How To Start Cryptocurrency Trading : Everything You Need To Know In 2021
How To Start Cryptocurrency Trading
Welcome to cryptocurrencies. If you are new to this space, don’t worry; we’ll show you everything you need to get started.
The easiest way to understand how cryptocurrency work is to compare them to traditional stock trading.
The picture below shows the traditional stock trading ecosystem. As you can see, you take funds from your bank account and send it to your brokerage account. Then, your broker connects you to the exchanges where you can buy stocks, bonds, options, etc. When you sell, the process reverses. Money from a stock you sell goes back to your brokerage account and then to your bank account if you choose.
The traditional stock trading ecosystem is well- developed. That’s why you can get away with using just one service, like Zerodha in the picture above.
The cryptocurrency ecosystem is still in its infancy. It’s not as built out as the traditional stock trading ecosystem. Therefore, we may need to use two or more services to accomplish our goals.
Cryptocurrency Lesson No. 1
Here’s the first thing you need to know about Cryptocurrency Trading : The space is still very young and being developed.
It is not yet at the same point the stock ecosystem is, where you can get everything done through one service.
That makes it a bit more difficult to get into the cryptocurrency space. But that difficulty is also our opportunity—an opportunity to get in before everyone else.
The Cryptocurrency Ecosystem
Below is a picture of the cryptocurrency ecosystem. It’s similar to the traditional system. However, the services are a bit different. Don’t worry if you are not familiar with these services. We’ll review each later in this guide.
With the cryptocurrency ecosystem, it all starts with converting your local currency to bitcoin. Then, you use cryptocurrency wallets to store your cryptocurrencies. And you use cryptocurrency exchanges to buy and sell cryptocurrencies. In a minute, we’ll go over in more detail how it all works together.
Cryptocurrency Lesson No. 2
While the traditional stock system operates through brokerages such as Zerodha, in the
cryptocurrency system, we use cryptocurrency wallets and cryptocurrency exchanges.
What exactly is a cryptocurrency wallet? A cryptocurrency wallet is a secure digital
wallet to store, send and receive a digital currency like bitcoin.
And what is a cryptocurrency exchange? It’s an online platform where you can buy, sell or exchange cryptocurrencies for other digital currencies.
Here WazirX and Binance both are exchanges we will use Wazirx to buy our first crypto because in Binance we can not deposit INR but in WazirX we can direct deposit money from our bank and buy listed cryptocurrencies.
you must be wondering why am I suggesting you Binance? when we can buy on wazirx then why Binance?
actually, wazirx doesn’t have all the coin listed that’s why we need Binance to trade and also Binance has the highest volume in crypto space so its easy to buy and sell Cryptocurrency trading on Binance plus Binance has a ton of features which wazirx is not offering right now. good thing is that coin transfer from Binance to wazirx and wazirx to Binance is FREE
Cryptocurrency Lesson No. 3
Remember this from above: Buying cryptocurrencies starts with converting your local currency to bitcoin.
And this is where the process can get confusing for those new to cryptocurrencies.
Not all cryptocurrency services support conversion from your local currency to bitcoin.
In other words, with some cryptocurrency trading wallets, you can exchange your localcurrency for bitcoin. But with others, you cannot. Same for the exchanges. Some offer local currency conversion, while others don’t,that’s why we will use Binance and WazirX Both
Guide to buy your first crypto and some FAQ
Where to Buy Coins ?
There are plenty of Exchanges providing a variety of services and different charges. You may pick the one that suits your needs. Internationally there are Exchanges such as Binance, Coinbase, Kraken, Bitfinex, KuCoin, FTX, Gemini, Bittrex_ etc. Most of the users here use Binance as it is the largest out there. In India, there are exchanges like WazirX, Coinswitch, and Zebpay. WazirX is the best in India at the moment. You can create an account in WazirX and link it to Binance also. Transfer between WazirX and Binance Wallets are completely free at the moment. (Not every coin though, but most of the big coins are transferred for free)
Signup link for wazirx:- https://wazirx.com/invite/zw3pcqhh (KYC Needed)
Signup Link For Binance :- https://accounts.binance.cc/en/register?ref=HA04YDXT (No Need of KYC until you trade more than 2 BTC or P2P trade)
*Above link has my refral if you will signup through this we both will get 20% discount on our trading fee if you directly signup on the exchange you will not get any benefit
How to Buy Coins ?
CoinsThere are two methods to buy a coin. P2P and Exchange. In P2P, you are buying the coins directly from another user and the transaction happens between you as a buyer and another user as seller directly through bank transfer, UPIs etc. When buying from the exchange you can buy directly through exchange via Credit/Debit Card.
How to Put Money in Exchange ?
You can put Fiat Money in the exchanges in the currencies which are supported by them. Alternatively, you can buy Stablecoins instead and store in your exchange wallet to use them when you so desire. Stablecoins are coins which as the name suggest are stable and pegged to a certain asset. For Ex TUSD is pegged to USD, i.e, 1.00 TUSD = 1.00 USD. Most of the exchanges use USDT or their own Stablecoin for Crypto Pairs. In Binance, u can either buy USDT or BUSD to buy other coins or park your money.
Is Crypto illegal in India ?
Crypto is not illegal in India. Even in 2018, RBI only sent a circular asking every entity under RBI to not allow users to purchase or sell cryptos. The ban was not applicable for any crypto to crypto trades. In 2020, the Supreme Court ruled against even that. Even in these two years’ period, the crypto trade was still active through the means of p2p. The reason for the case to be in favor of crypto was that RBI was not able to provide any solid evidence regarding its claim. Once they have, RBI may come again with a ban in the future. But I think P2P will live on. Rest assured, crypto cannot be banned.
Is it okay to keep our coins in Exchange ?
There is a popular expression in the crypto world *“not your keys, not your coins”* . Keeping your money in Exchanges is okay, but there is a risk to it. It is similar to keeping money in your bank account. The money is yours, but the bank decides what to do with it. So in any unforeseen event, when the exchange goes kaput, your coins are gone. So we would advise you to stay with the best of the best exchanges. Same as you do in choosing a bank to keep your money. However, you have an option to secure your coins by transferring it to an external wallet like coinbase or ledger. These can be software wallets or hardware wallets. There are withdrawal charges when you make a withdrawal of coins from an exchange wallet to an external wallet. So be aware of that.
Signup Link Of Coinbase – https://coinbase.com/join/chatur_id?src=android-link
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