Investing in the cryptocurrency market space can be a bit risky for cryptocurrency investors, as investing directly in cryptocurrency (CC) requires the use of new tools and adoption of some new ideas. So if you decide to dip your toes in this market, you need to have a very good idea of what you will do and what to expect.
To buy and sell CC you need to choose an exchange that deals in the products you want to buy and sell, be it Bitcoin, Litcoin or more than 1300 player tokens. In previous editions 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 do things their own way. See things that are important to you, for example:
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– Deposit policy, procedure and cost of each procedure
– Withdrawal policy and expenses
– They do no fiat currency transactions for deposits and withdrawals
– The products they trade in such as crypto coins, gold, silver, etc.
– Expenses for transactions
– Where is this exchange based? (USA / UK / South Korea / Japan …)
Be prepared for the exchange setup process to be detailed and lengthy as exchanges usually want to know a lot about you. Exchanges are like setting up a new bank account as a broker of valuables, and they want to make sure that you know who you are talking to and that you are a trustworthy person in any business. It seems that “trust” has been achieved over time, as exchanges usually allow small investments to be made.
Your exchange will keep your CC in your storage. Many offer “cold storage” which means your currencies will be kept “offline” until you indicate that you want to do something with them. There have been reports of exchanges being hacked and lots of coins being stolen. Think of your currencies as having a bank account on the exchange, 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 are always there to get your crypto coins and try their best to steal them. Exchanges typically provide password protected accounts and offer a number of 2-multiplier authentication schemes – with serious consideration to protect your account from hackers.
Given that hackers like to exchange and prey on your account, we always recommend that you use a digital wallet for your coins. Moving coins between your exchange account and your wallet is relatively easy. Be sure to 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 coins with merchants who accept CC to pay. The two types of wallets are “hot” and “cold”. Hot wallets are very easy to use but they keep your coins open on the Internet, but only on your computer, not on an exchange server. Cold wallets use offline storage media such as specialized hardware memory sticks and general hard copy printouts. Using a cool wallet makes transactions more complicated but they are the most secure.
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Your wallet has a “personal” key that allows you to start all the transactions you want to start. You have a “public” key that is shared on the network so that all users can identify your account when you are involved in a transaction. When hackers get your private key, they can take your coins anywhere and that 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 move forward.