Many beginners of Cryptocurrency “don’t know what to start with” when they want to do Cryptocurrency trading. To make it short, you gather information first, open an account with a Cryptocurrency Exchange, and then make a wallet. This time, I will explain step by step in details for those who don’t know how to start Cryptocurrency trading.
Let’s Start with Information Gathering
Let’s begin with gathering information. Why do we gather information first? By gathering information and accumulating knowledge about Cryptocurrencies, you can narrow down the currencies you trade. Then you can go to the next step, “opening an account with a Crypto Exchange”.
Know the Types of Cryptocurrencies
The first information you collect is the types of Cryptocurrencies. Cryptocurrencies are roughly divided into Bitcoin and Altcoins. Altcoins are all Cryptocurrencies except for Bitcoin. Nonetheless, now there are well-known Altcoins such as Ethereum and Ripple, etc. However, until a few years ago, the transaction amount of Bitcoin was overwhelming others, so it is divided into Bitcoin and others.
In fact, some of the Cryptocurrencies are listed below. It is TOP 10 of the market capitalization (currency price × issued amount) ranking as of July 2018.
- Bitcoin Cash：$12,062,818,720
As mentioned above, the total market value of Bitcoin is about US$107 billion (about 11.7 trillion yen), which is higher than that of NTT DOCOMO, Inc. in the Japanese stock market.
Know the Attractive Aspects of Cryptocurrencies
Well, after knowing what kind of Cryptocurrencies there are, let’s find the attractive aspects of each Cryptocurrency. Since there are too many Cryptocurrencies, I recommend you to check the above-mentioned Cryptocurrencies with the high market capitalization for the time being. Then you will find out why they are popular, and what is attractive with the whole Cryptocurrency industry.
In this process, you may be interested in other currencies than TOP 10 currencies, then you can search about it each time.
By the way, it is a good idea to check the following characteristics of the currency.
- Remittance Speed
- Mechanism of Mining (to issue new currency)
- Mechanism of Blockchain
After investigating in various ways, you find some kinds of Cryptocurrencies and their advantages, then you can choose which Cryptocurrency to invest.
How to Collect Information
The following 3 can be the main ways to collect information about Cryptocurrencies.
Although the information on the internet is a mixture of wheat and chaff, it can deepen your understanding if you check several websites. Also, there are many books about Cryptocurrency for you to refer. In addition, it is one of the best way of information gathering to check famous blogs about Cryptocurrency.
Open an Account with a Cryptocurrency Exchange
The next step is to open an account with a Cryptocurrency Exchange. Crypto Exchanges are like securities companies in stock trading and you can buy and sell Cryptocurrencies by opening accounts on exchanges. Since there are several Crypto Exchanges, it is better to choose one by comparing the fees and the listed currencies.
Compare the Fees
Depending on the Crypto Exchange, the fees for trading currencies are different. When comparing them, don’t forget to check the following points.
- Whether they are having promotion
- Cash transaction or Margin transaction
- Difference in service fees depending on the type of currency
At first, if the fee is very low, maybe the exchange is having a promotion. Then, please be aware that the fee can be changed when the promotion finishes.
Also, the fees can be different depending on the type of transaction, Cash transaction or Margin transaction. Cash transactions are to trade with the money they possess, but Margin transactions are to trade with the money they borrow from the exchange, which means they can invest more money than they possess.
Moreover, the service fees are different between Bitcoin and Altcoin, and between Altcoins, they’re also different. It depends on the type of Cryptocurrency. In general, the fee related to Bitcoin is cheaper, and the fee for Altcoin is more expensive, please be careful when you trade Altcoins.
Compare the Listed Cryptocurrencies
Depending on the Crypto Exchange, the types of listed Cryptocurrencies are widely different. In conclusion, Japanese Exchanges have less listed currencies, and overseas Exchanges deal with far more currencies. It is not a small difference, but a magnitude difference.
It’s Easy to Open an Account
It is easy to open an account with a Cryptocurrency Exchange, which has the following steps.
- Register your email address
- Verification of the email address
- Uploading your personal information data
Opening an account can be done by the above procedure. It is an advantage of Cryptocurrency Exchanges that they require very simple steps to open an account.
Let’s Make a Cryptocurrency Wallet
The last step is to make a wallet. In the first place, Cryptocurrency is not the real currency, it is the currency that exists on the internet. You can strengthen security by creating a wallet to store Cryptocurrency.
A Case without a Wallet
Suppose you buy Bitcoin at Crypto Exchange A. And if you leave the Bitcoin without making your own wallet, it means you leave the secret key (≒ PIN), which you need when you remit Bitcoin you bought, at Crypto Exchange A.
Therefore, if Crypto Exchange A were hacked and your secret key were stolen, your Bitcoin may be remitted illegally to the third party. By the way, the Coincheck Hack occurred in Japan is the case. In other words, if you can take this kind of risk, you don’t need to create your own wallet.
Types of Cryptocurrency Wallets
There are roughly 4 types of Cryptocurrency Wallets.
- Web Wallet (Free of charge)
- Software Wallet (Free of charge)
- Hardware Wallet (Charged)
- Paper Wallet(Free of charge)
The bottom one has the strongest security. A Web Wallet is the wallet created on the internet, and a Software Wallet is created on your terminal such as PC. A Hardware Wallet is created in a hardware like USB, and a Paper Wallet is managed on paper.
A Software Wallet is recommended for beginners. While a Web Wallet has high risk to be hacked, a Software Wallet has low risk as it is created on your own terminal. On the other hand, a Hardware Wallet is offline and has strong security, but it costs around US$100.
A Paper Wallet is difficult to be processed, and if you lose the paper, you lose everything. Therefore, a Software Wallet is the best-balanced wallet with no cost and no difficulty.
As abovementioned, the basic flow is “collect information → create an account →create a wallet”. Once you experience the flow, you will get used to it. So let’s start with collecting information. And I recommend that you continue to collect information after acquiring some Cryptocurrencies.