The world of cryptocurrency is complex and can be fruitful, speculative, or sometimes both simultaneously. Within a split second, tables can be turned, losses can be turned into gains, and vice versa – therefore, many experts in the crypto industry suggest understanding the fundamentals of buying, selling, and holding cryptocurrency.
If you are looking to make your crypto investments effectively and efficiently, then read on to find out optimal ways to buy, sell, and hold your digital assets! These are the tried and tested ways to buy sell hold cryptocurrencies to get the most out of your investment.
- Cryptocurrency fundamentals
- When should you buy cryptocurrency?
- Things to know before buying your first crypto
- 3 safest cryptocurrencies to hold
- When should you sell cryptocurrency?
- Things to consider before selling cryptocurrency
- Selling crypto through an exchange step-by-step
- Withdrawing money from crypto
The Fundamentals of Cryptocurrency
Cryptocurrency, also called crypto or crypto-currency, is a form of currency that has a digital existence and uses cryptology to ensure safe and secure transactions. There is no centralized system that records or issues crypto transactions. Instead, cryptocurrency transactions are issued and recorded by a decentralized system.
This does not involve physical money or cash; instead, it exists only as a digital currency that specifies transactions in an online database. When crypto funds are transferred, it records the transaction in a public ledger. Instead of a physical device, crypto uses digital wallets to store.
As it uses encryption to validate the transactions, it was named cryptocurrency. The main reason for this encryption is to ensure safe and secure transactions. Advanced and complex coding methods are used to hold and transfer the data between the public ledgers and the crypto wallets.
The first cryptocurrency was founded in 2009 and was called Bitcoin. Bitcoin has been the most popular and used cryptocurrency, and millions of people throughout the globe invest in Bitcoin to make sky-high profits.
How Does Crypto Work?
A decentralized system or public ledger runs and maintains the record of cryptocurrency. It is referred to as a blockchain network. A blockchain network is a system in which the record of cryptocurrencies is kept and maintained on different servers.
Mining is a process that uses a computer to solve complex mathematical problems to generate coins. Miners use this process to develop the units of cryptocurrencies. Cryptocurrency can also be bought through brokers and then stored in cryptographic wallets.
You don’t own anything physical if you have cryptocurrency. Instead, you have a key that can transfer specific units to another person without any third person. Bitcoin has been there for a lot of time, but it is still in the developing stage. However, this is an ever-growing market and is expected to have more people in the future.
The Different Types of Cryptocurrency & Tokens
The various types of cryptocurrency are dependent on how they are coded, designed formulated, as well as other factors. There are six main types of crypto which include the following.
These are digital currencies that get their value from external parties and may be traded legally as securities in accordance with certain financial regulations. As a consequence of this, they are put to use in the process of securitized tokenization of assets such as bonds, shares, real estate, property, and other fiat currencies.
Utility tokens are a unique kind of cryptocurrency token that was created particularly to address a certain use case inside a particular ecosystem. Utility tokens are, to put it simply, digital assets that let users take part in certain activities on a specific blockchain network or in a decentralised application.
Payment tokens are considered as the purest form of blockchain. It consists of a unique combination of numbers that are generated from a permanent account number (PAN). Many individuals turn to payment tokens as a means to make payments and exchanges online.
An exchange token is a token that is specific to a cryptocurrency exchange and was created by the company in charge of running the exchange. Since exchange tokens may be utilized on the exchange, they are sometimes referred to as “utility tokens.” The two most well-known examples of exchange tokens are FTX’s FTT and Binance’s BNB, which have the largest market valuation of any exchange token.
DeFi tokens, also known as decentralized finance tokens, are tokens that enable the removal of intermediaries and are made up of blockchain technology. They are built on decentralized platforms and are automated. Some well-known DeFi tokens include UNI, SUSHI, AAVE, as well as others.
