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Education, For Beginner Traders, 101

Crypto for
Beginners:
How To Start
Crypto Trading
April 11, 2023 - 12 min read
Get equipped to make your first crypto trade
with this guide from our experts.

With crypto’s ever-changing market of new players

and currencies, crypto can be daunting. That’s why we
created this guide to cryptocurrency trading to help
beginners work their way from first trade to advanced
strategies so they can experience all of the benefits
crypto has to offer.

In this article, you’ll learn cryptocurrency basics, how

crypto trading works, and easy steps to create your
first crypto strategy.

The world of cryptocurrency may seem overwhelming

now, but by the end of this guide, you’ll be ready to
take that first leap into your crypto journey.

What is cryptocurrency?

At its most basic, cryptocurrency is a form of digital

money.

The concept of digital money shouldn’t be too foreign

— you’ve probably paid a bill online or transferred
funds from one bank account to another on your
phone, tablet, or laptop.

Using money as a medium of exchange to purchase

goods and services or settle bills is one of the
cornerstones of the cryptocurrency market. But, unlike
the paper bills you carry around, cryptocurrency only
exists online. It’s not a physically tangible asset.

That means you can’t go to an ATM and withdraw a

‘physical’ Polkadot token. You’d first have to convert
the Polkadot cryptocurrency into dollars before
withdrawing those dollars from your crypto exchange
or bank account.

Unlike regular currency where the bank intermediates

any transaction, cryptocurrency is decentralized. This
means it depends on a peer-to-peer network —
instead of a bank — for creating, exchanging, and
overseeing all crypto transactions.

A peer-to-peer network is, simply put, many different

computers or “nodes” that are set up to store and
share files related to cryptocurrency transactions. At
its best, decentralization makes cryptocurrency a
faster, cheaper, and more secure way to transfer
money.

Currently, there are over 21,000 different

cryptocurrencies. All of them are secured, or created,
by cryptographic technology. Complicated
mathematical formulas are used to secure each unit of
cryptocurrency so it cannot be copied.

This makes the double-spending phenomenon nearly

impossible.

The double-spending phenomenon refers to scenarios

where asset holders can spend the same asset twice.
The technology that prevents this is called a
blockchain.
Crypto basics: Terms to
know

Blockchain
A blockchain is a public digital database capable of
storing transaction records in a secure, irreversible,
and decentralized manner.

Think of a blockchain as a piece of paper everyone can

see that’s used to record transactions, such as
deposits, withdrawals, and trades.

In all, blockchain technology provides the benefits of

enhanced security, transparency, and instant
traceability to transactions. It also results in cost
efficiencies.

Coin/token
As we mentioned, a coin or token represents a record
of digital value stored on a given blockchain. Although
the terms are often used interchangeably, they are
technically different.

A digital asset is a coin if it has its own blockchain. For

instance, bitcoin and Ether are coins, mined from the
Bitcoin and Ethereum blockchains, respectively. A coin
acts as both a store of value as well as a medium of
exchange.

Digital assets built on existing blockchains are

considered “tokens”. For instance, UNISWAP is a
token built on the Ethereum blockchain that powers a
decentralized exchange.

To simplify things, coins and tokens are generally

referred to as “crypto.”

Most popular cryptocurrency

There are thousands of cryptocurrencies available

today with more coming online all the time.

However, some of the most popular cryptocurrencies

include:

Bitcoin
Ethereum
BNB
Solana
Cardano
Dogecoin
Avalanche
Polygon
Uniswap
ApeCoin

Bitcoin
Bitcoin was the first cryptocurrency, created back in
January of 2009. Its value has climbed steadily over
the years, and it is currently one of the most valuable
coins on the market.

Altcoin
An altcoin is any cryptocurrency that isn’t bitcoin. The
term can refer to anything from the second-most
popular coin, Ether (ETH), to any of the thousands of
cryptocurrencies that have appeared on the market in
recent years.

