The world of cryptocurrency can be alluring; it has many prospects and many pitfalls. The reasons for buying cryptocurrency are varied – some might want to use it for spending in specific marketplaces while others are going to trade it for altcoins. Whatever your reason for wishing to buy Bitcoin or other cryptocurrency is, there are some things you will definitely need to know before you do.
Somewhere to Store It
Cryptocurrency is no different to normal currency in a sense that you will need somewhere to put it in when you own it.
When it comes to storing your cryptocurrency, there are multiple options and tools to choose from, with some being more secure than others. We will introduce you to our two preferred options and give reasons why you should consider them above all else. Beyond that, the decision is entirely yours.
As the name implies, this wallet is installed as software on your computer.
- A cheap solution with plenty of providers to choose from
- Cryptocurrency is always accessible when you need it
- Not as secure as a hardware wallet
A hardware wallet works like a USB device or an external hard drive. Storing crypto on the hardware wallet eliminates the ability for hackers to access it.
- It’s incredibly secure
- Can be a costly option, with some hardware wallets exceeding $100
- May not be practical to carry around with you on the move, so the cryptocurrency might not always be accessible when needed
The last point is that you will need to find a wallet that supports the cryptocurrency you wish to buy. A wallet that holds Bitcoin might not be able to store XRP, for example, and vice versa. Always select a compatible wallet.
All Coins Work in a Slightly Different Way
The next thing you need to know is that coins operate in different ways. Some are incredibly quick to transact with; others, like Bitcoin, can take an eternity to complete a complex transaction when the network is congested. Make sure you are selecting the crypto that suits your needs.
For example, if a large marketplace you are going to trade in accepts XRP and Bitcoin, you may wish to make a purchase with XRP and save yourself the time it would take to buy something with Bitcoin. This is due to the fact that the Ripple network can process over 1,500 transactions per second, which is way faster than Bitcoin’s.
When you know which cryptocurrencies you are interested in, read in detail about how they work. Also, pay attention to how much transactions cost, as Bitcoin, for instance, has considerably higher transaction fees than most altcoins.
Is the Coin You Want to Buy Minable?
A key thing to consider before buying cryptocurrency is whether or not the coin you have chosen remains easily minable. If it is, it might be worth mining rather than buying. To mine, you need to have a special computer equipment. There are mining pools and cloud services that you can join as well.
Mining is often cheaper than purchasing, although some cryptos are not minable and some are impossible to mine because they have been so heavily mined already.
Mining can be a very lucrative practice. If you are patient, it can pay off significantly. Some coins give better returns and some are taxed by the developers. Again, read up on the particular crypto and its mining practices before making a decision.
Security Is Vital
Hackers use a multitude of ingenious ways to rob you of your cryptocurrency, this is why it is advisable to have a hardware wallet. There are other security features you should be aware of.
With a cryptocurrency wallet, you will be allocated a public and private key. The public code is for sharing and allows for the authorized access to complete transactions. The private key is for you to access your cryptocurrency and should not be shared under any circumstances.
Hackers will do and try all sorts of spoofing or phishing to garner private key information from you; so don’t save it on your computer. Instead, write it down and lock it away in your house.
If you want to buy cryptocurrency, you will likely need to use an exchange at some point. Some exchanges are more regulated and secure than others. Make sure you are choosing one that is based in a reputable country with stringent policies in place to protect consumers.
Exchanges charge fees for their services. You can compare the fees of the shortlisted exchanges and decide which is the best for you.
Security also plays an important role, low-trust exchanges are more vulnerable to hacks and have had user’s funds stolen on more than one occasion. So, check whether the exchange you are going to use enjoys positive feedback from customers and invests heavily in security. Opt for those that have not had a single cent stolen from the user’s funds.
Weigh up the features of each exchange and select the one with the most benefit to you.
To Sum It Up
If you’ve decided to join the crypto community, make sure to buy coins safely. First, choose the currency you’re interested in, then, set up a wallet to protect your future funds. Explore the unique features of different currencies, and always keep in mind basic security measures. When you know what cryptocurrency you want to invest in and where to store it, register on a reliable exchange with multiple tools for buying and trading.