is called mining; To mine crypto, people use a computing power. All data is completely transparent and unalterable after feeding in blockchain. Because of this, blockchain is highly protected from hacker attacks.
Despite their smooth functionality and growing popularity, Cryptocurrency Too much risk – high volatility, a Limited number of areas They could be used, a possibility of government sanctions.
That’s why you may need cryptocurrency
Basically, buying crypto has three purposes:
- Holding. You buy some coins and keep them for a while. This could be to diversify an investor’s portfolio or to engage in just one trend activity.
- Transactions. Potentially more profitable than just holding, it works similarly to traditional exchanges. You register an account and try to sell or buy crypto in the most favorable terms. The process requires a decent skill and some luck to succeed.
- Uses every day. Depending on the nature of a particular cryptocurrency, you can use it to make regular money transfers, develop applications, or pay for products and services.
The main thing to learn
Whatever your motives, You will need a wallet Before buying crypto. A wallet has a universal address, like an email, which is used for sending and receiving money. A personal address is also used to confirm the transaction. Private keys should be kept secret.
Cryptocurrency wallets can be software, hardware and paper.
- Software. These wallets can be web-based or desktop. They are the most convenient and the least secure. Don’t use them to store large amounts of cryptocurrencies.
Examples: Blockchain.com, Jaxx, Exodus, Mycelium.
- Hardware. These wallets are expensive but more secure than software Being protected from internet hacks, they can still be physically broken.
Example: Safe, laser nano.
- Paper. Simply put, it is a piece of paper on which official and private addresses are printed. This is the only wallet that needs to enter the private key to withdraw money.
Another thing to keep in mind is taxes. Cryptocurrency trading is regulated by law, so you should know about the current tax rates in your country and report your crypto gains and losses. To avoid mistakes, consider consulting with tax analysts.
The need to hold crypto
Here are the most important rules for both long-term investors and occasional buyers:
- Find a reliable exchange. Big-name cryptocurrency brokers like Coinbase or Coinmama are considered trustworthy.
- After purchase, transfer the crypto to your wallet. Do not keep it in the Exchange account as it may be hacked.
- Read the news regularly. Depending on the market trends, it may be more profitable to sell or buy a portion of your funds. Track it to capture the exact moment.
- Remember about security. Protect your wallet and accounts with a two-factor authentication, don’t reveal your private key, and use a firewall.
Trading crypto is essential
If you want to get involved in trading, here are the rules to follow:
- Explore exchange services. Like major exchange registration CEX.IO Which also provides trading functionality. They offer lots of cryptocurrency pairs to trade.
- Diversify your portfolio. It is better to own not only Bitcoin but also other cryptocurrencies. Major crypto-to-crypto exchanges support an impressive number of tokens.
- To be reasonable. Don’t believe that you can get crazy benefits one day. It is possible but rarely achievable. Make your profit from small deals. Don’t make hasty decisions because the price of the currency has reached its peak.
- Always do your own research. Read guides and news, check statistics, explore the trading tools offered by the exchange and never stop researching. Don’t trust analysts who can fool you into achieving their own goals.
The need to invest in crypto
Here are the basics for investing in a solid crypto:
- Understand how a crypto project works. Before investing, read the white paper and try to predict its future.
- Get a suitable wallet. So far, since many small coins are not supported by multi-wallet, you will need a separate one for each coin. Choose a wallet according to its type and level of security.
- Check out the options. Make sure the project you are going to invest in is best suited to your purpose.
The golden rule of the crypto world says: Don’t invest more than you can afford to lose. Cryptocurrency market Contains a lot of risk, And every crypto-related activity should be well protected. Set a clear goal of buying cryptocurrency and follow the basic rules to reach your goal. Always do a lot of research and stay updated with current events.
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