How Does Cryptocurrency Work for Dummies

How Does Cryptocurrency Work for Dummies

Crypto assets are digital funds that have no physical form (you can’t touch and hold it) but perform the same functions as traditional money: you can buy goods and services; you can trade and invest.

How does cryptocurrency work? Let’s talk about it today. Crypto exists only in the digital space. Complex cryptography underlies digital assets and protects against hackers. One of the main differences between crypto and traditional money is decentralization, which means crypto does not depend on the government and banks. The supply of crypto assets has nothing to do with banks - the number of each crypto asset is encrypted in its algorithm and cannot be changed by anyone.

Because of independence and lack of control on the government’s part, crypto is exceptionally volatile. It is impossible to add coins (like governments do with traditional money) or to cut the supply artificially. This high crypto market volatility opens broad investment and trading opportunities.

Trading Cryptocurrency for Beginners

Trading crypto is an incredibly risky way to earn money. On the other hand, many people made a fortune from it. To succeed in crypto trading, you should:

  • understand the mechanism of the market work, trends, and what affects them;
  • pick a trading strategy and adhere to it;
  • not let emotions guide you;
  • be able to make quick decisions and act;
  • stay with a cool head.

The most popular strategies for trading crypto:

  • Scalping - when you open and close positions within a couple of minutes. This strategy is very dynamic and requires assistance in the form of automated programs.
  • Intraday trading - lasts 24 hours. It is crucial to open the positions and close them within one day. For that purpose, traders pick the best time of the day to buy low-price coins and sell them during the most active business hours.
  • Swing trading may last for a couple of weeks.
  • Buy and hold is probably the best strategy for crypto for beginners because it gives them enough time to think before making the next step.

The first step you need to take to start trading crypto is buying assets. Use, for example, the WhiteBIT exchange. It allows entering the market with cash and buying digital assets with fiat money:

  1. Register
  2. Pass verification
  3. Add your bank card
  4. Move funds to your account
  5. Go to the WhiteBIT converter and exchange fiat money for crypto.

To find a detailed step-by-step guide on how cryptocurrency works for beginners, visit the WhiteBIT blog.

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How Does Cryptocurrency Work for Dummies