As the name suggests, these are tokens that aim to maintain a consistent price over the passage of time. Stablecoins are a kind of cryptocurrency that attempts to “peg” its market value to another reference that is external to the cryptocurrency itself.
As a means of exchange, stablecoins are superior to more volatile cryptocurrencies such as Ethereum or Bitcoin. It is possible to “peg” stablecoins to either a fiat currency like the United States dollar or to the price of a commodity like gold.
What To Do When Buying Cryptocurrency
The cryptocurrency industry hit a peak value of $3 Trillion in 2021. This rapid rise in the value of crypto proved to be a big hit for all the early investors out there. With this rapid growth, the investment industry turned to cryptocurrency.
Blockchain has a huge potential for people who believe in the future of digital currencies. Another primary reason people want to invest in cryptocurrency is the need for stable and reliable money. As crypto is not owned or regulated by the government, the government cannot cease the crypto value or digital currency of anyone during tough times or inflation.
This digital asset is perfect for people looking for safer options during inflation or bank failures. It is also great for investing and making transactions, minus any third-party or government regulations.
When Should You Buy Cryptocurrency?
So, now you’ve decided to buy and invest in cryptocurrency. But when should you buy crypto? What time of the day, month, and week is best to purchase crypto? We’re here to let you know everything necessary.
What time of the day is the best time to buy crypto? The best part about digital currencies is that you can buy or sell them anytime. However, there are some times that you should consider so that you can get the best value. You should notice and observe the market trends to have an idea of the fluctuations and to find out the best time for you to buy crypto. Most experts say that the best time to buy cryptocurrency is early in the morning before the opening of the New York Stock Exchange.
During the week, the price of cryptocurrency changes, and you have to keep an eye on the trends. When the market is not busy, the prices are low. Usually, the market’s value is low on Monday as it rises throughout the week and then drops over the weekend. So, according to the expert advice, Monday is the best day to buy crypto, early in the morning.
When it comes to tracking the month, the best time of the month to buy crypto is usually the end of the month. Crypto prices start increasing when a new month begins and then continue to grow until a few weeks; after that, it starts going downward.
Things to Know Before Buying Your First Crypto
If you’re buying crypto for the first time, here are a few things that you should keep in mind so you have more chances to save yourself from disaster.
1. Learn about crypto
Learn everything about crypto before investing in getting the most out of your investment. Find out the best exchanges, how you can buy, sell or store crypto, which network to select when sending crypto, and everything before taking your first step.
2. Build a balanced portfolio
The worst mistake is putting all your eggs in one basket. Don’t expect huge profits or a rise in value if you’ve invested all your money in a single crypto coin.
3. Research, research, research
Research is crucial if you’re looking to invest in anything new. Take your hours, weeks, days, or even months to complete research and ensure your investment.
Steps to Buy Cryptocurrency
Here’s how you can buy cryptocurrency in a few simple steps.
1. The first step while buying cryptocurrency is deciding whether to invest with a broker or dedicated crypto exchanges. Do your complete research and compare the pros and cons to ensure the best outcome.
2. The next step is to fund your account so that you can start the show! Many exchanges offer a lot of options when it comes to buying crypto. This includes government-regulated money, debit and credit cards, and bank transactions. Keep in mind that many platforms do not allow the credit card option as the crypto market is highly volatile. Research and choose your option wisely.
3. The final step is to place your order. You can do that through your broker’s web, exchange’s web, or even a mobile app. You can simply select buy and specify the amount of crypto you want to purchase.
Elements of Holding Cryptocurrency
Now that you’re done with buying your crypto, you next need to hold it to ensure that it is secure and free from aching or theft. Holding or storing cryptocurrency is an art that needs to be mastered. But where can you store your crypto?
To store your cryptocurrency, you need access to a crypto wallet. A cryptocurrency wallet is a device, medium, or software that is used to store the public and private keys you need for crypto transactions. There are two significant types of crypto wallets, i.e., hardware wallets and software wallets.
