Cryptocurrency, also known as digital currency, comes under different names. You might have heard the name Ethereum, Litecoin, and Bitcoin, as these are the most famous ones. Presently, cryptocurrencies are being used as an alternative for making online payments.
So, before you decide to exchange your traditional currencies (pounds, euros, and dollars) into cryptocurrency, it is essential to understand how to invest in cryptocurrency for beginners.
Do you know that the cryptocurrency market is predicted to grow at an annual rate of nearly 13% until 2030 ?
Today, people are more aware of the term cryptocurrency than before. Businesses are accepting cryptocurrencies as a mode of payment. The increasing interest of businesses in cryptocurrency has encouraged investors to learn more about cryptocurrency.
There are over 300 crypto exchanges with an average total daily volume of nearly $ 290 billion.
As a cryptocurrency investor, you must know what this digital currency is all about. How many funds are required to start trading? Is it possible to mine cryptocurrency? How the price fluctuates in the market, how to invest in crypto for beginners, and many other such questions. This article will provide answers to some of your FAQs as a newbie in cryptocurrency investment.
What is Cryptocurrency for Beginners?
Cryptocurrency is an online asset. The term ‘crypto’ has been derived from the fact that the transactions of this digital currency are greatly encrypted. This makes the exchange more protected. Unlike other physical currencies, cryptocurrencies are decentralized. This means they are controlled and managed by a central authority.
You can buy cryptocurrencies through different exchange platforms available online. As a beginner in cryptocurrency investment, you should know more about exchange platforms. This article provides information about the top list of cryptocurrency exchanges.
Cryptos such as Bitcoin, Ethereum, and XRP are extremely popular and widespread. Even though nearly everyone has heard about these coins, they only comprise a small percentage of over 7,000 cryptocurrencies that exist today. The number of global cryptocurrencies went from 66 to 7,557 between 2013 and November 2021.
Cryptocurrencies have exploded onto the scene and have become a huge target for investors around the world. With a steadily increasing market capitalization of over $ 100 billion , cryptocurrencies such as Bitcoin and Ethereum have already begun to reduce gold’s market share.
What is Mining Cryptocurrency for Beginner?
You can even create cryptocurrencies. This process is known as cryptocurrency mining. It is a process in which powerful processing units solve complex problems. After this, bitcoin is rewarded for solving complex mathematical problems and performing successful transactions. Miners need to have highly digitalized computers that can provide energy in huge amounts.
How Much Money is Required to Invest in Cryptocurrency for Beginner?
You can straight away start trading with just a few dollars. For example, most of the crypto exchange platforms allow trading with as low as $ 5 or $ 10 . But, make sure to do your research before finalizing a platform. This is because some trading exchanges will take a big chunk of your money as a fee, especially when you trade cryptocurrency in small amounts. There are several ways to buy cryptocurrency, such as:
- Financial Apps: You can trade a few cryptocurrencies, including Bitcoin using a variety of payment apps and financial apps. The top financial apps are Webull and Robinhood, whereas the top payment apps include Cash App, Venmo, and PayPal.
- Traditional Brokers: Similar to taking services of traditional brokers for buying financial assets, such as stocks, you can also approach them for trading bitcoin and a limited number of other cryptocurrencies. The popular players in this field include tastyworks, TradeStation, and Interative Brokers.
- Crypto Exchanges: This is the most common type of method to get an extensive range of cryptocurrencies. These crypto exchange platforms offer the most competitive price and secure transactions. Some major platforms include Binance, eToro, Crypto.com. Kraken and Coinbase.
What are Altcoins?
When you are learning to buy a cryptocurrency for beginner, you will hear the term altcoins. An “Altcoin” is a category that comprises all the coins besides Bitcoin. This is because, initially, Bitcoin was the most popular and largest cryptocurrency, thus other coins are defined in relation to it.
Even though Bitcoin has the highest market capitalization, but now it is not as dominant as it was in the beginning. Today, there are more than 15000 altcoins present in the market. For example, Solana and Ethereum have widely grown with time in terms of popularity and market capitalization.
