Trading in cryptocurrency has really taken off in the last few years. There’s been an even bigger buzz around it lately and most frontline investors have already explored their options with this new commodity. Well, maybe not that new.
The history of cryptocurrency goes back a long way, with Bitcoin first hitting the market in 2009. In those days the coins weren’t tradeable or even useable, with the famous story of the first Bitcoin transaction is happening in 2010. Back then someone famously traded 10,000 bitcoins for 2 pizzas. Nowadays those bitcoins would be worth well over $100 million, making those some expensive pizzas!
In those days the value of this currency hadn’t been established. These days it has and currencies are traded openly on a number of exchanges. To stay safe, here’s some advice for you.
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Using a Wallet
When it comes to cryptocurrency, you need what’s known as a digital wallet to work with them. That sounds pretty simple but there’s a lot more to it than just that. For your own personal cryptocurrency, you need a wallet matched to the coin type. For example, investing in Bitcoin and in Ethereum means using different wallets. If you own multiple types of currency, you could need multiple wallets. Different wallet types can be needed for different devices too.
When it comes to trading there are also exchange wallets available, which is your wallet in association with a trading exchange. With a personal wallet, the security is on you, and you would have to be targeted by hackers for there to be any threat. With an exchange wallet, it’s a little less secure because the exchange can be targeted, which compromises everyone’s exchange wallet.
Consider the Overall Transaction
Most people find it quite obvious that you need to buy low and sell high to make a profit in the trading game. There’s more to it than that though. The biggest one is transaction fees which can vary by coin, transaction type and the exchange used. This fee will be charged on each transaction so make sure you know what this cost will be before making a trade – otherwise you might see a profitable train turn to one that breaks even or makes a small loss.
Outside of the transaction, there can be other fees too. Fees to make deposits, withdrawals, for payment processing and for currency exchanges are all commonplace. You may encounter one, some or all of these. Again they’re going to cut into your cash and are designed to earn money for traders and exchanges, so be smart when choosing where to trade.
Speaking of being smart, always use your common sense when trading. Don’t deal with unverified people or anybody that recommends taking things private and off the exchange. These type of deals happen between people who have built up massive trust over years of successful dealings. A stranger offering you a great deal to go private should immediately set alarm bells ringing.
When dealing with cryptocurrency you have to be technologically secure as well. Don’t give out details to anyone and keep your wallet safe if stored on a physical device such as a USB. Use a good antivirus and firewall and make sure both are always updated and active. Extra encryption can also be a good idea for your sensitive files and data but unless you’ve got a large stash or are known to be rich, you’re not so likely to be targeted in a crypto attack.