Brought to you by the Liquid team to help you make sense of crypto.
So you've caught the crypto wave. You know the basics of cryptocurrency and blockchain. But what’s next?
There are so many options.
We’re here to help you through the next steps of your journey.
In this guide, we'll walk you through:
- How to buy cryptocurrency
- What are popular on-ramp platforms for crypto?
- What is a cryptocurrency exchange?
- Which crypto exchange should you use?
- How to buy Bitcoin
- How do I know what cryptocurrency to invest in?
- How to choose a crypto exchange you can trust
- How to keep your crypto funds safe
- How to trade cryptocurrency
- What influences prices in the crypto market?
- What crypto tools should I use?
- Where can I get news and information about crypto?
- What are the key features of the Liquid exchange?
How to buy cryptocurrency
The first thing you need to get started in crypto is a fiat on-ramp. This is a platform that lets you use fiat currency to buy cryptocurrency.
Fiat currency: Legal tender backed by the government that issued it. Money, in other words, like US dollars or British pounds. In this article we talk about fiat currencies and cryptocurrencies.
There are simple on-ramps, like Coinbase. These are places where you can deposit your fiat and simply choose how much Bitcoin or another cryptocurrency you want to buy.
They're like crypto exchanges, but simplified, and they often come in mobile app form.
Simple on-ramps are straightforward enough, but they tend to have a more limited selection of assets compared to a full exchange.
Altcoin: Any cryptocurrency token or coin that isn't Bitcoin.
What traders often have to do is buy Bitcoin or Ethereum (the two most popular cryptocurrencies) from an on-ramp and then move those funds to an exchange to trade for a different crypto, just to get the coins you actually want.
Altcoins are most commonly paired against Bitcoin or Ethereum.
Some platforms, like Liquid, offer the best of both worlds, with simple on-ramp features combined with typical crypto exchange charts and tools.
Liquid is a convenient on ramp for fiat currencies like USD, JPY, SGD, EUR and AUD.
Liquid bridges the gap between traditional exchanges and simple on-ramps by adding features for quickly buying and selling, as well as trading.
At first the interface can look daunting, but once you know your way around, you'll get the hang of it in no time.
What is a cryptocurrency exchange?
Let's look a little deeper at crypto exchanges and what you can do on them.
A crypto exchange is a place to buy and sell the crypto you want and to manage your portfolio.
Some exchanges (like Liquid) support fiat, but most don't – and if they do, it's usually only a very limited selection.
Regardless, once you have some Bitcoin or Ethereum, the crypto exchange is your oyster.
You can choose what you want to buy and how much you want to pay – and if there are sufficient orders at your price, your order should get filled.
Bear in mind though: the price of cryptocurrency tends to fluctuate quickly. But this can work to your advantage (more on that later).
What crypto exchange is going to be right for you? What are the key differentiators?
Supported currencies, interface and fees are obvious things to look at, but you also need to think about security.
Our exchange, which we've mentioned previously, is called Liquid.
Liquid is a fiat-crypto and crypto-crypto exchange with a heavy focus on security and user experience.
We store 100% of customer assets in cold wallets – significantly safer than hot wallets.
Cold wallet and hot wallet: A cold wallet stores digital assets offline, while a hot wallet is connected to the Internet. Cold wallets are safest because they are much more difficult to hack. Most hacks of crypto exchanges and losses of funds have come about because of use of hot wallets.
But of course, we're not the only exchange around. Here are a few others you may come across.
Coinbase Pro is the exchange part of Coinbase. Coinbase Pro is a fiat-crypto exchange with a tiered trading fee structure, meaning the more you trade, the less fees you pay. Coinbase Pro is aimed at professional traders.
Gemini is a fiat-crypto exchange. Gemini stores the majority of funds in cold storage and also has a tiered trading fee structure.
How to buy Bitcoin
The process of buying your first Bitcoin is simple enough.
Note that when you're buying Bitcoin, you don't have to buy a whole Bitcoin. The "satoshi" (named after the creator of Bitcoin, Satoshi Nakamoto) is the smallest unit of a Bitcoin, worth 0.00000001 BTC.
So you could buy half a Bitcoin, a quarter of a Bitcoin or whatever you want above the minimum order amount.
The process boils down to this:
- Deposit fiat currency.
