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    Cryptocurrency

    Cryptocurrency Trading 2024: Everything You Need To Know To Start Today

    21 Mins Read


    Risk Warning: Your Capital is at Risk.

    Are you curious about trading cryptocurrencies like Bitcoin, Ethereum or Dogecoin? If so, it’s a good idea to find as much information on digital currency as you can before choosing an exchange or trading platform.

    This guide will explain what drives the price of digital assets and how to get started trading cryptocurrency. We’ll also give you our recommendations for where to buy and trade digital coins.

    In a hurry? Here’s a quick preview of top crypto brokers available in with modern mobile trading platforms:

    Disclaimer: Availability subject to regulations.
    Between 74-89% of retail investor accounts lose money when trading CFDs.

    What Is Cryptocurrency?

    Cryptocurrencies are digital currencies. They are created using digital cryptography to process transactions and create new “coins.”

    Cryptocurrencies like Bitcoin are popular because they are decentralized. In other words, banks and governments don’t control access to the currency. In contrast, fiat currencies are more easily manipulated by governments and banks.

    There are thousands of Bitcoin alternatives called altcoins. Cryptocurrencies like Ethereum and Ripple have improved upon Bitcoin’s original model or created differences in their currencies to support niche uses.

    Fiat currency is money that a government has declared to be legal tender. The term altcoin is sometimes used to refer to non-Bitcoin cryptocurrencies.

    What Is Blockchain?

    If you’ve heard of cryptocurrency, chances are you’ve also heard the term “blockchain,” since its technology is what makes cryptocurrencies unique and valuable. We’ll use Bitcoin as an example.

    In simplest terms, blockchain is a method of storing all Bitcoin transactions in a ledger that’s attached to each and every coin.

    From a digital perspective, blockchain is literally a chain of programmatic blocks. Each block lists transaction details like dates, times, amounts, and traders involved. All of the blocks together are called a chain, which functions like a publicly-accessible, if encrypted, database.

    Blockchain gives structure to the Bitcoin ledger. The ledger is encoded by cryptography so that its contents are insulated from hackers and can be copied to any computer. The use of cryptography also makes it very difficult to forge coins.

    Pricing the Cryptocurrency Market

    Cryptocurrencies are a high-risk trading instrument since they are much newer than fiat currencies, this makes their value difficult to predict.

    Cryptocurrencies may be appropriate for traders who are looking for a high-risk, potentially high-reward trading instrument.

    Crypto Market Size

    The University of Cambridge conducted two benchmarking studies on cryptocurrency, the most recent in 2019. Here are some of the findings.

    Over 139 million crypto wallets Only 38% of wallets (about 52.8 million) are considered active.
    52% of crypto companies work 2+ sectors The number of cryptocurrency companies operating across two cryptocurrency industry sectors or more, giving rise to an increasing number of universal cryptocurrency companies.
    84% of providers support more than one coin Multi-coin support by service providers has doubled since 2017. Over 84% of providers now offer support for more than one type of coin.
    164% growth in numbers of employees The number of employees working in the cryptoasset industry grew by 164% from 2017 to 2018, with a median number of 20 employees per firm.
    Source: 2nd Global Cryptoasset Benchmarking Study [University of Cambridge, 2019]

    What Drives the Price of Cryptocurrencies?

    Situations that affect cryptocurrencies are typically different from what affects fiat currencies.

    Simultaneous volatility – The cryptocurrency market is characterized by steep rises and sudden dramatic falls. An interesting quirk of cryptocurrency is that multiple coins tend to rise and fall in tandem.

    Media attention – As a currency hits the news, it is typical to see an influx of new traders. This tends to precipitate a rise in value. Early traders may then engage in profit-taking. Other traders panic and a rush to sell ensues, leading to a drop in price.

    Impending regulation – The prospect of regulation can make cryptocurrency traders bearish.

    Coin idiosyncrasies – Individual currencies are influenced by very specific factors. The most common reason a cryptocurrency sees a boost in value is support from the financial sector, but other factors (eg, a security problem) can impact values on a per-coin basis.

    Where Can I Trade Crypto?

    Before you start trading cryptocurrency, you should find out if it’s legal in your area to do so.

    Crypto Regulatory Bodies

    Various regulatory bodies around the world make laws that apply to cryptocurrency trading. Here are the largest regulators.

