Updated: Dec 8, 2020
Starting with a basic understanding of cryptocurrencies
To get things rolling , let’s make sure we’re all familiar with regards to what cryptocurrencies actually are. A cryptocurrency is a unique, virtual medium for exchanging capital. They use unique cryptographical functions and blockchain technology to conduct online transactions, securely and fast. Cryptocurrencies are completely decentralized, they’re not controlled by any one individiual and in theory they’re immune to government control.
Individuals can exchange cryptocurrencies online with very few (if any) processing fees. This advantage makes them much more appealing than traditional currencies and financial institutions for exchanges. There's lots of benefits to trading cryptocurrencies. Here are some of the primary reasons why people chooe to invest or trade crypto:
USER AUTONOMY: Digital currencies grant users increased autonomy over their own funds, much more than fiat currencies. Users are also able to control how they spend their money without dealing with an intermediary authority like a bank or government.
SECURITY: Exchanges are made with both public and private keys. This approach keeps things secure and also helps to keep transfer fees low.
TRANSPARENCY: Blockchain technology involves an online ledger that can be sent to all devices. This online ledger makes it easy to verify transactions and encourages all users to be honest.
DISCRETION: Purchases can be discrete. User can voluntarily publishes their transactions, but purchases are never associated with personal identity, much like cash-only purchases, and cannot easily be traced back to the user.
ACCESSIBILITY: Because users are able to send and receive using only a smartphone or computer, crypto is theoretically available to populations of users without access to traditional banking systems, credit cards and other methods of payment.
Storing and Securing Cryptocurrencies
Now that we have some understanding what cryptocurrencies are all about, lets look at how we can safely store our assets using wallets. Its important that we take this seriously and do our homework as keeping our crypto safe should be one of the main priorities for any investor or trader because it is essential to have your crypto wallet before buying any cryptocurrencies. You will need to store your coins within your secure personal wallets. Its not reccomended that investors leave their crypto on exchanges, although they allow users to hold purchased coins within assigned exchange wallets, it’s recommended that you withdraw your crypto and hold them in private wallets. This protects you and your investments from hackers and theft. It is also worth noting that wallet compatibility also needs to be considered. Some crypto wallets to choose from include but are not limited to:
• Coinbase Wallet
• Exodus Wallet
• Jaxx Liberty Wallet
• KeepKey Wallet
• Guarda Wallet
• Nano ledger
• Trust wallet
Before you dive in head first and select a wallet, theirs a few important things to note, which will help you stay on the safe side of crypto:
Only use wallets from a legit source: A growing number of wallets from less reputable sources that offer attractive features are malware in disguise. Nathan Wenzler, senior director of cybersecurity at Moss Adams has identified a number of these landmines which can result in the entire loss of your crypto portfolio.
Cold wallets are reccomened:
Moving onto a basic understanding of Investing and Trading
There is a difference between investing and trading. Investing entails building wealth gradually over an extended period of time through the buying and holding of currencies and stocks. Trading, on the other hand, involves more frequent buying and selling of currencies or stocks, with the goal of generating faster returns. When investing, the currency or stock is often held for a long period of time in contrast to trading, which is more frequent and can be upto multiple times a day.
For small, retail investors, investing over an extended period of time is far more suitable than trading, because trading involves a near constant monitoring of the currency or stock. Meaning its much more time consuming and will need a lot more effort, exposure to more elements of risk, emotion and a larger stack of capital is also required to trade sufficiently to make the risk to reward worthwhile. Trading also requires far more experience, knowledge and confidence.
Taking the time to understand some basic principles of trading and investing, how the markets work and what direction suits your own circumstances and minset is important. We can guarantee that most new investors and traders are desperate to make their first trades once they have learnt how buy their first cryptocurrency, we’ve all been their and know that feeling. Because its our feelings and emotions that drive us to make decisions and most likely as a new investor or trader you will make the wrong decisions. Now that’s not in all a bad thing because you learn from your mistakes and there is no better way to learn how to invest and trade than by making mistakes, which are inevitably unavoidable.