Stablecoin

A stablecoin with crypto ticker symbols

A stablecoin is a cryptocurrency that pegs its price to

the market value of an external asset. This external
asset could be a government-backed currency (like a
dollar), an exchange-traded commodity, or another
cryptocurrency.

Stablecoins have been thought to be less susceptible

to the volatility of the market, however, this is not
always the case.

Exchange
A cryptocurrency exchange is a digital marketplace
where users can buy, sell, and trade crypto.

Wallet
A crypto wallet allows users to store, access, and
manage their crypto funds. Wallets fall into two
categories: hot wallets and cold wallets.

Hot wallets are those that online cryptocurrency

exchanges offer to their customers and are connected
to the internet. Because they’re online, transacting
with a hot wallet is faster and often easier. However,
because of the internet connectivity, they can be
susceptible to hacks.
Cold wallets are those that store cryptocurrency
offline (e.g., on an external hard drive). These wallets
are typically disconnected from the internet and are,
therefore, slower and more cumbersome to transact
with. However, they are more secure.

Decentralized finance (DeFi)

Financial activities conducted without an intermediary
— such as a bank or government — are considered
decentralized finance. Examples of DeFi activities
include staking crypto and securing a loan backed by
crypto.

Crypto for beginners:

Mining versus buying

Person holding a phone and using a computer to learn

crypto for beginners

Mining is the process of verifying transactions and

adding new crypto to a blockchain. A miner is simply
the owner of a computer or “node.”

Miners are given the chance to solve very complicated

math problems by running a program on their
computers. The first one to solve each problem gets a
reward (new crypto).

Once it’s solved, the other miners who did not win
check the winning computer’s answer. If they all
agree, the new transaction can be added to the
blockchain.
These miners serve as the peer-to-peer network that
allows many blockchains to operate. Their consensus
(or agreement that the math problem was solved
correctly by the winning miner) is what underpins the
blockchain’s security.

When the first cryptocurrency came online more than

a decade ago, you could use your personal computer
to add transactions to the blockchain and create new
coins or tokens.

Though mining is the only way to bring new coins or

tokens to the market, the nature of its technology
means that once you create a cryptocurrency —
bitcoin, for example — every subsequent coin
becomes harder to mine.

To mine most of the world’s most popular

cryptocurrencies, you’d need an extremely powerful,
customized computer that might cost thousands or
even tens of thousands of dollars to build and operate.

Because of this, it has become prohibitively expensive

for most people in the crypto market to mine
cryptocurrencies themselves. Instead, the vast
majority of traders buy crypto using their local
currency on an exchange or trading platform.

In recent years, people have become aware of the

large amount of energy used in mining cryptocurrency
using the above-described techniques. New, less
consumptive validation methods are now being used
by many blockchains, including Ethereum.

One popular method is called Proof of Stake (PoS).

Instead of having multiple computers competing to
solve a very difficult math problem, Proof of Stake
requires validators to hold and stake tokens to earn
transaction fees.
Crypto for beginners: Why
trade crypto?

You might want to trade crypto for the same reason

you’d consider a host of different financial
opportunities: You believe that the value of the asset
will rise.

In cryptocurrency, when demand for a coin or token

increases, it’s possible its value will follow suit.

Why would demand for a coin or token increase?

There are several reasons specific to the various
currencies. For instance, perhaps a particular
cryptocurrency provides a better buying and selling
experience. If word of its benefits spreads, then
people may flock to that crypto.

As many cryptocurrencies — including bitcoin — have

a fixed supply, if demand for the currency is high and
supply is limited, the value of the currency could rise.

However, much of the market is speculative at this

early stage because many aspects of the crypto
market are untested. Cryptocurrencies are also quite
volatile. Trading crypto for beginners and
intermediates alike comes with risks.

It’s wise to consider your own financial goals, your

timeline, and your risk tolerance before jumping in.