- Exchange it for Bitcoin.
It’s as simple as that.
How do I know what cryptocurrency to invest in?
Bitcoin is only the beginning, the gateway cryptocurrency.
There are hundreds of other assets to choose from – and you'll generally need to use your Bitcoin (or Ethereum) to buy them.
What cryptocurrency should I invest in?
This is a tricky question to answer. It’s like asking a stock trader which stock is going to make money.
No-one knows which cryptocurrency is going to yield the best returns, but you can put yourself in a good position by picking cryptocurrencies that are more likely to have a bright future.
If you buy just one cryptocurrency and the price drops heavily, you’ve lost a lot of your initial investment.
If, however, you buy a small selection of quality cryptocurrencies, a price decrease of one crypto won't affect your investment nearly as much.
This is a way to manage your risk.
Look at fundamentals
Work on your fundamental analysis skills.
Research projects that you truly believe in for the long term.
When you fundamentally analyze a project, you are looking at the essence of what makes a project worthwhile.
At a base level tokenomics covers a cryptocurrency's token metrics, like total supply and how tokens are distributed.
Going deeper, tokenomics looks at:
- Purpose: what does the token achieve?
- Functionality: how does it achieve it?
- Utilization: is it actively being used?
- Distribution: how is the token distributed?
Understanding tokenomics can go a long way to helping you assess the merits of a given project.
Value use cases
Some crypto projects are successfully targeting real markets, but their tokens have no real value in their business plan, and as such, investment may not be worthwhile.
Look for projects that have practical applications of blockchain technology and are being used in the real world, not just in a whitepaper.
Make smart buys
Cost averaging is the process of buying an asset over time to minimize the effects of price movement.
As we know, cryptocurrency is volatile at the best of times.
If you are going to invest USD1000 in Bitcoin, you could buy all at one time at USD4000. If the price then fell, you may regret your purchase.
With dollar cost averaging, you would put aside your USD1000 and buy over a set time period.
If you buy USD1000 of Bitcoin over 10 days, buying USD100 worth a day, price movement will not affect your buy in as much.
Cost averaging is a highly regarded, battle tested investment technique.
Take your time.
FOMO (fear of missing out) is a common phenomenon that plagues new investors – and not just in crypto.
Buying in when prices have shot up can be a fast track to losing money.
How to choose a crypto exchange you can trust
Before you dive in head first, let's think about fund security.
When you buy cryptocurrency on an exchange, that exchange looks after your assets.
This isn’t necessarily a bad thing, but you must understand how an exchange works to ensure that you trust its ability to be the guardian of your funds.
The cryptocurrency movement is built on the belief that you should control your funds, but there will often be times when you may need to use an exchange.
For example, if you need to:
- Buy crypto with fiat
- Sell your crypto for fiat and cash out
- Use crypto to buy other crypto
- Buy and sell crypto (and hopefully profit)
- Trade on margin
- Take part in token sales
While crypto purists may argue that exchanges shouldn't hold all the power, there's a need for balance that will come with managing a crypto portfolio.
But who can you trust?
Do a quick Google search and you will see that there are dozens of crypto exchanges out there, all different, run by various people, with all manner of features and assets.
There's a huge divide between trustworthy exchanges... and the others.
When you store your funds on an exchange, you need to know that they follow the best practices to keep your assets safe.
Cold wallet storage is a must. Beyond this, look for other telltale signs that an exchange is legitimate and has your best interests at heart.
What makes an exchange trustworthy? Generally you want an exchange that is:
There is usually nothing wrong with keeping your crypto on an exchange if the exchange is secure and can be trusted.
Transparency is key. Does the exchange clearly show who their senior members of staff are, and where their offices are? If they do, that can add some additional points, but it by no means solidifies an exchange as trustworthy on its own.
If a cryptocurrency exchange is regulated, that’s a great start.
Being established and regulated in G7 countries such as Japan, United States or the UK is doubly great.
This means that the exchange is actively working with regulatory bodies to ensure customer funds and data are safe.
Liquid is regulated by the Japan Financial Services Agency.
What measures has your exchange taken to keep your funds safe? Does it use a cold wallet? Is 2FA mandatory? Is your account protected from being accessed by hackers?
How to keep your crypto funds safe
Don't give hackers a chance to get their hands on your funds.
