Cryptocurrencies have become increasingly popular and are now integral to the financial world. Many newbies are interested in buying cryptocurrencies but need to know exactly where to start. Therefore, a guide to cryptocurrency for beginners is an important and necessary step. Below is the article we will help to understand the basic steps and peculiarities of investing in electronic money.
What is Cryptocurrency Exchange?
Cryptocurrencies are digital monetary units. They must function independently and be controlled in a decentralized way. The most famous and oldest digital currency is Bitcoin. Cryptocurrencies are digital monetary units. They must work independently and be controlled in a decentralized way. The best-known and oldest digital currency is Bitcoin. Cryptocurrencies are based on decentralized computer networks, so-called blockchains. Banks or other financial service providers do not store cryptocurrencies. Digital coins are held directly by people through a “private key. As the owner, and you have access to your cryptocurrencies with a so-called “private key. This key reflects the ownership of a given number of cryptocurrency units on the network. Since many brokers now offer to buy and store, transactions are also possible without entering a private key – similar to stock trading on a stock exchange.
The technological basis from which cryptocurrencies emerge is the so-called blockchain. Blockchain is a decentralized network of computers linked together, each storing information separately.
Investors exchange real money for cryptocurrency for investments. This helps them buy a coin at a low price, and then sell it at a higher price during a period of growth.
Where to start for a newbie in cryptocurrency exchange? Below is a detailed scheme of how to get started with cryptocurrency.
Creating a wallet
Before you start buying cryptocurrencies, you need a wallet to secure your cryptocurrencies. First, you are creating an account, then choose the wallet. There are different types of wallets, such as hardware, software, or online wallets. We recommend using a hardware wallet because it is considered the safest way to store cryptocurrencies.
Choosing an exchange
Next, you need to choose a cryptocurrency exchange security to buy cryptocurrency. WhiteBit is a popular cryptocurrency exchange that offers a convenient platform and supports many cryptocurrencies. To open an account at WhiteBit, you must provide your personal information and confirm your identity.
Deposit the money
After opening an account, you need to fund your account. You can do this through various payment methods, such as credit card, bank transfer, or PayPal. Once funds are deposited into your account, you can start buying cryptocurrencies.
Once you’ve selected the cryptocurrency you want to buy, you can click “Buy” and enter the amount you want to invest. You can also create a limit order to limit the purchase price.
Also, remember that you can’t buy electronic coins blindly. It is precarious. The world of cryptocurrencies has its patterns. You need to study the fiat currency market in detail and the dependence of cryptocurrency on external factors. The exchanges have a detailed chart to watch the price dynamics for a selected period.
How blockchain ensures data security?
Blockchain is a unique technology that allows digital information to be stored, decentralized, secure, and transparent. Blockchain consists of a chain of blocks, each block containing a certain amount of transactions or data. Each block in the blockchain is protected by a cryptographic hash function, which guarantees that the block content is immutable and cannot be changed. In addition, each block in the blockchain is linked to the previous block, ensuring high integrity and security.
Blockchain technology is beneficial for storing transaction data and is often used with cryptocurrencies such as Bitcoin. Using blockchain technology, transactions can be executed quickly and efficiently without a central authority such as a bank or government.
You can find it on the exchanges:
- An irreplaceable token (NFT) is a unique digital asset that often represents art, music, or collectibles. Unlike other cryptocurrencies, NFTs are not interchangeable and therefore have an exceptional value. Each NFT has a unique identification number and is stored on a blockchain platform like Ethereum.
- Stablecoins are cryptocurrencies whose value is tied to a stable source of wealth, such as fiat currencies or commodities, to minimize market volatility. These cryptocurrencies aim to provide a stable alternative to unstable cryptocurrencies such as Bitcoin and Ethereum, which have historically experienced sharp price fluctuations. The idea is that a stable currency simplifies transactions and transactions because users do not have to deal with volatile price fluctuations.
Of course, Bitcoin and Ethereum remain among the popular cryptocurrencies. Its price has fallen slightly recently. This is due to the unstable situation in the country. But they don’t stop buying them. Newcomers can invest in more stable currencies, which are backed by euros or dollars. Here the risk of losing money is minimal.
Interestingly, the legal status of cryptocurrency exchange only exists in some countries. Where cryptocurrency is legalized, there is a tax for all transactions. But not all countries have adopted a law on the taxation of cryptocurrencies. Therefore, investors can increase their savings.
Risks of cryptocurrency exchange
Investing in cryptocurrency is always risky. This is due to the instability of coin performance. Therefore, before buying any token, it is necessary to assess possible risks. EU consumer protection rules do not cover crypto assets trading. People trading cryptocurrencies assets often need to be made aware of the risks that can lead to loss of money. Widespread use of crypto assets without regulation can lead to financial instability and market manipulation.
Even if bitcoins are sometimes advertised as a savings vehicle (digital gold), cryptocurrencies are subject to considerable fluctuations in value and have yet to prove safe havens in times of crisis. Therefore, cryptocurrencies as investments are classified as highly speculative. They are entirely unsuitable for retirement.
Fluctuations are also common in transaction costs. A Bitcoin transfer in March 2021 only cost $0.30, compared to more than $55 in December 2017. In addition, transaction costs may rise steadily the faster the energy needs for global cryptocurrency mining evolve. Currently, energy consumption just for Bitcoin mining is comparable to the Netherlands, and the trend is growing.
Therefore, before you start investing, you need to assess the risks of cryptocurrency exchanges and study the crypto market. Use traditional exchanges at the initial stage of investing. You should ignore one-day cryptocurrency exchanges. Choose only those on the need for a long time and provide complete protection for their users.