How to Trade Bitcoin?

As soon as day traders realized that Bitcoin may be here to stay, a large number of them decided to start trading bitcoins on various Bitcoin exchanges. Although the early days of Bitcoin were plagued with plenty of scams where exchanges or wallet providers would run away with the bitcoins overnight, the reality is that we are now looking at a much more mature market for trading bitcoins.

Whether you’re looking to enter your trades manually or have some bots do all the work for you, it’s important to understand how Bitcoin trading actually works before you dive into the deep end.

Choosing a Bitcoin Exchange

The first thing you need to do when you want to learn how to trade bitcoins is figure out where you’re going to be doing your trading. Although this is supposed to be a decentralized, P2P currency, the reality is that it’s currently impossible to do high-frequency trading without the help of a centralized server. These centralized servers have been known as a point of weakness for the Bitcoin market as a whole, but improvements in security have slowly been rolled out to various exchanges over time.

If you’re going to trade bitcoins on a regular basis, then you’ll need to have some deposits at one or two Bitcoin exchanges at all times. While platform features and unique trading options may be the most important aspects of exchanges in other markets, the reality is that security is the most important feature to think about when trading bitcoins in a hot wallet. Factors such as longevity, two-factor authentication, and proof-of-reserve are going to be the most important features to look at when choosing an exchange.

Longevity and two-factor authentication are two factors that you probably have in the back of your head for traditional exchanges, but proof-of-reserve is a new feature for Bitcoin exchanges that should be viewed with the utmost importance. Bitcoin exchanges are able to prove that they actually have the bitcoins they say they have by signing messages from Bitcoin addresses containing large amounts of bitcoins, so this should calm some of your fears when it comes to the possibility of an exchange running a Ponzi scheme. Certain exchanges that offer proof-of-reserve, such as Kraken and Bitstamp, should be at the top of your list.

Buy and Hold Bitcoins?

Once you’ve signed up for a Bitcoin exchange and verified your account, you can then start to think about your own trading strategy. There are plenty of traders who try to time the market on a daily basis, but the reality is that the buy and hold strategy is the one that has paid off for the largest number of Bitcoin holders in the past. You never know when a piece of regulatory news out of China or a newly announced killer app could cause a huge price swing one way or the other, so it’s usually a good idea to throw your emotions out the window and simply purchase bitcoins on a regular basis. This will be weekly for some traders, while others will decide to pick up a few bitcoins on the first of every month.

Attempting to trade bitcoins without understanding why you purchased them in the first place can also be a huge issue. Bitcoin has been known to drop in price by as much as 50% in a single day, so you cannot be tempted to exit the market at a loss when these kinds of events take place. Trading bitcoins without a view that the price will eventually go higher as the price increases can be problematic due to the fact that you will probably end up buying high and selling low.

Remember that as with any type of trading, your capital is at risk. New traders should start trading with small amounts or trade on paper to practice. Beginners should also learn Bitcoin trading strategies and understand market signals.

How to secure your Bitcoin Wallet:

Gotten yourself a couple of bitcoins and trying to find a way to keep them safe? Just like a regular wallet, you have to take precaution with your bitcoin wallet since you don’t want to lose your money. It may seem a bit difficult to protect a virtual wallet, but if done properly you can definitely secure it. The following guide will explain a few practices you can do to keep your virtual coins safe and sound.

Keep Only a Small Amount of Bitcoins in Your Wallet

In having a wallet, whether a virtual or physical one, you wouldn’t want to have all of your money in it since if you lose your wallet you are broke. Therefore, it is advised that you store only a few coins on your phone or computer which will be your everyday spending money. The rest should be kept secure at another location.

Online Wallets

This is a web-based wallet that stores your private bitcoin key online. This means your coins are controlled by someone other than you. In addition, it can place great power into the hands of the organization that runs your online wallet because they have the private key. On the other side, having a web based wallet is a good for when you want to have access to your bitcoins anywhere at any time. Here are a couple of known online wallet sites: Blockchain, Coinbase, Strongcoin. Out of these three, Strongcoin is the only one that allows you to encrypt your private keys before sending them online, offering a bit more security.

Encrypt Your BTC Wallet

A basic, yet imperfective way to protect your coins is to encrypt your wallet. Encrypting means setting a very strong (at least 16 letter) password with capital letters, punctuation marks, numbers, etc. This helps against most robbing mishaps, however there are limitations:

Hackers could use a software to log your keystrokes, hence even if you have a super strong password, it can still be hacked.

If you forget your password.let’s just say you are not seeing your coins again.

Tips on remembering your password:

Write it down on paper and keep it in a vault or something with a powerful lock. Basically any place you keep your most expensive and precious things.

 Make a password that is difficult for anyone you know to figure out, but something you can still remember. In short, memorize it.

Backup Your Wallet!

Backing up your wallet ensures that if all else fails (computer crashes, phone gets stolen, you get fired from work etc) you can restore your coins.

Bitcoin wallets have hidden private keys. If you only have a backup for your visible Bitcoin addresses, you will not be able to restore all of your money. Thus, we advise you backup your entire wallet.

