Investing in the cryptocurrency market space can be a bit difficult 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 still decide to dive into this market, you will want to have a very good idea of what to do and what to expect.
Buying and selling CC requires that you choose an exchange that offers the products you want to buy and sell, be it bitcoin, lightcoin or any of the more than 1,300 other tokens in the game. In previous editions, we have briefly described the products and services available on multiple exchanges to give you an idea of the various offerings. There are many exchanges to choose from and they all do things their own way. Look for things that are important to you, such as:
– Deposit policy, methods and cost of each method
– Withdrawal policy and costs
– What fiat currencies do they work with for deposits and withdrawals
– The products they deal with, such as cryptocurrencies, gold, silver, etc.
– Transaction costs
– where is this exchange? (USA / UK / South Korea / Japan …)
Be prepared for the fact that the Exchange setup procedure will be detailed and lengthy, as exchanges usually want to know a lot about you. It’s like creating a new bank account because exchanges are brokers of valuables and they want to be sure that you are who you stand for and that you are a reliable person to deal with. It seems that “trust” is earned over time, as exchanges usually allow you to start with only small amounts of investment.
Your Exchange will store your CC in storage for you. Many offer “cold storage,” which simply means that your coins are stored offline until you show that you want to do something with them. There is quite a lot of news about stock market hacking and a lot of stolen coins. Think about the fact that your coins are in something like a bank account on the stock exchange, but remember that your coins are only digital and that all blockchain transactions are irreversible. Unlike your bank, these exchanges do not have deposit insurance, so remember that hackers are always trying everything they can to get your cryptocurrencies and steal them. Exchanges typically offer password-protected accounts, and many offer two-factor authorization schemes – something that should be seriously considered to protect your account from hackers.
Given that hackers love to hunt on the stock market and your account, we always recommend that you use a digital coin wallet. 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 from sellers who accept CC for payment. Two types of wallets – “hot” and “cold”. Hot wallets are very easy to use, but they leave your coins online, but only on your computer, not on an Exchange server. Cold wallets use standalone storage media such as dedicated hardware memory cards and simple hard copies. Using a cold wallet makes transactions more complicated, but they are the most secure.
Your wallet contains a “private” key that authorizes all transactions you want to initiate. You also have a “public” key used on the network so that all users can identify your account when engaging in a transaction with you. When hackers get your private key, they can move your coins anywhere, and it’s irreversible.
Despite all the challenges and wild volatility, we are confident that the underlying blockchain technology will change the game and change the way transactions are conducted.