Digital currency trading isn’t easy. With hundreds of different cryptocurrencies that are all extremely volatile, it’s hard to know which ones are worth your time and money.
However, even though there are many risks involved with cryptocurrency trading, you can very easily earn great returns in a short amount of time when done right.
What Is Cryptocurrency?
A cryptocurrency is a form of digital or virtual currency that uses cryptography for security and anti-counterfeiting measures.
Using decentralized technology— a significant departure from the centralized banking systems of today — blockchain enables peer-to-peer transactions across multiple platforms. Here are the best ways to handle your newfound assets so you can manage your money and minimize your losses.
1. Find Reliable Sources for Cryptocurrency News
Many people are getting into cryptocurrency, with some working to benefit the industry and others interested in taking advantage of newbies.
You can avoid being scammed by using trustworthy media sources that deliver quality content about crypto and blockchain, such as Coindesk. It’s a great resource for everything regarding cryptocurrencies.
2. Cryptocurrencies Are Volatile
One of the major reasons for this is that it’s relatively new and still very much in its beginnings. The currency sees value changes every second of every day, and this can be a little bit hard to swallow for people who aren’t used to these kinds of conditions.
A bit more accustomed to seeing their money fall apart? Even experienced crypto traders have trouble managing volatility, and any new investor has to be ready for something of this sort.
3. Explore the World of Altcoins
Altcoins have long been the dark horse of cryptocurrency investment. Although Bitcoin is still the king of cryptocurrencies, it’s not alone in its success.
According to the experts at SoFi, the list of cryptocurrencies has reached over 2,800 since October 2019. And you shouldn’t dismiss altcoins as if they were simply spin-offs of Bitcoin. In fact, specific use cases back most altcoins that users can benefit from — whether it’s anonymous transactions, micro-transactions, or something completely different.
For example, Ripple (XRP) has an efficient payment network that works with bank-grade infrastructure.
4. Understand the Differences Between Hot and Cold Wallets
Hot wallets are free to use and easy to access. Bitcoin holders can get a hold of these encryption-protected online wallets easily. However, because they connect them on the Internet, they offer very little protection from hackers and other miscreants.
Cold wallets provide better protection against such threats. You can also use them more efficiently for transacting bitcoin, given that they’re totally offline.
5. Stay Vigilant
When trading and storing cryptocurrencies without banks or institutions, you are opening yourself up to new vulnerabilities.
The common approach is to avoid leaving assets in hot wallets — but there are second lines of defense that you should adopt, regardless of how much time you spend on crypto trading. With a secure, private mode of digital currency exchange, they have the potential to change the way we handle money forever.
You will not become a cryptocurrency expert overnight. You’ll have to understand its basics and master the technology behind it before you can really make it work for you. It’ll take time, so don’t rush yourself and enjoy the learning experience.