Crypto for beginners:

Matters of safety
If you’re going to include crypto in your financial
strategy, keeping it safe is key. Safety in crypto refers
to several different things, and not everything will be
within your control.

First, there can be risks in the crypto project itself.

Although we talked earlier about the high security of
crypto thanks to the peer-to-peer network and the
mechanics of the technology, there have been several
high-profile hacks over the last few years resulting in
large losses.

You should think about this risk when you embark on a

crypto strategy.

Second, there is the security of your own crypto

holdings. Keeping your crypto wallet safe is key to
your strategy’s success. You will have to maintain your
crypto wallet, which is secured with a private key. That
private key cannot be shared and should never be
stored online.

Your crypto is only as safe as the security of this key. If

you forget the password (called a seed phrase) of this
key, you will not be able to access your wallet. Many
have lost fortunes by forgetting or losing their
passwords.

Third, you must consider the overall volatility of

crypto. Over the last few years, crypto has
experienced significant growth followed by massive
losses. Various cryptocurrencies have fallen to near
zero valuation in a matter of days.

It may go without saying, but when it comes to crypto

for beginners, as with anything risky, you only want to
put in what you are prepared to lose.
Crypto for beginners: Pros
and cons

Crypto pros

Access to financial markets

Crypto allows greater access to financial markets,

namely to those who have little to no access to
traditional financial systems. There is no credit check,
ID, or other verification needed. All one needs to get
started is a computer or smartphone and an internet
connection.

No government middleman

As there is no “trusted third party” in crypto and

transactions are peer-to-peer, governments do not
manage the money supply.

Cost-effective

Crypto can be used to transfer funds globally with

little transaction cost. That means no more large bank
transfer fees or credit card fees.

Greater security

Blockchain advocates talk about the greater security

the cryptographic validation of transactions has over
current centralized systems. Because blockchain is
decentralized, there is no single point of failure.
Crypto cons

Volatility

Crypto is volatile. The market has experienced

considerable ups and downs over the last few years,
and its unpredictability makes it challenging to fully
manage risk.

Environmental impact

To mine many currencies, computers expend

enormous energy, which can take a toll on the
environment. This being said, many crypto companies
have changed the way they validate transactions to be
more eco-friendly.

Regulatory uncertainty

Because crypto is complex and developing rapidly,

governments are trying to keep up. As they gain a
handle on consumer protection and other issues
surrounding crypto, regulatory changes may occur
that could affect projects and financial opportunities.

Crypto for beginners: How

to trade
If you’ve decided that you do want to go forward and
develop your own crypto strategy, here are a few steps
to get you started.
1) Create a crypto exchange account
The first step toward trading cryptocurrency is to
create an account with a crypto platform, like
Binance.US. This will give you the ability to convert fiat
currency (money backed by a local government) into
cryptocurrency.

Before choosing a trading platform, be sure it has

features that work for you regardless of the crypto you
choose to trade.

Consider such features as:

Low trading fees

Ability to set recurring buy orders
Numerous supported cryptocurrencies and
cryptocurrency pairs
Real-time order books
Advanced trading API
Security

2) Fund your account

The second step toward trying out a new strategy in
crypto is to transfer funds from a traditional bank
account to your newly created crypto exchange
account.

Most trading platforms offer a variety of ways for you

to fund your account, including:

ACH (from a bank account)

Debit card
Credit card
Wire transfer
We recommend verifying that the trading platform of
your choice offers a funding method that’s convenient
for you.

3) Select which token to trade

You may start out trade in BTC or ETH (two of the most
popular coins), or you can also explore other
cryptocurrencies (like Solana, Cardano, and Polygon,
for example).

Learn as much as you can about each crypto you’re

considering and its value proposition or purpose.
Then, diversify by choosing coins or tokens with
different use cases.

For example, BTC is not only a means of exchange but

also a store of value. ETH adds the functionality of
smart contracts that are used for decentralized
applications. Stablecoins are pegged to fiat currency,
commodities, or other financial instruments,
theoretically mitigating some of the risks of volatility.

