What Is Crypto Trading? And Other Questions You Might Ask

A beginner’s guide to cryptocurrency is what you need when firstly brought to this instrument. In this blog, you will get access to the aspects that most beginners ask about. We try our best to simplify the terms and necessary information so that you can build a solid foundation to enhance your skills and knowledge later on.

What Is Cryptocurrency?

Instead of confusing you with complicated explanations, we will share a simple cryptocurrency definition that you can easily understand and remember.

Let’s break down the word — Cryptocurrency. There are two parts, including Crypto and Currency. So, it indicates that you can use it to buy goods and services. Yet, the crypto part refers to the codes for making such a new kind of currency.

In a nutshell, cryptocurrency is a digital currency with decentralized governance and a distributed ledger technology called a blockchain. The high security and confidentiality of crypto trading do not conflict with the transparency and open source.

The reason is the superior structure and secure cryptography, along with the decentralized system of blockchain technology.

Thanks to the digital format, cryptocurrencies have been used for cross-border transfers and huge-value transactions. Also, the superior features of the structure and crypto systems make it among reliable instruments! Thus, the values of crypto coins climb as the number of its traders and investors keep mounting.

How Many Cryptocurrencies Are There In 2022?

The number of available currencies in the market is overwhelming, with over 19,000 cryptocurrencies! Rather than have the same standards, the value of each cryptocurrency varies. And it explains why the crypto markets are challenging and simultaneously fascinating.

One of the most dominant currencies is Bitcoin whose total market cap is almost $576 billion. Meanwhile, the rising coin, Ethereum, is around under $500 billion. It is popular for smart contract platforms. Ripple’s XRP is the preference of many banks for international transactions.

The overwhelming growth of bitcoin has other cryptocurrencies called altcoins, which means alternative coins to Bitcoin. Some altcoins follow the structure of Bitcoin while others have blank space to start from. These coins are Solana, Litecoin, Ethereum, Cardano, EOS, etc.

Is It Wise To Invest In Cryptocurrency?

Well, it is not easy to have an exact answer for this question. It is true that many people get rich thanks to crypto trading while there is another fact that many people lose their fortune to this digital currency! It indicates that there are always both sides of a coin.

The advantages of cryptocurrency include:

• The decentralized system of operation makes it transparent in terms of transaction and management. There is almost no space for manipulation of any individual or governments.
• Smoother and easier transfer with cryptocurrencies is what you can expect. There are no related third parties so the process can be executed without waiting for approvals by many parties or departments. Also, 24/7 operation makes it possible to process any cross-border transactions.
• Without third parties involved, you can cut down on a great deal of transaction fees. It is another advantage besides the acceleration of the process.

Meanwhile, there are some risks that you need to be aware of when trading cryptocurrencies.

• Cryptocurrency can be used as a medium for many illegal activities, which can cause difficulties for the authorities.
• The whole computer systems that run and store databases of cryptocurrencies cost money and energy.
• There are still hacking accidents in the crypto markets, which makes people doubt whether the high security of crypto trading is overhyped or not.

How Can You Buy Cryptocurrency?

The process of buying cryptocurrencies does not challenge you as you just need to go to an exchange platform, such as Coinbase, Cash App, etc. or get the support of brokers.

The step-by-step guideline includes:

• Set up an account.
• Deposit cash.
• Place a trade order to buy the coin you want.

Every platform now has a user-friendly interface so that even a beginner crypto trader can easily execute the process. Besides buying cryptocurrencies, you can also buy ETFs, mutual funds, stocks, etc.

Are Cryptocurrencies Legal?

Conceptional form of currencies fiat currency which the government of a country issues. Yet, cryptocurrencies seem to go against this system while not having any public or private entities. And this factor makes it not legal in many countries due to the different legal systems throughout the world!

In 2019, the Financial Action Task Force (FATF) suggested that the crypto transactions should follow the requirements of the Travel Rule. Until December 2021, El Salvador accepted Bitcoin as a legal tender for monetary transactions. Also, cryptocurrency is considered as legal property by Japan’s Payment Services Act.

Meanwhile, China has banned any exchange related to cryptocurrencies and mining within the nation as the government wants to take total control of monetary transfers.

Yet, you can use cryptocurrencies as financial instruments in the European Union. In June 2021, the Markets in Crypto-Assets (MiCA) regulation was released as the safeguards that companies and vendors use cryptocurrencies for their financial services.

We hope the answers to some essential aspects of cryptocurrency above could help you take some good notes in a beginner’s guide to cryptocurrency. There are still many things that you need to learn to level up your skills and increase your profits! Follow our page to learn the simpler explanation of helpful and effective strategies and techniques to better your trades!

References:

https://penntoday.upenn.edu/news/beginners-guide-cryptocurrency

https://www.investopedia.com/terms/c/cryptocurrency.asp

https://www.kaspersky.com/resource-center/definitions/what-is-cryptocurrency