Any computer or device connected to the internet is susceptible to hacking and theft. Therefore, you should encrypt (set a strong password) on backups that are on your computer or phone.

Where Should I Store Backups?

Have multiple secure places to store your backups. Why? Because if you only use one USB that has the backup and you happen to lose that USB, say goodbye to your coins. So, for example, you can use: USBs, CDs, Hard drives, paper, etc and then put these in a vault or something else that is secure. Also, make sure to keep your backups up to date. Any new coins update your backup!

Keep your Bitcoin Software up to date

If you do not have your BTC software up to date, it might be susceptible to theft and hacking. Thus, it’d be in your best interest to keep it updated. This will ensure that your coins receive more security and stability. Remember to update all the other software on your computer or phone as well to keep your wallet secure. A safe environment provides security for your money.

Take Your Wallet Offline!

One of the best ways you can protect your wallet is if you store it in a place that is not connected to the internet. Why? Because anything connected to the internet is susceptible to hacking. This is called cold storage which basically store private bitcoin keys offline. Many software wallets offer cold storage, check to see if yours does.

How would this even work out?

A way you can approach this is by transferring most of your bitcoin wealth into cold storage and leaving only a small amount for your everyday spending wallet. This way you have most of your money in a place that is secured, and some of your coins at hand to trade with. Hey, you get the best of both worlds.

Why use cold storage?

If your computer or phone gets stolen or hacked, only a small amount of coins in your everyday wallet will be taken from you. The rest are secured in your super secret vault (cold storage) that is away from the prying hackers of the web. This results in minimal damage for you and even if your everyday wallet gets robbed you can go on your merry way. You know, by getting more bitcoins and the like.

Paper Security

If you don’t see cold storage working out for you, you can also just use paper to store your wallet. This is known as a paper wallet. Many websites have paper BTC wallet options and this is how it goes down:

1. You’ll get a bitcoin address

2. You’ll also get an image of 2 QR codes (one code is the public address from which you can get BTC; the other is a private key that can be used to spend BTC from that address)

Think About the Future

If you are the only one who has knowledge and access to your bitcoin wallet, you might want to keep this in consideration: if you happen to die, your bitcoins will be lost and no one else will be able to use them. This is similar to the money you earn: if you don’t say in your will or testament that you want your wealth given to a specific person or charity, your wealth will be divided amongst your intestate heirs. However, unlike regular currency, to have access to your coins, you need the private key. Keep this in mind for the future.

What Does This All Mean?

Like with securing your physical wealth, you should review your options carefully and decide the best way to keep your bitcoins safe. This could mean going cold storage, paper storage, encrypting your wallet, backing up, or all of the above. Look through the options we’ve given you and chose the one that offers the most security.

Easy ways to earn Bitcoin for Beginners

Bitcoin has recently gained a lot of awareness from the press, due to its exponential price growth. People from all over the world are beginning to use the digital currency, looking to strike it rich, or simply take advantage of its unique features.

Scrape Bitcoin faucets

Bitcoin faucets have played an essential role in the history of Bitcoin. Faucets are websites which automatically dispense free BTC to a user who enters his or her Bitcoin address. This is an ideal way for newbies to get a small amount of BTC for free.

There are many different faucet websites, each with its own unique features. For example, some websites require players to complete a simple game, instead of solving a boring old CAPTCHA. A number of Bitcoin casino sites give out coins which can be used to bet on a dice roll or sports event. You could potentially earn a lot more from these sites, compared to regular faucets.

Mine Bitcoin

Mining is the process of generating Bitcoins through solving computationally-difficult problems. It also serves the purpose of confirming transactions, which secures the network. In layman’s terms, this simply means that you can use computers to crunch numbers, and earn BTC as a reward.

Bitcoin mining is actually a lot harder than it sounds. In 2009, when the virtual currency was first released, you may have been able to mine hundreds of BTC with any regular computer effortlessly. Today, miners employ specialized devices in a race to earn the 12.5 BTC block reward. In fact, the Bitcoin network is around 256 times faster than the world’s top 500 supercomputers combined.

So is it possible for ordinary people like you and me to take part in the Bitcoin gold rush? The answer is simple. You can join a mining pool to work with other miners, and then split the reward based on how much computational work you did. USB-powered mining hardware, such as the ASICMiner Block Erupter, are readily available, and affordable to the average Bitcoin user. Although there is a chance that you won’t make back the money you spent on purchasing hardware, you will still learn how Bitcoin works, and earn some extra money along the way.

Sell goods and services

Instead of simply purchasing Bitcoins on an exchange, you can also earn it through selling useful items and services to the community. If you’d like to sell something, you should consider accepting Bitcoins, instead of simply listing the item on eBay. Even a number of Subway shops now accept BTC as payment.

One of the key features of Bitcoin is that it allows you to send and receive money from anywhere in the world. That means that you could make money by providing useful services to international customers. If you are skilled at a particular job, such as programming, or graphics design, you could earn a good amount of Bitcoin doing freelance work.