If you are new to Cryptocurrency and are thinking of buying Bitcoins (or part of a Bitcoin) or another Crypto Currency then we would recommend that you read the information in this article.
As a potential investor in Bitcoin or another Crypto Currency, whether you have $1000, $10,000 or $100,000 to invest, the principles will be the same. If you read and apply the following rules then you should not have any problems.
Open An Account With A Reputable Exchange
To purchase a Bitcoin or other Crypto Coins you will need to open an account with a reputable Crypto Currency exchange. A reputable exchange will request for you to provide suitable identification (ie. Passport, Drivers License, Proof of Residency etc) to gain account approval. All these exchanges will have fees for purchasing & selling the currency on your behalf. The fees vary from exchange to exchange but it is worth checking them out in advance so that you are fully informed. Once your account is approved you can then commence transferring funds into your account via:
- Bank transfer of Fiat currency (ie. USD$, Euro etc)
- Pay Pal
- Credit Card (be wary of the fees associated with doing it this way)
- Other means
For a list of reputable Crypto Currency Exchanges you will find them in this article.
Understand What You Are Buying
Do you understand what Bitcoin does and how it functions? If the same applies to another Crypto Coin you are thinking of investing in then I strongly suggest that you do some research into the product. So many people are taking a “tip” from a friend or relative who tell them “it’s a sure thing….it’s going to the moon!” On this recommendation people are literally throwing their hard earned cash at something they have no idea about. The prices are fluctuating wildly in this market mainly because of a lot of “spin doctors” making predictions without any facts. I have seen forums with over 1500 people on “live” all talking up or down “coins” without any facts to verify their stance. There is so much “chatter” moving so quickly it is difficult to keep pace.
So be warned – DO SOME RESEARCH!
Be Aware Of Scams
As this article is being penned there are some 1493 currencies (sorry….. by the time this paragraph was completed there are 2 less – 1491 listings) listed on Coin Market Cap (click here for the current live numbers). On the recent fall in the market this number dipped to 1440. There are new ICO’s being released weekly and just as quickly some of them are falling off the radar with their investor’s funds. As this market is still in its infancy there are ICO’s being released with nothing more than an idea and a good social media marketer. They are able to raise millions of dollars of your money with no real obligation to follow through with the project.
How To Store Your Bitcoin Safely
When you purchase your chosen currency (let’s use Bitcoin in this example) you are issued with 2 important KEYS. One is a PUBLIC key and PRIVATE key.
What is the difference between a PUBLIC and PRIVATE Key?
To put it simply when you purchase Bitcoin(s) or part of a Bitcoin you are issued with a Public and a Private Key.
The Public Key allows you to encrypt your Bitcoin transaction. However the Private Key is the only way to decrypt your transaction to allow you to gain access to it for sale or a transaction for other means.
Storing Your Private Key:
If your computer is hacked and your private key is stolen or you are careless and leave it in public view your Bitcoin(s) can be transferred into another persons account and it will be lost forever with no trail to follow. Should you lose your private key your Bitcoin(s) will also be lost forever in cyber space.
What you can do to prevent this happening is:
- Store your keys in an online wallet and then take it offline
- Make several copies of your KEYS (possible ways: in writing, on a USB, on a card reader, engraved on a piece of metal) Store these in a safe place and try to think of every possible contingency. ie. Fire, water damage, forget where they are). I know of some people who have engraved them onto a metal plate & buried the plate.
- You could also write it on paper & store it in a watertight container & bury it in your backyard.
- Lock it up in a bank safety deposit box (but do you trust your banks)
If you choose to keep your Bitcoins on the exchange’s site there are risks associated with that (referring to the Mt Gox Exchange)
The safest practice is to store it in a wallet and take it offline then securing your keys in a safe place. If you do write your keys on paper do not make the reference for the keys too clear in case someone happened to stumble upon your storage crypt.