Cryptocurrency is a digital currency that uses encryption techniques to control the creation of units and verify funds being transferred between buyers and sellers. Because this technology operates independently from any central bank or government entity, it allows users full ownership over their money without going through a third party (like a bank).
Purchasing cryptocurrency is not a simple process, but it’s also not that difficult. This guide will help you buy your first coin.
Which Cryptocurrency Should You Buy?
Given the number of cryptocurrencies on the market, it can be daunting to pick the right one to invest in. The reality is that if you’re getting into cryptocurrency, you should probably stick with a more established currency like Bitcoin or Ethereum.
These currencies have been around longer and are more stable than some of the newer currencies on the market. If you want to test out something new, though, there are plenty of options out there for you to try. Some up-and-coming coins include Zcash, Dash, and Ripple’s XRP.
How Do You Set up a Crypto Wallet?
Cryptography is a notoriously complicated and intimidating field. Don’t let that scare you off from creating a secure cryptocurrency wallet. To keep your funds safe, you must follow these tips to get started:
- Have a PIN or password set up on your mobile or desktop device before installing the wallet software to protect your recovery phrase (or private key).
- Generate the private key with several random words. Make sure you save this in an encrypted format on your computer before being able to spend actual money. If you have multiple devices and don’t have time to remember all of these things, use something like Google Authenticator.
- The public address where the funds will be sent should be written down somewhere safe (such as in your email) and kept secure in case you lose access to your devices or phones. That could be possible if those devices are stolen, so make sure it’s safely stored away from any online accounts such as Facebook and Twitter that could hand over sensitive information when hacked.
- Choose a strong password for the account so that no one else can read it through online services such as Gmail without two-factor authentication enabled in Google Authenticator. So, even if someone gains access to these accounts, they won’t have access to anything unless they know the password too.
- You should encrypt some sort of backup – this is what holds onto what would typically be lost if passwords were forgotten or cracked by hackers (like the one who stole $50 million worth of bitcoins).
One option is encrypting a paper printout with a QR code that uses multi-signature technology, so only 2-of-3 keys are needed for sending money out – instead of just 1, thereby making it more difficult for hackers.
How Do You Buy Cryptocurrency and From Where?
To buy cryptocurrency is a straightforward process, but there are some key steps to take that can save you headaches. The first step is getting a cryptocurrency wallet.
To get started, go to one of the many online exchanges like Coinbase or Gemini and register an account with them. Once your account is verified by either request or doing it later, you’ll be able to buy crypto with a credit card or bank transfer.
The next step is buying cryptocurrency with fiat currency such as dollars, pounds, Euros, etc. That can be done through an exchange site like Coinbase directly (using your bank account) or by exchanging Bitcoin first for another digital currency like Ethereum or Litecoin then converting back to Bitcoin at the best available rate.
It is important to note that it will be subject to fluctuating exchange rates once you convert crypto into fiat money. Do not use it for day-to-day purchases, as it will lose value rapidly unless held securely in a wallet until you’re ready for use.
Where Do You Store It?
Before you can start investing in the cryptocurrency craze, you need to understand what crypto is, where you can store it, and how to buy it.
- Cryptocurrencies are digital currencies that function as money or credit cards. Instead of being issued by a central bank or backed by a government, they’re generated on a blockchain—a shared public ledger of all transactions using them.
- The key point is that each transaction is anonymous and encrypted so that no one but its owner can see it. That makes them more secure than standard credit cards because your financial details aren’t stored anywhere online, leaving your personal information out of reach for hackers.
- With all this security and anonymity comes a measure of risk, though. Hackers can hijack wallets and steal their value. That isn’t likely (they’re no more likely to do that than physical wallets), but if you want some peace of mind, there’s an easy way: hardware wallets are available with built-in encryption keys for storing cryptocurrencies offline.
Risks of Buying Cryptocurrency?
Before taking the plunge into buying crypto, it’s crucial to consider any potential risks. There are several ways in which your crypto holdings could be in danger.
- The crypto exchange that you purchase cryptocurrency from can be hacked.
- Your cryptocurrency wallet can get hacked if it contains a large number of coins.
- Any third-party storage service you use to hold your coins could also potentially be compromised by hackers.
However, once you navigate the risks carefully, you can successfully buy your first crypto and continue trading.