    Countries Regulators
    Australia Australian Securities and Investments Commission (ASIC)
    Canada Canadian Securities Administrator (CSA)
    European Union Cyprus Securities and Exchange Commission (CySEC),
    Markets in Financial Instruments Directive (MiFID),
    European Securities and Markets Authority (ESMA)
    Germany Federal Financial Supervisory Authority (BaFiN)
    Japan Financial Services Agency (FSA)
    New Zealand Financial Markets Authority (FMA)
    Switzerland Financial Markets Supervisory Authority (FINMA)
    United Kingdom Financial Conduct Authority (FCA)
    United States Financial Crimes Enforcement Network (FinCEN),
    Security and Exchange Commission (SEC)

    Regulation is critical to trading cryptocurrency, so we encourage you to read our regulatory guide.

    Crypto Trading by Country

    Many countries allow some form of cryptocurrency purchasing or trading.

    See countries where cryptocurrency purchasing or trading is allowed.

    • Afghanistan
    • Albania
    • Andorra
    • Angola
    • Antigua and Barbuda
    • Argentina
    • Armenia
    • Australia
    • Austria
    • Azerbaijan
    • Bahamas
    • Barbados
    • Belarus
    • Belgium
    • Belize
    • Benin
    • Bhutan
    • Bosnia and Herzegovina
    • Botswana
    • Brazil
    • Brunei
    • Bulgaria
    • Burkina Faso
    • Burundi
    • Côte d’Ivoire
    • Cabo Verde
    • Cambodia
    • Cameroon
    • Canada
    • Central African Republic
    • Chad
    • Chile
    • Comoros
    • Congo (Congo-Brazzaville)
    • Costa Rica
    • Croatia
    • Cuba
    • Cyprus
    • Czechia (Czech Republic)
    • Democratic Republic of the Congo
    • Denmark
    • Djibouti
    • Dominica
    • Ecuador
    • El Salvador
    • Equatorial Guinea
    • Eritrea
    • Estonia
    • Eswatini (fmr. “Swaziland”)
    • Ethiopia
    • Fiji
    • Finland
    • France
    • Gabon
    • Gambia
    • Georgia
    • Germany
    • Ghana
    • Greece
    • Grenada
    • Guatemala
    • Guinea
    • Guinea-Bissau
    • Guyana
    • Haiti
    • Holy See
    • Honduras
    • Hungary
    • Iceland
    • India
    • Ireland
    • Israel
    • Italy
    • Jamaica
    • Japan
    • Jordan
    • Kazakhstan
    • Kenya
    • Kiribati
    • Kyrgyzstan
    • Laos
    • Latvia
    • Lebanon
    • Liberia
    • Libya
    • Liechtenstein
    • Luxembourg
    • Madagascar
    • Malawi
    • Malaysia
    • Maldives
    • Mali
    • Malta
    • Marshall Islands
    • Mauritania
    • Mauritius
    • Mexico
    • Micronesia
    • Moldova
    • Monaco
    • Mongolia
    • Montenegro
    • Mozambique
    • Myanmar (formerly Burma)
    • Namibia
    • Nauru
    • Netherlands
    • New Zealand
    • Nicaragua
    • Niger
    • Nigeria
    • North Korea
    • North Macedonia
    • Norway
    • Palau
    • Palestine State
    • Panama
    • Papua New Guinea
    • Paraguay
    • Peru
    • Philippines
    • Poland
    • Portugal
    • Romania
    • Russia
    • Rwanda
    • Saint Kitts and Nevis
    • Saint Lucia
    • Saint Vincent and the Grenadines
    • Samoa
    • San Marino
    • Sao Tome and Principe
    • Senegal
    • Serbia
    • Seychelles
    • Sierra Leone
    • Singapore
    • Slovakia
    • Slovenia
    • Solomon Islands
    • Somalia
    • South Africa
    • South Korea
    • South Sudan
    • Spain
    • Sri Lanka
    • Sudan
    • Suriname
    • Sweden
    • Switzerland
    • Syria
    • Tajikistan
    • Tanzania
    • Timor-Leste
    • Togo
    • Tonga
    • Trinidad and Tobago
    • Tunisia
    • Turkey
    • Turkmenistan
    • Tuvalu
    • Uganda
    • Ukraine
    • United Kingdom
    • United States of America*
    • Uruguay
    • Uzbekistan
    • Vanuatu
    • Venezuela
    • Yemen
    • Zambia
    • Zimbabwe

    *Only some US states allow cryptocurrency trading — see our list of states below.

