If you had invested N16, 200 towards acquiring 100 Bitcoins back in February 2011 when it was just N162 to a bitcoin, you would be worth a minimum N700, 000,000 today… that is Seven hundred million naira 6 years later!
Talk about investing in a jackpot and it gets crazier.
As of writing this, 1 Bitcoin exchanges for approximately USD$20,000!
Nevertheless, it’s not too late. With other “Alt” coins such as Ethereum and Litecoin picking up speed, there may never be a better time to jump on this ship!
In the first part of this series, I introduced you to Bitcoin and cryptocurrencies explaining how they work using the Blockchain technology. I believe you have done some further reading and are itching to get started.
So how do you start trading cryptocurrency? I have broken the process down into easy steps for you to follow.
- Know a lot: READ and RESEARCH
The importance of this cannot be stressed enough.
With a sharp increase in opportunity to make money comes an entirely new knowledge field and scammers or opportunists looking to make some quick cash. The first step in investing in cryptocurrency is to read and research extensively. Explore cryptocurrency forums and identify sources of information you can always depend on. Some of the best market indicators and tips will come from some of this discussion boards.
The cryptocurrency sphere is a volatile and rapidly changing one. The difference between profit and loss is in the amount of information you have at your disposal.
- Purchase Bitcoin: Identify and sign-up with a reputable exchange company that you can buy and store bitcoin with.
A cryptocurrency exchange company is a platform that allows you exchange your money for Bitcoins. Most of them are dollar denominated though. They also offer an e-wallet system for you to store you purchased coins before trading or just storage. They can exchange paper currency for coins or coins for paper currency whenever you feel you want to liquidate your investment.
Over years, many exchanges have folded up, been hacked or just stopped operating resulting in millions of dollars’ worth of losses to the unlucky people that stored their coins on these platforms. While some of these exchanges provide some degree of insurance in a bid to convince you to transact with them, there really is no sure formula to identify which exchange will last, not be hacked or is safe. However, from online discussions and forums, you can get a grasp on which platforms other traders use and this can form the basis for your decision. The most trusted platform and most consistent today is Coinbase.
- Sign-Up for an Account at one or all of these CryptoCurrency Trading Platforms.
If you would prefer to actively trade Bitcoin in the crypto market as opposed to just storing and waiting for the value to appreciate, you will need to sign up on a trading platform.
Similar to the forex applications that are used to trade foreign exchange, these platforms allow you to buy and sell cryptocurrency depending on the prevailing market situation. Depending on the platform, you also see at a glance, how your choice of cryptocurrency is fairing compared to other coins as well as pick up on trends that may allow you buy or sell.
Make sure to read Crypto trading platform reviews and comments a lot as well.
- Transfer purchased coins from exchange platform to trading platforms
Now that you have purchased your crypto and signed up on a trading platform, it is time to start trading. There are two trade types, however. We have the day-to-day traders who observe and watch the market regularly cashing in on subtle appreciations and depreciation to make their money on a daily basis.
We also have the “Hodl”-ers or long term traders who can wait for months or years just to leverage on a gradual or marked increase in value. They see cryptocurrency as a means of wealth storage and long-term investment.
You can equate this to putting money in a fixed savings account for a defined long-term tenure only that in this case, the duration is determined by you and the value is determined by the market as opposed to a fixed quarterly or monthly percentage.
- Have a Trading plan and Start trading
Now that you have a grasp on the basics, you need to determine what type of trader you are. You also need to have a strategy or a plan before you start trading otherwise, you’ll end up swaying to market forces without any clear approach. It is much more difficult and complex to be a day trader as that comes with a steep learning curve. However, whatever your strategy, stick to it!
I will advise that you only trade with funds that you can afford to lose. Cryptocurrency trading is volatile and just as it is rising, it can also fall drastically. Some of the third party platforms mentioned above are simply recommendations and not endorsements. I will encourage you to do your own research and identify which works best for you. However, be watchful of scams.
In the next series, we will take you through existing scams to avoid as you plan to invest in cryptocurrency.
Are you interested in trading Bitcoin, Ethereum or Litecoin? Have you stated trading and need some direction? Do you have experiences you think might be helpful to new traders or you simply have your opinions or reactions to this article?
If yes, then drop a comment and I will do my best to reply accurately and timely!