Bitcoin and hundreds of other cryptocurrencies are a new form of digital money: they are global, independent of any particular government, and thus a great way to store your savings anonymously and safely. This way, you can also avoid your local currency inflation. But the cryptocurrencies have their downside too. Owning and exchanging Bitcoin and cryptocurrencies requires some skill – it is not as easy as managing good old paper money. The great news is that the Internet and technology are developing fast all over the world, so if you can find and read this article, then you are probably ready to learn about buying, selling, and managing cryptocurrencies. It is not much more complicated than, let’s say, managing your social profile or any other Internet-based account. So, let’s first learn some cryptocurrency basics and then talk about how to exchange Bitcoin and other crypto coins.
How to store Bitcoin and cryptocurrencies
There are two ways of storing your cryptocurrency: your personal crypto-wallet or your cryptocurrency exchange wallet. In the first case, your cryptocurrency is represented by two charsets: one of them is your wallet ADDRESS, and another one is your PRIVATE KEY. Your key is like a password to your wallet. With your key, you are independent of any website or provider, and you can access your cryptocurrency whenever you want, using any software or application you choose. When you want someone to send you cryptocurrency, you provide them with your cryptocurrency wallet address. When you want to use your cryptocurrency, you then need your private key to access your wallet and make any transactions with your crypto coins (like sending it to another address or selling it for your local currency).
The second way of storing Bitcoin and other cryptocurrencies (non-Bitcoin cryptos are called altcoins) is to open an account on one of many cryptocurrency exchanges. These are special websites that gather thousands of people wanting to buy and sell cryptocurrency and let them make deals with each other. Cryptocurrency exchanges provide you with a platform that allows people to trade cryptocurrency, and it functions similarly to many other online exchange platforms: someone states their price, and someone accepts it.
The beauty of using a cryptocurrency exchange for storing your digital coins is in its simplicity. When you open your account on a cryptocurrency exchange, you automatically get your free cryptocurrency wallets for all cryptocurrencies listed on that exchange. For example, when you open an account on the world’s largest cryptocurrency exchange called Binance, you automatically get your free wallets for hundreds of cryptocurrencies. All those wallets are valid immediately, and you can use them to store or exchange any cryptocurrency. This way is easier than managing your own crypto wallet and private key for every cryptocurrency. This option is recommended for most beginners because losing your private key means losing all your digital coins – let the exchange bear this risk for you! When your coins are on a crypto exchange, you access your Bitcoin and cryptocurrency wallets with only one password – the one you create when you register on the crypto exchange website. If you choose to verify your identity at Binance (by uploading a scanned copy of your photo ID), then losing your password will not be so bad because you can use your personal information to restore access.
How to buy your first cryptocurrency
Most crypto exchanges are built on similar principles. Let’s use the world’s largest cryptocurrency exchange Binance as an example. First, you need to open an account on their website. It is as easy as opening your account on any other website. You will need to confirm your email address, so type it in carefully. Make sure your password is kept safe. After you register on the Binance exchange, you will be offered a number of ways to buy your first Bitcoin or any other cryptocurrency. It can be done using your Visa/MasterCard, bank account, or any other payment method, depending on your location. As you may know, you can buy a fraction of Bitcoin or other cryptocurrencies. You don’t need to buy the whole Bitcoin, which currently costs more than 20 000 USD – you can only invest, let’s say, 200 dollars and buy 0.01 Bitcoin. The smallest amount of Bitcoin is 0.00000001 and is called one Satoshi.
After choosing your payment method, state the amount you want to invest, and follow the prompts. Binance may redirect you to one of their partner websites, which will allow buying your cryptocurrency with low commission. You will be informed about how much of a selected cryptocurrency you are going to get. After you transfer the money you owe, the cryptocurrency will be transferred to your Binance wallet. Some cryptocurrencies are transferred almost instantly, but others (like Bitcoin) take some time to appear on your wallet. It’s because the blockchain (the technical infrastructure behind the cryptocurrency) may be used by a large number of users at that moment, so your transaction will need to wait in a queue.
