Investing in the cryptocurrency market space can be a bit daunting for a traditional investor, as investing directly in Crypto Currency (CC) requires the use of new tools and the adoption of some new concepts. So if you decide to dip your toes into this market, you need to have a very good idea of what to do and what to expect.
Buying and selling CC requires choosing an exchange that deals in the products you want to buy and sell, be it Bitcoin, Litecoin, or any of the more than 1,300 other tokens in operation. In previous editions, we briefly described the products and services available in a few 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. Find things that interest you, for example:
Deposit policies, methods and costs for each method
Withdrawal and cost policies
– What are the paper currencies that they deal with in deposits and withdrawals
The products they deal in, such as cryptocurrencies, gold, silver, and others
Where is this exchange located? (USA / UK / South Korea / Japan …)
Be prepared for the Exchange setup to be detailed and lengthy, as exchanges generally want to know a lot about you. It’s akin to creating a new bank account, as exchanges are brokers for valuables, and they want to make sure that you are what you say, and that you are a trustworthy person to do business with. “Trust” appears to be gaining ground over time, as exchanges usually allow only small investment amounts to start with.
Your Exchange will keep your CC in storage. Many offer “cold storage” which simply means that your coins remain “offline” until you indicate that you want to do something with them. There are quite a few news stories about stock exchanges being hacked and many currencies stolen. Think of your coins in something like a stock exchange bank account, but remember that your coins are only digital, and all blockchain transactions are irreversible. Unlike your bank, these exchanges do not have deposit insurance, so be aware that hackers are always trying everything they can to obtain and steal your cryptocurrencies. Exchanges generally offer password protected accounts, and many offer two-factor authorization systems – something you should take seriously in mind in order to protect your account from hackers.
Since hackers love to break into exchanges and your account, we always recommend using a digital wallet for your coins. It is relatively easy to transfer coins between your Exchange account and your wallet. Make sure to choose a wallet that deals with all the currencies you want to buy and sell. Your wallet is also the device that you use to “spend” your coins with merchants who accept CC Pay. The two prefect types are “hot” and “cold”. Hot wallets are very easy to use but leave your coins exposed on the Internet, but only on your computer, not on the Exchange server. Cold wallets use offline storage media, such as specialty hardware memory cards and simple printouts for hard copies. Using a cold wallet makes transactions more complicated, but it is the most secure.
Your wallet contains a “private” key that authorizes all transactions you want to perform. You also have a “public” key that is shared online so that all users can recognize your account when engaging in a transaction with you. When hackers obtain your private key, they can move your coins wherever they want, and there is no turning back.
Despite all the challenges and extreme volatility, we are confident that the underlying blockchain technology will be a game-changer and revolutionize how transactions are conducted in the future.