Trading cryptocurrency is a legit investment opportunity these days. However, as with any investment, knowledge is power, and the more you know about crypto, the better you’ll be able to make a wise investment that will pay off. Since it is so easy to get started investing with crypto, many people forget this fact and become discouraged when things don’t work out. Fortunately, there are a few things that you can take note of before you get started crypto trading that will make a big difference.
1. There Are Many Different Types of Crypto
Some people who are new to crypto think that crypto is Bitcoin and that Bitcoin is crypto, in other words, that the two terms are interchangeable. This isn’t the case at all, Bitcoin is simply one kind of cryptocurrency.
The truth of the matter is that there are over 7,000 cryptocurrencies worldwide as of 2021 according to Statista. In addition to Bitcoin, other well-known currencies are Shiba Inu crypto, not to be confused with DogeCoin, and SafeMoon crypto.
It is also worth mentioning that some of these 7,000 currencies might be defunct or exist only in specific countries and/or markets. The number that you have access to as a means of investment is lower than the total number depending on your location and other factors.
2. Using a Digital Wallet
Since crypto doesn’t exist physically in real life, it must be kept in a digital wallet. A wallet is a type of platform that allows for the storage and trading of crypto on the blockchain, something we’ll get to in a moment. A digital wallet can be an app on a phone, desktop PC, or even exist as a USB device that can be transported as needed.
Just as there are many forms of crypto, there are many digital wallets. Some are free, but most include fees of some kind such as subscription fees or transaction fees. Also consider the fact that some wallets can hold multiple types of crypto, while others will only hold one type. The type of crypto you intend to invest in will affect which wallet you choose.
3. Understanding the Blockchain
There is some confusion when it comes to the nature of the blockchain. Some mistakenly think that the blockchain is the same as a crypto wallet, or that the blockchain and crypto itself are interchangeable terms. The truth is, the blockchain is a digital ledger that keeps track of cryptocurrency transactions.
Essentially by tracking crypto transactions, the blockchain is what allows crypto to exist since it doesn’t exist physically. The blockchain is also decentralized and heavily encrypted meaning that it is very difficult to hack. This makes crypto one of the most secure and anonymous forms of payment in the world.
4. You Need an Investment Strategy
As with most forms of investment, it is important to go in having a good strategy. Just purchasing a form of crypto that’s doing well, or is in a dip, and hoping for the best is a bad idea. Instead, having a solid understanding of market fluctuations, long term prospects, and fully researching the type of crypto you want to invest in is a better idea.
There are many resources online that can help you to make smart decisions regarding your crypto investments such as CoinMarket Cap which tracks the value of various forms of crypto, and displays graphs regarding their trends. There are also training programs like The Plan with Dan Hollings which will teach you everything you need to know about crypto trading.
5. Scammers Exist
Like in any other thriving industry, scammers exist in the world of crypto trading. Crypto scams can take many forms, such as the classic MLM pyramid scheme, exit scams, pump and dump, and more. Being able to recognize scammers will help you to keep your assets safe, and ensure that you don’t waste money on a poor investment that’s been hyped up by someone trying to scam you.
Understanding Crypto to Make Smart Investments
Crypto trading isn’t overly complicated. It’s so easy that many children trade crypto. The catch is that there are certain things that you absolutely must know before getting into crypto training, such as the points that we just went over. The more you educate yourself, the better you’ll do in crypto trading.