Bitcoin has been in the news in recent months for the wrong reasons.
The world's biggest digital currency that gained a lot of popularity over the years mainly because of its rapid growth has found it hard to continue the same trend. In April 2021, Bitcoin registered a peak value of USD $65,000 but has since cut by almost half.
Nevertheless, this digital currency is still far more valuable than it was a few years ago. It continues to attract new investors who are hopeful that the trend will soon change for the best. As a ripple effect, more crypto exchanges are also coming in to fulfill the world's growing demands.
If you're interested in trading, you can visit bestcryptoexchangeaustralia.com.au to compare some of the best crypto exchanges in Australia. But first, there are some things you'll need to keep in mind as a beginner before investing. Read on to learn more!
What to consider as a beginner
To avoid getting caught up in the hype, you first need to think why you're investing in cryptocurrency. Everyone has an investment goal, and you should too!1
Also, make sure you understand how cryptocurrency works before investing your hard-earned money. Many people fail because they're too eager or excited to make their first dollar from trading cryptocurrency and forget all the fundamentals.
Finally, know where and how to trade. This is crucial, especially now that the market is filled with scam platforms on top of legitimate ones.
Are you interested in learning more?
Below is a short guide to help you get started on investing in cryptocurrency on an exchange:
Tip 1: Pick an exchange within your region
One of the most significant issues about exchanges is that some investors, especially beginners, cannot validate their business addresses.
If you can't find the company's address, then that should be a red flag.2
However, it's difficult to know whether the location indicated is valid or not, if you're trying to register from a different country or state.
As such, experts recommend that you find a crypto exchange that's located in your country or a location where you can easily confirm its existence. For one, this will give you peace of mind, knowing the exchange you're signing up for has the needed documentation to operate.
Another advantage is, it gives you a good idea of where to start whenever you have complaints regarding the company.
For instance, if you get hacked, you might not know where to report your case because you're unsure of the jurisdiction within which the exchange falls. However, filing a lawsuit or complaint is made easier when you know the company's physical location.
Tip 2: Consider the security levels
The most critical factor in modern financial world is cyber-security.
A crypto exchange with a less secure network puts your investments at risk, and that's what hackers usually target. Other than the location, one thing you should also consider when looking for a crypto exchange is the security protocols put in place to safeguard your data and, most importantly, your coins.
It might be difficult to judge an exchange's overall security at first glance, but some pointers should give you a clue on the same. For instance, does the company have a two-factor authentication system when accessing your account?
This is an extra layer of security that's necessary in this day and age, especially in financial institutions. When this or any other related security protocol isn't available, that should be reason enough for you to find another crypto exchange.
Another red flag you should look out for is the use of hypertext transfer protocol (HTTP). Today, any organization serious about data security, especially their clients' data, should be willing to invest in HTTP's more secure iteration, hypertext transfer protocol secure (HTTPS). The latter is more secure since it encrypts standard HTTP requests before sending them to the desired destination. This makes it difficult for hackers to crack the website's security.
Finally, you won't be wrong to go through the company's history. Check our reports on the most common cryptocurrency security threats in 2020 as they were faced by the exchanges and see how the platforms dealt with them.
If there's anything unclear, be sure to ask relevant authorities or anyone who's dealt with the exchange, before signing up and starting your crypto portfolio.
Tip 3: Transactions speed
How long will you wait before the cryptocurrency coins are credited to your account?
This is something that every crypto exchange should be ready to communicate to its customers. In fact, the user manual should have all the necessary information regarding the same.3
So what's the average transaction speed? This may vary from one exchange to another and depend on the size of transactions you're making. Generally, it should take anywhere between a few hours to a day. In case of any delays, the company is obligated to inform you beforehand.
Speaking of transactions and delays, it's imperative that you ask about the pricing. Some crypto exchanges charge more than what you'd paid earlier because the market keeps changing. Others, however, prefer to stick to the initial price until the end of the transaction. To avoid any inconveniences and frustrations, make sure the exchange has cleared up any related issues before committing to any contract.
Tip 4: Transparency is paramount
Due to the rising security risks, most crypto exchanges store their tokens offline to prevent hacking.
As a trader, you have the right to be informed about the exchange's cold storage location. Any exchange that's not ready to provide the necessary information, including the addresses of this cold storage, should be scrapped off your list of potential candidates.
Such lack of transparency is a red flag and one that you should take seriously to avoid regrets in the future.
With the growing popularity of cryptocurrency, there has been a significant increase in the number of exchanges.
As such, distinguishing between a genuine and a scam platform can be difficult for any prospective trader, especially for newbies.
As a first-time crypto trader, before signing up to any platform, you should consider the location, transaction speeds, security, and transparency levels. By following the tips in this post, you'll make your cryptocurrency journey a lot easier for you.
Good luck and happy hunting!
"How To Buy Cryptocurrency", Source: https://www.forbes.com/advisor/investing/how-to-buy-cryptocurrency/ ↩
"Don't Buy Your Bitcoin From A Place That Could Disappear Overnight", Source: https://www.cnbc.com/2018/03/21/how-to-pick-the-best-cryptocurrency-exchange.html ↩
"Best Crypto Exchanges", Source: https://www.investopedia.com/best-crypto-exchanges-071855. ↩