Last Updated on February 19, 2021
We know that you’re totally over-the-moon-and-beyond excited about wanting to dip your feet in the pool of digital currencies. But before you throw it “all-in”, here’s what experts at swyftx.com.au have to say about vital information regarding what to do in trading cryptocurrencies.
And by the way, here’s an initial bonus: DON’T throw it all in. Take a look at these 3 steps.
3 Crucial Steps In Understanding Trading Cryptocurrency
1. Automatic Swap
We’ve listed down steps in signing up for a cryptocurrency exchange and creating a crypto-wallet on separate posts. Here, we will talk about the actual what-to-do to trade. The first step is to know about the Automatic Swap.
Also referred to as a peer-to-peer exchange via what’s known as “smart” contract technology, it can aid traders in swapping 2 different types or “brands” of cryptocurrencies directly from your personal crypto-wallet.
In other words, you, as an individual crypto-coin and wallet owner, can commence the trade with one or more individual traders, through automatic swaps. And all on your own.
As long as you add-in extra security measures for every automatic swap you make (i.e. 2-step verification), you can join these cross-chain swaps even if you don’t personally know those whom you are to trade with.
2. Cold Versus Hot Storage
These two opposing yet directly paralleled terms have to do with what medium your wallet is connected to. “Hot storage” refers to wallets that are linked to the mother-Internet. On the other hand, “cold storage” or a “hardware wallet” is exactly the opposite— wallets that are accessible without being connected to the web.
Each one has its pros and cons, and the decision will be up to you with regards to which type you will utilize from here on out.
Hot storages are easily accessible through any device, as long as you are connected to the internet. Alternately, you will have to take extra precautions to secure your hot wallet and guard against hackers.
Cold storage or a hardware wallet is a physical device (they are available in USB-style) where ledgers are kept and safeguarded. You can carry it around with you because they are super handy.
They are generally “new” so you will need to trust the company/manufacturer in safeguarding its contents via their design framework. Also, ensure that you store it in a safe place to keep it from being easily stolen and/or misplaced.
3. Private Keys And Public Address
Your cryptocurrency wallet saves your personal private key and public address, both of which serve as gateways for sending, receiving, and storing crypto-coins.
Private keys are a form of cryptography that allows you to send crypto-coins. They are highly sophisticated because they deal with the protection of your digi-wallet against potential threats of hacking, theft, and other modes of unauthorized wallet-access.
Your public address is what other traders will use to send money to your wallet.
Even after other traders have sent you a sum through said public address, you, being the owner of the wallet, will still need to input your personal private key in order to withdraw and/or transfer the same.
Private keys are for your eyes and your eyes alone, whereas your public address is the ONLY information you should give other traders.