Before you create your accounts on any exchanges, you should know what you’ll do with your cryptocurrency once you get some.
There are generally 3 things you can do:
- Day-trade (Very risky)
- Keep it on the exchange until you want to sell (Mild risk)
- Store your cryptocurrency yourself (Still some risk)
Let’s break these down individually.
Personally, I don’t encourage day-trading. Everyone thinks they’ll get rich in a week or two by doing this. But you probably won’t. In fact, well over 90% of day-traders lose money. If you really want to, go ahead. I cannot stop you. Just be wary of the risks.
If you day-trade, your cryptocurrency will stay on an exchange until you decide to sell it or trade for another cryptocurrency. The important thing to remember here is this:
You will lose all your cryptocurrency if the exchange closes.
This is why you should only keep your cryptocurrency on reputable exchanges. Personally, I use Coinbase (and Coinbase pro), but some other good options are Kraken and Gemini. Each exchange has pros and cons. I strongly suggest researching each exchange to see what works best for your situation. Here’s an article to help out.
Store your cryptocurrency on the exchange
This is a fairly popular option with many folks. But as I just mentioned, there will always be the possibility of the exchange being closed or hacked.
At the end of the day, you do not have full possession of your cryptocurrency when its on an exchange. It isn’t really yours.
This is why the 3rd option is arguably the best.
Storing your own cryptocurrency
This is the most secure option. But it comes with some risk. If you send your cryptocurrency to the wrong address it will be gone forever.
But if you do it correctly, no person on Earth can take your cryptocurrency from you.
There are a few options for storing your own cryptocurrency. Some are better than others. But here they are.
- Hardware wallet — storing on a secure device
- A paper wallet — storing your keys/password yourself
- Digital wallet — storing your crypto on a digital wallet
Each of these is different. Storing your cryptocurrency on a paper wallet is difficult to set up. But it’s more secure than a digital wallet. Again, I strongly suggest you do your own research and do what you think is best for your situation.
Whatever you end up deciding on, make sure to fully understand every step of the process before you purchase your cryptocurrency. Having a plan on what you will do will save you from emotions.
This market is extremely volatile. And it can be an emotional roller-coaster. Don’t fall victim to emotions. Because you will lose if you do.