Experts say that the safest option to store your cryptocurrency is hardware wallets or custodial wallets. However, you can choose your own wallet depending on your preferences. There are plenty of options, like hardware wallets, software wallets, hot wallets, cold wallets, and custodial wallets.
Why Hold Cryptocurrency?
Cryptocurrency is very different from the traditional market; hence more risks are there, and more research is required. You should have a whole plan of action before even investing in crypto.
Crypto should be held to ensure that your amount is safe and secure and will not fall prey to hacking or theft. As told earlier, there are a lot of wallets that you can consider to hold your crypto and make it a lifetime investment.
When Should You Hold Cryptocurrency?
Well, there is no hard and fast rule when it comes to holding your cryptocurrency. It is recommended not to sell it because the price has dropped or because you have doubts now. Experts say that to have a good yield, buy and hold stocks for at least five years. As crypto distinguishes itself from others, all rules don’t apply. However, you can do your research and take action based on what suits you.
3 Safest Cryptocurrencies to Hold
Now that you’ve decided to be patient to earn big from your investments let’s look at the safest crypto options you can hold.
1. Bitcoin (BTC)
As this is the most well-known cryptocurrency, it has gained credibility over the years. For this reason, the prices of Bitcoin have skyrocketed. You could buy one Bitcoin at the cost of $500 in 2016, whereas the price of a single Bitcoin in November 2022 is $16,936.
2. Ethereum (ETH)
This familiar crypto platform is also a blockchain network and has seen excessive growth in the past few years. In April 2016, one unit of Ethereum cost $11, whereas, in November 2022, the price was around $1,272. It’s an 11,463% increment.
3. Tether (USDT)
If you’re looking for more stable options that are not as volatile as cryptocurrency, look for Tether. Most cryptocurrencies are only digital and are free from any governance. However, Tether is backed by real currencies. It is an excellent option for people wanting consistency.
Essentials of Selling Cryptocurrency
Cryptocurrency can be a roller coaster ride. One should be aware of when to buy and sell crypto to take advantage of it. A volatile market needs to be monitored continuously to make your investments safer and more favorable.
When Should You Sell Cryptocurrency?
If you get into the following situations, consider selling your cryptocurrency.
The value has increased rapidly
If you see that the value of your crypto has doubled or tripled from the time you bought it, sell it or at least a portion of that amount. You can sell the amount you started with at first. The crypto market is so volatile and unpredictable that the profits vanish quickly. So, never forget to take advantage of such situations.
You can’t see the growth anymore
Since cryptocurrency is such a volatile market, one should be prepared for anything at any time. One instinct of a successful businessman is he knows when to cut losses.
It is important to avoid getting over-attached to this or any project that you start so that you can see on time when to withdraw your money and efforts. Don’t try too hard if you’re not seeing any long-term growth.
You’ve got better opportunities
The crypto world is constantly transforming. Cryptocurrencies that were not even known have become popular now. If you see any currency having future prospects that the one you’ve currently invested in lacks, it is a good idea to sell your crypto and buy the other one or maybe invest in another business that suits your desires.
When Should You Not Sell Cryptocurrency?
Again, there are no strict rules to it. The most important thing to keep in mind is that you never sell your crypto just because the price has dropped. As long as you see long-term growth, hold it. A lot of investors regret when they panic sell because when the prices go up, they can’t get the fruit of it. So be patient and analyze the whole situation before making a decision.
Things to Consider Before Selling Cryptocurrency
Here are some factors to remember before selling crypto:
How much are you going to sell? You don’t always have to sell the entire amount. You can sell a portion of it and keep the remaining if you think it is growing.
How much tax applies? Calculating this is crucial to ensure you don’t pay more than your profits, leaving you with no extra income. You have to bear crypto taxes if you get short term gains from crypto. If you’ve held the crypto for a long time, consider keeping it for some more days to reduce the tax.
