There are almost no barriers to entry for the world of cryptocurrency market.
Investors interested in jumping into the new technology need only to complete a few quick and easy steps to get started. To buy or sell cryptocurrencies, consumers will need access to an internet-connected computer. Regular access to an internet-connected mobile device, such as a smartphone or tablet, is not absolutely necessary but will vastly improve user’s experience with digital currencies.
Once they have selected a device or devices to use, consumers need to set up a digital wallet. Next, they will choose one or more cryptocurrencies appropriate to their needs and intentions. Finally, consumers can pick an exchange to work with. With those pieces in place, they will be ready to acquire their first cryptocurrency tokens. Consumers new to the cryptocurrency market are advised to take some time during the setup process to research digital currencies and exchanges if they have not already and learn basic information about cryptocurrency. Proper caution and a little legwork can substantially reduce investors’ risks, help consumers save money and improve their experiences.
Blockchain-based digital currencies are not, strictly speaking, “stored” in digital wallets or on a user’s devices. Tokens or coins are stored on the decentralized platform that tracks all cryptocurrency transactions and electronically assigned to users’ public keys or bank accounts. Digital wallets are software interfaces that allow users to interact with their accounts. Wallets save users’ public and private keys (i.e. passwords), protecting them through encryption or “cold storage.” Cold storage is when information is saved on hardware rather than on the internet. This creates a layer of safety because in order to hack information in cold storage, viruses or other attack programs must be downloaded and then sneak past whatever protective software users are running on their devices.
Digital wallets may be installed on desktop computers or mobile devices. Users may also elect to set up web or cloud-based wallets, which are accessible from anywhere with an internet connection. Alternatively, consumers may opt for hardware-based wallets, which employ cold storage to protect cryptocurrency accounts and coins. Wallets installed on desktop computers store public and private keys only on the single computer they are loaded onto. This creates both security and risk. Desktop wallets are secure in that hackers and thieves must gain access to that specific device to steal or tamper with the user’s account(s). However, should the device become damaged or unusable, users must have a backup of their account and key information or they could lose access to their assets. Examples of commonly used desktop wallets include Bitcoin Core, Hive OS X and Armory.
Digital wallets can be set up on mobile devices via easily downloadable apps. Mobile wallets allow users to pay for products and services in participating brick-and-mortar establishments using though several different methods. Bitcoin Wallet and Mycelium are options for mobile wallets.
Web or cloud-based wallets include Coinbase and Blockchain. They can be accessed from any internet-connected device and may offer many of the same benefits as app-based mobile wallets. It is essential that consumers verify the safety and authenticity of any mobile or web-based wallet they are considering using. Malware systems can be configured to look like digital wallet programs and may trap incautious users into entering their public and private keys, leaving their accounts open to theft. Users should only use wallets with strong reputations in the cryptocurrency community and clear safety and verifiability features.
Unlike other forms of digital wallets, which are usually available for little or no cost, cold storage wallets must be purchased and may cost up to a few hundred dollars. Cold storage wallets come in the form of separate pieces of hardware much like portable hard drives. They can generally be connected to other computers using USB cords when consumers wish to access their accounts and move funds around. Typically, consumers who adopt this form of wallet leave a small amount of currency in circulation in an active internet-accessible account for ease of use. Regardless of what form of wallet consumers select, they should regularly backup their systems to ensure that access to their assets is not lost in the event of computer malfunctions. Choose A Currency
Once consumers have set up a digital wallet, they need to determine which type or types of cryptocurrencies are most appropriate to their needs. Not all cryptocurrencies are alike. Some, like Bitcoin, can be “mined” by users with the interest and computer processing power to do so. Others cryptocurrencies may have been introduced to the market in IPOs only after all available blocks or units were completed. Cryptocurrencies may be inflationary or deflationary and come in varying levels of liquidity. (Liquidity is the ease and speed with which a cryptocurrency may be exchanged for another cryptocurrency or fiat currencies.) Certain currencies are more likely to be accepted by merchants who take cryptocurrencies as payment than others.
New investors should also be aware that some cryptocurrencies are designed to serve industry-specific purposes. AudioCoin, for example, is a music-industry-specific cryptocurrency that would be largely unhelpful to consumers looking primarily to use their funds for every-day transactions. Generally, major digital currencies such as BitCoin and LiteCoin, which are readily available and highly liquid, are safe places for consumers to start if they are uncertain about their long-term needs.
After consumers have determined which type or types of cryptocurrencies to start with, they are ready to acquire their first tokens. While it is possible to accumulate tokens through mining or by earning them in the digital marketplace, most new investors buy their first tokens in an online exchange. Which exchange an investor decides to use often depends largely on a few key factors.
With digital wallets in place and their currencies and exchanges of choice decided, new investors are ready to purchase their first cryptocurrency tokens.