Trading Bitcoin for Dummies

Short beginners guide to Bitcoin trading.

Trading Bitcoin for Dummies

Bitcoin – the name we see every day on the news lately. The craze that’s taking over the internet and the world itself, changing how we sense old concepts like currency, trading, economy, and giving them new form and meaning. Bitcoin is challenging the very understanding we have of them, how they work, and, ultimately, what they are. With how important they are for economic development today, it’s not odd to see more people interested in them now than in past years. So, let’s dive in and learn how trading Bitcoin works.

There are currently two main ways of earning Bitcoin: by mining and by regular trade.

Mining consists on lending a computer’s processing power to register Bitcoin transactions, and in return, you get freshly generated Bitcoins. This process is also how the currency itself produces, what brings new coins into existence.

However, mining is a very tasking and expensive approach. The electric costs are too high, and since you’ll be spending so much money on electricity and equipment (namely, miners, the computers made specifically for this task), it’s not a very profitable way of getting Bitcoins. So, unless you have enough money to invest and space where to keep your miners, it’s not recommendable.

This leaves us with trading. Trading is just the exchange of currencies, in Bitcoin exchanges usually it’s fiat currencies (USD, EUR, Yuan, etc.) that you give in return for tokens. Mostly, it’s just buying Bitcoins, and since you can go little by little, you can end up making a lot in the long run by just investing a percentage of your leftover money, especially if you stay vigilant for price swings and do so when they’re low.

So, let’s evaluate how you can start trading Bitcoin

Acquire an e-wallet

E-wallets have two main types: Seedless wallets and seed wallets.

Seedless wallets are the easiest to use but offer less safety. They act just like banks: you open up an account and then you’re allowed to access it and manage your cryptocurrencies. The problem is that if the bank suffers any loss, every user will also experience it. A great starting one is Coinbase.

Seed wallets (like Mycellium) are way more secure as they work by giving you a key which acts like an address where Bitcoins go to. You give it to whoever wants to send you some. If you lose the key, the money’s lost.

Enter an Exchange

Once you have your wallet, all you have to do is find a Bitcoin exchange and start trading Bitcoins. You can choose international exchanges (like Bitstamp or Kraken) or local ones.

Bitcoin exchanges are relatively easy to understand. You sign in on the website, pick a price limit, and then the site itself will look for the best offer or the one that matches your price. Once done, it’s all about setting up the transactions with the other person, since Bitcoin operates peer-to-peer, meaning the only ones involved in the operation are the seller and the buyer.

In case you want to sell Bitcoin, you just need to post it on the same exchange and list a price for them, then wait for offers.

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