The cryptocurrency market scares off new users because it seems complicated and risky. But this is not the case if you follow simple rules. We tell you how to start an inexperienced trader so as not to lose all the money
Inexperienced users can make a lot of mistakes when starting to work with cryptocurrency. For example, choose an exchange where it is risky to store funds, or indicate the wrong address when transferring digital assets. Each of these and many other oversights can lead to partial or complete loss of investment.
To avoid these mistakes, the editorial staff of topplabs.org prepared detailed instructions: how to start working with cryptocurrency, how to buy it and where to store it.
1. Decide on a strategy
First of all, it is important for a user who starts working with cryptocurrency to decide on their strategy. It depends on where the trader will store his assets. If he prefers to buy coins and forget about them for a long time, it is safer to keep them in a cold wallet. If the user wants to try trading digital assets, it is better to choose an exchange.
Both methods have their advantages and disadvantages. It is more convenient to keep assets on the exchange: they can be sold at any time, exchanged for other coins or withdrawn in fiat money. This is especially true during sharp market fluctuations. If a rapid decline in the price of bitcoin begins, coins stored on the exchange can be immediately exchanged for dollars, rubles or other currencies.
The cold wallet is less convenient in this matter. The coins will first have to be sent to the exchange in order to be sold later. Accordingly, while the transfer is going on, there is a risk of losing it due to the fall in the exchange rate. On the other hand, keeping cryptocurrency in a cold wallet is safer. Any, even the largest and most well-known exchange, can be hacked, as happened with KuCoin, or turn off the withdrawal option without warning, as OKEx did.
Another problem with cold wallets is the lack of multicurrency. For example, you won't be able to store Ethereum on a Bitcoin wallet. Accordingly, the more a novice investor wants to buy different coins, the more wallets will be required to store them.
The solution can be hybrid wallets that work, for example, as applications on a smartphone. This is a safer way to store funds than on an exchange, and at the same time, most of these wallets allow you to make purchase and sale transactions with popular cryptocurrencies.
2. Create a crypto wallet and create an exchange account
After choosing a strategy, you should create a wallet for storing cryptocurrency: either download the application to your computer or smartphone, or create an account on the exchange. You can choose both options. Experienced traders keep part of the assets on trading floors, which are needed for operations. The remaining funds are stored in over-the-counter wallets.
When choosing an exchange, it is safer to pay attention to large, popular platforms. They have more tools to provide protection against hacker attacks. There are also lower risks that well-known exchanges will turn out to be fraudulent projects. However, this only reduces the likelihood of losing funds, but does not exclude it.
You can find the most popular exchanges using crypto market data aggregators such as coinmarketcap.com or coingecko.com. With the help of these services, you can sort sites by trading volume. For example, Binance, Coinbase PRO, Huobi, Kraken, Bitstamp are currently the largest in this indicator. However, not all exchanges provide services for users from Russia, it is important to check this before registering.
When registering on the exchange and especially before transferring funds to it, it is important to check the terms of the user agreement. Some exchanges may not provide services to traders in your country. The platform, if it finds out that you have violated this rule, may block your account. Another important condition concerns verification. The exchange may require identity verification in order to open an account or to withdraw funds from it.
When registering, you can use the referral link trick. Most marketplaces reward their users for referring new customers. If a new user signs up using your referral link, you will receive a small percentage of the commissions that he will pay for transactions as a reward. The trick is to create a new account using your own referral link, and get a small income from this from your own operations.
3. Buy bitcoin
There are two main ways to buy cryptocurrency. The first is directly on the exchange, if you have created an account on it. Many large trading platforms now provide an opportunity to replenish the balance directly from a card or through a payment system. A commission is taken for this, as a rule, in the amount of 3-5%.
This method is convenient in that you can transfer rubles or other currencies to the exchange and immediately buy various coins. Then they can be traded, left on the balance sheet or transferred to a cold wallet.
The second way is through exchangers. These are special services for buying and selling cryptocurrency. They allow you to purchase most of the popular coins and immediately send them to an exchange or wallet, or vice versa, exchange digital money for traditional ones and withdraw them to a bank card or electronic wallet.
Exchangers work as follows:
- You choose the cryptocurrency you want to buy and the payment method;
- Indicate the amount for which you want to purchase cryptocurrency;
- Indicate the address of the wallet where the cryptocurrency will go. This can be a cold wallet (you can see its address in the application), or an exchange wallet. To see its address, you need to go to your account on the exchange, select exactly the coin you are buying, and click "top up balance";
- Confirm the purchase request and transfer funds. It is important to transfer the amount strictly specified in the application, otherwise the service will not recognize the transaction and the funds will not come;
- On many services, after payment, you need to click the "I paid" button. If this is not done, the service will receive money, but will not transfer the cryptocurrency to you.
Exchangers charge a commission for their services. Its size is usually 2-4%, although it can often be higher. To find the most profitable option, you can use services for monitoring exchangers. They aggregate information from all exchangers and allow you to sort them at the best rate.
If you decide to trade cryptocurrency and have registered on the exchange, it is safer to replenish your balance directly through it, and not through exchangers. In this case, you can lose a little more on commissions. But on the other hand, the risk of using the exchanger launched by scammers will decrease.
There are different approaches to investing in bitcoin. In the previous article, the editorial staff of topplabs.org talked about the three simplest strategies for working with cryptocurrency. They are suitable for novice users and will help reduce the risk of losing funds due to emotions and in the pursuit of quick profits.