A Beginner’s Guide to Crypto Trading is 4 part guide covering all you need to know about crypto trading. In this first part, we introduce the reader to the new concept of crypto trading, and cover some basic definitions.
When a new market shows up, the good trader will seek opportunity and potential to get the best out of it. In fact, new markets feature possibilities that no other markets can meet, due to its own uncharted behaviour. Foremost, if that market is entirely based on digital ways and powered by a disruptive technology, the interest in it can only grow as more traders are attracted to its traits and early revenues.
That is what is happening with the cryptocurrency market, an always growing market based on a trustworthy technology like no other, the blockchain, and featuring a whole range of different currencies to trade with, depending entirely on the trader’s goals. Actually, it has been even said that there is a different cryptocurrency for every trader.
From long-term investment to quick and fast revenue trading, the crypto-market offers a whole new world for those who are willing to invest in the future of the currency itself. A breakthrough market where being literate and always-online are two major perks.
Understanding how it works and its own set-up will make a big difference when trading in it. That is why we have decided to write a guide for those who are interested in leaping onto this all-out crypto-world.
The guide highlights all essential aspects of the cryptocurrencies, from its very own definition to throwing some tips about what to do once you have your first precious bitcoins. Following this guide will definitely help you building your starting-portfolio in the crypto-market without getting lost in it. In the first part of the guide, we cover the basic definitions of what is blockchain and cryptocurrencies.
1. Blockchain and cryptocurrencies
If we are to define cryptocurrencies, the easiest way to do so is the following:
“a cryptocurrency is basically money on software platforms.”
In many ways, crypto money works the same as the FIAT money, that is the beginning of it. You can buy and sell products with it, exchange it for other currency and even pay bills, just like normal money without the physical part of it. This might be the main use of a cryptocurrency, but not the only one so far.
But before getting too far, what it is probably the most interesting of it is how it is created and under what conditions. There must be sceptical and traders who don’t really trust this digital money, which is in fact only numbers on a digital wallet on the screen.
That is why it is important to keep in mind that the teams/companies that are behind these cryptocurrencies are not only creating a new form of currency, but a new software platform.
This platform is the blockchain. In fact, the blockchain is what makes this currency open, safe, accessible for everyone and worldwide-focused. A simple way of defining blockhain is provided by Blockchain Revolution author Don & Alex Tapscott:
The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.
Basically, a database, but not just quite.
With a blockchain database, the data can be backed up on potentially thousands of computers all over the world, for a much, much lower cost. The information in these databases is heavily encrypted and sometimes files are broken up into pieces, so even if one piece is exposed, it will not expose the entire file.
If the information on one server does become compromised by hackers, the other copies of the databases have to “agree” that the compromised data was a legitimate change to the data. If the other copies do not agree, then the change is rejected and it is changed back to match the others.
Most of the cryptocurrencies are powered by blockchain which makes all transactions secured and backed-up by an incorruptible coding behind them. There are no such thing as fake bitcoins in the crypto-market.
Part 4 can be found here.
Part 3 can be found here.
Part 2 can be found here.