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What are Cryptocurrencies and How Do You Trade Them?Salem-News.com Business
It's similar to selling shares of stock...
(SALEM, Ore.) - Cryptocurrencies are intangible assets, also called digital assets, which serve as a medium of monetary exchange between parties. The crypto part of the term is used because when this digital asset is exchanged, there are very sophisticated cryptographic codes used to verify the transactions and protect the information.
In many ways, it helps to think of cryptocurrency as a sort of cyber-protected, online bank account denominated in a globally-accepted form of money.
To trade these kinds of assets, you don't need to understand all the technology behind them. All you really need is a trading platform and a place to store your currency. In fact, you can even conduct crypto trading via a Forex broker with contracts for difference.
If you want to enter the exciting, and often quite volatile, cryptocurrency market, keep the following facts in mind:
There are a Few Big PlayersCurrencies like Bitcoin, Lite, Ethereum and Ripple are a few of the names you have likely already heard of. They, particularly Bitcoin, are among the most prominent cryptocurrencies in current use among traders worldwide.
Bitcoin alone accounts for about 40 percent of all digital currency assets in existence. For new traders, it is wise to stick to one of the major currencies that already has an established market.
When you attempt to sell a cryptocurrency, you'll be able to find a buyer rather quickly if you are selling one of the major currencies. If your portfolio of cryptos is held in newer or small crypto coins, you might struggle to find buyers.
It's similar to selling shares of stock. If you need to unload 100 shares of IBM, you can make a sale instantaneously. But if you need to sell shares of a tiny company that few people have ever heard of, it might be weeks before you locate a willing buyer.
It's also worth noting that if you’re trading cryptos with contracts for difference mentioned above, you’re only trading the price – not holding the underlying asset – ensuring fast entry and exit for your trades.
You Need a Wallet and an Exchange to Get StartedCrypto traders use the term wallet to indicate either on online location where they store the code that proves they own a set amount of cryptocurrency, or else a thumb-drive device that stores the code offline.
You can also opt for the most secure storage of all: physical paper, which is akin to the kind of currency we are all familiar with. Choosing an exchange is an important step as well. There are dozens of respected crypto exchanges but they all have different rules. Some only deal with Bitcoin or one or two other main cryptos.
Others will let you buy and sell any number of cryptos. Note that some exchanges will allow you to trade dollars (or any existing, traditional currency) for cryptocurrency or let you open an account by depositing cryptocurrency that you already hold. For example, a few exchanges only accept U.S. dollars for new accounts. Others let you deposit Lite, Monero or Bitcoin to start your account.
The Crypto Market Can Be Unbelievably VolatileIf you think the stock market is a wild ride, crypto is even more. Price swings can be breathtaking and have led many traders to start out very, very slowly. It's wise to spend a few weeks just observing the market and making some small trades in order to get used to the incredible swings.
Source: Salem-News.com Special Features Dept.
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