What is Bitcoin and How to Trade Cryptocurrencies
“What is Bitcoin?” is probably one of the most commonly asked questions on the internet, especially in recent months with the value of Bitcoin skyrocketing. The question is easy to answer, but it also opens the door to so much readily available information that can seem overwhelming for someone new to cryptocurrency.
In essence, Bitcoins are a form of currency that you cannot see or touch. They exist as a digital payment system and were the first decentralized form of currency in the world. This is an accolade in itself, but the benefits of such a currency don’t end there.
The BTC to CDN value, as of November 2017, sits at 12,439.86 Canadian Dollars. That means that the value of 1 BTC to CDN is enough to buy you a vehicle, or a luxury holiday to escape the winter in Canada. This can seem like a hard concept to grasp for some people, but in effect, the money you hold in your wallet has less value than the money you own on your computer screen.
However, there’s more to Bitcoin than meets the eye. You can trade and invest in it, you can spend it, or you can mine it using a graphics processing unit and software. Rather than overwhelm beginners, in this article, we’ll look at the straightforward approach to BTC to CAD cryptocurrency trading. Once you get started, you’ll find it hard to stop!
What do you need to begin trading?
If you believe you’re ready to hit the ground running and get your taste of the cryptocurrency action, you’ll need to do a couple of things first. Firstly, you need to set up a cryptocurrency wallet. You will then need to find a cryptocurrency exchange that ticks all the boxes for security, low fees and ease of use. It also helps if it’s mobile-friendly so that you can trade on the go.
Before you dive right in, it’s also important to consider choosing a cryptocurrency exchange that isn’t part of a regular stock exchange. We recommend the likes of CoinSquare or Coinbase, or even GDAX. All are valid options and have similar mechanics to the likes of those used on Wall Street.
You then should decide whether you wish to trade cryptocurrency stocks, or cryptocurrency itself. By trading in shares rather than cryptocurrencies, you’re avoiding having to deal with the currency directly, and it’s also a much faster process. However, Bitcoins are cheaper than trading in stocks which can make it a far more lucrative experience. Your decision can ultimately be based on your knowledge base. Do you know enough to consider trading shares? Or would you prefer to stick with the cryptocurrency itself?
If you’re just looking for a fast, secure trading system that enables you to be involved in this modern-day phenomenon, we recommend heading to Coinbase. It’s easy to set up an account and a wallet, and you can then trade in Bitcoin, Litecoin, and Ethereum. However, there are several other exchanges to choose from as well, such as Kraken and Bittrex.
Stocks, shares, and any investments are all risks, but trading in cryptocurrency is even riskier. It’s a volatile investment that can see you making thousands in a day, before losing thousands the next. There’s no way of avoiding the risks, but you can lessen them by choosing to invest in the more well-known cryptocurrencies. There are over 1200 cryptocurrencies to invest in, but Bitcoin, Ethereum, and Litecoin are the less volatile of all options.
The process of learning how to start trading cryptocurrencies differs for each exchange, but we’ve included some base information below. This might change, depending on your exchange of choice.
- Sign up to your preferred exchange.
- Create a digital wallet.
- Connect a payment method such as your bank account, a credit card or a debit card. This helps you to exchange your currency in and out of Canadian Dollars.
- Buy your cryptocurrency of choice, such as Bitcoin, Litecoin or Ethereum.
- When the price is right – sell your cryptocurrency and trade it back into CAD.
- Take note of all your trades. You will need this for tax purposes.
Hints and tips
- Even if a debit or credit card has always been a more convenient payment method for you, many people choose to use a bank account. This is because the fees are far lower. The process may take longer, but it’s worth it when you consider the money you can save on fees.
- Choose to trade in higher amounts as you get more confident with the system. Fees will start becoming lower.
- Ensure you’re safe online. Only use secure exchanges, and set up 2-factor authentication so that a code is sent to your mobile phone when you try to log in.
- Opt for mobile-friendly exchanges. This makes trading so much easier when you spend more time on your smartphone than your home PC.
- Don’t get too complacent. Remember, you won’t always be “onto a winner.” The BTC to CAD rate can fluctuate on any given day, so have a plan B.
Not everyone will want to begin trading cryptocurrencies, but for those who do, the payoff can be enormous. Do your research, find an exchange that works for you, and become a part of one of the most astronomical modern-day phenomenon this world has ever seen.