Investing in the cryptocurrency market can be a bit intimidating for the traditional investor, as investing directly in cryptocurrencies (CC) requires the use of new tools and the introduction of new concepts. So when you decide to enter this market, you want to have a very good idea of what to do and what to expect.
Buying and selling CC requires you to choose an exchange that will trade the commodities you want to buy and sell, be it Bitcoin, Litecoin, or any of the game’s over 1300 tokens. In previous editions, we have briefly described the products and services of some exchanges to give you an idea of the different offers. There are many exchanges to choose from and each one does things in its own way. Look for things that are important to you, for example:
- Deposit policy, methods and cost of each method.
- Cancellation policy and fees
- What fiat currencies you trade for deposits and withdrawals
- The products that they market as cryptocurrencies, gold, silver, etc.
- Transaction costs
- Where is this exchange based? (United States / Great Britain / South Korea / Japan …)
Be prepared for the Exchange setup process to be detailed and extensive, as exchanges in general want to know a lot about you. It is similar to opening a new bank account where exchanges want to sell valuables and make sure that you are who you say you are and that you are someone they trust. It seems that “trust” is earned over time, as exchanges generally only allow small amounts of investment.
Your Exchange stores your CCs for you. Many offer “cold storage”, which simply means that your parts will stay “offline” until you indicate that you want to do something with them. There is news about hacked wallets and many stolen coins. Remember that your coins are in something like a bank account with the exchange, but remember that your coins are digital only and all blockchain transactions are irreversible. Unlike your bank, these exchanges do not have deposit insurance, so be aware that hackers are always around to try anything to get your cryptocurrencies and steal them. Exchanges often offer password-protected accounts, and many offer 2-factor authorization schemes, something you should seriously consider to protect your account from hackers.
Your wallet contains the “private” key that authorizes all the transactions you want to initiate. They also have a “public” key that is shared across the network so that all users can identify your account when they are involved in a transaction with you. If hackers get your private key, they can move your coins anywhere and it is irreversible.