How cryptocurrency trading works, start investing now

How cryptocurrency trading works? A comprehensive overview on how to trade and buy Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC), Monero (XMR) etc. can be found here. The purchase, sale, and exchange of Fiat currency for cryptocurrency are done in cryptocurrency exchange websites. Most cryptocurrency exchanges will require the user to have a verified ID and account while other exchanges do not require users to hold accounts. There are primarily two types of exchanges namely; forex brokers (with crypto CFD’s/stocks) and crypto exchanges (which include trading platforms and direct trading). When looking for a suitable exchange for your trading, you should consider the reputation, transaction fees, payment methods, verification requirements, geographical restrictions, and the exchange rate of each exchange. Some of the best cryptocurrency exchanges include;

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Cryptocurrencies, like fiat currency, need to be stored (this is not the case at brokers, they will take care of it). Cryptocurrencies can be stored on your blockchain address called a Wallet. Each Wallet is assigned both a public and private address whereby the public address is used to receive funds while the private keys act as the password to accessing and sending your funds. The blockchain wallet can be further classified into;

Type of storage Explanation
Paper wallet Which is ideally the most secure but least convenient. Funds are stored on paper through printing preferable on waterproof printing paper and stored anywhere safe.
Online wallet Which is the easiest but least secure. However, it is convenient for online purchases and account financing.
Mobile and desktop wallets Mobile wallet requires the use of the “Mycelium” app to store your funds on your phone. The desktop wallet, on the other hand, is where all funds are stored entirely on your computer.
Hardware device wallet Whereby funds are stored in hardware devices such as; Flash Drives.

Examples of the best hardware device wallets include;

Hardware wallet Explanation
Ledger Nano S This is an example of a Hardware device wallet designed to resemble a flash drive, which can store cryptocurrencies such as Bitcoin and Ethereum and other Altcoins, in a safe, malware proof environment. It is connected via USB cable and can run multiple apps.
Ledger Blue It essentially is a large colored touch screen which features the most advanced hardware security gear, offering easy transportation, storage, and security. However, the price for this device is quite high but the value it adds to your trading activities and just as significant.
TREZOR This device offers Google Chrome extensions for a quick set up and easy use. It is one of the most secure and ideal for authenticating and storing cryptocurrencies.
Electrum This platform uses remote servers to provide security for cryptocurrency traders to manage their portfolios and private keys. It integrates with hardware device wallets such as TREZOR or Ledger products. Account recovery is done using a secret phrase and private keys can be stored offline on Electrum.
Mycelium This is a mobile app which allows its users to send and receive Bitcoin in a secure scene. It is android based and has a hardware wallet and is also integrated with TREZOR.
Jaxx This wallet offers an integrated support system for ShapeShift. Its users are given a multi-currency wallet for the private keys they hold. The user interface is one of the best for entry level and expert level traders. They are launching their own hardware device wallet, Ice Cube, to enhance security.

Once you have started trading cryptocurrencies, you probably would want to track the prices of the currencies in your portfolio. There are a few apps designed for cryptocurrency trading including;

Tracking app Explanation
Blockfolio This app allows the user to create a watch list and add trades to track their portfolio and displayed in the currency of choice while other tracking apps insist on displaying in Bitcoin.
Coincap This app allows the user to filter cryptocurrencies by market capitalization, volumes, and other ranking features. It also allows the user to display the information in the currency of choice.

Payment methods e.g.

               How cryptocurrency trading works     
Rating explained

The higher the rating the easier and more convenient it is to start to trade and to enter the market. Brokers are generally an easy way to trade cryptocurrencies as those are well-established companies, have userfriendly interfaces (also for beginners), fiat payment options and you don’t have to think about how to store cryptocurrencies. Although a high degree of leverage can work against you as well as for you.

Most crypto trading platforms and direct trading websites are exchanges which are still busy building up a good reputation. Some of them are really good but can lack fiat payment options, are focused on experienced users or you need to take care of your own cryptocurrency storage. However a big benefit of some cryptocurrency exchanges is that they are available on a worldwide basis without restrictions concerning your location.

Furthermore, brokers tend to provide only the top tier cryptocurrencies, while some crypto exchanges offer a wide range of alt-coins.

How cryptocurrency trading works

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