For the past few years, investing in cryptocurrency has been in every physical and digital investment advice column. Investors and non-investors alike have been interested in trading bitcoin, Ethereum, dogecoin, and other cryptocurrencies. As crypto traders, we often get many questions about groundbreaking digital currencies.
Like other investments, trading cryptocurrencies is all about building wealth for investors. Selling and buying bitcoin and other assets should help individuals achieve financial freedom, live a comfortable life, and even pay off debt. Experts estimate that only a small percentage of investors succeed in their endeavors.
At EazyBot, we’re here to help novice and experienced investors alike to invest in cryptocurrency. Read on to learn more about the fascinating crypto world.
What Is Cryptocurrency?
A cryptocurrency is a payment method backed by blockchain technology — a decentralized system distributed by users and not managed by a financial institution like central banks. Because of its cryptography, it’s almost impossible to counterfeit or double spend.
Investing in cryptocurrency involves online transactions documented in code on an open ledger. It records movements in blocks that form chains of previous transactions.
The technology behind crypto exchanges set them apart from the traditional financial system in various ways, including:
- Eliminates almost all overhead costs typically associated with banks
- Lower international transaction fees
- Finite supply independent from any exchange rate
- Replaces the need for intermediaries
Satoshi Nakamoto — most likely a pseudonym — created Bitcoin in 2009. Nakamoto’s paper on Bitcoin describes the project as an electronic payment system based on cryptographic proof instead of trust.
Bitcoin remains the most known and valuable blockchain-based cryptocurrency, with an estimated 46.5% of the total value. However, there are now thousands of other cryptocurrencies on the market. Some developers created Bitcoin forks, and others built new ones from scratch.
How Cryptocurrency Works
Many individuals invest in cryptocurrency because of its price volatility, where fluctuations can boost the price of your investments. If you have the time to buy and sell bitcoin and other cryptocurrencies, you can achieve returns much higher than traditional investments.
In most cases, people start investing in cryptocurrencies to buy Bitcoin or profit from traditional currencies like USD.
Once you buy crypto and start investing in digital assets, you risk losing your currencies. Because of how cryptocurrencies work, it’s not uncommon for investors to quickly gain or lose money on a trading platform.
Before you purchase cryptocurrency and visit crypto exchanges, you need public and private keys. Your cryptocurrency wallet generates these keys, which work as passwords do. Your public key connects to your wallet and enables your crypto account to receive currencies. On the other hand, only you have access to your private keys.
Pros and Cons of Investing in Cryptocurrency
Once you have access to your private keys, you can visit a crypto exchange to buy and sell bitcoin or any other popular cryptocurrency. However, before you dive deeper into the world of crypto, let’s go through the pros and cons of investing in these currencies first.
According to Statista, there are now over 70 million active cryptocurrency wallets worldwide. Let’s look at some of the components that make them attractive to experienced and novice investors alike.
Rapid Growth Potential
No expert can undermine the growth of cryptocurrency, especially bitcoin. When the creators introduced bitcoin at $0.30 per unit, very few people expected its worth to multiply by thousands.
Despite the fluctuations, experts believe it will continue growing. A Facts & Factors study estimates an overall growth of 30% by 2029. As long as investors hold cryptocurrency and it gains popularity, its uptake can also rise in price.
The rise of crypto exchange platforms has made crypto wallets more accessible than ever. Aside from the growing numbers of cryptocurrency exchanges, more channels are facilitating crypto transactions. Now, users can complete crypto purchases from any mobile device.
Megacorporations like Google and Amazon developed technologies that made selling and buying cryptocurrency more convenient. If you have a phone and a bank account, you can activate online wallets for crypto.
Bitcoin and crypto users have complete control of all their transactions in cryptocurrency exchanges, keeping them safe and anonymous. There is no record of individuals’ details, therefore preventing fraud and identity theft. Additionally, cryptocurrency exchanges use digital wallets and eliminate the reliance on a bank account.
While Bitcoin and other such currencies have gained worldwide popularity, some investors tread cryptocurrency trading carefully. Let’s find out why.
Steep Learning Curve
When it comes to crypto, one of the most discouraging factors is the steep learning curve. Traditional stocks are straightforward, where you buy shares and wait for the price to appreciate. However, trading cryptocurrency is much more complex.
No matter how much time you spend on market research, it’s challenging to understand when investing in crypto is worth it. Luckily, if you find the ideal crypto exchange for you, you can sell and buy crypto with confidence. The best crypto exchanges even offer financial advice.
Historically, bitcoin has enjoyed massive growth since its market capitalization. However, if you follow crypto price charts, you will witness that cryptocurrency prices often fluctuate. For example, bitcoin experienced a sharp drop in value during the start of 2018 and again in the middle of 2019. With such instabilities, investors can experience devastating losses in their exchange wallets.
Bitcoin and cryptocurrencies only exist in online wallets that users can access with a private key. Unlike traditional currencies, you cannot retrieve your crypto if your digital wallet is compromised.
