How to trade cryptocurrencies? How they work? If you're a beginner, read this guide!

Cryptocurrencies for Beginners

“I’m a newcomer, and I’d like to invest. Where should I start to learn about Bitcoin and cryptocurrencies?”
This is a question we all asked ourselves, at least once, when we started to approach the crypto world. Usually, the answers we receive are numerous, some useful (guides, articles, suggestions) and others less useful (messages from scammers and similar).

With this article, we decided to take a step forward and provide a step-by-step guide to the crypto market by following the content of our blog articles. In this way, we can answer the question “where should I start from? What do I need to know?” and offer a path to lead you, step by step, to the discovery of the world of cryptocurrencies. In each paragraph, there’ll be links to blog articles that you can use to deepen your knowledge.

In this guide we will see:
– What Bitcoin and cryptocurrencies are
– How to invest in Bitcoin and other cryptocurrencies
– Some insights about the crypto ecosystem and the market
– How to safely store Bitcoin and other cryptocurrencies.

Step 1: What are Bitcoin and the other cryptocurrencies?

The first thing you need to understand is the nature of Bitcoin and the other cryptocurrencies. Evaluate for yourself whether it’s worth it, whether you’re interested in the subject or not. Bitcoin is a peer-to-peer currency, based on encryption, designed to ensure anonymous, fast, and secure transactions. Following the idea of Bitcoin and its technology (the blockchain), many other cryptocurrencies were born. Read these two articles to get a better idea:

Step 2: How to invest in Bitcoin and other cryptocurrencies?

Now that you know how Bitcoin works, you can evaluate whether or not to invest in it. Investing is an extremely complicated art, that requires in-depth knowledge and self-control: going at a loss, at least temporarily, is normal, and if you’re unable to manage anxiety (or, vice versa, to curb enthusiasm when the price rises) you can make terrible mistakes. To help you out, we’ve written a special guide.

Mastering market psychology

The most common way to buy cryptocurrencies is to deposit money (e.g., Euros or Dollars) on an Exchange that accepts bank transfers or credit cards. The Exchange is an online platform dedicated to the trading of cryptocurrencies, even using “fiat” currencies (e.g., Euro, Dollars, etc.). The main exchanges that allow USD and EUR deposits are COINBASE, KRAKEN, BITSTAMP.
Pay attention to websites and platforms like IQoption and Plus500 that seem to be Exchanges, but aren’t: they don’t sell cryptocurrencies, but particular financial instruments called CFDs that replicate the trend of cryptocurrencies. Buying CFDs, you expose yourself to higher purchase costs with less security, and some brokers do not guarantee 24/7 operation (some, for example, are closed on weekends) while the above-mentioned exchanges are always available.

Looking at the market and the Exchanges, you’ll realize that there are many other cryptocurrencies, and not just Bitcoins. Some are potentially interesting investments. To understand how to choose the cryptocurrencies to invest in and so to create a personalized portfolio, we have written a 7-point guide to help you manage your investments.

A guide to invest in cryptocurrencies

And, since we spoke about the Exchanges, we’ve also written a guide to optimize the purchase and sale price of Bitcoin and other cryptocurrency using the order book. It’s a bit technical, but you can save something thanks to it. Very important for cryptocurrencies less liquid than Bitcoin, more difficult to buy.

How to use the order book.

Of course, you’ll also need technical information about the various cryptocurrencies. For this purpose, we provide several articles about the main cryptocurrencies:

Step 3: How to store your cryptos safely.

The technology on which cryptocurrencies are based is designed to be free from the control of any authority.Your funds in Bitcoin or any other crypto are exclusively yours, and, if properly secured, no one can ever confiscate them.
Each cryptocurrency is connected to a given “address” on the network (a sort of crypto-IBAN), a sort of virtual wallet is linked to any address: you can use it to store your Bitcoins and other coins. When you buy cryptocurrencies on an Exchange, they are stored in the Exchange wallet, which is the “keeper” of your coins. If you want maximum security, you have the option of using a personal wallet, which can be downloaded to your PC and/or smartphone. The most trusted wallets currently available are:
– ELECTRUM for Bitcoin only; on PCs and Android devices.
– COINOMS and EXODUS for every cryptocurrencies; for all computers and smartphones.

There’s also the possibility to have “hardware” wallets: these are devices in which your cryptocurrencies are stored offline (to execute transactions you have to connect them to another online device). These are the most secure wallets. The two most used types are LEDGER and TREZOR.

Step 4: Find more!

Obviously, the crypto world is complex. Exploring the numerous aspects and trends can help you to better understand the future of the crypto market and help you evaluate your investments. Among the many topics that need to be investigated in-depth, we’ve chosen some to allow you to expand your knowledge of cryptocurrencies:

  • The scaling debate: Bitcoin was born as digital currency, but, to date, it’s not able to handle a large enough number of transactions. This is a common problem even for other cryptocurrencies. “Scaling”, to manage more transactions, is today a technological challenge of enormous importance for the future of the crypto ecosystem.
  • Crypto market and institutional investors: In the last two years, there have been discussions about how hedge funds and various financial institutions (the so-called “institutional investors”) could invest in Bitcoins and cryptocurrencies, leading to a new bullish phase and major changes throughout the entire crypto environment. In this article, we can better see who they are and what effects they could have on the market.
  • Is Bitcoin a bubble? People often say that bitcoin “is worth 0”, “is overrated”, “will have a short life”. In this article, we try to determine whether Bitcoin is a bubble (i.e., it’s overvalued and destined to collapse) or not. Rather a useful article for those interested in investing.
  • ETF & Futures on Bitcoin: Let’s not forget about two trend topics on Bitcoin and finance, very important for the so-called “financial adoption” of Bitcoin (i.e., mass purchases from investment funds and similar). Recommended for those who are passionate about finance.

We hope this guide was helpful to you. The material is extensive, so enjoy reading it! What interested you the most? Do you still have any doubts? Don’t hesitate to let us know in the comments 😀

More Stories
Among the many cryptocurrencies, there's one that is stable in the top 10: Litecoin. Let's see together how it works, and what are the main differences with Bitcoin.
Litecoin vs bitcoin: how litecoin works