Bitspark is a bankless money transfer company that helps you convert cash to cryptocurrency, globally.
At first, getting into crypto trading may seem overwhelming with all the different terms and jargon injected into everything. But it doesn’t have to be like that. While the technology that makes blockchain, crypto, stablecoins, and exchanges possible is certainly complex, basic questions around crypto trading can be answered without getting technical.
So if you’re new to crypto trading, here are 10 simple answers to 10 basic questions to help you on your way.
Looking beyond Bitcoin and Ethereum, the list of all cryptocurrencies seems near endless. Certainly during 2017/2018 we saw a constant stream of new coins entering the market vying for top positions. However, the usual suspects have held their positions in the top of the charts with names you’ll likely be familiar with such as Ripple, Litecoin, Dash, EOS and Bitcoin Cash.
Most crypto exchanges will largely have the same popular coins available for trading, with some smaller coins - in terms of volume - being only available on a few select exchanges.
Coinmarketcap is one the best resources to get a clear overview of all the cryptocurrencies that exist today. For each coin, you can see the market cap, price, volume, circulating supply and price charts. Technical and fundamental analysis will help you identify interesting crypto trading opportunities.
You can buy crypto using bank transfers, credit cards or in some cases even with cash. Your options will largely depend on where you buy and what service you use. Services available to you depends on where you are located to some extent. If you’re in HK, see this list of Hong Kong crypto exchanges.
In some places, you can only use your local currency to buy BTC or ETH, while other companies may also offer stablecoins as an entry coin. After that, you are free to trade into any of the other coins available on the exchange.
For the most part, this simply means you can go to an exchange that services your market, with bank transfers and credit card purchases as the most probable options. Generally speaking, credit cards are the most expensive way to buy crypto.
Buying crypto with cash used to be easy through P2P network Localbitcoins, but that service has been cancelled. Bitspark still serves the cash market with a network of Cash Points, and in some cities you can also use Bitcoin ATMs.
This means you need to look both at the flat fee charged for the purchase, and compare the exchange rate they provide with others.
Bitcoin ATMS for example build a 7% charge into the exchange rate, and the same happens on exchanges - especially if you buy with a credit card. Buying crypto with cash using the Bitspark mobile app only incurs a 1.5% fee.
Looking into crypto exchanges, you may have seen that some are centralised and others are decentralised.
A centralised crypto exchange is like a traditional exchange where a central party connects traders to buy and sell assets. For this to work, a centralised exchange holds all the coins being traded in wallets of their own. That’s a security risk as centralised exchanges can get hacked, but it does make the process easier for beginners.
On a decentralised exchange (DEX) like Sparkdex, traders interact directly without any middlemen. You are in control of your keys, your wallet, your coins. The downside is that if you lose your keys for example, there is no company customer service that can help you out. Everything you do is under your own responsibility. That’s what makes it safer in terms of hacking - everyone holds their own coins so there is no centralised target to exploit.
Simply put, a centralised exchange is easier to use but less safe, a DEX is less easy to use but safer. Read our more in-depth comparison to learn more.
In any case, you can easily move crypto funds from one exchange to the other if you change your mind.
Yes. While some exchanges can’t serve certain markets, generally anyone can go to any website and create an account.
Depending on the service you use, you may need to provide identity documents whereas with some you don’t need to at all - the latter being the default for decentralised exchanges.
Not really. Of course, this depends on which service you use but generally speaking the minimum purchase amounts are very low. In fact, for cash purchases, Bitspark doesn’t have a minimum amount at all. We want to make crypto available to everyone, and that’s one way we do that.
On most centralised and decentralised exchanges there will be trading fees. The rates do vary quite a bit so if you are planning to trade actively, make sure you find rates acceptable to you. DEXs are typically the cheapest option.
There are many trading strategies, analyses and indicators used in crypto trading that will be familiar to traders with a Forex background.
In crypto trading, short term trading is a very popular approach because cryptocurrencies tend to be very volatile. Short term trading is also referred to as active trading and the most common form is day trading where crypto traders open and close positions within 24 hours.
If you’re not actively trading, it is best to store your crypto in a wallet separate from the exchange. A hot wallet is software installed on a device which is a safe option, and a cold wallet is a hardware device that’s offline which is even safer.
We have put together a guide on optimising security for crypto traders for further reading.
Stablecoins are pegged to the value of another asset. Generally, most stablecoins are USD-based but increasingly there are new stablecoins on the market for different currencies such as HKD, PHP, JPY, IDR and so on. See the full list of stablecoins to get an overview of what’s available on the market today.
In crypto trading, they are mostly used as entry and exit coins to connect you to the crypto market with your local currency. For example, the HKD stablecoin available with Bitspark is used to make it possible for you to access the crypto market with Hong Kong dollar.
During trading, stablecoins can also be used if you expect a drop in prices. You could move your volatile crypto assets into USD stablecoins for example, provided you believe the USD price will hold long enough for you to ride out unfavourable market conditions.
Selling crypto works the same way as buying crypto. If you have your crypto funds in a cold wallet, or if you have them in a DEX account, then you need to send the funds to a wallet connected to an account that has withdrawal services.
Through most exchanges, you can withdraw your crypto funds to a bank account, which usually requires you to provide identity documentation if you haven’t yet. Some peer to peer platforms also have bank transfers as a payout channel. Alternatively, you could sell crypto for cash using a Cash Point network like the one we have set up. To use our services, all you need is the mobile app.
With these 10 basic crypto trading questions answered, you are set for making your first move into crypto.
But, to lift your crypto game over time, make sure to keep reading the Crypto Trading section on our blog to develop in-depth skills, and read a collection of crypto news everyday to keep up with what’s happening in the market.
Bitspark is a bankless money transfer ecosystem that enables businesses and people to cash in and cash out cryptocurrencies across Asia and Africa.