Steps to Sell Cryptocurrency
Selling crypto through an exchange
A cryptocurrency exchange is an easier way to sell crypto as it does everything for you without hassle. Here are the steps you need to follow to sell your crypto through the exchange:
- Click the Buy/Sell option on the home screen of your digital wallet application.
- Select crypto you want to sell
- Select the Sell tab from the top.
- Select the preferred currency you would like to receive in exchange of the crypto you are selling.
- Enter how much you want to sell and the crypto you want to sell
- Select “Preview sell” to have a look at your sale, and then click “Sell now” to complete your process.
Selling through P2P trading
Selling through peer-to-peer trading is more of a task, but it saves you from paying those extra charges. Here are a few steps you can follow if you want to sell your cryptocurrency through P2P trading. We’re showing you how to do it through the Binance app.
- Select Trade P2P on your homepage.
- Then tap P2P Trading.
- Click “Sell” and select the cryptocurrency you want to sell.
- Select “Sell” next to the order you prefer.
- Enter the amount of crypto you want to sell and the amount of fiat you wish to receive.
- Tap “Sell,” and your order will be confirmed.
Methods of Withdrawing Money
When you’ve currency in your digital wallet, the next thing you’d want to do is withdraw that amount. There are three major options for withdrawing money, with their terms and conditions and transaction fee.
Bank Account. This is the most convenient option. When you’ve added your bank details, you just need to select the withdraw option to get the money transferred to your bank account.
Payment Services. Another common option is using Paypal or other payment services. People prefer this when they might not want to list their bank details on the exchange, or they want to keep the bank account separate from crypto earnings. Whatever the reason is, it’s quite easy to receive your payment through Paypal.
Cash. If you prefer getting cash over digital banking, that can be done too! You can withdraw your money through a Bitcoin ATM. It works just like a regular ATM. The only difference is that instead of putting your debit card inside, just enter your bitcoin address but make sure it remains confidential.
Cryptocurrencies are based on a digital system and involve a digital wallet. The technology is still quite new, and a lot of development has been going on in its improvement. Crypto is a volatile and unpredictable market and can turn out to be a fortune or misfortune for you. Make sure you do your complete research before investing and understand the risks, as crypto is speculative.
It has become easier to buy and sell bitcoins in the past few years. You can easily withdraw money through various channels. However, be careful of the threats of cybercrime, as it can cause major losses. Also, make sure that you are associated with a trustworthy broker, so you don’t get defrauded.
How are crypto transactions recorded?
All crypto transactions are recorded on a digital public ledger known as the blockchain. Cryptocurrency is based on decentralized technology that is spread all over the world.
What are the most popular cryptocurrencies?
The most well-known cryptocurrency is none other than Bitcoin has a total market of over $1 trillion. There are over 7800 cryptocurrencies, and the top ones after Bitcoin are Ethereum, Tether, Litecoin, and XRP.
Why do cryptocurrencies fail?
There can be several reasons behind the failure of cryptocurrencies involving fraud, lack of funding after launch, and not being able to evolve.
Which cryptocurrency is the best to buy and hold at the moment?
The top-rated cryptocurrency token to buy and hold at the moment is Bitcoin. This crypto has a market value of more than $400 billion and is considered the Alpha of crypto!
Is buy and hold a good strategy for crypto?
The buy and hold strategy, also known as the “hodling” strategy, is an effective way of gaining returns on crypto. Considering how volatile the crypto market is, this strategy enables investors to gain through medium to long-run asset value appreciation.
What time is the best to sell cryptocurrency?
Based on what experts in this field have found, the best time to sell or trade crypto is between 12:00 AM to 1:00 PM (UTC).
Is it too late to invest in crypto?
No, it is not too late to invest in cryptocurrency. Individuals can build their crypto portfolio in just about 5 minutes or less. Moreover, due to the persistence of Bitcoin, the market still has potential.