Cryptocurrency Trading: Exchanges
Once you have done your due diligence and understand the premise of what you’re putting your money into how do you actually buy cryptos?
Currently the most popular method is via online exchanges. There are dozens of popular exchanges, you can see reviews for some of these HERE (And the others Coming soon). You make an account as you would any other online service, most exchanges will require ID and address verification in order to deposit FIAT and take a few days to process your application. If you are deposting one type of crypto to exchange it for another you shouldn’t need any verification. Once you have made an account it is HIGHLY ADVISABLE to create a two-factor authentication method, which means having two layers of security. I personally use the Google Authenticator app from the Play Store. Hacks of personal exchange accounts are not uncommon so this step shouldn’t be skipped. Most exchanges will walk you through the steps of setting this up.
Once your account is set up and you have the 2FA (Two factor authentication) you can send FIAT money to your account, by credit card, bank transfer, Paypal… depending on what the exchange accepts.
Below is an example of how to deposit your account with crypto using Bittrex:
Trading is a huge topic on its own which I may cover in another guide. For now this is all you need to know about buying and selling on exchanges. Please be aware that Exchanges charge transaction and withdrawal fees most of the time.
How to Trade Crypto Currency Coins, Bitcoin,Ethereum and other Alt Coins
There are some websites, the most well known of which is Localbitcoin.com, that match you with people who are buying or selling bitcoin in your country/area. There are options to purchase with bank transfer, deposit and in cash amongst others. This method is recommended if your bank doesn’t allow you to deposit to an online exchange. Please take the necessary precautions when using this method. There is a points system on the site that allows you to judge how trustworthy a buyer or seller is. If meeting in person, meet somewhere public and wait for at least 6 confirmations before you are sure the transaction has gone through.
You can check out this website for locations of Bitcoin ATMS near you, there are many different models but generally the process is the same and very straightforward. Press the screen to start. It will tell you to place the QR code of your wallet up against the scanner (wallets are explained HERE). Once it has read the QR code it will display your public address corresponding to the QR code. You can then insert cash into the ATM. Once you have inserted all the cash you wich to turn into BTC you can press confirm and the screen should tell you how much BTC has been sent to your wallet. Some ATMs also allow you to withdraw FIAT currency from BTC but beware that most ATMs will charge a premium for their services.
Peer to Peer
The good old fashioned way and how I started out buying BTC. Similar to Localbitcoins except you buy from friends, acquaintances, meetups, strangers. Obviously be aware of the risks, especially when dealing with strangers.
Storing your cryptocurrency
All cryptos are stored on “Wallets”. These can be on your computer, your phone, a specialized piece of hardware, a piece of paper or even only exist in your mind (yes, really). Even exchanges store your cryptos on their own wallets.
you can think of wallets in much the same way you would think of your traditional cash wallet or your bank account. It contains the amount of crypto that belongs to that “address”. Setting one up and using it to send and receive payments is very easy, but you need to be very careful with your security.
Your wallet uses something called a “private key” to sign any transaction you make. This also acts as the ID of your wallet. If you lose access to your wallet your private key is the only thing that will reliably let you get access to your funds back. When a wallet is created it will display your private key and sometimes a 12 word phrase. You should write both of these down as backups and store them somewhere safe.
Your “Public Address” is what other people use to send you funds. DO NOT GET THE PUBLIC ADDRESS AND THE PRIVATE KEY MIXED UP.
It is impossible for someone to guess your private key, even with a supercomputer, but if someone knows your private key they will have access to your account so be extremely careful if you decide to share that information with anybody. If someone finds your private key they can send your funds to their own wallet and there is no way to reverse this.
There are three important points to know about storing cryptocurrencies:
- When your cryptos are on an exchange you are placing your trust in that exchange. You DO NOT have 100% assurance they will not be hacked
- When controlling your own wallet access to the private key gives you access to your funds. DO NOT reveal your private key to anyone.
- BACK UP your private key somewhere, preferably offline, on a piece of paper or a hard drive disconnected from the internet. Ideally you should have more than one backup. If you lose access to your wallet and don’t have a back up your funds become irretrievable forever.