Investing in the cryptocurrency market can be a little daunting for a traditional investor, as investing directly in Cryptocurrency (CC) requires the use of new tools and the adoption of some new concepts. So, if you decide to dip your toes in this market, you will want to have a very good idea of what to do and what to expect.
CC trading requires you to choose an Exchange that deals with the products you want to buy and sell, be it Bitcoin, Litecoin or any of the more than 1300 other symbols in the game. In previous publications, we have briefly described the products and services available on several exchanges to give you an idea of the different offers. There are many exchanges to choose from, and they all work in their own way. Look for things that are important to you, such as:
– Deposit policy, methods and costs of each method
– Withdrawal policy and costs
– What fiat currencies are used to make deposits and withdrawals
– The products they are engaged in, such as cryptocurrencies, gold, silver, etc.
– Operating expenses
– Where is this Exchange located? (USA / UK / South Korea / Japan …)
Be prepared for the Exchange setup procedure to be detailed and lengthy, as exchanges want to know a lot about you. It’s like opening a new bank account, because stock exchanges are brokers of valuables and they want to make sure that you are the person you are talking about and that you are a reliable person. Apparently, “trust” is gained over time, because exchanges usually allow you to start with only small investment amounts.
Your exchange will store your CCs for you. Many offer a “cold storage”, which means simply keeping it “offline” until you indicate that you want to do something with your coins. There are several reports of stock market crashes and the theft of many coins. Imagine that your coins are on something like a bank account on the Exchange, but remember that your coins are only digital and all blockchain transactions are irreversible. Unlike your bank, these exchanges do not have deposit insurance, so keep in mind that hackers are always trying to do their best to take your cryptocurrencies and steal them. Exchanges generally offer password-protected accounts, and many offer two-factor authorization schemes – something you need to think seriously about to protect your account from hackers.
Given that hackers love to hunt stocks and your account, we always recommend using a digital wallet for your coins. It is relatively easy to transfer money between your exchange account and your wallet. Make sure you choose a wallet that handles all the coins you want to buy and sell. Your wallet is also a device that you use to “spend” your money with merchants who accept CCs for payment. There are two types of wallets: “hot” and “cold”. Hot wallets are very easy to use, but they leave your money open on the Internet, but not on the Exchange server, only on your computer. Uses offline storage devices such as cold purses, special hardware memory sticks and simple printed documents. Using a cold wallet complicates operations, but they are the safest.
Your wallet has a “private” key that allows all the transactions you want to start. You also have a “public” key shared on the network so that all users can identify your account when they participate in a transaction with you. Hackers can move your coins wherever they want when they get your private key, and this is irreversible.
Despite all the challenges and wild variability, we are confident that key blockchain technology is a game changer and will revolutionize how transactions are conducted in the future.