Cryptocurrencies have been in the spotlight for the past year due to Bitcoin’s bull run that has also reflected on the prices of other cryptocurrencies. So, it’s safe to say that this bull market phase has attracted a great number of investors, not just for BTC but for other cryptocurrencies. Actually, there are over 4,000 cryptocurrencies on the market, and the number is following an upward trend. If you also want to join the crypto bandwagon and invest in crypto, in this article, we cover essential tips to get you started.
The first step is to learn about blockchain technology which is the driving force of the crypto world. The blockchain network was invented by Satoshi Nakamoto, the creator of Bitcoin. Its design is decentralized and peer-to-peer based, which means that this is a unique database that is independent of the control of any central authority or external entity to the network. In case you’re a complete beginner, then a great place to learn about virtual currencies and blockchain is cryptocurrency 101. You will find reliable and in-depth information about the crypto world.
It should be noted that the blockchain network is the underlying technology of most cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and other virtual currencies. Even though there are differences regarding the governance systems and the blockading protocol, basically, the main advantages of the blockchain network are that your transactions are completely secure and your identity is anonymous.
Furthermore, the data about the transactions are public, the transaction fees are low, and the processing time of crypto payments generally doesn’t take long. For instance, for Bitcoin, it can last up to 10 minutes, and for Ethereum, the processing time takes about five minutes.
The second step is to familiarize yourself with the crypto trading market. There are loads of trading sites where you can open an account, but first, you need to perform due diligence and compare multiple trading sites, their features, and transaction fees. You also should know that most cryptocurrencies aren’t available on every platform, so take that into consideration when you’re registering on a crypto trading site.
Crypto wallets are very important for online trading, and because they are storage option that keeps your crypto assets safe. You need to know that a hot wallet is connected to the internet, and therefore is a more accessible and convenient option. In comparison, cold wallets grant more protection from hackers because they are not connected to the internet. In terms of hot wallets, there are the following formats desktop, mobile, and online wallet.
The mobile wallet is an app that you install on your smartphone or tablet, and it is great for keeping track of your trades on the go, while the desktop wallet is more secure because it is a storage option installed on your computer, but it’s not that convenient of trading.
Lastly, a web wallet is the most popular and globally accessible type of wallet, as most exchange sites offer this option, and you can obviously trade and access your account from any device. But, because this is an online wallet, your assets are stored on a separate server that you don’t control.
A good tip is to mix cold and hot wallets. So, you can back up your assets with a cold storage option like a hardware wallet, but keep some for trading on your mobile wallet, for example.
In conclusion, it is also important to learn about the cryptocurrencies you want to add to your investment portfolio. Fortunately, they all have white papers available online, so you can learn more about them and what are their specific characteristics. In addition, it is equally important to carry out your research, choose a reliable source of news about the crypto market, and also take the time to pick a secure provider of your crypto wallet.