    Crypto Trading in US States, Districts, and Territories

    In the US, cryptocurrency trading legality varies by state. Here’s a map showing where eToro allows crypto trading.

    States that allow eToro cryptocurrency trading

    See the US states, districts, and territories where eToro allows crypto trading.

    • Alabama
    • Alaska
    • Arizona
    • Arkansas
    • California
    • Colorado
    • Connecticut
    • District of Columbia
    • Florida
    • Georgia
    • Idaho
    • Indiana
    • Iowa
    • Kansas
    • Kentucky
    • Maine
    • Maryland
    • Massachusetts
    • Michigan
    • Mississippi
    • Missouri
    • Montana
    • New Jersey
    • New Mexico
    • North Dakota
    • Northern Mariana Islands
    • Ohio
    • Oklahoma
    • Oregon
    • Pennsylvania
    • Rhode Island
    • South Carolina
    • South Dakota
    • Texas
    • United States Minor Outlying Islands
    • Utah
    • Vermont
    • Virginia
    • Washington
    • West Virginia
    • Wisconsin
    • Wyoming

    How to Start Trading Cryptocurrencies

    Before you start trading crypto, we have put together some simple steps to help minimize your losses.

    This short guide explains what you need to know before getting started.

    1. Do your research on how the cryptocurrency market works. You may encounter new phrases, so understand the core terminologies. Supply and demand cycles are also different in the cryptocurrency space. Coins are created and distributed in a variety of ways, depending on the type of blockchain, as well as retail and commercial traders’ access to coins.
    2. Choose a platform and learn about what features distinguish crypto trading platforms. Some platforms offer crypto derivatives like CFDs, options, and forex, but ensure that what you want to trade is available in your country. Others offer real cryptos. Fees, account types, products offered, supported funding methods, and platform availability (e.g. mobile/desktop) are just a few variables to keep in mind. Learn more in our Crypto Broker Guide.
    3. Practice with demo money. Brokers like Plus500 and eToro offer a demo account where you can practice cryptocurrency CFD trading. However, if you’re in the US or UK, this isn’t an option, since crypto CFDs are banned in both countries. Binance is also a widely available cryptocurrency platform with a demo account, along with a good selection of charting and analytics tools.
    4. Verify your account with the broker whose fees you can afford and supports the crypto products you want in your country. This typically requires proof-of-identification (e.g. passport, driver’s license), proof-of-address (e.g. utility bill). In some cases, you’re also asked to present a social security number or corresponding tax identifier.
    5. Secure your account with a bare minimum of two-factor authentication, ideally SMS, as well as email  authentication. Crypto brokers tend to have a guide on how you can do this in a few easy steps.
    6. Make a deposit and start trading with real money. Remember to deposit only what you can afford to lose. Keep an eye on the broker’s fees and/or third party payment providers’ fees on your deposits and withdrawals.
    7. Know your rights and obligations of what you can and cannot legally do in your country when it comes to cryptocurrencies. For example, find out whether you’re subject to income tax on any profits gained from crypto trading.

    To start trading crypto with real money, you can visit a broker like eToro. Remember, you don’t have to fund your account to use the demo money in the demo account.

    Start trading Bitcoin at eToro today

    Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.

    Cryptocurrency Exchanges

    One way to purchase crypto is by using a cryptocurrency exchange. With an exchange, you can:

    • Use fiat money to buy tokens (ie, coins)
    • Store cryptocurrency in a digital wallet
    • Trade tokens for different cryptocurrencies that are available on the exchange.

    Using an exchange can be a risky prospect. Ensure that you research the following criteria before choosing a cryptocurrency exchange.

    Fees Associated With Exchanges

    A crypto exchange generates funds primarily through fees. Most traders will want to choose exchanges with low fees. However, some exchanges do offer more features in exchange for higher fees.

