Starting with crypto? Begin with small amounts to minimize risk. Learn from minor mistakes rather than costly ones.
Table of contents
Wallets
You need a wallet where you control the private keys via a 24-word Seed Phrase. Download wallet software to your computer. Phones are less secure for large investments.
Exchanges
Create an account on a crypto exchange. Provide banking details and ID. Transaction limits increase over time. Exchanges report your crypto activity to the government for tax purposes.
Buying and Transferring
After signing up (which takes days), buy Bitcoin. Once available, transfer it from the exchange to your wallet. This is crucial because exchanges can be vulnerable.
Backup
Back up your Seed Phrase or Private Keys. Create at least two handwritten copies on paper and store them separately to protect against disasters. Keep them hidden. Anyone with your Seed Phrase can access your crypto.
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Selling Crypto
When selling, the process is reversed. Transfer your crypto from your wallet back to the exchange. Once there, you can initiate a sell order. There are typically two types of orders: market orders (executed immediately at the best available price) and limit orders (executed only when the price reaches a specified level). Choose the order type that best suits your needs and risk tolerance.
Security Considerations
Crypto security is paramount. Always use strong, unique passwords for your exchange and wallet accounts. Enable two-factor authentication (2FA) wherever possible. Be wary of phishing scams and never click on suspicious links or share your private keys with anyone. Regularly update your wallet software and operating system to patch security vulnerabilities.
Tax Implications
Cryptocurrency transactions are generally taxable. Keep detailed records of all your buys, sells, and transfers, including dates, prices, and amounts. Consult with a tax professional to understand the specific tax regulations in your jurisdiction and ensure you comply with all applicable laws.
Due Diligence & Risk Management
Before investing in any cryptocurrency, conduct thorough research. Understand the technology, the team behind the project, and the potential risks involved. Cryptocurrency markets are highly volatile, and prices can fluctuate dramatically. Only invest what you can afford to lose, and diversify your portfolio to mitigate risk.
Staying Informed
The crypto landscape is constantly evolving. Stay informed about the latest news, trends, and regulations by following reputable sources of information. Be skeptical of hype and do your own research before making any investment decisions.