Here are some other ways to diversify your crypto

holdings:

Consider including crypto from different

blockchains in your strategy.
Think about location. You don’t want all of the
crypto projects you include to be based in the same
region.
Diversify with different crypto use cases like DeFi,
gaming, metaverse, and identity.
Consider adding utility tokens and other digital
assets to the mix.
Like with a traditional portfolio, you may want to
mix larger, more known crypto projects that may be
 more stable with smaller emerging projects that
have a potential for growth.

4) Choose your trading strategy

A variety of crypto strategies exist, including day
trading, HODLing, range trading, and dollar-cost
averaging.

Start by identifying how long you’re willing to commit

to your crypto strategy (e.g., days, weeks, months, or
years), and then choose the long-term or short-term
strategy that fits your goals.

Once you’ve settled on a strategy that works for you,

you’re ready to access the features on your trading
platform and start trade.

Tips for trading crypto

1) Research first
Before creating your crypto strategy, be sure to
research the tokens or coins you’re interested in.

Gather information from multiple sources, and always

keep in mind that:

Crypto markets are very volatile

Many cryptocurrencies are so new that nothing is
set in stone yet
Even experts in one cryptocurrency may not
understand the new cryptocurrencies coming
online
The more time you spend researching, the better
you’ll be able to protect yourself from the ups and
downs of the cryptocurrency market.

One thing you can do is check the website of the

project. The website should have a link to the crypto’s
whitepaper.

A whitepaper is a document common with blockchain

projects that states the mission of the project and
details how the crypto works. This is a good place to
start.

You can also Google the company and read what’s

being said about it. But remember to take everything
with a grain of salt and consider the source. It’s also
smart to find out about the team behind the project
and any major supporters or partners.

Another thing to look at is the exchange or platform on

which the coin is being offered. To lessen your risk,
only include crypto available on recognized platforms
in your strategy.

2) Diversify
Diversify your crypto portfolio so you don’t overexpose
yourself to the peaks and valleys of the market.

3) Don’t rush
The old saying “haste makes waste” certainly applies
to trading crypto for beginners.

Resist the urge to buy unproven coins you’ve seen

hyped on social media. Unscrupulous individuals often
use this method to inflate a token’s value, sell what
they’ve got at high prices, and then disappear when
the value crashes.

Again, research is essential before trading any

cryptocurrency.

Build your portfolio with

Binance.US
When you trade cryptocurrency, the risks and rewards
vary based on the token you purchase and the
strategy you choose. Considering the risks, crypto for
beginners can seem daunting.

However, you can minimize risks by learning all you

can before diving in, taking it slow, following the tips
on this list, and partnering with the right exchange.

Whether your crypto strategy involves trading every

day or HODLing for the future, choosing Binance.US as
your crypto platform is the best way to maximize the
rewards associated with crypto trading.

Sign up with Binance.US today to explore a new crypto

strategy.

Download the Binance.US app to trade on the go: iOS |

Android

Legal disclaimer: This material has been prepared for

general informational purposes only and should NOT
be: (1) considered an individualized recommendation
or advice; and (2) relied upon for any investment
activities. All information is provided on an as-is basis
and is subject to change without notice, we make no
representation or warranty of any kind, express or
implied, regarding the accuracy, validity, reliability,
 availability or completeness of any such information.
Binance.US does NOT provide investment, legal, or tax
advice in any manner or form. The ownership of any
investment decision(s) exclusively vests with you after
analyzing all possible risk factors and by exercising
your own independent discretion. Binance.US shall not
be liable for any consequences thereof.

Risk warning: Buying, selling, and holding

cryptocurrencies are activities that are subject to high
market risk. The volatile and unpredictable nature of
the price of cryptocurrencies may result in a
significant loss. Binance.US is not responsible for any
loss that you may incur from price fluctuations when
you buy, sell, or hold cryptocurrencies. Please refer to
our Terms of Use for more information.

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