It was probably a friend, a friend of a friend, or maybe Uncle Bob, who first bragged to you about how much profit he clocked from the Bitcoin (BTC) boom when prices hit an all-time high of $64,800 in April this year.
And as he droned on and on about how cryptocurrency is the future, you wondered how you could get in on the action, too.
As a complete beginner in the cryptocurrency world, things may be intimidating at the start with words you’ve likely never seen before, like blockchain, Ethereum (ETH), DeFi, smart contracts, hot and cold wallets… Oops, sorry, we got carried away.
We’re not going to lie — there is a learning curve. But the good news is, everyone who’s now trading cryptocurrency has had to start somewhere. And hey, better now than later, and better late than never. Here’s a quick crash course on all you need to know to start trading cryptocurrency today.
What is cryptocurrency?Why is everyone going crazy over cryptocurrency?How does cryptocurrency trading work?What are the risks involved?What do I need to do to start trading crypto?
What is cryptocurrency?
Essentially, cryptocurrency is a digital or virtual currency. Most times, it is facilitated by blockchain technology. In 2009, this technology was used to create the first and most popular cryptocurrency today known as Bitcoin.
Apart from Bitcoin, there are more than 11,000 cryptocurrencies in the world, with different goals and features. (Cryptocurrencies that are not Bitcoin are considered alternative currencies, or altcoins for short.)
What you need to understand about blockchain technology in relation to cryptocurrencies is that it is basically a public record-keeping system that notes down transactions onto a global peer-to-peer network without the need for any central authority to manage it (e.g. a bank).
This means that no one person nor group can control or manage BTC or any other cryptocurrency. The strongest crypto proponents believe that this is the future of money: a complete decentralization of the global financial system. No more central banks, no more monetary authorities.
Why is cryptocurrency popular?
The cryptocurrency boom earlier this year played a part in catapulting what was once considered a counterculture to the mainstream recognition we see today. Just to prove how much the cryptocurrency industry has grown, check out these numbers:
Global cryptocurrency market capitalization: $1.92 trillion BTC market capitalization: $860 billionETH market capitalization: $371 billionDaily volume traded in cryptocurrency derivatives: More than $100 billion on a busy day (rivaling the daily volume traded in the New York Stock Exchange)
From the days when the first BTC was transacted for zero dollars, the cryptocurrency industry has grown exponentially in the last year alone.
If the sheer volume of cryptocurrency trades wasn’t enough to convince you of the impact of digital currency, how about the fact that major banks such as JPMorgan are embracing cryptocurrencies? In fact, renowned companies like Amazon, Visa, Microsoft, and even Starbucks are also reportedly planning to accept cryptocurrency as a form of payment. (Although admittedly, most Bitcoin holders are unlikely to use it to buy a frappuccino any time soon).
So why are cryptocurrencies so popular? It’s not easy to pinpoint a single reason, but we can take a look at the common key characteristics of cryptocurrencies that have likely helped to propel the industry to its current prominence.
Decentralized; As discussed earlier, the decentralized nature of cryptocurrencies eliminates the need for a central authority. This is unlike fiat currencies such as the U.S. dollar that are backed by the government that issued it. Irreversible and immutable; This feature means transactions cannot be undone once they are recorded on the blockchain, and it is impossible for anyone but the owner of the underlying cryptocurrency asset to move the funds. Anonymous: In a way, cryptocurrency is anonymous because you may hold a cryptocurrency address without linking your identity to it. Think of it as using a pseudonym instead of your real name.Transparent: At the same time, cryptocurrency transactions are completely traceable because of the public ledger we talked about earlier, which tracks and makes public each and every transaction on the blockchain.
How does cryptocurrency trading work?
If you’re keen to start cryptocurrency trading, you need to first decide if you are a short-term or long-term trader.
Most cryptocurrency beginners tend to lean towards the self-explanatory HODL strategy, which refers to Hold On for Dear Life. In this strategy, a HODL-er would buy and hold their crypto-asset for long periods regardless of the state of the market, and without an exact selling price in mind.
Then there are position traders, who buy and hold until the market reaches the price level that they were waiting for.
Among short-term traders, there are three main types. The first type is day traders who open and close their trades on the same day. The second are swing traders, who keep their trades open for more than a day to wait for larger profits. The last type is scalp traders, a type of day traders that open and close trades every hour, in search of as many positive trades as possible.
Next, you’ll have to decide if you want to trade “on the spot” or in derivatives.
The first option is known as spot trading. Traders buy or sell an asset immediately at the current market price, as the owner of the asset. This is the most popular trading market environment for cryptocurrencies and for crypto traders who are just starting out.
In derivatives trading, traders do not own the underlying asset. Instead, derivatives are financial contracts that get their value from fluctuations in the underlying asset. These derivatives include futures contracts, which are agreements to buy or sell the asset at a predetermined price at a specific time in the future. Meanwhile, perpetual contracts are similar to futures contracts but have no expiration date.
Compared with spot trading, derivative trading is complex and requires knowledge of technical analysis. A trader will also need to have a relatively high-risk appetite and tolerance when trading derivatives.
What are the risks involved?
Just like any other trading activity, there are risks involved in cryptocurrency trading. In fact, unlike stocks, the cryptocurrency market fluctuates in greater magnitude and on a more frequent basis.
One way to mitigate your risk is to choose cryptocurrency trading exchanges that offer stop-loss orders so you are able to protect your trades.
In addition, you should be aware of the market conditions, do your own research, and take proper risk management decisions in every trade you make.
Ultimately, trading in anything, really, requires technical and analytical thinking. So decide carefully if it is suitable for you.
What do I need to do to start trading cryptocurrency?
If you’re not sure where to start trading cryptocurrency and need a recommendation, why not start with one of the top crypto trading platforms in the world: Bybit? Since it was established in 2018, Bybit has gained more than two million registered users.
Bybit is a great place for beginners. Here’s why:
Smart trading system: Set up take profit/stop loss at entry, receive strategy alerts and adjust your order(s) with one click. Bybit’s powerful API also ensures that you get lightning-fast market updates. No server downtimes: Bybit prides itself on a 99.99% system functionality and no server downtimes, thanks to its grey release feature and hot patches released on-the-fly.Unparalleled customer service: Another key feature of Bybit that sets it apart from its competitors is how seriously it takes customer service and feedback. It boasts 24/7 customer service, available in 8 languages to support traders around the world. These languages include English, Chinese (simplified and traditional), Japanese, Korean, Russian, Vietnamese, Thai and Bahasa Indonesia.Up to $600 in welcome rewards: Bybit offers an attractive welcome package for all newly registered users when they complete simple tasks and hit milestones. For example, you can get a $50 coupon when you make a first-time deposit within 48 hours of joining Bybit. This coupon can be used to pay for trading fees.
If you managed to make it this far, congrats! But if you still find things slightly complicated and confusing, we’ve broken down what you need to do to get started with crypto trading on Bybit in simple steps. Just follow the instructions and you’ll be set.
How to sign-up for a Bybit account?
Sign up for a new Bybit account here. You can either register using your email address or mobile number. However, as you will need to bind your email address to make withdrawals, we strongly suggest you register with an email address. Note that you will not be able to change your email address once it has been registered! Verify your email address using the verification code sent to your email inbox. To make your first deposit, go here. Identify which coin you would like to deposit. Click on the corresponding “Deposit” button.Go to your Rewards Hub here to see what you need to do to claim your welcome rewards. Start trading! If you need more help, Bybit’s comprehensive Help Center has an answer for every question. Otherwise, you can make full use of their 24/7 customer support available on live chat.
All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
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