How to Buy, Trade, and Hold Cryptocurrencies
Part III: Beginner’s Guide to Buying Cryptocurrency
Let me start with a warning — in dealing with large amounts of internet money you’re bound to find a few scams along the way, so make sure you understand how to identify a legitimate website and always stay on the lookout for cons.
Let’s assume now that you’ve done the hard work and you’ve found a soon-to-be-hyped gem that ticks all the boxes and is worthy of your hard-earned dollars.
How do you actually buy that currency?
To make your first cryptocurrency purchase there are three main tools you’ll need.
Currency Conversion Services
Currency conversion services are the gateway between traditional currency and cryptocurrencies and enable you to convert your fiat currencies (dollars, euros etc.) into one or more cryptocurrencies.
Most currency conversion services will only allow you to buy Bitcoin — some will have a whole selection of cryptocurrencies on offer.
The most popular currency conversion services exist on the internet, but you can also find cryptocurrency ATM’s and even gift cards available through retail outlets.
In most cases the most popular currency conversion services will be native to your country.
Coinbase is a unique example of a currency conversion service because it accept US Dollars but is available in 32 countries. It also allows you to buy and trade a multitude of different coins so it doubles as a cryptocurrency exchange.
To find other options you can google “how to buy cryptocurrencies in <your country>,” but don’t just automatically choose the first option that pops up. Take the time to search for reviews, articles and online conversations comparing the services.
If you have family, friends or colleagues who are already bought cryptocurrencies, ask them about the services they have used and what kind of experience it was. Doing the hard work now will ensure you avoid any scams and enable you to find the best option available to you.
Consider reliability, exchange rates, fees, and ease of use as your top 4 priorities.
Be aware that different countries have different legal requirements that may need to be met when registering with a currency conversion service so when you have decided on your chosen service ensure that you carefully follow the instructions they provide.
If in doubt, or if you need help, contact the company directly, search their FAQ, or even search YouTube for instructional videos or guides.
Cryptocurrency Exchanges
A cryptocurrency exchange is a marketplace that allows you to trade one cryptocurrency for another.
In the same way that the currency converter enabled you to convert your fiat currency to a gateway cryptocurrency, an exchange allows you to trade between different cryptocurrencies.
There is no one single exchange for cryptocurrencies. Many different exchanges exist and each operates in a slightly different way, and offers a different variety of cryptocurrencies to trade.
Exchanges are a cost-effective way to trade because you can set up accounts with multiple exchanges, choose the exchange with the most favourable conversion rate for the coin you wish to purchase, and preset a trade order for the price you want.
If someone chooses to trade with you at the price you set you can make fast profits by catching a bargain. Alternatively you can trade into someone else’s preset offer for an instant transaction.
The trading fees on most exchanges are usually minimal and deposit fees are rare. Most of your fees will usually come from withdrawing coins out of the exchange.
Exchanges are a good place to keep your cryptocurrency if you are holding under $5000 and planning to trade. It means your coins are liquid and you can trade in and out of positions with ease and avoid unnecessary withdrawal fees.
Exchanges aren’t as secure as cryptocurrency wallets though, so they can a risky place to keep a portfolio over $5000, or a portfolio that you are planning on holding for an extended period of time.
It should go without saying but NEVER divulge the size of your portfolio to anybody you don’t trust. Posting your account balances on Telegram, Facebook or any other social media is a quick way to make yourself a target for fraud.
As a cryptocurrency becomes established it will usually start to list on a variety of exchanges, and some of these exchanges may be more reputable than others. To find the best exchanges, you can google “cryptocurrency exchanges”, however don’t just automatically choose the first option that pops up.
Search for reviews, articles and conversations comparing the services.
Once again, doing the hard work now will ensure you avoid any scams and enable you to find the best options available to you.
Consider volume, fees and ease of use as your top 3 priorities.
Although the basic principles of an exchange are universal, each exchange is visually different and may operate in slightly different ways. When you have chosen a suitable exchange for your trade, sign up with them and carefully follow the instructions they provide.
If in doubt, or if you need help, contact the company, search their FAQ or even search YouTube for instructional videos.
Cryptocurrency Wallets
If you have a large portfolio, or are intending to hold onto your coins for a significant amount of time, then you will need a cryptocurrency wallet.
Security is the priority when choosing your wallet.
After all, if the wallet is less secure than your chosen exchange then why bother paying the fees, and enduring the processing delays, in order to move your coins in the first place?
You may as well leave your assets on the exchange.
Another benefit of a good wallet is that it will usually display the current value of your portfolio in your native currency.
This means that rather than spending every waking minute of your day aimlessly scrolling through your Facebook and Instagram feeds, you can now spend every waking minute of your day refreshing your wallet and double-checking the current value of your assets.
Your life will be so much better once you’re spending your days watching your net worth skyrocket upwards, and then plummet 5 minutes later, based on completely external factors that seemingly have no relationship whatsoever to the project you support.
In addition to cryptocurrency wallets available for PC and mobile phone there are also hardware wallets. A hardware wallet is essentially a secure physical passkey which allows you to send commands to your blockchain address.
Mobile wallets are a lot more convenient and user friendly, but hardware wallets are generally considered more secure.
A word of advice though: be sure to purchase your hardware wallet from an original supplier and NEVER through a third party. Especially not eBay or Amazon.
To find the best mobile wallets — simply google “secure mobile cryptocurrency wallet”. Likewise, to find the best hardware wallets — simply google “secure hardware wallet”. In either case, don’t just automatically choose the first option that pops up — search for reviews, articles and conversations comparing the services.
Consider security, privacy, fees and ease of use as your top 4 priorities.
Each wallet is visually different and may operate in slightly different ways. When you have chosen a suitable wallet for your cryptocurrency storage, ensure that you carefully follow the instructions provided.
If in doubt, or if you need help, contact the company, search their FAQ or even search YouTube for instructional videos.
Things To Remember
Measure Your Progress in Bitcoin
The market goes up and down from day to day.
At the moment, however, the general trend for cryptocurrency is that overall the market is consistently growing. This is why most speculators are winning more than they lose.
Within the overall cryptocurrency market, money is moving from one coin to another based on what is being hyped and what is being dumped. This is where people gain positions or lose them in comparison to their average stake in the overall market.
Currently,the best way to measure the performance of your portfolio is by tracking how much Bitcoin your assets are worth.
If you are buying and selling, trading one asset for another and then back again, and after all of your maneuvers you’ve ended up with less Bitcoin then you started, then you may as well have just kept your money in Bitcoin.
Emotions Rule the Cryptocurrency Market
Cryptocurrency speculators aren’t usually season veterans. Many have been trading for only months and will make emotional decisions at the drop of a hat.
They will buy coins when they see them going up and sell them when they see them going down. This only makes the rises greater and the falls harsher.
If you take nothing else from this article — remember this:
Trust your own logic.
Don’t listen to people’s opinions.
Get them to tell you the facts, the numbers, the history, the technology and then form your own judgement.
Only believe what can be proven.
People want you to buy the coins they’ve bought simply because they want you to raise the value of their stake.
Research Everything
Support projects you truly believe in.
If you don’t truly believe something will succeed, move on and continue researching until you find one that you do believe in.
I guarantee you there are coins out there that are going to completely disrupt entire industries. If you haven’t found one yet then you haven’t been looking hard enough. Or perhaps you just didn’t know until now what it was that you should be looking for.
In either case, you’ve got the tools now, so start digging deeper!
I wish you the best of luck.
