Cryptocurrency is a mainstream financial asset and is no more of interest in the niche world. As crypto-acceptance keeps increasing, growing awareness of investments in Bitcoins, Ethers, and other currencies, it becomes highly important to know how one can acquire them safely and store them so as to secure the assets from theft and loss. Here’s the easy guide to buying cryptocurrencies safely and a guide for storing them so these valuable assets would be protected from theft and loss.
What is cryptocurrency?
First of all, one should understand what cryptocurrency is. Then it is possible to step into questions like how to buy and where to store cryptocurrency. A lesson should precede the fact that cryptocurrencies, essentially and basically, are virtual currencies based on encryption and thus digital by nature.
They are decentralized and based on blockchain, which gives them less propensity towards fraud or tampering. Cryptocurrencies also allow peer-to-peer transfers with no middleman. This usually helps reduce fee production for a transaction and execute faster transfers.
Step 1: Understand the Cryptocurrencies
First comes some research before investing in any cryptocurrency, given that there are thousands of such cryptocurrencies, each differing in multiple characteristics and risks. Obviously, the best known is Bitcoin, but others, like Ethereum, Binance Coin, or Cardano, have lately gained attention for intended purposes and communities. Some said characteristics one ought to look for when doing said research include:
- Purpose and Use Case: This is a question of knowing what the cryptocurrency is trying to do. For example, Ethereum was created with the intent to run a smart contract and hosting dApps. Bitcoin is more of a store of value.
- Market Capitalization: Market cap can serve one in determining an idea of the stability and prospect for growth of a cryptocurrency. Generally, bigger market caps ensure that more established and stable assets are captured.
- Development Team and Community: Research about the development team behind the cryptocurrency and behind it. Good community and active development are an indicator of long-run sustainability.
- Historical Performance: Past performance is not a prediction of future results, but the historical performance can sometimes provide indications about the types of market patterns.
Step 2: Choosing a Reliable Exchange
Once you have chosen what kind and how many cryptocurrencies you want to buy, something is waiting in store for you, like choosing a good exchange. There are some things that you have to put into consideration when choosing an exchange, among those are the following:
- Security Features: Any good exchange must be involved with such security features, ranging from 2FA, encryption, and placing assets in cold storage.
- User Experience: An exchange needs to have an interaction that allows user-friendly interfaces and customer support without compromise. A user-friendliness may make the difference between buying or selling currencies.
- Costs: The structures of the fees for trading, withdrawals, and deposits vary from one exchange to another. Proceed and research the fees applied in your preferred platform.
- Supported Currencies: Choose an exchange that supports the cryptocurrency you intend to buy. Not all exchanges support all cryptocurrencies.
- Legal Compliance: Refine the good practice of selecting exchanges that are working in line with the law in your country or state to prevent legality issues or loss of trust.
Best Cryptocurrency Exchange Services
- Coinbase: One of the most friendly interfaces, very newbie-friendly; Coinbase accepts many cryptocurrencies and provides learning resources.
- Binance: Low trading fees; large selection of cryptocurrencies. Experienced traders
- Kraken: Strong security; enough fiat-to-crypto pairs
- Gemini: USA-based regulated exchange with a secure system and easy interface
Step 3: Account Creating
The first step is creating the account for the exchange you’d like to trade on. For that, you need to go through the signup process in the exchange in which you are interested in trading. The signup usually asks for at least the following information most times:
- Personal Info: You’ll need to enter a first and last name, email address, and sometimes phone number. Most exchanges will also need to verify your identity due to regulatory demands.
- Security Configuration: Activate Two-Factor Authentication (2FA) as an additional layer of security for your account.
- Add Payment Method: Almost every exchange website will enable you to link your bank account, credit card, or some other source of funds to your account so you can fund it.
Step 4: Buying Cryptocurrency
Set up your account. Now you go out and buy up the currency you are interested in. Here’s the nut shell of how you do that:
- Fund Deposit: To get started, just fund deposit the currency you’d like to trade in. You can fund deposit using fiat money, USD or EUR, or cryptocurrencies
- Order: Now log on to the trading page within your chosen exchange. There are basically several ways you can enter various forms of orders:
- Market Order: Buy at best price available.
- Limit Order: Set the price you want to buy it at. The limit will only get executed if the price hits your defined level.
- Confirm Your Purchase: Before sending it you need to check the details of your order in terms of the Bitcoins ordered and the fees.
Step 5: Safe Storage Option
When acquiring any cryptocurrency, an individual should ensure that it will be safely kept. Keeping assets on an exchange exposes one to some risks; some of these risks include hacking and theft.
The major options for storage include the following:
- Hot wallets: Hot wallets, also known as online wallets, are connected to the internet. They are highly convenient for trading and easy access but stand a higher risk of hacking attacks. Examples of hot wallets include:
- Exchange Wallets: Most of the exchanges have a wallet where users can store the assets, but it is not recommended for long term because security problems may come.
- Web Wallets: These wallets are easily accessible and available but have no improved features of security.
- Cold Wallets: Cold wallets are the off-line wallets, which therefore are more secure. They are ideal for long term storage of assets that are kept from internet dangers. Some of such types include;
- Hardware wallets: physical storers that exist in real-world places where your private keys will never hit online world. This is one of the safest places one can keep the cryptocurrencies.
- Paper Wallets: A printed paper, containing your private and public keys. Paper wallets are safe from the threats of internet but are easily lost or damaged-do make sure that they are safe.
- Custodial Wallet: Custodial wallets are third-party managed. Think about an exchange or a cryptocurrency management company. It’s much easier to use, but you’ll have to entrust the private keys to the custodian. Try respectable services and get to know their security practices.
Step 6: Secure storage of your assets
Whichever storing method you had chosen, security is the most important factor. Here are a few best practices to keep up to date:
- Use strong mixed-case alphanumeric and symbolic passwords. Don’t use easily guessed information.
- Turn 2FA ON: Always use 2FA on all accounts. That is one more layer of security that thieves are now locked out of.
- Upgrade Wallets, computer software, and devices for safe usage of vulnerabilities.
Backup Your Wallet: This is a regular necessity, that is, backing up your wallet and keeping the backups in a safe place so you will be in need of them when you lost access to your wallet.
Be Cautious About Phishing: always watch out for your URLs and never click any suspicious link. The hackers’ usual trick is when they appeared to represent some specific exchange and services in a fraudulent exchange.
Use VPN: access your accounts through cryptocurrency especially public Wi-Fi with the use of virtual private network to ensure that your internet will be secured.
Conclusion
Investing in cryptocurrency can indeed be pretty lucrative. However, proper planning and security awareness are quite required for it. Now that you know how to invest in cryptocurrency in the safest way possible, to store it in the safest way, you will be able to protect your investment from robbery and loss.
Everything starts with proper research, putting it on trusted exchanges, and demonstrating your security in the way it’s stored. That’s all. Take these steps and venture forth in the cryptocurrency world confidently and securely. Again, only invest what you can afford to lose, along with learning more on the ever-changing digital assets.