Bitspark is a bankless money transfer company that helps you convert cash to cryptocurrency, globally.
Getting involved with cryptocurrencies can be an exciting, yet daunting adventure. In this post, we lay out some of the essential things to help get you started.
Firstly, and it must be said, while investing and trading in crypto can be immensely profitable, there are zero guarantees. It is not an easy short-cut to wealth, it requires work, patience and wisdom, and whatever amount of money you’re putting in, you’ll have to be willing (and able) to lose, should things go south.
Secondly, let’s assume that you already know that besides bitcoin there is a wide range of altcoins such as Ethereum, XRP, Litecoin, Dash and Bitshares. You also know that each transaction is recorded on an associated blockchain.
While blockchain technology is incredibly safe, you still need to think carefully about how to protect yourself from hackers and scammers, and make informed decisions about where you will trade and how you will store your funds (keys).
Here are some basic tips on safety:
The safety of your funds is also determined by how you store your funds and where you trade. While we will deal with this in the following sections, make sure to read our previous post where we cover security in more depth.
In order to store and trade crypto you’ll need a wallet. While funds themselves never actually leave the blockchain, wallets hold the keys associated with your funds, and whoever holds the keys controls the funds.
The easiest way to get a wallet for your funds is by registering with an exchange, such as Coinbase, Binance, Sparkdex or over-the-counter platforms (OTCs). It is important to know, however, that just like exchange platforms only list a limited number of currencies, wallets are currency specific, supporting only a number of tokens. For this reason, it’ll be good to know beforehand what coins you intend to trade in and then to find out which exchanges and wallets support these currencies.
There are many different types of wallets, but generally we can distinguish between hot and cold wallets:
We basically advise to keep around 20% of your funds in a hot wallet and the remaining 80% safely stored away in a cold wallet.
In order to get started with crypto, you’ll need to obtain crypto. Bitcoin, due to its overwhelming popularity and fame, is by far the easiest one to obtain. However, altcoins such as Ethereum, can also be bought with fiat currency.
When it comes to choosing where to trade there are a number of things to consider.
Exchanges are good to begin with in order to easily trade in and out of different currencies. It will be important to check which currencies are supported. Whereas Binance is well known for its wide array of different currencies, including tokens from recent ICOs, an exchange like Sparkdex (in addition to Etherum and Bitshares) boasts a variety of stablecoins, which are cryptocurrencies pegged to fiat currencies such as the US dollar, Renminbi and the Hong Kong Dollar.
When choosing an exchange, it is also important to distinguish between centralised and decentralised exchanges (refer to the DeCe scale). Centralised exchanges (CEXs) are generally easier to use and often boast more liquidity because of their popularity. The danger of CEXs, however, lies in the fact that they hold custody over your funds. This means that the safety of your funds depends on their security systems and, as has happened numerous times over the past few years, when they get hacked, you lose your money.
True decentralised exchanges (DEXs) such as Bitshares and Sparkdex, however, often offering much lower fees, facilitate peer-to-peer trading on the blockchain and leave custody over funds with the traders themselves. This type of exchange is widely recognised as the safest way to trade in crypto.
Generally, there are three ways to conduct a trade:
This allows you to set a price you want to buy or sell a token at and specify the amount of tokens you want. When the price of the token hits your price target, the buy or sell order is automatically filled.
Some exchanges like Binance and Bittrex allow you to buy or sell at the market rate. This is the quickest way to buy or sell a token immediately.
This way of trading basically enables you to automatically trigger and order at a set price (or a better one), up until a set limit. This also works the other way around if you place a stop limit sell order.
As you delve deeper into the crypto space, you’re likely to end up trading a variety of coins at different exchanges. There are apps out there which can help you log your trades and assist you in remembering which tokens you’re invested into, how much you’ve bought, what price you’ve bought in at, and so on. Apps that you could consider are Blockfolio and Delta.
Trading in crypto is an ongoing process. It is still a young field where lots of developments are happening simultaneously, whether from a technological, a regulatory or a social perspective. It will be good to keep up to date and track the news regularly for important events and insights.
Resources to keep an eye on include Coindesk, Cointelegraph or Coinjaw for an overview of the internet of cryptocurrencies. Forums such as Bitcointalk or Reddit can be useful to interact with other crypto enthusiasts, although once again, be vigilant and wary of any type of scam. Regularly check Coinmarketcap, to identify market trends and have an overview of the industry.
Lastly, meet others like you through MeetUp, at business events or conferences.
More on getting started with crypto:
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Bitspark is a bankless money transfer ecosystem that enables businesses and people to cash in and cash out cryptocurrencies across Asia and Africa.