- When did you last change your password?
- Are you using two-factor authentication everywhere you can?
If your funds are stolen, you won't get them back.
Bulletproof your passwords. Don’t use the same password for everything – and make sure it is appropriately complex.
If needed, use a password manager so you can have different and complex passwords for everything, especially different crypto platforms.
Be aware of phishing.
Phishing: An attempt to lure a user into providing sensitive information like passwords, private keys, seeds and more.
Websites exist that mimic popular crypto websites, but are actually well-made fakes that will phish for your login details.
Make sure you are always logging into the legitimate website.
And most of all:
NEVER GIVE ANYONE OR ANY WEBSITE YOUR PRIVATE KEYS.
If you are going to store your crypto off an exchange, make sure you are using a proper crypto wallet.
Look into using a hardware wallet or a paper wallet.
Hardware wallet: A secure external device that stores your private keys, allowing you to keep your funds offline.
Paper wallet: Usually made out of paper, a paper wallet is a public and private key printed together.
We've talked a lot about how to set yourself up for success, but what you're really itching to know is how you can make money with cryptocurrency.
Cryptocurrency prices are impressively volatile, which can make trading profitable.
The motto "Buy low, sell high" should serve you well.
You most likely aren't buying crypto to keep it forever. You want your portfolio and profits to grow.
This is where trading comes in.
Naturally, the first thing you need to begin trading crypto is an exchange to trade on.
Pick a worthy exchange and start to learn how the user interface works.
Types of cryptocurrency trading
There are two main types of trading in crypto:
- Spot trading
- Margin trading
Spot trading is the most common form of trading. It's where you trade one asset for another, for example, trading Bitcoin for Ether.
For beginners, you're going to want to start with spot trading.
It's simple and safe.
Margin trading is more complex, and is not available on all crypto exchanges (though we have it here on Liquid).
Margin trading is an advanced form of trading that involves borrowing funds to increase the amount you are trading, where your trade banks on the price either going up or down.
Borrowing the funds allows you to generate higher potential profits, but it's risky if you don't know what you're doing.
When you are margin trading you pick from two options: long or Short.
Long = you think the price will rise, and if it does, you profit.
Short = you think the price will drop, and if it does... profit!
Every trader should have a solid strategy and know how to manage risk.
90% of traders lose money because most people trade with no risk management whatsoever.
If you don’t employ risk management techniques in your trading strategy, there is a good chance that you will end up losing money.
Beyond this, trading strategy can get very deep.
Market trends can affect price and market cycles also have an impact.
For example, we are currently in a bear market.
Bear market: Sentiment and price action are bearish, with more lows than highs.
Bull market: Sentiment is bullish, prices are up across the board, and more people are making profits.
Understanding market cycles is useful, but to become a competent trader, you'll need to get the hang of basic technical analysis.
What is technical analysis?
Technical analysis is analysis of an asset based on trading activity used to make informed decisions about when to buy and sell to maximize profits.
But don't worry, as you don’t have to do the math: the charts do it for you.
Let's start with some basics:
Support and resistance levels are terms you will come across frequently.
Support level: A price where the buying pressure is high, which acts to support the price from falling.
Resistance level: The opposite. This is where there is strong selling pressure at a certain price, preventing the price from rising above that price level.
Trading indicators are important here too. These are statistical graphs built into trading charts that can help you assess past performance so you can judge what might be coming.
Combining indicators allows you to make an educated judgment call.
Some well-known indicators you may have heard of include:
- Relative Strength Index (RSI)
- Simple Moving Average (SMA)
- Moving Average Convergence Divergence (MACD)
- Trading volume
Also be on the lookout for chart patterns. These can give price signals, which are extremely valuable to traders.
Fundamental analysis is another way to look at the projects you are trading to figure out which way the price is going to move. It is the evaluation of an asset's intrinsic value.
There are many things that can impact a project's price action.
If you are interested in investing in a project, keep an eye out for updates and get involved in the community to help you judge if it's worth your money.
Frequent project updates and positive news will normally act as a catalyst to keep price moving in the right direction.
Other aspects of a crypto project to look at are:
- Market cap
- Market size
Get your fundamental analysis on point so you are looking at your trades from both angles.
What influences prices in the crypto market?
Prices are driven by supply and demand.
