Cryptocurrency trading has been a popular subject for the past couple of years, ever since the bitcoin started gaining traction with its price volatility and became a mainstream attraction.
After the big boom in December 2017, when the bitcoin was valued around USD 20,000 on the crypto exchanges, and soon after that, the price started crashing down, people have been worried about managing their crypto coins.
The CBNC even published an article about managing the stress of owning bitcoin and other cryptocurrencies where they talk about the consequences of possessing crypto coins and what you can do to deal with that anxiety.
In this article, however, we are going to talk about the more practical sides regarding the subject of cryptocurrency and also give you a few tips and tricks that might make you feel safer the next time you decide to invest.
Copyright: Photo by Andre Francois on Unsplash
How To Choose The Cryptocurrency?
If you ever worked in corporate law or are at least familiar with mergers and acquisitions, then you know that the most crucial step before the drafting of the contract is the due diligence. We are recommending you take a page from the corporate lawyer’s playbook and always, without question, do your due diligence! Nobody wants to buy a company that just lost one of its major clients!
Investing in anything can be risky, but investing in crypto coins and ICO’s is more dangerous, and you need to aware of that threat before you go into it. Doing your homework will pay off. You can track the prices and check out the circulation supply of the coin and the market cap. Also knowing the history of the currency can help you understand its price patterns.
Cryptos have started stabilising this year, but that doesn’t mean you shouldn’t be careful!
Buying Crypto Coins the Right Way
Knowing how to buy crypto coins properly is the first step towards successful trading. We have to mention this topic because choosing the right exchange can shape your whole experience. You should always pick a local exchange because of the conversion costs, which is reputable and compliant with the law.
There are so many options right now, and reading about other people’s impressions, researching the tokens options for smaller fees or taking a look at the altcoin and fiat currencies lists featured on the platform might give you a good general picture of the exchange.
Storing Crypto Coins the Right Way
According to the cybersecurity company Carbon Black, approximately 1.1 billion USD was stolen this year in crypto coins, and we’re only in the beginning of the second half of the year. Another interesting fact regarding this issue is that the malware market alone is worth around 6.7 million USD, which is what crypto theft hackers use to steal the coins. Moreover, this is where hardware wallets come in!
Everybody has been talking about hardware wallets since Trezor showed up on the market because it is the most secure way to protect your coins from theft! When you’re not trading with your coins on the platform, keeping them on a cloud wallet is just irresponsible in today’s climate. Taking the right precautions can at least protect you from hackers.
Market Capitalisation Is Important
We can’t stress the importance of market capitalisation enough when it comes to investing and managing crypto coins. It’s not that the price doesn’t matter, it’s just that it doesn’t come close to how vital the market cap is for investors. Let’s explain this, the number of purchased coins multiplied by the price of those coins is the total market cap, and when it’s compared to the circulation supply, you can deduct the value.
Another thing that might not be clear when it comes to cryptocurrency trading is that you turn profits when the market cap is up, not only when the price of the coin is up. For example, if you invest in ether or bitcoin, and the market cap goes up 15 percent for both of them, you’ll make the same amount of money off of each.
Another thing that differentiates the altcoins, however, is the circulation supply. For example, the ripple has a circulation supply of 39,299,874,590 and a market cap of $16,831,462,787 v.s. the bitcoin with a circulation supply of only 17,193,337 and a market cap $120,528,174,664, which tells us why the bitcoin can easily double and why the ripple won’t.
If you want to play on the safe side (if it is such in the crypto world), the most straightforward approach is to buy and sell early. Of course, for this method to work, you have to pay very close attention to the numbers and stay updated all the time on what’s going on and, most importantly, you shouldn’t become too greedy.
The trick here is to stick to the plan you drafted at the beginning with your buying and selling points and to track what’s going on with Reddit and Telegram very carefully.
Sam Hoffman is a passionate finance explorer of the cryptocurrency world who likes to write about creative aspects of the digital trade. Currently, he is part of the team behind Blockbid.io content.