Cryptocurrency is quickly becoming an extremely popular form of currency. They are also being used to engage in various forms of trading now, much like binary options and Forex trading. In fact, just like there are many different automated services which trade BO and Forex for you, there are now many emerging programs centred of trading cryptocurrencies. There are various different cryptocurrencies, with some of the most popular ones being Bitcoin and Ethereum.
In recent years the value and usefulness of these currencies have increased drastically, with one single Bitcoin currently being worth around $2,500. Since it is something relatively new, many people may not know how to trade or invest cryptocurrencies, which is exactly why we are here today. Let’s teach you all about this relatively new type of currency and how to successfully invest it.
How To Invest Cryptocurrencies: Step By Step
Investing this new type of currency really is not that hard, but there are a few different steps that you need to follow to be successful at it. As long as you follow our cryptocurrency investing steps below, you will have no problem generating an income with them. Just to be clear, Bitcoin is the most popular cryptocurrency right now, but there are many others too, mostly referred to as altcoins, because they are alternatives to the popular Bitcoin.
Step 1: Identify Your Cryptocurrency & Exchange
These currencies are traded on their own exchanges just like NASDAQ and other such exchanges. There are different equities and exchanges, such as on the New York Stock Exchange, but not all of them offer cryptocurrencies as something to be traded with and invested in. Whatever the exchange you choose, your best bet is to choose a large exchange with a high volume to increase your chances of trades going through and being profitable.
For example, large volumes of Ethereum and Bitcoin can be traded on exchanges such as GDAX, Bitfinex, Gemini, and Kraken. All of those exchanges have high volumes of the aforementioned cryptocurrencies, they use USD and you can use bank transfers and credit cards to invest money. The biggest difference between these different exchanges is the interface as well as the fees they charge. For example, an exchange such as Coinbase is pretty expensive with high fees, but it also provides a better user interface and wallet to work with.
Once you select one, you will have to go through a vigorous registration process with many steps to confirm your identity. This is because cryptocurrency trades are final and non-refundable, so staying on top of fraudsters is a big issue. Now that you have done that, you will want to select the particular cryptocurrency that you want to trade with. It is up to you to do the proper research and gather the tools necessary to make profitable trading and investment decisions.
Step 2: Cold Storage & Choosing Your Wallet
Security is a pretty big concern when it comes to this kind of currency. After all, everything is stored on computers and online databases which are not immune to hacking and theft. However, the security for Cryptocurrency wallets has gotten much better over the last few years. When you buy any amount of Bitcoins or other currencies on an exchange, it is linked to a public key, which everyone can see. You will also own a private key that shows your ownership of the public key.
Your private key is the only proof you have that you own that public key, which is linked to a certain amount of currency. If you lose your private key or someone steals it from you, then that currency is no longer yours. As long as your currency remains on the exchange you are not in full ownership of it, so you should transfer it to a personal wallet. There are a few different types of wallets in existence.
- Hardware – You can USB devices such as Ledger Nano S to access the block chain.
- Desktop – Applications like Exodus, Parity, and Jaxx can be installed on your computer to give you storage and access capabilities.
- Web – These keys and currencies can also be stored on the web. There are various websites which now offer this service for a fee, with one of the most popular ones being MyEtherWallet.
The function of all of these storage methods is to give you a secure and safe place to store your private key so only you have access to the currency, otherwise known as tokens. If you are new to this kind of thing, it is recommended that you use something simple like a desktop application.
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Step 3: Creating & Confirming Smart Contracts
You will have to create and confirm smart contracts in order to receive and send funds, but this is not very hard at all. This is what will allow you to transfer tokens, or in other words, your money. If you want to move the cryptocurrency to the exchange, just post your wallet’s public key into the exchange website and send. If you want to move cryptocurrency to your wallet, just paste the exchanges public key into the transaction contract in your wallet and confirm it.
This is how you transfer funds back and forth. It will cost a little bit to transfer funds, but not very much at all. It is worth it considering that these little fees help stop theft, plus they are still much cheaper than doing wire transfers!
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While the process to get started with investing cryptocurrencies is not all that difficult, it does take a decent amount of time to get done. You need to pick the right currency for you, which is easily doable with some research. As well, you need to pick a good exchange. After you have signed up for an account, you need to choose a wallet to store your tokens in. Just remember to always do your research and you will be just fine. More articles on Bitcoin and other cryptocurrencies to come!
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