But by having some understanding of basic investing, trading and market principles before you start will limit those first nasty, costly mistakes and blunt the learning curve allowing newbies to survive the initial baptism by fire. By having some knowledge before you proceed will also assist in understanding why and how mistakes were made and will give new investors and traders a quicker and less costly learning process.
Do you know the basics of blockchain technology and Bitcoin? Do you understand how exchanges, wallets, private keys, public keys and Authenticators work?
If you can’t answer these basic questions, you’ll be in trouble quick. So Take some time to prepare yourself, it’s essential to learn the basics. You can navigate our website and find plenty of information to help you get started. But you will defiantly need to find information from multiple sources as this space is vast and now is the time that you’ll start get a clear picture if this is for you or not.
Researching, reading and educating yourself in the crypto space is by far the most important process your going to undertake. So if your too impatient to simply have or take time to read and learn, then you will stack the odds against yourself and the chances of failing will be much higher. Just as the chances of succeeding will be much higher if you prepare yourself with the correct learning and understanding of the space before diving in.
Many experienced investors have been trading, reading, networking, researching and growing their wealth of knowledge consistently, leading to huge amounts of experience. Not only have they chose to dedicate time to learning and understanding to improve their chances of success. But they have used their time management skills wisely to optimise the time they have and fully dedicated themselves to reaching their targets and goals. Not only do they claw as much time into the process as they can, but the time they do dedicate is laser focused with no distractions.
Tip: Many more experienced Investors and especially traders keep themselves very fit physically and mentally meaning they have strict diets and routines to suit their chosen work loads. They don’t indulge in fast food, alcohol or drugs and limit or completly cut out social media, so as to claw back as much time into perfecting their time and focus to investing and trading. So if you think this is going to be a walk in the park, take a look around at what your going up against, because if your not prepared, in top shape, physically and mentally, you will get steamrolled by people who are.
Every day, potential investors miss out because they aren’t confident about how to get started and this is normal because of course with a lack of experience a lack of confidence is only to be expected. It wouldn’t be normal for someone to be confident on a subject in which they have no experience in. Even experienced investors miss out on opportunities that could bring significant profits simply from not staying active and taking action. But why are a lot of new investors lacking confidence in general? It could be mainly due to being scared to make mistakes, but what they don’t understand is, that the only way to learn, is by making those mistakes, especially in crypto!
We recommend during the early stages of investing and trading, where most of the mistakes will take place, that smaller amounts of capital are used to control and limit the damage that all the mistakes will make, not only on peoples wallets, but on their mind sets. This is where most people fail, because they have not approached the task at hand with the right mindset and havnt done the basic research and tried to get an understanding of the market or how crypto works. This is exactly where most people get burnt out mentally due to huge losses from stupid mistakes that could have been either avoided or made far less serious from having done some basic research to understand the task at hand. limiting the damage of the mistakes will protect your capital from running dry and keep a balanced mindset that is able to carry on and conquer the task at hand. At this stage we reccomend people take their time to fully understand the space and by taking action and making mistakes is the only way its going to happen.
Tip: Taking Action will result in experience over the course of time and experience will result in better decision making. In fact the experience is all about learning from the mistakes you make. So not only should people not be afraid to make mistakes, but they should aim to adjust their mindsets so as to not be scared to make mistakes, but to embrace and own those mistakes and most importantly, learn from them! limiting the damage of the mistakes will protect your capital from running dry and keep a balanced mindset that is able to carry on and conquer the task at hand.
Formulise investment strategies that suit you
Now that you have spent some time learning and getting an understanding of the space, you can start to formulise and adopt strategies that you feel will suit you, this once again in many cirumstances is a case of trial and error, so once again, keep that capital on a leash for now! We are going to break this section into two parts starting with investing.
The best thing about investment strategies is that they’re flexible. If you choose one and it doesn’t suit your risk tolerance or schedule, you can certainly make changes. But try to make sure you try to fully understand each strategy by taking the time to understand the characteristics of each, you will be in a better position to choose one that’s right for you over the long term without the need to incur the expense of changing course.