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, 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 asserts, 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 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.
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. The most common way to buy or trade crypto is to use an exchange, such as Binance or Coinbase. Another option is a self-custody crypto platform like ShapeShift. ShapeShift helps you set up a cryptocurrency wallet and does a lot of the initial work for you. Another term to be familiar with is ICO, or initial coin offering. These were a popular way in 2018 for companies to raise funds and get their tokens in the hands of users. Today, ICOs are far less common due to increased regulations. While we’ve just skimmed the surface, you can check out our blog on the top cryptocurrency terms to use as a resource.
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 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.
The original coin, Bitcoin was created in 2008 and has a loyal community of users and advocates. A sub-community, known as “Bitcoin Maximalists” do not buy altcoins, and only hold bitcoin. An altcoin is an “alternative coin” and are those launched after Bitcoin, such as Litecoin. While the top ten coins fluctuate, bitcoin has remained the most popular coin. 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, such as utility tokens, stablecoins, or staking tokens. A coin can also “hard fork” and split in two, creating a brand new coin. For example, Bitcoin Cash hard forked from the original Bitcoin protocol.
Explore popular cryptocurrencies:
Setting Up Your Cryptocurrency Wallet
Once you have a basic understanding of crypto, the first step to buying your own is setting up a wallet. 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. Follow the steps below to generate a new wallet.
Create a Wallet
1. Download the ShapeShift app or visit the ShapeShift Platform
2. Select Portis wallet
3. Enter your email and choose a password
- Ensure your password is somewhere safe and it cannot be lost or forgotten - there is no way to do a password reset. 4. Click “Register” - you just created a new wallet!
5. Record your private keys from the settings menu by clicking “Get Recovery Sentence”
- These 24 words are the only way to recover your Portis account in case you forget your password. Make a copy and store it in a safe place.
Now that you have a wallet set up, you need to add some crypto. You can either buy BTC or ETH with your debit card or send yourself crypto from another wallet.
More Insight on Cryptocurrency Storage
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.
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 recommended for advanced users.
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, there have been many hacks on exchanges resulting in lost crypto funds. A wallet that is controlled by an exchange comes with the risk of that exchange being hacked, unexpectedly shutting down, or being a scam.
Luckily, 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 Portis wallet is a self-custody solution, meaning you’re the only one that has control over your crypto. You can then use a web-based solution, like the ShapeShift Platform to buy Bitcoin and Ethereum, trade between different cryptocurrencies, 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 Crypto Exchanges
First things first, you need to get some crypto. You can use a debit card to buy BTC or ETH in a matter of seconds and without an account on the ShapeShift Platform. You can also purchase crypto through your bank account. You will need to verify your account and purchases can take up to five business days to arrive in your account, but the fees are a little lower. You can also find other fiat onramps that work with a credit card or that allow you to set up recurring buys, just make sure to check the fees.
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 Portis 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
* If you are logged in with a verified ShapeShift account you can trade without commissions or spread.
5. That’s it - your new will be sent to your wallet shortly
A service offering one-to-one, noncustodial trades is typically called a market maker, meaning they supply the liquidity and you are trading directly with them. This is beneficial because it gives you access to top-tier liquidity from multiple sources and you never have to worry about thin order books. Learn more about how our trading works here.
For traders interested in more specific tools like limit and market orders, a larger 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.
Regardless of which type of trading engine you use, just remember to never invest more than you’re willing to lose. Check out our blog with more information on trading strategies.
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.
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.
- 6 Strategies for Trading Crypto Assets
- The 5 Best Bitcoin Documentaries for Cryptocurrency Enthusiasts
- The 10 Best Crypto Podcasts
- 9 Best Books for Crypto Beginners
- 7 TED Talks to Learn About Bitcoin and Crypto
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. Get started today and earn 100 FOX Tokens or explore more crypto resources in the ShapeShift Blog Library.
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.