Generally, if more people want to buy an asset than sell, the price will go up. Of course, the inverse is also true.
While supply and demand drive the price, there are a number of external factors to consider.
Sometimes prices can move on a piece of positive news or if an influential person or persons starts to talk about a project in a positive light. People often buy impulsively.
Often though, prices will move based on charts and patterns. These aren't an exact science, but you'd be surprised to see how often they are correct.
There's an element of market psychology at play. Trading analysis is largely the study of charts based on trading psychology. Traders buy or sell getting the same (or similar) signals from the same charts.
Aside from charts, fundamentals play a role.
And never underestimate the power of good (or bad) news to move prices.
What crypto tools should I use?
Now that you are getting deep into the world of crypto, you could do probably do with a few tools to make your life easier.
Let’s start with security.
Browser bookmarks are also your friends. Bookmark all crypto sites you normally use so you can go directly there, and reduce the chance of being phished.
If you’re an investor, you are going to want to keep track of your investment portfolio in one place. There are a few good platforms and apps that are great for this:
Aspiring traders should take a look at tradingview. You can view detailed charts, draw on them to your heart's content, check indicators and follow pro traders. It’s a great place to learn.
As always, do your own research (DYOR).
Following cryptocurrency related news is a good way to stay up to date, especially as news can act as market signals as well.
Some popular crypto news sites include:
Crypto blogs are also often an excellent source of knowledge for all things crypto.
There are bubbling crypto communities in a lot of other places.
Lots of projects like to use Telegram to talk to engage with their communities, so this is a popular pick.
Successful traders and investors have followed suit and created their own telegram groups, some of which are private, to discuss crypto, trading, and more.
Similarly, there are many free and paid crypto Discord servers that are filled with excellent information.
Unfortunately, you often have to rifle through a lot of duds to get the good stuff with free groups.
Twitter is also a valuable resource. A lot of successful traders hang out on Twitter, offering tips and advice. It’s a great place to find new projects to look into.
Reddit is another popular place for crypto. There are bigger subreddits, such as /r/Cryptocurrency, as well as smaller ones. Most projects will have their own subreddits. You’ll have to dig around to find the ones that suit you.
So now that you know about crypto and you've got the urge to dive in, you've got a decision to make. Where are you going to do your trading?
We would love to have you here on Liquid. We're a safe, secure, regulated company and we have a great platform ideal for newcomers and pros alike.
What are the key features of the Liquid exchange?
We’ve been through a lot in this guide. The main thing that should stand out is that you need to be careful in crypto.
Crypto is a new thing. There are exploits, scammers, hackers, and there isn’t enough regulation at the moment.
To stay safe, you have to pick an exchange you have confidence in.
Liquid is designed to fit every kind of user. Learning to trade cryptocurrency couldn’t be easier on Liquid.
Safety and security are our top priority.
We store all customer assets in 100% cold storage, which means your funds are stored offline.
We have a protocol in place that protects your account at all times. It’s called Iron Shield, and it ensures that when aspects of your account are changed it goes into cooldown, so hackers can’t access your assets.
One of our hard stances is that regulation in cryptocurrency is important.
We believe that working with regulators is imperative for us now, and for future growth.
Liquid is licensed by the Japan Financial Services Agency – and we are audited by Deloitte.
Of course, regulation and security are not the only things that make a great crypto exchange.
We have a number of fiat currencies listed, and lots of cryptos to choose from.
The user experience on Liquid was built with every customer in mind. While the interface is sleek and simple, perfect for beginners, it gives access to powerful tools that pro traders need.
Margin trading is huge in crypto, and you can trade on margin on Liquid with up to 25x leverage.
If you aren’t much of a trader, you can lend your crypto to margin traders and earn yourself interest on your holdings.
Finally, Liquid means liquidity. Our mission is to provide the most liquid cryptocurrency markets.
Liquidity: The depth of a market, and how much someone can buy or sell without affecting the price. Good liquidity is required for traders and investors.
Our technology, known as the World Book, matches orders between order books, massively increasing liquidity.
Overall, Liquid is a safe, secure and regulated cryptocurrency platform with all features you need to get started in crypto.
Liquid could be your next step into crypto discovery.
WRITTEN BYAlex Aves
"Baby shark" of the Liquid marketing team.