Cryptocurrencies are digital forms of money that do not exist in the physical world. Bitcoins are one such type of cryptocurrency. The method to secure these currencies is cryptography, and it is not possible to pirate them or double-spend. That is, you cannot spend the same currency twice. Bitcoin was the first currency to solve the issue of double-spend.
Bitcoins are associated with blockchains. Now, what is the use of a blockchain? Well, blockchains are a kind of database to store the information and transactions of bitcoins. Every new data is entered in new blocks. Once the data is inserted cannot be changed.
What is bitcoin trading?
Humans have a greedy nature, and they want to earn fast and become rich. Bitcoin trading is the fast way to make money, but the risks involved are more. Traders have to keep track of bitcoins prices by keeping a watch on news or events happening. The idea behind bitcoin trading is to buy cryptocurrencies when the prices are low so that less fiat currency is spent and sell them when there is a rise in the value to receive a significant amount of fiat currency.
Bitcoin trading experiences ups and downs as cryptocurrency prices fluctuate. Traders use derivatives to keep an eye on prices. Derivatives are the products that derived their value from underlying assets. CFD’s, futures, options, ETP’s are the derivatives available in today’s date. Derivatives are suitable; they allow newcomers to enter the market. The main thing is that they limit the risks involved in trading. One most considerable advantages of bitcoin trading are that one can trade 24/7. When the volatility increases in the market, there is no profit no loss condition.
How to invest in bitcoin?
Before buying or investing in bitcoins, we need to take care of few things. Privacy should be taken care of by investors, as security is the most important thing. Significant holdings should be avoided initially, understand, and then invest. People perform many malicious activities, so do not share the private key with anyone. Identification is checked before you start investing; this enables a person’s name whenever there are any transactions. If the person sends it to another wallet, then it’s traced.
Choosing a cryptocurrency exchange:
Using an exchange is a good practice. One can buy and sell cryptocurrencies and even hold them after signing up for the crypto exchange. Fractional shares of bitcoins can be sold and bought via exchanges.
Bitcoin exchange is of vivid types, and they allow the withdrawal of cryptocurrencies for safety. Some exchanges allow dealers to remain anonymous by not disclosing their personal information. These are decentralized exchanges. Most popular exchanges are centralized and require KYC. Kraken, Coinbase, and Binance are a few examples. These exchanges are well-known for their features. Bitfinex is a long-running cryptocurrency exchange that caters to advanced traders.
Binance provides a good trading functionality and helps to choose altcoins in a better way. The remaining exchanges listed above also accept altcoins and are the most convenient option to invest in cryptocurrency. Most exchanges in India demand an amount ranging from 100 to 500 rupees, with some additional fees to permit. For security purposes, use safer internet practices while making an account. The extended password should include special characters, capital letters, lowercase letters, and numbers. Enable two-factor authentication too with a unique password.
Connecting to a Payment source:
In this step, you require personal documents that can be a driving license; you have to share the source of funds. The information may vary according to the region and the laws over there. Once the exchange assures your identity, you can connect the payment method. Some exchanges enable you to connect debit and credit cards, and you can also connect a bank account. But connecting credit cards is not suggested due to the volatilities in cryptocurrencies.
In some nations, bitcoins are legal, but in others, they are not. You have to make sure that your bank allows you to deposit. For beginners, Coinbase is an excellent place to start. It has a 3.99% fee for credit or debit cards, and it has a 1.49% fee for bank accounts. It is essential to know various payment fees associated with different exchanges and choose the best exchange for you. Exchange fees can also be per transaction, which is commonly referred to as a flat fee.
Choosing a safe and secure storage option;
Wallets are used to store bitcoins securely after you purchase cryptocurrencies. Storing the cryptocurrency in your wallet ensures its safety while you have control of your private key. The risk of losing your funds is minimum. Wallets are of two types:
a. Hot wallet:
Hot wallets are online wallets that run via the internet. As the private key is digitally kept on your internet-connected devices, there is a risk of data entanglement. Accessing the data and looking into your transactions can be simple and convenient. One has to make their accounts secure as no one can steal your funds. It may happen even if you have posted your details, like how much you earned or the number of bitcoins in your wallet.
b. Cold wallet:
Cold wallets are indeed not connected to the internet. Here the risk of bitcoins getting stolen is significantly less. No one will get the private key, as there is software where one can view their portfolio. Popular cold wallets include ledger nano and trezor. You can use this wallet if you buy more coins.