The safety of the exchange is paramount
Organisations are working to implement the purchasing method of buying Bitcoin, Ethereum and other cryptocurrencies. Digital coins, therefore, can only be purchased through an exchange – a cryptocurrency crypto platform where you can trade your money for virtual currencies. These work online and don’t share the same threats as owning traditional, fiat money.
However, handling paper bills exposes you to risks like losing, damaging, stealing, etc. Plus, centralised finances pose many issues, and corruption is among the most significant ones. This is why you should always ensure your wealth is safe and sound. To do this on a crypto exchange, you must make sure the platform uses top technology to secure your money since central institutions do not back such applications. How can you do that? A good starting point is to go with the most significant platform available in your country. Generally, they’re the most popular for various reasons, like being user-friendly and secure.
If you intend to keep your virtual coins on an exchange account instead of moving them into your crypto wallet, it’s best to use a platform that has strong protections against theft and uses offline, cold storage. Some exchanges have insurance policies to help prevent users from being hacked.
If you intend to enlarge your investment portfolio but are not sure if cryptocurrency is for you, this article might help you to make up your mind.
Don’t neglect the storage methods
If you lose access to your crypto, you can probably tell it goodbye forever. This is why it is crucial to store your funds safely. You have several options to choose from, from hardware devices to paper. Here are some facts about some of the most common crypto storage methods.
– Custodial wallet. With these wallets, another party, like a crypto exchange, is responsible for storing your digital coins. It’s the most convenient and simple option, yet, you’ll allow other parties access to your funds.
– Hot wallet. This application stores crypto online and is popular for its convenience and ease of use. Its drawback is that it stores crypto online, exposing your money to a few risks.
– Cold wallet. This hardware used to store crypto offline is the most secure among all the storage methods. Yet, many people don’t jump on this practice due to its various costs.
– Paper wallet. Physical storage of private crypto keys is convenient because it’s free and offline but poses the risk of losing money.
You can opt for the most popular cryptocurrency at the beginning
Bitcoin (BTC) continues to lead the pack of cryptocurrencies in terms of market capitalisation, popularity and user base. Other cryptocurrencies, like Ethereum, Tether and BNB, assist in developing DeFi systems. Some altcoins have been backed as having additional functionalities compared to Bitcoin, like using alternative consensus algorithms or handling more transactions per second.
Because BTC is not the only cryptocurrency available, it’s important to research others and determine which ones are also performing well. Here are some cryptocurrencies that have survived steep price rises and drops.
– Ethereum (Ether or ETH). This crypto debuted in 2015 and is now the second-largest cryptocurrency by market capitalization after Bitcoin. Ether is the first Bitcoin alternative and works as a decentralised software platform that allows dApps (decentralised applications) and smart contracts to be built and run without control, fraud or interference from a third party. The goal of Ethereum is to develop a decentralised set of financial services that anyone in the world, regardless of faith, nationality and ethnicity, can freely access. However, remember that this one is a volatile asset and that it’s wise to check the Ethereum price before deciding on the amount you invest in it.
– Tether (USDT). Tether (USDT) is among the first and most prevalent class of cryptocurrencies known as stablecoins, aiming to reduce volatility by tying their market value to other external reference points, like currency. Most cryptocurrency, including major ones, can experience periods of extreme volatility, so USDT and other stablecoins try to smooth out price volatility in order to appeal to people who would otherwise be wary. Tether’s value is directly linked to the value of the US dollar. Therefore, the system enables you to trade cryptocurrencies for US dollars quickly.
– Binance Coin (BNB). This one’s a utility currency serving as a payment method for trading fees on the Binance exchange. This digital coin began as an ERC-20 token that ran on the Ethereum blockchain, and eventually, it got its own mainnet launch. By market capitalization, it is the third-largest cryptocurrency and serves as the foundation for Binance’s decentralised exchange. Changpeng Zhao founded the Binance Exchange, which is now one of the world’s most popular exchanges in terms of the trading volume.
You can change your trading strategy anytime
Regarding trading strategies, know that you don’t have to limit yourself to only one. You can hold crypto in the long term or be a day trader. Day trading is among the most common crypto trading methods and implies you buy and trade on the same day. When engaging in such a trade, your primary goal is to profit from intraday price movements in the chosen cryptocurrency. For a successful transaction, you can rely on technical indicators to determine entry and exit points for the digital coin.
Another popular yet complex crypto trading method is Dollar-Cost Averaging (DCA). When determining the ideal entry and exit point in a cryptocurrency market, it’s safe to assume that market timing is nearly impossible. Therefore, DCA is a relatively sound cryptocurrency investment strategy. This method allows you to avoid the time-consuming task of market timing and instead build wealth over time.
Here are other practices that investors take on when they own cryptocurrency:
- High-Frequency Trading
- Building a balanced portfolio
- Range trading
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Alternatives to buying crypto
Remember that cryptocurrency is and will likely be a volatile industry long from now. However, if this is still a baffling topic for you or you can’t decide on a coin to invest in, don’t demoralise – you can still diversify your portfolio with other assets, including the following:
- Short-term government bond funds
- Short-term certificates of deposits
- Short-term corporate bond funds
- High-yield savings accounts
- Dividend stock funds.