An Easy Guide To Understanding How Crypto Works

An Easy Guide To Understanding How Crypto Works

Cryptocurrency is one of the world’s most popular investment choices, especially among young, savvy internet investors. There’s no limit to how much money you can make with crypto, but you do need to be disciplined. Lots of traders make very bad decisions and lose lots of money investing crypto because they trade with their hearts and not with their heads.

Cryptocurrency can be very confusing, particularly if you’re new to trading in general. In this article, you will find an easy guide to understanding how crypto trading works so that you can get started:

What Is Crypto?

Crypto is short for cryptocurrency, which is a type of digital money. Cryptocurrency is a type of software and isn’t a physical asset [there’s no such thing as a crypto coin or note]. Unlike real-world currencies, cryptocurrency doesn’t have a financial overseer. This allows anybody to make their own cryptocurrency. This also means that it isn’t regulated, which is why crypto markets are so unpredictable. A cryptocurrency that’s worth $1 million today can be worth nothing tomorrow. If you’re planning on getting involved in crypto trading, then you need to be aware of how unpredictable the markets are.

Crypto Exchanges

To buy cryptocurrency, traders log onto ‘cryptocurrency exchanges’ where they’re able to convert, buy, and sell their cryptos. On an exchange, you can convert your RM to BTC or dollars to XRP; there’s no limit to what you can convert or what you buy. Exchanges are generally very safe to use, although you need to make sure that you do your research before depositing any money. There have been instances where exchanges have been hacked. If an exchange is hacked, then your private information and cryptocurrencies can be stolen. Make sure you find an exchange that offers robust security and takes the personal information of its customers seriously.  

Storing Crypto

Once you’ve purchased crypto from an exchange, you can either leave it deposited in your exchange account [which makes it more susceptible to fraud and theft] or you can move it to a wallet. Most crypto traders use wallets. Wallets are like bank accounts, except there’s no financial institution monitoring them and looking after them. This means that you have to go to great lengths to protect your wallet’s information. Most people add two-factor authentication to do this. You should never reveal your wallet’s password or login information to anybody.

An Easy Guide To Understanding How Crypto Works

Trading Crypto

Trading takes place on exchanges, as we mentioned previously. Traders watch markets in real-time and make trades according to the market’s conditions. Because crypto markets can be extremely volatile, you need to make sure that you do a lot of research and know when to execute a trade. Like we mentioned previously, you also need to trade with your head and not your heart. Lots of traders make very bad decisions because they panic and make irresponsible trades. You can learn how to predict and watch markets by attending crypto courses or watching guides on YouTube.

If you want to learn how crypto works, then this article should serve as an introduction. There’s lots more to learn, that you can only do by attending classes or really studying. There’s lots of money to be made in crypto if you’re sensible about how you invest.