Custodial Services Explained
A custodial service allows a trader a quick and cheap service. These are third-party cryptocurrency custody solutions that provide storage and security services for cryptocurrencies. Their services are aimed at investors who hold large amounts of bitcoin or altcoins.
Non-Custodial Services Explained
A non-custodial service is a type of wallet that lets you be your own bank, where you have full control over your funds and on the associated private key. These wallets serve users with two types of private keys that can be used to perform a transaction.
You will find that many cryptocurrency exchanges will have a built-in wallet within their service. Wallets are different from exchanges.
Exchanges are a platform through which buyers and sellers can transact with one another, and the wallet is a digital storage service for cryptocurrency holders where they can store the private keys that are a requirement in order to authorize the transactions themselves and access the bitcoin address of a user.
Many bitcoin exchanges typically provide bitcoin wallets for the users for the sake of convenience, however, due to the fact that they are offering this service they might charge an added fee.
Makers and Traders Explained
When it comes to online cryptocurrency participants, these are in the form of makers and takers.
In other words, when a buyer or seller makes a limit order, the exchange adds it to its order book until the price is matched by another trader on the opposite side.
When this price is matched, the buyer or seller who has set the limit price is known as a maker. A taker is a trader that places a market order that immediately gets filled.
How to Get Started with Trading
If you want to start trading cryptocurrencies, you need your own account at a crypto exchange. Here you can transfer an initial amount of money within the account.
Crypto exchanges typically do not accept USD or other FIAT money, but there are plenty of FIAT to crypto exchanges out there that could do this service for you.
Now, the first thing you need to do at a cryptocurrency exchange is select the cryptocurrency you will trade with. Now, keep in mind, there is not one single cryptocurrency that is the best, and that will bring you value each and every time.
You need to realize that this is a highly volatile industry and that everything is possible. However, there are some best cryptocurrencies that are specific to certain use cases.
Bitcoin is the best cryptocurrency that can be used as a reserve asset due to the fact that it is the most widespread adoption and has a finite supply of coins available.
The others are typically the ones who are in the top charts when it comes to the market capitalization of cryptocurrency.
Many small market cap cryptocurrencies have use cases and do not deliver on their promises, and as such, small market cap cryptocurrencies are riskier than large-cap coins such as Bitcoin and Ether.
Now, here is a step-by-step guide on how to use a cryptocurrency exchange.
Make a cryptocurrency brokerage account. To make an account, you will need to provide this brokerage with personal identification information that is similar to the information you will probably give when opening an account at a stock brokerage.
After that, fund your account. Once you have created an account and the sign-up process is completed, you will need to connect our bank account.
It is typical for many cryptocurrencies to offer bank funding through debit cards and wire transfers. Wire transfers are the cheapest options that you can use to fund your account.
The next step you need to make is to select the currency, or currencies you will be investing in.
We would highly recommend investing in cryptocurrencies that have a solid team backing the project itself, so you will need to read up on a lot of them before being able to make an educated and assessed decision.
Decentralized Finance or DeFi cryptocurrencies are currently some of the most popular altcoins of 2021 and potentially in the future as well.
Next, you need to store your cryptocurrency. This can be done in a cryptocurrency wallet. There are many types of cryptocurrency wallets out there.
You have hot storage devices, which are pieces of software, websites, or even computer hard drives that are connected to the internet, and cold storage devices which are essentially all devices that store your private key but are not connected to the internet in any way.
Then you can simply develop your trading strategy and go at it for as long as you can, hopefully turning a profit by the end of it.