For example, if you lose your private key, you risk losing your digital access forever. To this day, there are no systems that help recover lost crypto.
Some investors consider cryptocurrency exchanges more as speculation instead of a good investment. Cryptocurrencies don’t generate cash flow, which means someone has to pay more for your currency than you did for you to profit.
A successful business gradually increases its value by increasing the profitability of the operation. On the other hand, if you purchase bitcoin, you leave your investment’s circumstances on components you can’t always control.
However, some investors consider cryptocurrencies like Bitcoin as the currency of the future.
As Bill Gates famously said, “The future of money is digital currency.”
Now that you understand the core components of cryptocurrency exchanges, it’s time to learn the trading basics.
If you’re ready to enter a cryptocurrency exchange, follow the five steps below.
1. Create a Crypto Wallet
You cannot buy cryptocurrency without a digital wallet. Review this list of the best crypto exchanges and find the best one for you. Find the one with a simple user interface and an extensive range of cryptocurrencies.
Creating a crypto wallet is similar to opening a bank account and will require personal information like Social Security number, home address, birthday, and email address.
2. Fund Your Account
Once you have a crypto wallet, you can link it with a bank account. Most exchanges offer bank funding services through online transfers, which a reputable service provider shouldn’t charge.
3. Choose Your Crypto
Most crypto traders invest in bitcoin and Ethereum, but there are now thousands of other currencies available. Here are some of the most popular ones:
- Binance Coin (BNB)
- Cardano (ADA)
- Tether (USDT)
- XRP (XRP)
- Dogecoin (USDC)
These known cryptocurrencies are often more predictable than smaller altcoins, making them ideal for novice and experienced investors alike. However, some altcoins have grown over 1,000% in a few months, boosting their appeal to risk-tolerant investors.
4. Pick a Strategy
You can track an extensive range of trading indicators before you sell or purchase bitcoin. No matter how much experience you have, you can learn many things from communities dedicated to building wealth for members.
Check out EazyBot for an entire ecosystem of resources and a complete knowledge base. The EazyBot team developed a trading software designed to help investors generate passive income by trading cryptocurrency.
EazyBot does one thing exceptionally well: create new money for its users. Here are some of its unique features:
- Works 24/7: Our automated system works nonstop to discover market changes that can lead to massive growth.
- No losing trades: One thing that sets EazyBot apart is that it never closes on a losing trade. Many traders lose money for different reasons, but using the right tools can help you avoid such instances.
- Zero experience required: Whether you’re a novice or experienced investor, you can create a source of passive income through crypto trading.
- Finds volatilities: The groundbreaking technology behind EazyBot allows us to take advantage of trading opportunities.
If you want to fund a new home, raise a family, or pay for student loans, EazyBot can help you develop a customized strategy for financial independence.
5. Store Cryptocurrency
Trading cryptocurrency involves storing funds in crypto wallets with a private key. This step is helpful if you want to hold crypto for long periods.
There are two types of crypto wallets: software wallets or hardware wallets. In most cases, hardware wallets offer more security because they store your crypto on an offline device.
Expert Trading Tips
Have you decided to join the exciting world of training cryptocurrencies? Before you begin your journey, we have a list of expert trading tips for you.
Have a Purpose
As cliché as it may sound, you must have a purpose for every trade. Doing so boosts motivation. Keep your goal in mind and remember the risks.
Once you decide on your preferred crypto and strategy, everything else will come naturally. You can use the latest tools to help you reach your targets.
Set Profit Targets
Setting targets is one of the best ways to keep you grounded. When you have a goal in mind, you manage your trades rationally. It’s always a great idea to distance yourself from emotional business decisions. In most cases, getting greedy despite hitting targets leads to massive losses.
Fear of missing out (FOMO) is one of the most common reasons crypto traders fail to make profits. If you hear about success stories from your family or friends, you want to experience the same gains as they did.
The moment you want to buy or sell because of hearsays, you set yourself up to fail. Instead of using every tip you hear, research on market trends and algorithms.
The term high risk, high return applies to most trades, especially when it comes to cryptocurrencies. Instead of aiming for massive gains, try to gather small but sure profits. If you’re a risk-averse trader, invest less of your portfolio in less liquid markets.
One of the cardinal rules of investing is to trade what you can afford to lose. A good measure to follow is to risk only up to 5% of your portfolio on any trade. Doing so helps you mitigate losses but still create substantial gains.
Begin Your Crypto Journey Today
Like any investment, trading bitcoin and other cryptocurrencies can help you achieve financial freedom. It’s an excellent source of passive income for novice and experienced traders alike. However, if you’re not careful, you can quickly lose massive amounts from this endeavor.
Your EazyBot community is here to help you make the best decisions for building your wealth. We’re a group of crypto enthusiasts who aim to help traders make the most out of their investments. Join us today to take your crypto journey to the next level.