Cryptocurrency is a simple term known and defined as an algorithm. This algorithm itself works like software used in several cryptocurrency trading.
Although the Bitcoin is an asset, it’s location is mostly outside the physical.
Taking a closer look at this cryptocurrency, we can see it is such an asset that defines the fundamental law of currency. It isn’t physical and doesn’t come from one source of production. Despite its lack of physical presence, a lot of people have used it to make a lot of business transactions.
Many people have wondered how it came to be because there was nothing like algo-coin or virtual-coin before the year 2000. Because of this, a lot of people started reading books and learning about cryptocurrency.
Well, here, you will be significantly exposed to a piece of mind-blowing information about this concept. You will find cryptocurrency explained in such a more straightforward term than any other place.
A Brief History of Crypto Coins
As people began to grow tired of the system that surrounds the spending and trading of regular money, they began to seek out new methods of having their trades without following undue protocols. A man by the name Satoshi Nakamoto took it on himself to build something called Bitcoin.
When creating this Bitcoin, the only thing on his mind was to fashion a method that will make it easy to make transactions between peers. In other words, people do not need a bank before they dispense their money. In a better term, there would be no need for anyone to monitor your transactions. Instead, no one will have the chance to track transactions.
When he created this coin, he never expected the massive success that followed it. Thus, bitcoin became the first and most important Crypto Currency available.
From the above statement, you can easily deduce that there are cryptocurrencies that are not Bitcoin. With time people began to create more cryptocurrencies like Etherium, Litecoin, etc.
And that sparks a need to know how it really works.
How Does Cryptos Work?
As stated earlier, cryptocurrencies are such vital that they must remain monitored by software. Cryptography is called. This software is like the bank of the currencies. Now, take a step back. You have read earlier that there is no central bank. So, that arouses some questions in your mind.
Cryptography is like the marketplace for any cryptocurrency market. It doesn’t monitor your transaction. Its work is simply to make sure you have your pass while making transactions with anyone within its market.
Cryptography provides you with a public and a private key.
These keys are referred to as encryption and decryption. The purposes of the keys are to help you send a message privately to someone you know or wish to make any sort of transaction with.
One of the keys, the public key is to make the person sending the message to you send a particular transaction to you. It is his own pass to you. If you don’t provide it, the deal can’t happen. The private key is like your personal password. Its job is to help you decipher the operation.
As brief as it may look, you must have garnered a lot of information from this post and will surely use that to pad your knowledge of cryptocurrency.
We will be looking at cryptocurrency as CFD if it’s a good short term strategy.
Holding coins as a form of long term strategy. Wallets and how to set up a wallet. How to use a cryptocurrency exchange. How to buy and sell on cryptocurrency exchanges. And last but not least, how to grow your coin portfolio.
So how to trade cryptocurrency as CFD? Like any other CFD or contract for difference, it offers traders and investors the opportunity to profit from price movement without owning the asset. Basically, you could make money even when the price of cryptocurrency is depreciating by selling into the asset.
Likewise, if the price of cryptocurrency is appreciating, you could make money when buying into the asset.
Obviously, you will have to choose for a broker to facilitate your trades and have the actual cryptocurrency asset on the platform.
Trading cost is essential for any trader, and not always a cheaper way will determine your success.
All of the use, as mentioned earlier, MT4 as a trading platform and self-developed trading applications for beginner traders when trading cryptocurrency as CFD.
For the actual trading, you need basic knowledge for both fundamental and technical analysis to be profitable.
However, if you don’t, the brokers will help you out with eBooks, personalized trading sessions, and video tutorials.
If time is an issue, don’t despair because the same brokers have available social trading, which will allow you to follow profitable and experienced traders.
Stepping away from cryptocurrency as CFDs. Let us go on how to buy and hold a cryptocurrency.
First and foremost, you will need a wallet, an electronic portfolio, to be precise.
The best and most secure cryptocurrency wallets are the hardware wallets, such as Ledger and Trezor. That’s because you can store your coins and have the wallet offline protecting your holdings.
Similarly, phone or desktop secure wallets exist and can be used in the same manner.
Let’s have a look at a couple of them:
Coinbase wallet easy to set up and use where you can swiftly convert your money into cryptocurrencies. The ones this wallet supports are BTC, ETH, Bitcoin cash, Ehereum classic, litecoin, and relatively new addition zero X.
Once we have a wallet set up, we can use the coins or tokens in exchanges.
Note that exchanges can also act as wallets, and the anterior part is if you’re not trading and just want to keep the coin, no fees will be deducted.
Most of you already experienced exchanges first hand and have a basic idea of how the work. But if you’re a beginner, I will show you how to set up an account with Binance.
First, go to their official web page and on the top right corner click register.
After filling out the registration form and agree to terms and conditions after reviewing, you will have to verify your account.
Simply go to the inbox of the email you used and click the button Verify email. By doing that, you will get a confirmation with your account activation and log in.
Every login to your account will always prompt you with a safety risk notice. Here you can read and understand what NOT to do to keep your cryptocurrency safe.
On the top left, you can see the funds tab, orders, join us, support, and news. With a level 1 account, you are limited to only 2 BTC every 24h withdrawals.
To increase the limit, you will have to submit your verification documents. Such as proof of identity, utility bill, and a selfie of you holding your identity card or passport.
After they approve your documents, the limit of withdrawals will increase to 100 BTC every 24h.
To deposit into your account, simply go to the funds’ tab and click on the deposit. Storing on Binance can be done with one of the 180 plus cryptocurrency coins available on the exchange.
Let’s find out how to trade on the cryptocurrency exchange since we completed all the tasks required for registration and KYC.
On the top left corner, you will see the tab Exchange, click on it, and chose from Basic if you’re a beginner and Advance if you’re an experienced trader. We will go with the Basic mode in this webinar.
What we can see now is the platform with the desired coin for trade.
On the left-hand side, we have all the current opened buy and sell orders.
In the middle is the chart of the desired coin pair and the buy/sell option.
On the left-hand side, we can see the trade history and recent market activity for the cryptocurrency.
You will notice three options for buying and selling, and the easiest way to do it is by clicking on the market tab to get the bitcoins price today.
Chose the quantity of your portfolio from 25% 50% 75% or 100% and click buy or sell.
In our example, we have Bitcoin Vs. Tether, which is value is roughly $1.
For 1 BTC, you will need 6,368 Tether coins or $6,368, which will be 100% of your portfolio. Alternately you can choose 50% of your Tether coins with is $3184 or 25% the equivalent of $1592.
That been said, let’s find out how we can increase the number of coins when trading on a cryptocurrency exchange.
The answer might not surprise everyone, but we will use the sell and buy limits.
Previously we wanted to buy 1 bitcoin at the current market price, which was $6368; however, we don’t want to purchase at that price. So by setting up manually, let’s say $6200 per BTC; we will pay with $168 less. The tricky part is you will have to wait for the current price to drop to that threshold, and the platform will execute your trade.
Probably you are wondering, OK, where is my profit? Well, when the price dropped from $6368, we saved $168 to make a profit, we will have to hold that BTC up to when it will get back to $6368 or even higher.
To be more specific, once the BTC price changes from $6200 to let’s say $6400, you will already have a sell limit at that price. When it hits the magic number your BTC will be automatically converted to Tether, Your balance will be 6400 Tether coins or the equivalent of $6400.
Concluding the basics of increasing our portfolio on cryptocurrency. We invested 6200 Tether coins and made a 200 coins return on investment. This might take a day or week, but you’re doing this as a long term trading strategy.
Like always, I wish you all Happy Trading and Every Success!