If you have extra money lying around, you’d be surprised what you can do with it.
With just a few dollars worth of Bitcoin you can start trading cryptocurrencies right now.
There are no broker fees, there are no middlemen to deal with, nor really any barriers to entry or red tape. All you need is some percentage of a single Bitcoin.
There is no reason not to try it out. If you can accept risking a few dollars, it’s a great way to get into cryptocurrency.
But what is cryptocurrency?
Cryptocurrency is more than just a bunch of digital numbers that people have decided to use as money.
The technology that was brought forth by Bitcoin is essentially a decentralized public ledger system, known as the Blockchain. This cryptographic Blockchain technology is what makes Bitcoin, Litecoin, Darkcoin, and other Bitcoin-alternatives a “cryptocurrency.”
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Being a decentralized ledger, the Blockchain can never be controlled or manipulated by a single institution. Its design makes transactions virtually error proof, and it can also do much more than just transfer the ownership of digital currency; it can be used for transferring assets and shares of companies, smart contracts, commodities, and escrow services.
This technology will likely change the future of finance as we know it, democratizing financial markets while simultaneously eliminating “banksters.”
If you’re just getting your feet wet with cryptocurrency, all the technical jargon can seem overwhelming.
It’s important to learn, but for now, If you’re just interested in trading and investing, having a basic common-sense understanding of business, consumer demand, and economics is enough to give you an edge over other traders (at the moment).
Most of the current batch of traders are early cryptocurrency adopters, cryptocurrency “miners,” programmers, and basically people that are more tech savvy than business/market savvy.
They’re focused on small technological innovations that help build hype for a coin in the short term, without giving much thought about how the coin will exist outside of the exchanges and crypto community.
This gives you a huge advantage.
So let’s get started.
First buy some Bitcoin.
There are some exchanges that will let you purchase specific cryptocurrencies for USD, but it’s a better idea to buy Bitcoin first. With some Bitcoin, you can trade into and out of every other cryptocurrency on the market, on every crypto exchange.
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Remember: you don’t have to buy a whole Bitcoin ($2200 as of writing this); you can purchase Bitcoin in fractions known as Satoshis; for example, 500k Satoshis equals 0.005 Bitcoin.
The safest, most popular place to purchase Bitcoin is coinbase.com, however you can also go to an exchange that has a USD-BTC pairing to try to trade USD for Bitcoin at a cheaper rate.
Now that you have some Bitcoin, it’s time to find an exchange.
The most reliable exchange I’ve found is Bittrex.com.
1. Buy (or trade) a Cryptocurrency
There are other exchanges: some are good, some are bad, some have been shut down already — the Mt. Gox scandal might ring a bell.
Some people are discouraged from cryptocurrency altogether when there’s news of an exchange getting shut down or coins being stolen, but I see all of this as a right of passage for any new market that is still in its infancy.
I find it very encouraging that most of these shady exchanges have been terminated and their CEOs have been doxxed and sued to hell.
News spreads very quickly in the crypto world, so check news feeds daily.
You will usually see smoke before there’s a fire, as long as you pay attention to the news on twitter.
Crypto exchanges and businesses are being talked about on twitter. Check in on twitter and crypto forums daily, follow hash tags, see what people are talking about.
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Information is power, news is power, and rumors are opportunities!
Once you have Bitcoin in your exchange account, you can start trading.
However, before you just randomly pick some cryptocurrencies and watch their charts, I recommend you do some research first; otherwise you’re trading blindly. The best way to learn about each coin is to search it, like “Cannabiscoin ann” – “ann” as in announcement.
This search phrase will lead you to the bitcointalk.org forums, to the official announcement thread of Cannabiscoin.
An official announcement thread of a coin will show you important information: Total coin supply, technical details, development plans, mission statement, community speculation, and a lot more. Additionally, Twitter is a great resource not just for news, but tracking down web pages and other forums related to a cryptocoin.
Researching the market is referred to as “fundamental analysis.” By gaining the right information at the right time and understanding how it will interact with the market, it becomes easier to stay predict trends — essentially whether or not a cryptocoin will rise or fall.
In addition to fundamental analysis, you also have “technical analysis.” Technical analysis is equally important, but it refers specially to studying charts and finding patters—for example, at a certain price, a coin will fall repeatedly.
The most basic but important thing to remember: Buy low, Sell high.
The best time to buy a coin is after it has been dumped.
Because the people that didn’t cash out during the pump (called “bag holders”) don’t want to sell their coin at the bottom, at a much lower price.
It goes without saying that if the price of a coin you’ve bought moves upward quickly, it’s best to cash out, back into Bitcoin. And If it’s a good coin that you want to invest in for the long term, make sure you buy back in after a dump. Sometimes it is better to focus on accumulating good coins rather than making more Bitcoin, because a good coin will always rise again.
That’s how trading is done.