Thu. Dec 3rd, 2020

Planet Compliance

Innovation & Regulation in Finance

Cryptocurrency for Beginners: 5 Tips and Tricks You Should Know

5 min read

When people think of cryptocurrency, “complicated” is probably one of the first things that come to mind. The concept has been around for over a decade, but many still don’t have a complete grasp of it—and who can blame them?

When Bitcoin first emerged in 2009, it grabbed the attention of the finance and tech industries. For a while, people didn’t seem to care—until it started to cost $19,783 apiece back in 2017. This was perhaps the peak of the hype surrounding cryptocurrencies, and suddenly people wanted to be in on the trend.

Since the inception of crypto, other altcoins have appeared in the digital space to serve as competition. The likes of Ethereum, Ripple, Litecoin, and more have also become stable and worth investing in, as technology brings in the age of e-wallets and cashless payments. Cryptocurrency for Beginners: 5 Tips and Tricks You Should Know

What is Cryptocurrency Anyway?

Before moving further along, it would be helpful to get on the same page. Simply put, cryptocurrency is a type of money that only exists electronically—digital money, if you will. The technology behind it aims to solve some of the most significant pain points about traditional banknotes.

For one, it eliminates the need for having a governing body, such as a bank, to print and issue it. Transfers are done from person to person, not having to go through an intermediary. This also spells out instantaneous transactions that do not get imposed with high fees. Let’s run through the different advantages of owning cryptocurrency below.

Top Advantages of Cryptocurrency

  • Swifter, cheaper transactions – Instead of having to go through all the legalities and unnecessary steps when sending money to another person, a crypto transfer is relatively simple and straightforward. No agents, brokerage fees, commissions, and extra fees are needed, which just makes way for a fast, easy, and cheap transaction.
  • Secure and confidential dealings – Any transaction done with cryptocurrency is encrypted, safe, and basically anonymous. No one can get the chance to spy on your financial activity or get your details from your account history, such as banks would. Only you have the power to view your recent transactions.
  • Financial freedom for the unbanked – Globally, there are around 7 billion unbanked adults. This means they have no account with any financial institution or mobile money provider.

    This could be because of the strict application process and requirements financial institutions require from their depositors, which can be a great hindrance to many. Since that does not exist with cryptocurrency, a person can easily make an account right away.

  • Quick international trade – What used to take days or weeks on end can be transferred in a matter of seconds with crypto. Since these are online transactions that do not need to be passed on from one bank to another, the waiting time for money transfers is reduced, no matter where you are in the world.
  • A growing investment opportunity – It has been a while since Bitcoin arrived, and now there are around 5,000 different altcoins in circulation today, serving over 20,000 markets.

    This sector will only grow in the future as the world adapts and takes on the needs of the post-modern population. A number of these coins are already in use and circulation today, and it will be a great investment opportunity for those who want to participate in trading them.

5 Tips and Tricks You Should Know

If you are planning to invest in crypto for the first time, it is crucial to be aware of the new venture you are entering. Below are some of the things you should keep in mind to help you navigate the field better.

  1. Find reputable news sources

There will always be lots of opposing opinions about cryptocurrencies, as well as the people who own them. Many think that crypto is just a fad, and those who engage in them will only find disappointment.

If you are already convinced that this can benefit you, then just stick to sources you can trust and avoid the noise of the non-believers. If you want to be a successful investor or altcoin owner, stick with the facts.

  1. Be prepared for volatility

It is not a secret that cryptocurrency is still not as stable as the standard currencies—just go back to that inflation of Bitcoin to almost $20,000 apiece less than three years ago. You have to be agile with your decisions and think about what will be best for the current amount of assets that you have.

Even experienced crypto traders and owners still have no luck with mastering the trends of these virtual coins, so do not be shocked if you find yourself in the same boat.

  1. Venture into other altcoins

Bitcoins are only one part of the story when it comes to cryptocurrency. Be careful to place all your eggs in one basket, as you may end up losing than gaining. Do your research and see which coins are thriving well, with the most-used cases that you can benefit from. What you will use your crypto for will be up to you—so choose your assets wisely.

  1. Learn the uses of both hot and cold wallets

While crypto exists digitally, you can still have a way of storing them online and offline—through hot wallets and cold wallets. If you are a beginner, the ease of access to hot offline wallets will prove to be more useful and versatile. Cold wallets, however, do offer more protection from hackers and other miscreants. As part of your journey into diversifying your assets, learn to use both types of wallets.

  1. Be vigilant

While cryptocurrencies have higher safety ratings than traditional money, it still pays to be on the alert. If you want to trade or own large amounts of altcoins in your mobile wallet, you have to be prepared against the risks and vulnerabilities that you are opening up yourself to.

Try to study different ways of handling your newfound assets and see how you can manage your money in a way that is both responsible and convenient for you.

Conclusion

Mastering the world of cryptocurrencies will take a while, so don’t pressure yourself to become a whiz on day one. Like any skill, it takes time, practice, and constant learning to find out how you can maximize the potential of your virtual coins—whether you want to use it for trading or daily transactions.

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