Bitcoin Trading for Beginners: A Comprehensive Guide
By TOI Staff April 28, 2023 Update on : April 28, 2023
The success stories of the millionaires that made tons of money with cryptocurrency trading have been inspiring people to trade Bitcoin. It has become an interesting and profitable side gig for many. Before we discuss bitcoin trading essentials and some useful tips, know that it’s the first cryptocurrency. Bitcoin is a highly volatile currency and carries a high risk.
Its value might fluctuate at extreme levels. That’s why it’s important to understand how the crypto market works and Bitcoin’s value fluctuates. In this post, we have discussed all you should know about Bitcoin trading, how to navigate the market safely, and the factors affecting Bitcoin price.
How Does Bitcoin Work?
Bitcoins are treated as digital assets that can be stored either in your encrypted digital wallet or crypto exchange. You can buy one or multiple coins, or just own a small percentage of the share of a coin. These are powered by blockchain, an open-source, transparent platform that captures each translation detail and gives users a clear picture of who owns which shares.
The wallets have public and private keys, which enable users to digitally sign Bitcoin and transfer the ownership of its shares from one user to another securely. Bitcoin mining is a process of verifying transactions to ensure that the user doesn’t buy or sell Bitcoins they don’t own or are not authorized to trade. The entire process is carried out securely on the crypto exchange.
As tempting as it may sound, Bitcoin is one of the risky investments. As a rule of thumb, investing a small part of your income in such volatile assets is a good decision, especially for beginners who are not familiar with technical and fundamental analysis. Bitcoin has great growth potential. With a large number of people investing in these coins, it implies that this cryptocurrency might witness a transformation soon.
How to Trade Bitcoin?
Now that you know what Bitcoin is and how investing in cryptocurrency comes with excellent growth potential, let’s take a look at the steps for trading Bitcoin.
Register with a Crypto Exchange: starting a Bitcoin trading profile is a quick and straightforward process. Select an exchange platform, such as CoinSwitch Kuber or CoinDCX, and fill in your personal information to register an account successfully. These platforms have a wide variety of cryptocurrencies, including Bitcoin.
Deposit Money: Once you have selected a Bitcoin exchange platform, the next step is to deposit money through wire transfer, credit/debit cards, and e-wallets. Once you have funded your wallet, you can choose from different cryptocurrencies and the quantity. Researching the market trends and the price fluctuations of Bitcoin before investing can help you mitigate the volatility risk.
Start Trading: Select the quantity of bitcoin you’d like to purchase and make a transaction. You can use automated bots at the crypto exchange for help. They will guide you throughout the process and also give you tips on making informed investment decisions.
Store Bitcoins: As mentioned earlier, you have two options for storing Bitcoin—a crypto exchange or a digital wallet. You can buy a wallet if you are planning to hold the coins for a long period. Alternatively, you can store them on the exchange. Wallets are also categorized into software and hardware wallets, each offering unique perks.
Factors Affecting Bitcoin’s Price
The supply and demand factors have a significant influence on Bitcoin’s price. There are a limited number of coins that are believed to be exhausted by 2041. Till then, the fluctuating demand and supply will directly impact Bitcoin’s price.
Apart from that, any major change in the Bitcoin community or the latest news regarding crypto can have a drastic impact on its prices. For now, Bitcoin is not managed or powered by a centralized authority. Once it legalizes in most countries and is accepted as a legitimate source of payment, it’s going to affect the prices of the currency.