Investing in the cryptocurrency market space can be a little daunting for conservative investors, as investing directly in cryptocurrency (CC) requires the use of new tools and adoption of some new ideas. So if you decide to immerse these toes in this market, you will want to have a very good idea of what to do and what to expect.
To buy and sell CC you need to choose an exchange in which you want to buy and sell products, choose Bitcoin, Lightcoin, or any one of the more than 1300 tokens of the game. In previous editions we have given you an overview of the products and services available on some 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. Find things that are important to you, for example:
– Deposit policy, method and cost of each method
– Withdrawal policy and costs
– They do no fiat currency transactions for deposits and withdrawals
– The products they trade, such as crypto coins, gold, silver, etc.
– Transaction costs
– Where is this exchange based? (United States / United Kingdom / South Korea / Japan …)
Be prepared for the details and length of the exchange setup process, as exchanges usually want to know a lot about you. This is equivalent to setting up a new bank account, because exchanges are brokers of valuables, and they want to make sure that you are who you say you are, and that you are a trusted person to deal with. It seems that “trust” is gained over time, as exchanges usually only allow small amounts to start with.
Your exchange will keep your CC in your storage. 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 have been several reports of exchanges being hacked, and many coins being stolen. Think of something like a bank account on the exchange of your currencies, but remember that your coins are only digital, and all blockchain transactions are immutable. Unlike your bank, these exchanges do not have deposit insurance, so be aware that hackers always try their best to get your crypto coins and steal them. Exchanges typically offer password protected accounts, and many offer a 2-factor authentication scheme – something to seriously consider in order to protect your account from hackers.
Hackers prefer to exchange and prey on your account, we always recommend that you use a digital wallet for your coins. Transferring currency between your exchange account and your wallet is relatively easy. Be sure to choose a wallet that you want to buy and sell all the coins. Your wallet is also the device 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 expose your coins to the Internet, but only to your computer, not to the Exchange server. Cold Wallet uses offline storage media, such as special hardware memory sticks and general hard copy printouts. Using a cold wallet makes transactions more complicated, but these are the most secure.
Your wallet has a “Personal” key that allows you to initiate all transactions. You have a “public” key that is shared across the network so that all users can identify your account when transacting with your user. When hackers get your private key, they can move your coins anywhere they want and it is immutable.
Despite all the challenges and wild instability, we are convinced that the underlying blockchain technology is a game changer, and will revolutionize how transactions are handled.