Investing in the Crypto Currency market space can be a little scary for the traditional investor as direct investment in Crypto Currency (CC) requires using new tools and adopting some new concepts. So, if you do decide to dive into this market, you’ll want to have a very good idea of what to do and what to expect.
Buying and selling CC requires you to select an exchange that trades the products you want to buy and sell, be it Bitcoin, Litecoin, 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 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 matter to you, such as:
– Deposit policy, methods and cost of each method
– Withdrawal policy and costs
– In which fiat currencies do they work for deposits and withdrawals
– The products they deal in, such as cryptocurrencies, gold, silver, etc
– Transaction costs
– where is this exchange located? (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. It’s like opening a new bank account, as exchanges are brokers of value and they want to be sure that you are who you say you are and that you are a trustworthy person to do business with. It seems that “trust” is earned over time, as exchanges usually only allow small amounts of investment.
Your exchange will store your CCs in your vault. Many offer “cold storage”, which simply means that your coins are stored “offline” until you indicate that you want to do something with them. There is quite a bit of news about exchanges being hacked and many coins being stolen. Think of your coins as sitting in something like a bank account on an exchange, but remember that your coins are only digital and that all transactions on the blockchain are irreversible. Unlike your bank, these exchanges do not have deposit insurance, so be aware that hackers are always trying their best to get their hands on your crypto and steal it. Exchanges usually offer password-protected accounts, and many offer two-factor authentication schemes – something you should seriously consider 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. Moving coins between your Exchange account and 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 the device you use to “spend” your coins at merchants that 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 cards and simple hard copies. Using a cold wallet makes transactions more complicated, but it is the most secure.
Your wallet contains a “private” key that allows all transactions you wish to initiate. You also have a “public” key that is distributed across the network so that all users can identify your account when they engage in a transaction with you. If hackers get hold of 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 be a game changer and revolutionize the way transactions are done in the future.