Beginners Guide to DeFi Crypto Trading
You’ve probably noticed that digital assets and DeFi crypto have become exceedingly popular in recent times. We’ve seen an increase in the number of people willing to trade digital tokens and coins, and the future of cryptocurrencies is certainly exciting. In this article, we explain how DeFi works, what you need to know as a beginner, and how to protect your digital assets against cybercriminals. But let’s begin with the fundamentals.
Introducing DeFi crypto
DeFi crypto is a term that describes the cryptocurrencies that are used for trading goods and services on the internet. DeFi is an abbreviation for decentralised finance and is a broad term that encompasses a range of financial services that are hosted on public blockchains. The likes of Bitcoin, Ethereum, and Litecoin are all examples of DeFi crypto.
The key aspect of the DeFi industry is that it is completely decentralised. It is also censorship-free and peer-to-peer, meaning there is no requirement for paperwork and third parties to be involved in the facilitation of transactions. Decentralised finance has the potential to revolutionise financial markets and can make transactions fairer, more accessible, and easier to complete for people and businesses all over the world.
How do you trade DeFi crypto?
People who own digital assets are usually involved in crypto trading. There are several ways to trade crypto, but the easiest is to sign up for a cryptocurrency exchange, where you can buy and sell specific coins. In essence, a crypto exchange works just like an online brokerage platform, and it makes it possible for you to trade digital currencies of your choice. There are lots of apps out there for beginner crypto traders, and the likes of Coinbase make it really easy for you to enter the crypto market for the first time.
Another option is to trade crypto via derivative financial instruments, with Contracts for Difference (CFDs) being a prime example of this. CFDs enable you to speculate on the price movement of cryptocurrencies and are an approach that many experienced crypto traders have utilised in recent times. Platforms like Plus500 enable you to invest in CFDs, although there are other choices out there too.
Is DeFi crypto trading secure?
Trading cryptocurrencies is risky, as is the case with any investment. Therefore, your investment can go up or down, and there are some cryptocurrencies that are regarded as particularly high-risk investments. Essentially, before investing in crypto, you need to realise that the markets are volatile.
There is also a rise in cryptocurrency-related crimes. Since 2016, crimes relating to crypto have increased 312% per year and include a wide range of incidents, such as coin thefts and sophisticated crypto trading scams.
Therefore, when you decide to trade crypto, you need to enhance your online security. A good idea is to keep your coins in a cold wallet, which is an offline device that has no connectivity to the internet. You should also consider insuring your digital assets, which is super important if you have a considerable amount of money invested in crypto.
A simple and reliable insurance provider for everyone involved in Web3 is Amulet. Their DeFi insurance provides a safety net for Web3 users and reduces many of the risks associated with crypto investments and other digital assets. If you haven’t done so already, consider insuring your assets with Amulet insurance today.