Given the ongoing craze for cryptocurrency trading, you may have thought about investing in it. However, the lack of knowledge of how this type of trading works and the unfamiliar jargon make it a daunting industry to risk your money. Do not worry; you're not alone. Everyone goes through this beginner phase and needs to give themselves time to advance in the learning curve.
We're going to demystify cryptocurrency trading to give you a better picture of what you'll be doing when you're on the field.
What is cryptocurrency?
First, let's define the topic that is on the same page. Cryptocurrency is a digital asset that is protected from unscrupulous people by cryptography – an encryption technique used to hide and protect valuable data. This digital money is used to buy and sell goods and services, but it cannot be used to buy goods such as gold.
How do you buy and sell cryptocurrencies?
Buying and selling cryptocurrencies is done online and does not require identity disclosure. They are sold and bought on virtual marketplaces Cryptocurrency exchange. These companies act as middlemen for crypto traders who want to buy or sell cryptocurrencies. There are many crypto exchanges out there. Some of them include Coinbase, CashApp, Binance, among others.
To get started with the cryptocurrency, you'll need to log into your preferred exchange, go through the two-way verification process, and choose your payment method. However, be careful in Choose your crypto exchange there are bad apples among them. After registering, you can now trade cryptocurrencies to your heart's content.
How do you trade cryptocurrencies?
Before we dive into cryptocurrency trading, you will first need a wallet to protect your cryptos. The wallet is a type of safe that stores your information, including your private key and public address, for selling, buying, and holding cryptocurrencies.
- Private key – is your access to using and sending your cryptocurrencies.
- Public Address – The address where others can send you cryptos
Now let's get down to business. Trading cryptocurrencies is not an exact science and requires patience and willingness to learn.
You can start trading Atom swap through which you trade your cryptos directly to another trader, also known as peer-to-peer. When using the Atomic Swap, you and the other trader will need to establish a shared secret that will be verified when attempting to exchange cryptos. If the secret matches, you're good to go. This is also to ensure that a third party, even if they want to intervene, does not receive any of the coins because they are not in secret.
You can also trade cryptocurrencies via day trading. Here, people sell and buy cryptos several times a day. Day trading takes skill, but it's worth it once you get the hang of it. Although you need to remember that cryptocurrencies are a very volatile investment and will put you on a roller coaster ride once you start playing on them.
Understand the world of digital cryptocurrency
Now that the cryptocurrencies are demystified and you understand a little how it works, you can start the hard work. Learn more about how to play the game. If you can, use demo accounts to learn more about how it really works.