A person pushing large bitcoin down the hill at night

It’s easy to feel overwhelmed when you first get involved in crypto, but trading cryptocurrency isn’t as difficult or daunting as many might think. Advancements in blockchain technology, coupled with mainstream crypto companies and decentralized applications such as ShapeShift have made the cryptocurrency market more accessible than ever. Trade bitcoin and other digital currencies for the first time by following the steps below. You’ll learn about popular crypto assets, how to set up a wallet, start crypto trading, and stay secure.

How to Trade Cryptocurrency in 4 Easy Steps

1. Understand the basics by learning common cryptocurrency terms and about the most popular coins. 

2. Set up your self-custodial cryptocurrency wallet and learn about the different wallet options available.

3. Use a trading platform to start trading Bitcoin and monitoring cryptocurrency price movements.

4. Keep advancing by learning from the best resources on trading cryptocurrencies.

1. Common Cryptocurrency Terms

Crypto is a nascent industry with many unique terms and names. It’s important to understand the terminology around how to buy Bitcoin (BTC) and trade crypto. Unfortunately, the most common way to buy or trade crypto is to use an exchange, such as Binance or Coinbase. However, with this option, you are not in complete control of your funds; the exchange acts as a custodian and can freeze your funds at any time. There are also risks of exchanges being hacked or becoming insolvent–much like FTX, therefore it’s important to understand the differences between centralized (CEX) and decentralized exchanges (DEX).

Another option is a self-custody crypto platform like ShapeShift. ShapeShift currently offers over 8 cryptocurrency wallet interfaces as well as a native ShapeShift wallet and makes it easy for anyone to get started. You are in full control of your funds at any given time. All you have to do is write down your secret recovery phrase for your wallet and keep it safe so you can access your funds.

Learn About Popular Cryptocurrencies 

You’ll quickly learn there are thousands of different coins and tokens available in the crypto ecosystem and it can feel overwhelming to get started. The best place to start is by checking a site dedicated to market data, like CoinCap. This compiles data for thousands of cryptocurrencies and updates in real-time to show you price movements and other relevant information. 

About Bitcoin

The original coin, Bitcoin was created in 2008 and has a loyal community of users and advocates. A sub-community, known as “Bitcoin Maximalists” or “Bitcoin Maxi’s” do not buy altcoins, and only hold Bitcoin. An altcoin is an “alternative coin”--coins that were launched after Bitcoin, such as Litecoin. While the top ten coins fluctuate, Bitcoin has remained the most popular coin by market cap.

About Ethereum

Ethereum (ETH) was one of the earlier altcoins and has the second-largest market cap. Cryptocurrencies built on the Ethereum blockchain are known as ERC-20 tokens. There are many different types of digital assets with various functionalities built on the Ethereum blockchain, such as utility tokens or stablecoins.

Explore popular cryptocurrencies:

2. Setting Up Your Cryptocurrency Wallet 

Once you have a basic understanding of crypto, setting up a self-custodial wallet is the first step to buying your first Bitcoin or alt-coin. A cryptocurrency wallet holds your private and public keys, which allow you to interact with various blockchains to send, receive, and manage your crypto. It’s important to understand that a wallet does not actually store any crypto, but it records transactions related to your crypto. By creating a new wallet, you are generating unique addresses for each coin that no one else in the world will have, giving you a way to send or receive crypto. Check out all of the available wallet options on our platform.

Create a Wallet

1. Download the ShapeShift app or visit the ShapeShift Platform

2. Create a ShapeShift native wallet or choose from other available wallet options

3. Now that you have a wallet set up, you need to buy your first coin! You can either buy BTC or ETH with your debit card instantly using the available on-ramp solutions on our platform or send yourself crypto from another wallet.

More Insight on Cryptocurrency Wallets

Once you are managing a crypto wallet, it’s essential to understand what the functions of a private key and a public key are. A public key (or address) can be used by anyone to send crypto to a particular recipient. The corresponding private key is proof that you own the crypto in your wallet, and is the most important thing to keep safe. Think of your public key like an email address and your private key as the password to the mailbox. Keep your private keys in a safe and secure place, as anyone with access to them, has access to your funds.

There are various types of cryptocurrency wallets on the market, but they can be broadly broken down into two categories - hardware and software.

Software / Web-Based Wallet

Both online platforms and software wallets allow you to create a wallet via your computer or mobile device and store your private keys online in hot storage. These are far easier to use and make it more convenient to manage your crypto. However, users need to be extra cautious of keeping their private key safe since it remains online, and is therefore more vulnerable. For those less familiar with crypto, it is recommended to begin with a software wallet. An example of a web-based software wallet would be the native ShapeShift wallet.

Hardware Wallet

A hardware wallet is a physical device that holds your crypto private keys offline, eliminating the risk of malware, keyloggers, computer viruses, or other risks that software wallets and exchanges are vulnerable to. Keeping your private keys offline through cold storage is the most secure way to manage your crypto. However, cold storage is typically not as user-friendly due to set-up, keeping up with a physical device, and feature limitations. Therefore, hardware wallets are more commonly used by advanced users. An example of a hardware wallet would be a KeepKey–learn more about KeepKey here.

