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 fingers 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 you to select the Exchange that trades the products you want to buy and sell, be it Bitcoin, Litecoin or any of over 1300 other in-game tokens. In previous editions, we have briefly described the products and services available on several exchanges to give you an idea of the different offerings. There are many exchanges to choose from and they all do things their own way. Look for things that are important to you, for example:
– Deposit policies, methods and costs of each method
– Withdrawal policies and costs
– Which fiat currencies are traded for deposits and payouts
– Products they trade with, such as crypto coins, gold, silver, etc.
– Transaction costs
– where is this stock exchange? (USA / UK / South Korea / Japan …)
Prepare for the Exchange setup process to be detailed and time consuming, as exchanges generally want to know a lot about you. This is similar to opening a new bank account, because stock exchanges are intermediaries of valuables and want to make sure that you are what you say you are and that you are a confidential person that you need to deal with. “Trust” seems to be gained over time, as stock markets typically allow only small amounts of investment to begin with.
Your exchange will keep your CC in storage for you. Many offer a “refrigerator,” which simply means that your coins are kept “offline” until you indicate that you want to do something with them. There is quite a bit of news about stock market hacking and stealing a lot of coins. Consider whether your coins are in a similar bank account on the stock exchange, but keep in mind that your coins are only digital and that all blockchain transactions are non-refundable. Unlike your bank, these exchanges do not have deposit insurance, so keep in mind that hackers are always there and try everything they can to get to your cryptocurrencies and steal them. Stock exchanges generally offer password-protected accounts, and many offer two-factor authorization schemes – something to seriously consider to protect your account from hackers.
Since hackers love loot on the stock 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 buy and sell. A wallet is also a device that you use to “spend” coins at merchants who accept CC 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 on the Exchange server. Cold wallets use offline storage media, such as specialized hardware memory sticks and simple prints in printed form. Using a cold wallet complicates transactions, but they are the safest.
Your wallet contains a “private” key that authorizes all transactions you want to initiate. You also have a “public” key that is shared online so that all users can identify your account when they are involved in a transaction with you. Once hackers get your private key, they can move your coins wherever they want and that’s irreversible.
Despite all the challenges and wild volatility, we are convinced that basic blockchain technology is a change in games and will revolutionize how transactions are conducted in the future.