We take for granted how things that seem simple to those involved in the crypto space are a new and cutting edge world to those on the outside.
I received a message from a friend, which is listed below word for word:
Noob Request
“I was thinking about signing up for an account on Binance, but I don’t have any experience in crypto market investing. Basically, do you purchase a certain amount of crypto, wait for them to go up in value, and then sell? Also, how long does it take you to sell the crypto, and who buys it? Do you get the amount of money the crypto is worth, or will people try to offer you a lower price than the market value? Please fill me in on this because I’d like to learn.”
I contemplated back and forth how to respond to him. This is what I landed up responding to him.
Response
Once you fund your Binance, you can immediately begin to buy and sell crypto. Your only limit when buying cryptos is the amount of funds you have in your account, but there is no limit on how many cryptos you can buy of each cryptocurrency. If you decide to sell crypto, a market order is executed immediately, as long as the market is still open. A market order means that you sell your cryptos for whatever the asking price is at that moment in time. The other type of sell order is a limit order. This varies from a market order because you set a price in advance for what you will sell each of your cryptos for. The order is not executed until another party is willing to pay your specified price for the cryptos. Sometimes a party is willing to pay what you are asking for right away; however, there are times when nobody will want to buy your crypto for the price you selected, meaning it is too high.
Be aware that cryptos do not always go up in value, and sometimes you will need to sell after their value has declined. In this scenario, you are selling because the fundamentals of the cryptos you invested in have changed, and you are trying to sell before the cryptos price declines further. Many crypto investors believe that knowing when to sell cryptos is more complicated to figure out than when to buy cryptos.
After you sell your cryptos, you get the total amount the crypto is worth minus the trading fees. However, it is essential to keep in mind that you will be paying taxes on any capital gains you may have. A capital gain is defined as the difference between what you bought the cryptos at and what you sold them at. For example, if you purchased 1 Eth at $3000 and sold it for $3500, you would have $500 worth of capital gains. Not to bore you, but you should also be aware of the current tax implications if you sell your cryptos within a year. If you do this and have recorded a capital gain, your profit will be taxed at your ordinary-income tax level. However, if you hold the cryptos for at least a year, you will be taxed at a lower set rate. Thus, it is more tax-friendly to HODL your cryptos for at least a year. Good luck investing.
In hindsight, maybe I should’ve instead sent him screenshots as a companion to the list of steps. In previous conversations with said friend, we have covered the first principles of cryptos to buy, so this conversation was more about the actual process of buying and selling cryptos on a cryptocurrency exchange.
How else would you have advised a friend if they reached out to you?
Thank you for reading and hope you have a good rest of the day!
Follow me on these other platforms where I also post my content: Publish0x || Hive || Steem || Read.Cash || Noise.Cash || Instagram || Twitter || Pinterest
