For traditional investors, investing in the cryptocurrency market space may be somewhat difficult, because direct investment in cryptocurrency (CC) requires the use of new tools and the adoption of some new concepts. Therefore, if you decide to enter this market, you will have a good understanding of what to do and what to expect.
Buying and selling CC’s requires you to choose an exchange to trade the product you want to buy and sell, whether it is Bitcoin, Litecoin or any of the more than 1,300 other tokens. In the previous version, we briefly introduced some of the products and services provided by the exchange to give you a better understanding of different products. There are many exchanges to choose from, and they all do things in their own way. Find things that are important to you, such as:
-Deposit policies, methods and fees for each method
-Withdrawal policy and fees
-Which fiat currency do they use for deposits and withdrawals
-The products they trade, such as cryptocurrency, gold, silver, etc.
-Where is this exchange located? (USA/UK/Korea/Japan…)
Be prepared for the detailed and lengthy Exchange setup process, because Exchange usually wants to know a lot about you. This is similar to setting up a new bank account, because the exchange is a broker of valuables and they want to make sure that you are who you are and that you are a trustworthy person who is worth trading. It seems that “trust” is gained over time, because exchanges usually only allow a small amount of investment to start.
Your Exchange will reserve CC storage space for you. Many offer “cold storage”, which simply means that your coins will remain “offline” until you instruct them to be processed. There are many news reports that the exchange was hacked and many coins were stolen. Consider whether your coin is in the bank account of the exchange, but remember that your coin is only digital, and all blockchain transactions are irreversible. Unlike your bank, these exchanges do not have deposit insurance, so be aware that hackers will always do their best to obtain your cryptocurrency there and steal them. Exchanges usually provide password-protected accounts, and many exchanges offer two-factor authorization schemes-in order to prevent hackers from hacking into your account, serious consideration is required.
Given that hackers like to prey on exchanges and your account, we always recommend that you use a digital wallet to store coins. Moving coins between your Exchange account and wallet is relatively easy. Make sure to choose a wallet that can handle all the coins you want to buy and sell. Your wallet is also the device you use to “spend” coins with merchants who accept CC payments. The two types of wallets are “hot” and “cold”. Hot wallets are very easy to use, but they expose your coins to the Internet, but only on the computer, not on the Exchange server. Cold wallets use offline storage media, such as dedicated hardware memory sticks and simple hard copy printouts. Using cold wallets will make transactions more complicated, 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 shared on the network so that all users can identify your account when transacting with you. When a hacker obtains your private key, they can move your coin wherever they want, and this is irreversible.
Despite all the challenges and huge volatility, we are confident that the underlying blockchain technology will change the rules of the game and will completely change the way transactions are conducted.