Getting Started With Crypto3 min read
Investing in the Crypto Currency market space can be a little daunting for the traditional investor, as investing directly in Crypto Currency (CC) requires the use of new tools and adopting some new concepts. So if you do 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.
Buying and selling CC’s requires you to choose an Exchange that deals in the products you want to buy and sell, be they Bitcoin, Litecoin, or any of the over 1300 other tokens in play. In previous editions we have briefly described the products and services available at a few exchanges, to give you an idea of the different offerings. There are many Exchanges to choose from and they all do things in their own way. Look for the things that matter to you, for example:
– Deposit policies, methods, and costs of each method
– Withdrawal policies and costs
– Which fiat currencies they deal in for deposits and withdrawals
– Products they deal in, such as crypto coins, gold, silver etc
– Costs for transactions
– where is this Exchange based? (USA / UK / South Korea / Japan…)
Be prepared for the Exchange setup procedure to be detailed and lengthy, as the Exchanges generally want to know a lot about you. It is akin to setting up a new bank account, as the Exchanges are brokers of valuables, and they want to be sure that you are who you say you are, and that you are a trustworthy person to deal with. It seems that “trust’ is earned over time, as the Exchanges typically allow only small investment amounts to begin with.
Your Exchange will keep your CC’s in storage for you. Many offer “cold storage” which simply means that your coins are kept “offline” until you indicate that you want to do something with them. There are quite a few news stories of Exchanges being hacked, and many coins stolen. Think about your coins being in something like a bank account at the Exchange, but remember that your coins are digital only, and that all blockchain transactions are irreversible. Unlike your bank, these Exchanges do not have deposit insurance, so be aware that hackers are always out there trying everything they can to get at your Crypto Coins and steal them. Exchanges generally offer Password protected accounts, and many offer 2-factor authorization schemes – something to seriously consider in order to protect your account from hackers.
Given that hackers love to prey on Exchanges and your account, we always recommend that you use a digital wallet for your coins. It is relatively easy to move coins between your Exchange account and your wallet. Be sure to choose a wallet that handles all the coins you want to be buying and selling. Your wallet is also the device you use to “spend” your coins with the merchants who accept CC’s for payment. The two types of wallets are “hot” and “cold”. Hot wallets are very easy to use but they leave your coins exposed to the internet, but only on your computer, not the Exchange server. Cold wallets use offline storage mediums, such as specialized hardware memory sticks and simple hard copy printouts. Using a cold wallet makes transactions more complicated, but they are the safest.
Your wallet contains the “private” key that authorizes all the transactions you want to initiate. You also have a “public” key that is shared on the network so that all users can identify your account when involved in a transaction with you. When hackers get your private key, they can move your coins anywhere they want, and it is irreversible.
Despite all the challenges and wild volatility, we are confident that the underlying blockchain technology is a game changer, and will revolutionize how transactions are conducted going forward.