    Here are the most common types of fees:

    • Trade fees: Usually take the form of a maker or taker fee. Traders are charged a fee to place a trade on the market or to take someone up on a trade. Trade fees can be up to 1% of the transaction, depending on currency pairs or payment method.
    • Deposit and withdrawal fees: It’s typically cheaper to deposit money with an exchange than to withdraw from it. Some exchanges allow you to deposit via a credit card but this typically incurs fees between 3-4%.
    • Exchange fees: These fees are exacted when converting tokens between currencies. The amount of the fee varies depending on the currencies involved.

    Identity Verification

    Most traders will want to use an exchange that has ID vetting. Identity verification can help prevent illegal or fraudulent activity.

    If you are concerned about your identity being linked to your Bitcoin for philosophical reasons, there are some options. However, the whole market is changing. In mid-2019, LocalBitcoins stopped allowing this.

    Currency Pairs Offered

    Not all exchanges offer the same currency pairs. Some focus exclusively on a single currency, usually Bitcoin. Other exchanges provide trading across hundreds of altcoins.

    Two of the best exchanges when it comes to the variety of currency pairs are Kraken (over 30 unique cryptocurrencies with 85+ fiat/crypto and 65+ crypto/crypto pairs) and Coinbase (over 20 unique cryptocurrencies).

    Security

    Make sure you research potential exchanges for factors that make the platform safer to use. Factors to consider include:

    • The age, history, and stability of the exchange
    • Scam-prevention
    • Individual trader ratings
    • Reviews and comments from the exchange’s users.

    Top Cryptocurrency Exchanges

    Here are some popular cryptocurrency exchanges:

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    Cryptocurrency Trading Platforms

    Instead of owning cryptocurrencies directly, another way you can speculate on crypto is with a regulated broker that offer various trading products like forex, options and CFDs. Start your research with reviews of these regulated brokers available in :

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    CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.

    CFDs (Contracts for Difference) are a form of derivatives trading that lets you speculate on the rising or falling prices of cryptocurrencies without actually having to own them.

    Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.

    Choosing a Crypto Trading Broker

    Picking a CFD broker can be difficult, but you should first ensure that the broker is regulated because:

    1. They must comply with high security and ethical standards to ensure that deposited money is safe.
    2. They must comply with laws designed to protect traders.

    Let’s discuss some of the factors you should consider before choosing a crypto broker.

    Commissions and Spreads

    The cryptocurrency market is highly competitive which means that very few regulated brokers charge commission fees.

    Instead, they make money by charging on the spread. A spread is a percentage per “unit” (or token/coin) which can add up quickly with the low-value, high-density currencies.

    Most regulated brokers, such as Markets.com, are transparent about costs. They include a minimum spread per unit in US dollars (USD) which makes it easy to figure out exactly what you are being charged.

    Make sure you also check to see whether a broker charges fees or commissions for holding a position overnight. Be aware that many brokers charge a premium for this service. Overnight fees can add up quickly.

    Brokers often provide extra features to help you manage your trading risk, which can be worth paying a bit more in spreads.

    These features range from the risk management tools at Plus500 to the unique social trading aspects of a more newbie-friendly broker like AvaTrade.

    Plus500 risk management tools
    Plus500 is a CFD broker.

    Experienced traders may find the diversity of instruments and pattern-recognition tools offered by CMC Markets to be more helpful.

    There are many other factors to consider when picking a trading platform. We encourage you to read our Brokers Guide to learn more.

    Try the Demo Account

    Most crypto trading brokers offer a free demo account. Demo accounts allow you to test a broker’s trading interface, tools, and resources, by making trades with demo money.

    Features to consider in a demo account:

    1. Expiry – With some brokers, your demo account never expires — eg, eToro.
    2. Switching – Many brokers make it easy to switch back and forth between the demo account and your “real money” account — eg, Fortrade.

    Crypto Coins Overview

    There are a huge number of cryptocurrencies in existence, making it hard to decide which coins to trade. To guide your choices, we’ll take a closer look at some of the most popular cryptocurrencies, but here’s a good overview:

    Bitcoin

    Bitcoin (BTC) is the cryptocurrency that started it all and it remains the gold standard for a cryptocurrency.

    It can now be used to buy goods and services electronically — and can also be used as a way to pay for goods in foreign currency while avoiding transaction fees.

    Bitcoin is by far the most popular cryptocurrency and many crypto traders choose to start trading crypto with it.

    Here’s a chart showing how Bitcoin has performed versus the US dollar over the last five years: