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(Last Updated On: June 6, 2022)
If you are already investing in the stock market or forex market, Crypto investing is pretty much similar in the way it works. You can buy assets from different cryptocurrency platforms. The most popular today is Binance, Gate.io or MEXC global. I have tried all of this crypto currency wallets and the best now is probably Binance in terms of transactions handled per day, literally in the Billions worth of crypto Coins and in number of users who trust the platform.
For those who are not yet familiar with Crypto Currency, I have summarized below the most common knowledge needed to start investing in these new class of assets. Admittedly its not new anymore but there is considerably more risk involved in Crypto assets as they are not regulated by the government, hence the term decentralized currency is synonymous to Crypto
What is Crypto Currency
Crypto currency is a terminology use to define the new type of currency that is in digital form or a digital asset that is decentralized in its nature. Decentralized means no single person, government or entity holds control on the currency as this is owned by anyone who holds the rights (transaction records) to the crypto asset.
To better understand what constitute a crypto currency, we can start on the basic definition of a centralized currency or what we know as fiat currency. Fiat means the actual cash or money that we are using now.
In early days, people trade with some type of assets like gold or farm products. So, these assets have a perceived value where people can exchange for each other. As time goes by and we were able to form societies this barter system that we are doing have been extended to every-day activities like we do now. We work in exchange for money and the money we use to buy things that we need. People have trust on the money and thus we use it daily without worrying of its value being depreciated.
But this money or gold that we are using now have been under government control as of today to moderate its usage and avoid fraudster or illegal activities from using the currency. The notion that a government is controlling the activities with this currency is known as “Central Authority”, much like the opposite of a crypto currency.
With the advent of technology, government and big business institutions also initiated the creation of digital assets that we are now aware of such as credit cards. But this type of asset is still centralized as all dealings and transactions can be recorded and accessed later by the government where they can trace a certain person activities or the money trail is easy to follow.
Why Create Crypto Currency?
If government can create a digital asset similar to crypto currency, then why still there is a need for crypto currency?
As the digital assets is widely used, a problem known as “double spending” happens with credit cards system. As this transactions operates on a nodal system where the transaction of credit card data is done from every know location for example from the store where you buy, to the central node for the digital transaction formation.
As the nodes need some transaction confirmation this is very prone to data copying from outsider (eg your credit card number). So others who intercepted the signal can copy and use the details to buy other stuff. You know, those transaction on your card which you don’t have an idea why it happened?
Cryptocurrency can solve the double spending issue as there is no single authority checking transactions rather multiple entity is confirming your transaction where “majority” confirms legitimacy of your transactions.
What is Bitcoin
Bitcoin is a crypto currency, out of the thousands if not millions of generated tokens used as a crypto currency, bit coin is the most popular and considered the pre-cursor of all crypto currency. It is like the Best company in stocks there is.
Bitcoin was created by a certain Satoshi Nakamoto and initially described as a peer to peer version of electronic cash without going to a financial institution (central authority). He discusses also on the problem posed by double spending to be solve by a decentralized transactions. All transactions can be verified by anyone unlike in digital currencies used in credit cards where only banks can verify.
What is the difference between Bitcoin (Decentralized) and a Digital Currency (Centralized)
Here is a summary of the main difference between a Bitcoin and a Digital currency. Bitcoin is decentralized, transparent, and the owner is not known. While digital currency is centralized, not transparent to the public, and the central government will know who is doing the transactions.
Bitcoin is now worth a whopping $30,000/coin. It did pull down from its 60k peak but still from a zero value coin to 30k in just 4 years time, its historical and astronomical price appreciation.
How can you earn from Crypto Currency?
There are several ways to earn on crypto currency. The most popular way now adays is by trading or investing in the crypto market. Others do mining of the crypto currency where computers solve the complex mathematical problems to create or mine a coin.
Yahoo finance has now a section on its webpage where 24hour 7day/week monitoring of crypto prices are monitored.
Everyday billions of transactions for trading in the crypto market happens, just like in trading stock market, the values of the coins varies every second and it depends also on different reasons. If the coin has a demand, the price fluctuates and appreciate in price, so if you buy low and sell high you can earn money from the price difference.
You can do “short” trading or “long” trading in the crypto market. Some take advantage of crypto futures trading with high leverage where people can earn high percentage for a small amount (very high risk as well)
The crypto currencies are also affected by the major market sentiments like during the start of conflict in the WEST, the price of the coin drops.
The golden age of crypto started last year after lockdowns happened due to the pandemic, people cannot go to work and do online activities only, so crypto did make a sudden surge in prices when crypto games or assets like NFTs proliferated. People tend to “play and earn” only during these times so the demand for coins and tokens skyrocketed. Games like AXIE INFINITY, Plant vs undead, My Defi Pet became the normal and I did see people earn millions from trading the market.
Aside from trading the price differences on the crypto some people believe the world wide adaption later of cryptocurrencies and its potential so people do the buy and hold strategy. Looking back from what happened to Bitcoin where it has risen from few hundred values to 60K is a staggering percentage upside for any crypto currency. It can go from 0% to 1,000% for start ups in 1 day.
How to Open a crypto Currency account for Trading and Investing
To be able to buy and sell crypto currency, you need to open a trading platform just like what we did with stock investing. Binance as I mentioned is the most common platform used nowadays.
- Go to the link https://accounts.binance.com/en/register?ref=WGUNQHVH and click register portion
2. After clicking register you can sign up using your phone, email or your google account
3. Choose your country of residence, create account by filling in the details
4. Remember to prepare for ID documents and email verification to complete the process of registration.
5. You can complete Identity Verification on your Binance account to unlock the fiat deposit and withdrawal limits. This process typically takes a few minutes to complete, which includes verifying your basic account information, providing ID documentation, and uploading a selfie/portrait.
6. Be sure to secure your Binance account – while we do everything to keep your account secure, you also have the power to increase the security of your Binance account. See our Security Tips for more information.
7. Once you are able to log in to your account, you can deposit fiat or money to be converted to crypto currency. You can easily do this using peer to peer trading. Attached is a video on how to do it.
You can start by converting your currency to cryptocurrency on the p2p portion of your platform. Click the buy USDT after you select the preferred person to do the Binance transaction.
8. Once transaction is completed you can then view your balance in fiat and wallet section, it should look like this.
9. To be able to trade the markets, you can watch the video attached. You can do spot trading for beginners. Remember to start trading or invest small amount first and then gradually increase your investments as there is risk in trading or investing in crypto. Research also the coin that you are buying, due diligence is a must.
Buying or trading coins usually take pairs, for example if you want to trade Bitcoin or BTC movement, you can select BTC/USDT where your USDT (USD coin equivalent) can buy or sell BTC coins.
10. Once you start trading or investing in crypto currency be sure to have a goal or limits as the volatility for the coins can be very high, remember what happen to LUNA/USDT pairs during the recent bear market in crypto, the supposed to be stable $1 value of a stable coin wen to zero in just 3 days. There is significant risk for losing your investment but with diversification and due diligence on studying the underlying principle of coins, you can be one of the millionaires out there who were able to take advantage of this opportunity. The crypto era right now is like when the internet was just starting.