How to get (and store) cryptocurrencies
Unless you’ve been living under a rock all this while, you’ve probably seen and heard about the cryptocurrency rush.
At the forefront of it all is Bitcoin – seen by some as a scam and digital gold by many others. With the prices of Bitcoin and other cryptocurrencies consistently breaking new records, it’s no surprise that everyone is looking to get on the wagon.
But before you get on the wagon, let’s take a look at:
What are Cryptocurrencies?
Cryptocurrencies or cryptos are digital assets that exist only in a digital form – meaning that there is no such thing as physical cryptocurrencies.
Besides that, cryptos are entirely unregulated and decentralized – meaning that cryptos are free of government control.
They are not stored by banks but instead on crypto wallets (more on that later but you can check the best crypto wallets here: https://blog.tezro.com/best-crypto-wallet-apps/).
Types of Cryptocurrencies
Bitcoin isn’t the only cryptocurrency in the market. In fact, altcoins have gradually risen to challenge Bitcoin for the prime position.
These are just some of the most popular cryptos on the market today:
- Bitcoin (BTC) – the most popular form of crypto in the world that is also the most widely circulated.
- Ethereum (ETH) – second most popular type of cryptocurrency. Regarded as the working man’s currency with a variety of features like smart contracts.
- Litecoin (LTC) – the silver to Bitcoin. Developed as a means of correcting all of Bitcoin’s existing issues.
- Ripple (XRP) – developed by Ripple Labs and used by some companies to transfer funds.
- Dash (DASH) – a cryptocurrency that focuses on privacy and safeguarding information during transactions
Now that you’ve gotten an idea of what cryptos there are, let’s take a look at how you can get your hands on some.
1. Crypto Mining
Unlike fiat currencies, cryptos are entirely decentralized – meaning that anyone can generate/create their own Bitcoins, Ethereum, etc.
If you’ve got enough capital and plenty of cheap electricity, you can start mining your own cryptocurrencies.
But given how competitive the market has become, this isn’t really recommended.
2. Buying Cryptos on An Exchange
Rather than mining your own cryptocurrencies, it’s much more convenient to buy them on an exchange.
These services exchange fiat currency i.e. USD for cryptocurrencies i.e. Bitcoin. However, you’ll probably have to pay a service fee and be subject to a less favourable exchange rate.
But at the end of the day, exchanges are still the easiest way to get investing in cryptocurrencies. Crypto exchanges are 100% online and to make use of them, you will need a crypto wallet and a bank account.
This takes us to our next point:
Unlike traditional assets, cryptocurrencies are not stored physically in a bank. Rather the encryption keys that give you access to them are kept on what is called a crypto wallet.
These wallets can be divided into two categories:
I. Hot Wallets
A hot wallet is an online service that stores your cryptocurrencies on a server for easy access. These services are usually free to use and allow you to send and receive cryptocurrencies from other users.
Besides that, some hot wallets also let you buy new cryptocurrencies on their in-house exchange.
Hot wallets are extremely convenient and are used for performing various transactions. While relatively safe, hot wallets are a favourite target of hackers and thieves. And cases, where millions of dollars worth of cryptocurrency have disappeared, are not uncommon.
As a rule of thumb, store only a minimal amount of cryptos in a cold wallet. The bulk of your assets should instead be kept in a cold wallet.
2. Old Wallets
Cold wallets are the more secure method of storing cryptocurrencies. They come in a variety of forms – with the most common being a pen drive or hard drive.
These wallets do not need to be connected to the internet to work. Thus making them nearly immune from cyber attacks of any kind. Additionally, cold wallets can be physically secured i.e. in a safe deposit box or safe for added protection.
While definitely secure, a cold wallet can be bulky and difficult to carry. Additionally, it can make gaining access to your cryptocurrencies difficult.
So there you have it, a short but informative look at what cryptocurrencies are, how to obtain them, and how to safely store them. Just remember that the crypto market is an unstable one and you can just easily make a fortune as you would lose everything.