3. Research Cryptocurrency Exchanges 

One of the easiest ways to get involved in the crypto market is by using an exchange. There are several large, well-known custodial exchanges that give users the ability to set up a wallet, buy crypto, trade, and sell crypto back into fiat. The main disadvantage to a custodial exchange is that they are technically holding your crypto for you, in the same way a bank does. Just as the 2008 financial crisis uncovered the inherent risks of allowing 3rd parties to hold funds, we once again saw the same issue arise during the FTX insolvency crisis where customer funds were lost. As seen by numerous events in the history of crypto, a wallet that is controlled by an exchange comes with the risk of that exchange being hacked, unexpectedly shutting down, or becoming insolvent. 

Thankfully, the risk listed above can be mitigated as there are products on the market that offer the benefits and tools of an exchange while still giving you complete ownership over your digital assets. The ShapeShift native wallet is a self-custody solution, meaning you’re the only one that has control over your crypto. You can then use the ShapeShift Platform to buy Bitcoin and Ethereum, trade between different cryptocurrencies, earn on your crypto and track your portfolio performance in real-time. While exchanges make managing crypto easy, there are many solutions available with the same benefits that don’t compromise control over your crypto. 

Trading On the Open-Source ShapeShift Platform

Getting started:

To start trading, you need to get some crypto. You can use a debit card to buy BTC or ETH instantly and without an account on the ShapeShift Platform. Don’t have a debit card? No problem—you can also purchase crypto through your bank account but you will need to verify your account and purchases can take longer to arrive in your wallet. Check out all the available on-ramp solutions on our platform.

Making a trade:

Now that you have some crypto, it’s time to make a trade. Services with a one-to-one exchange are a great place to start, just watch out - such convenience will often come with high fees. Make sure you’re getting the best deal by comparing rates in real time.  To start, let’s do a simple Bitcoin to Ethereum trade. 

1. Login to your ShapeShift native wallet here

2. Choose BTC as the coin you have and ETH as the coin you want 

3. Decide the amount of BTC you want to trade

4. Click Trade and confirm your transaction 

5. That’s it - your ETH will be sent to your wallet shortly

For traders interested in more specific tools like limit and market orders, a custodial exchange will get you where you need to go. Setting a limit order means you pay the price you want, but you have to wait for the price to rise or fall in order to fulfill the order. A market order in contrast is completed as quickly as possible by paying the current market price. 

Our platform offers much more than just trading. Our open-source web and mobile app offer more options for buying, trading, earning and managing your digital assets, all in one interface. You can manage your cryptocurrency portfolio through our free, non-custodial crypto portfolio management platform while:

💰Staying in control of your crypto by connecting with non-custodial wallets

🤑 Earning the same APY (or higher)

🔑 Maintaining control of your data and privacy (no KYC, no tracking)

🆓 Not paying additional fees–our app is free.

🏦 Never risking your funds being frozen 

Our decentralized, community-owned platform has no infrastructure holding your data. It's just you, your funds and the blockchain.

Keeping Your Wallet and Trades Secure  

Something as powerful as crypto ownership comes great responsibility. There are two main security threats to be aware of when you are managing your cryptocurrency wallet: theft and catastrophic loss. It’s in your hands to protect your crypto. No one else can do this for you.

Be aware of potential security vulnerabilities, be vigilant when researching what tokens to invest in, and only use trusted exchanges and crypto management tools. Optimizing your wallet security in order to trade safely and maintain full access to your crypto should always remain a priority.

There are a variety of essential security tips to keep in mind now that you have crypto. Check out our list of tips for crypto beginners

1. Verify your private keys are correct, keep them in a safe place, and don’t share them with anyone

2. Don’t store your crypto on exchanges

3. Watch out for phishing attempts by checking the URL to make sure you are at the correct website 

4. Use difficult passwords and never reuse the same one

5. Use 2FA whenever possible, but never SMS 2FA

You can also read our full list of crypto security tips and tricks. 

4. Continue Learning to Trade Cryptocurrencies: TED Talks & Documentaries to Watch

If you’re interested in learning more from some of the experts in the crypto space, we’ve compiled some great resources below.

Get Started in Crypto Trading Today

Getting started in crypto can feel overwhelming, but with a little help, it can quickly become an exciting new industry to dive into. With ShapeShift, you can trade commission-free in our powerful platform while still controlling your cryptocurrency private keys.

Your Keys, Your Crypto!

These blog posts serve as a general overview of the crypto industry. No content in these blog posts or on the ShapeShift website constitutes purchase or investment advice. Digital assets are experimental, volatile and risky, and we therefore recommend that you seek professional advice from a qualified advisor before making any financial decision.

The information is provided “as is” without warranty of any kind, express or implied, and in no event will ShapeShift be liable for damages of any nature resulting from reliance upon the information. The blog posts may contain links to third-party materials that are not owned or controlled by ShapeShift. ShapeShift does not endorse or assume any responsibility for any such third-party sites, information, materials, products, or services.