Step-by-Step Guide to Buying, Storing & Trading Cryptocurrency Safely

The crypto space is exciting and offers a treasure trove of opportunities for innovation. At the same time, beginners may feel like traversing a maze while exploring the world of cryptocurrencies. If you want to start cryptocurrency trading safely, then now will be the best time to make your first move. With more people diving into the crypto space, you might think of buying your first cryptocurrency and participate in trading.

As of now, the crypto market is running on bullish sentiments as Bitcoin reaches new all-time highs. However, you must know the basic steps for buying, storing and trading crypto to ensure your safety and make the most of every opportunity. Let us learn some crucial things that will help you interact with the crypto space without safety concerns.

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Understanding the Risks Associated with Cryptocurrencies

Before you buy any cryptocurrency, you must learn about the unique digital currencies and their risks. Most of the answers to “How to start crypto trading as a beginner?” focus on learning how cryptocurrencies are different from traditional fiat currencies. Cryptocurrencies are decentralized currencies that work on blockchain technology to facilitate peer-to-peer transactions without intermediaries. On top of it, decentralization in cryptocurrencies also enhances transparency and reduces unwarranted intervention of central authorities like governments and banks.

While the lack of intermediaries may sound like an advantage, it creates security risks. For example, you will have no one to complain to in the event of theft or accidental loss of your crypto funds. Crypto beginners must also know about other risks such as volatility and immutability of crypto transactions. Furthermore, regulatory uncertainty is still a big problem in the crypto landscape as many countries are struggling to establish clear crypto regulations. 

Anyone with basic knowledge of the crypto market will agree to the fact the crypto prices are extremely volatile. The prices of crypto assets can fluctuate abruptly without any prior warning, thereby creating risks of financial losses. In addition, you must also remember that crypto transactions are irreversible due to the immutability of transactions added to the blockchain. If you send cryptocurrencies to the wrong address, then they may be lost forever. 

Buying Your First Cryptocurrency

Irrespective of the challenges in the crypto space, cryptocurrencies have attracted thousands of investors worldwide. Where can you buy your first cryptocurrency? The following sections help you understand the essential things required to buy cryptocurrencies.

Choosing the Crypto Exchange

As a beginner, you can rely on a crypto trading platform or exchange to acquire cryptocurrencies. However, choosing a crypto exchange might be one of the toughest tasks for a beginner in the domain of cryptocurrencies. The ideal traits of a reliable crypto exchange include liquidity, user-friendly interface and robust security.

Reputable crypto exchanges use two-factor authentication or offer cold storage for a large portion of assets. Some exchanges also offer insurance for crypto holdings, which adds another layer of security for users. You should also check whether the exchange has any history of security breaches or loss of funds. User reviews will provide a detailed impression of any incidents that the exchange might try to hide.

The other important things that you should keep in mind while choosing a crypto exchange include the list of supported cryptocurrencies, regulatory compliance and fees. The crypto exchange must follow the essential KYC and AML norms in the jurisdictions where it operates. You must also find out whether the exchange supports the cryptocurrencies you want to buy. Finally, buyers should also check the trading fees and withdrawal fees on the exchange before using it.

Process of Buying Cryptocurrencies

Once you have picked the crypto exchange, you can start buying cryptocurrencies with few simple steps. Most of the guides on trading cryptocurrency for beginners will suggest that you start by creating an account on your chosen crypto exchange. You can create an account on the exchange by providing your email and completing KYC verification process with identification documents. It is important to enable two-factor authentication on your crypto exchange account. Two-factor authentication ensures that you would need a code along with your password to access the account.

Once you have set up your crypto exchange account, you can deposit fiat currency from your bank account into the exchange. Crypto exchanges have dedicated wallets where you can add fiat currency to purchase cryptocurrencies. The buying process starts with the trading section of the exchange, where you can choose a market order or a limit order. 

A market order indicates that you want to buy cryptocurrencies at the current market price while a limit order suggests that you should set a specific price to buy cryptocurrencies. Beginners should go with the market orders as they are a lot simpler than limit orders. Once you execute the order, you will have your cryptocurrencies in the exchange wallet.

How to Store Your Cryptocurrency Safely?

The most obvious question on anyone’s mind after buying cryptocurrency will be about secure storage of their crypto assets. The most popular crypto trading strategies suggest that you can keep small amounts of crypto in the exchange wallet for active trading. On the other hand, you cannot rely on crypto exchanges for long-term storage of large amounts of cryptocurrencies. Therefore, you must pick the right wallet for your crypto if you want to store it safely.

Types of Crypto Wallets 

The two most common categories of wallets that you can find for cryptocurrencies are hot and cold wallets. The biggest difference between hot and cold wallets is the fact that hot wallets are connected to the internet. Some of the common examples of hot wallets include exchange wallets, desktop wallets and mobile wallets. The wallets operate as any other software on desktop and mobile devices as well as crypto exchanges. Hot wallets are actively connected to the internet, thereby making them vulnerable to security breaches.

Cold wallets, on the other hand, are completely disconnected from the internet. The primary advantage of cold wallets is that your private keys are never exposed online. However, cold wallets are susceptible to physical damage and theft. For instance, hardware wallets and paper wallets are not immune to disasters, such as fire and flooding. 

Anyone can start cryptocurrency trading safely with the type of wallet they want by following some precautions. Hot wallet users must use strong and unique passwords alongside two-factor authentication and keep the wallet updated with latest security patches. Cold wallet users should purchase directly from the manufacturer and pay attention to physical security of wallets.

How Can You Start Crypto Trading?

With cryptocurrencies in your wallet, you might want to know the best practices for crypto trading. Interestingly, the only thing that can help you navigate the complex crypto landscape is a trading strategy. You can formulate crypto trading strategies with the help of market analysis, which involves technical analysis and fundamental analysis of the crypto asset. Crypto beginners must also learn about portfolio diversification and risk management before they start trading.

Final Thoughts 

The insights on best practices to buy, store and trade cryptocurrencies showcase that anyone can interact with the crypto space. You don’t have to be a tech wizard to understand how to open an account on a crypto exchange and acquire cryptocurrencies. However, beginners must learn the best practices to choose crypto wallets and requirements for safe storage of crypto assets. On top of it, awareness of the essential requirements to trade cryptocurrencies with a strategic approach can make a huge difference. Learn more about strategies for crypto trading right now.