When you finally get your cryptocurrency and see it on your wallet, you can then do whatever you wish with your crypto coins or tokens (cryptocurrencies linked to the smart-contract infrastructure). If you want to send it to someone, you need to ask for their cryptocurrency wallet address. Please note that each crypto has it’s own address format, so make sure you send Bitcoins to a Bitcoin wallet, Ethereum tokens to an Ethereum wallet, etc. To send a cryptocurrency, you need to choose this option at your cryptocurrency wallet interface, then state the destination address and the amount you intend to transfer.
How to exchange your Bitcoin or altcoins
Let’s imagine you want to sell a certain amount of your cryptocurrency. For example, you may want to exchange it for another cryptocurrency or real money (like United States Dollars, Indian Rupees, Nigerian Naira, etc.). Many cryptocurrency exchanges only allow cryptocurrency to cryptocurrency trading, but Binance will enable you to exchange cryptocurrency into your local currency too.
Most crypto exchanges only allow you to trade cryptocurrencies via BTC (a short name for Bitcoin) and ETH (a short name for Ethereum) pairs. So if you want to convert cryptocurrency A into cryptocurrency B, you need to exchange A into BTC first and then exchange your BTC into B. But large cryptocurrency exchanges like Binance will allow you to directly convert between any cryptocurrencies via the Convent menu. Depending on the liquidity (popularity) of that particular cryptocurrency at that particular exchange, you may face a different percentage of commission. To save on this commission, you need to trade manually: exchange your crypto into BTC and then BTC into another crypto or real currency.
Now let’s learn how to exchange cryptocurrencies on Binance. When you want to exchange some cryptocurrency manually, you usually do it via the Markets section. The way you exchange cryptocurrencies is the same with every market pair. First, you need to select the market pair from the list; then, you will see the standard cryptocurrency trading platform opened (see the screenshot below).
In this example, we are trading BTC/USDT market pair. USDT is a short name for Tether – a special type of cryptocurrency that always costs around one United States Dollar. On the left side of the trading platform, you can see two columns with prices. The red prices correspond to the bids that are made by people who want to sell Bitcoin. In this example, the lowest bid is 22811.97 USDT per 1 BTC. The sellers are ready to sell 0.084993 BTC for 1938.85777 USDT. In case you buy this amount of BTC and want to buy more, then the next bid will apply. It means that you will buy 0.035045 BTC for 799.45810 USDT (as the bid is 22812.33 USDT for 1 BTC). The green prices represent buyer bids. As you can see, the best offer is 0.005000 BTC for 114.05580 USDT (the bid is 22811.16 USDT for 1 BTC). If someone who wants to sell Bitcoin accepts this bid, then the trade is completed and removed from the list. The next best offer would be at 22810.34 USDT, etc.
The diagram at the center of the screenshot shows how BTC/USDT price changed with time. You can modify this diagram by setting the time interval: 15 minutes, 1 hour, 1 day, etc. Under that diagram, you can find the interface for making bids. You can set your own bid, which will then be added to the list of existing bids (shown on the left side of the trading platform), or accept the existing bid by clicking any price in those columns and confirming the trade. To complete/confirm your deal, you need to state the price and the amount you want to buy or sell. In this example, we have around 585 USDT to trade with, and we make our bid to buy 0.025660 BTC at the price of 22800.22 USDT per 1 BTC. To submit our bid, we press the “Buy BTC” button. If the bid meets someone on the market (sometime later), then the trade will be finished, and the amount of BTC will be added to our Bitcoin wallet on Binance exchange (minus 0.1% commission that is deducted by Binance). Binance is not only the best overall, but one of the cheapest places to buy and trade cryptocurrency. So, if you want to start making money on cryptocurrency price movements, open your free account now while they are still accepting new clients from your country.