Do you know the market size for cryptocurrency will get to $ 1087.7 million by 2026 ?
The drastic growth of the cryptocurrency market is commendable.
Causes of Fluctuations in Crypto Price
The cryptocurrency market also fluctuates like the stock market. The only difference is in the degree of volatility. The market fluctuates very quickly. The fast movements in the prices can be scary at times, but you can also gain huge profits in the cryptocurrency market.
Thus, you should know the causes that make this market fluctuates. Some major factors include government decisions and political events that can positively or negatively impact crypto prices. Other factors include media coverage (negative or positive news regarding a specific cryptocurrency). Similarly, cryptocurrency price has started to increase because companies are accepting it as a mode of payment.
How to Buy Cryptocurrency for Beginner?
After understanding the basic information about cryptocurrency, the next step is to know the important steps that must be taken to start cryptocurrency trading. This guide on cryptocurrency for beginners is helpful if you want to start trading now.
First, you have to look for an appropriate trading exchange and create an account. The selection of trading platforms depend on the goals and needs of cryptocurrency traders. There are several exchange platforms available on the internet today.
Globally, 459 cryptocurrency spot exchanges exist, with a total 24-hour trading volume of $ 93.4 billion.
Some of the critical factors that you have to consider before choosing a trading platform include low transaction fees, ease of use, customer support, and security features. Once you are done selecting the most suitable platform, now you have to complete their registration form to create an account.
For this, enter your valid email address along with a strong password. After this, you will receive a mail with a code that will be used for your account verification. After successful verification, the next step is to deposit your initial capital and begin your cryptocurrency trading journey. You can deposit capital through bank transfer, Skrill, and even via debit / credit cards.
You might be thinking it is easier to be a successful cryptocurrency trader. However, this is not the case. It is essential to follow a few tips that play an important role in making good profits.
You cannot become a millionaire in one night with Cryptocurrency trading. Neither, it is a short-cut scheme to become rich instantly. In fact, cryptocurrency trading is an income generating and a wealth building method that requires skill, patients, and discipline . Following are some great tips to help you to buy cryptocurrency for beginner.
- Research is Necessary
There are always some pros and cons of everything. The same is the case with the crypto market. It is a huge marketplace with a variety of trading protocols. Thus, it is imperative to have a better understanding of the ups and downs of the market on your own instead of taking help from other crypto experts.
As a cryptocurrency for beginner, you should research information about crypto platforms and top cryptocurrencies that are worth your investment. Do technical analysis and extensive research to learn about the benefits, drawbacks, and risks of making investments in such a diverse market. Once you are satisfied with all the information, you can continue trading.
- Practice, Practice, and Practice
The crypto market is highly volatile. The best way to understand this market is to start experimenting and doing your trades. You can begin trading through dummy accounts. This will help you in understanding how the actual market works. There are many dummy accounts available online for all the popular coins. Simply, select according to your interest and start practicing.
- Start Trading After Choosing Cryptocurrency Wisely:
In the current market, there are over 7,000 cryptocurrencies in circulation. Select a coin depending on its past performance, price, and its potential to give profit. Since you are learning cryptocurrency for beginner, you must avoid trading ICO (initial coin offerings) as their success rate is not known.
- Diversification
You must have heard this famous quote:
Do not put all your eggs in one basket.
This saying is applicable for both stocks and digital assets. It may seem lucrative to invest in digital assets, however, at the same time, there is a high possibility of facing a huge loss. Therefore, you must diversify your investment in different altcoins. This will help in decreasing your loss if one of your altcoins drops in price.
Conclusion
The growth of cryptocurrency market is unstoppable.
Last year around July 2021, the total number of crypto users stood close to 230 million. However, as August came, the same figure shot up to 263 million. In the latest report from Crypto.com, a possible prediction for 2022 says that the total number of crypto users by December could reach the ten-digit figure.
The FAQs related to cryptocurrency present in this article will help you in solving your doubts related to crypto trading. If you are a beginner in the crypto market and have doubts that are becoming a hurdle in starting your crypto journey, then these FAQs will assist you to learn about the basics of cryptocurrency and explore this option of making money.