Cryptocurrency Guide
Starting out step by step in cryptocurrency can be daunting unless you’ve got the right guide. There are so many markets and exchanges in a decentralized world it’s hard to know where to start. This guide covers the basics of what you need as a beginner to expert.
1. Select your cryptocurrencies
Select which cryptocurrencies you want to start trading. This will determine which wallets and exchanges you will be selecting. If you don’t know and are just starting out it’s a good idea to obtain wallets and exchanges with a large varied selection of cryptocurrency. However, beware that some wallets and exchanges have higher minimums than others when selecting ones you like. Some also only allow you to trade dependent on whether you possess another type of cryptocurrency on certain exchanges. If you need specific wallet(s) for only some cryptocurrency, go to FreeWalletLibrary.com. For example, EOS cannot be traded in certain exchanges or wallets unless you have a certain amount of ethereum. These are some of the limiting factors to get to know when starting out to avoid the pitfalls of being unable to trade your cryptocurrency. You will most likely have to have several wallets and exchanges for anything other than bitcoin itself.
2. Transferring money to and from your wallets and exchanges
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Liquidity is very important when trading. Each exchange and wallet have different sets of rules when it comes to depositing and withdrawing your funds. Some have higher minimums than others and it is important when you select a wallet and exchange you know how money may be deposited and withdrawn for your cryptocurrency account. The majority of deposits and mostly all withdrawals occur through bank wire. Some exchanges and/or wallets will allow you to deposit or purchase via credit card but withdraws made from the account to you must come through bank wire. Keep this in mind as most outgoing bankwire fees can range from $0-$140 and up. When withdrawing most incoming bankwire fees are much lower ranging from $0-$20 and up. To avoid large multiple fees try to deposit as much as you can when you can and avoid multiple deposits in shorter periods of time as liquidity fees can eat up your profit.
3. Select an exchange for depositing and withdrawing your funds
Selecting an exchange requires a balance of all below:
A. Make sure the exchange can trade the cryptocurrency you want to trade. For example, if you want to trade mana or link and the exchange doesn’t have them there’s no point to join that exchange.
B. Make sure the exchange has deposit and withdrawal methods. Too many people confuse wallets with exchanges only to find they have nowhere to deposit and withdraw their funds.
C. Make sure the exchange has both regular and margin trading. People often join an exchange only to find that margin accounts are not available so if they want to trade short they can’t.
D. Make sure you can pass the verification process with the exchange. Documents you will need include Id, matching phone, email, address and sometimes bank or utility statements. Sometimes you may be required to take a “selfie”, a photo of yourself on the phone to complete the requirements.
E. Make sure your exchange is able to convert between cryptocurrencies. The more conversion pairs there are the better your options are to invest in cryptocurrency.
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4. Select a wallet
When selecting a wallet:
A. Once again, make sure your selected wallet includes the cryptocurrency you want to trade. Cryptocurrency wallets and exchanges are not like the foreign currency exchange. Every pair is not carried by every exchange or wallet.
B. Know the wallet’s minimums and maximums for trading and conversion. If the minimum for trading is 100 xrp and you only have 25 xrp you will not be able to trade and/or convert your cryptocurrency.
C. Know if your wallet has minimums or stipulations such as having a certain cryptocurrency to send and receive from your exchange. Most do not have though there could be a small fee with some (usually pennies).
D. Make sure your wallet can send/receive between individuals. This is the key function of the wallet other than to store and hold your cryptocurrency.
E. Make sure when you are setting up both your wallet and/or exchange you record the “secret phrase” issued to you in a safe place for wallet and/or exchange backup.
5. Compatibility
There is no such thing as one compatible wallet with one compatible exchange and some wallets are exchanges. For example, exodus functions as a wallet and exchange while kraken is only an exchange. With a wallet you can send and receive between anyone while with an exchange you cannot, you may only market trade. A wallet does not have deposit and withdraw fund capabilities so you will need both.
Now that your wallet and exchange have been set up we’re ready to start!
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