The 3 things every crypto newcomer needs to know
Cryptocurrency trading is no longer new to us, but it is still a complex business to understand fully. Even those who consider themselves crypto gurus are sometimes stumped for answers, like why does crypto go up and down. We are not saying this to deter you from starting your crypto trade—quite the contrary. If you are keen on crypto trading or want to buy some bitcoin as an investment but have never ventured beyond the traditional stock market or hedge fund, then we are here for you. We explore the three things you need to know as a newcomer to the crypto world if you want to be better at trading or investing.
Know the language
When in France, you need to know some French; in Rome, you need some Italian and so on and on, and crypto trading is no different. You won’t get very far if you don’t know the language of your place. Here are some crypto terms we found vital to know before starting your journey.
1. Decentralized – something that has had power removed from an authoritative body.
2. Blockchain – a ledger that tracks and records digital transactions.
3. Confirm – a confirmation is proof of a successful transaction. Confirmation is the number of times the network has accepted the transaction. The more confirmations you get for a transaction, the higher the likelihood of it being legitimate.
4. Altcoin – an altcoin is any coin other than Bitcoin.
5. Block – a block forms part of a Blockchain. It’s made up of transaction records and can hold a limited amount of data.
6. Decentralised Finance (Defi) – financial activities without a third party or intermediaries like a bank or financial institution.
7. Exchange – this is a digital marketplace where you can sell and buy cryptocurrency.
8. Fork – a fork happens when users change a blockchain’s rules, this change creates two new paths. The old rules and the new rules form a new blockchain. An example of this is Bitcoin and Bitcoin Cash.
9. Gas – the fee developers pay to use the Ethereum network, and the gas is paid in ether.
10. Non-fungible Tokens (NFTs) are units used to represent the ownership of unique digital items such as art.
This is not the complete Cryptocurrency dictionary; just like any language, you will pick up other terms as you continue investing. Continue learning and ask around when unsure. Education is key.
Understand the different currencies
Like stocks, there are a lot of different currencies in the crypto market, and it’s best to know which ones are popular, which perform better than others and which are more volatile than others. Take a look at our top five currencies to look out for.
Bitcoin is the king of all cryptocurrencies and the most popular currency. It is available on all exchanges and is the most accepted currency. It is also very volatile so do thorough research before investing. Bitcoins cap of 21 million tokens that will ever be mined makes it a desirable currency to own.
The second most popular currency is also a network and software platform for creating new applications.
Dogecoin was created in just 2 hours as a coin, but now it’s no laughing matter. It has a sizeable unconstrained supply and attracted millions of new investors in 2021 after catching the interest of Tesla CEO Elon Musk.
Litecoin was created in 2011 and was designed to be faster than Bitcoin. It also has a larger supply than Bitcoin, with a maximum of 84 million Litecoin tokens that will be mined.
Bitcoin Cash (BCH)
Bitcoin cash is a fork of the original Bitcoin blockchain, and it was launched in 2017 on larger block sizes so it could facilitate more transactions. It works on the exact mechanism as Bitcoin with the same cap supply of 21 million tokens. Crypto experts have said BCH will be used as a medium of exchange.
When choosing a currency, it’s always advisable to invest in well-known, mainstream currencies rather than smaller ones. Also, remember that cryptocurrencies are volatile, not just Bitcoin, so be patient when you notice a slump in performance.
Join a community
Birds of a feather flock together; find an online community of other Crypto enthusiasts so you can learn from them and get a better understanding of how crypto works. The digital currency space is constantly changing, and being part of a robust, active community keeps you in the loop. And you can also get predictions and tips from your fellow members.
Reddit has some of the largest and oldest cryptocurrencies; communities such as r/Cryptocurrency and r/Bitcoin have over 4 million members.
Remember to conduct extensive research before investing any of your money, don’t just follow the hype you see on social media. Always invest smartly with a well-developed plan; don’t just put money on a popular or trending currency that day or week. Unlike conventional investment instruments, crypto trading is not insured, so only invest with money you are willing to lose.
Whether you want to become an expert trader or hold on to some cryptocurrency as a long-term investment, make sure you are well-versed in what you want to achieve.