Become a Cryptocurrency Trader in 5 Minutes
After reading our previous articles, you may be wondering the ways to start your own trading. If so, this article will be super helpful. Today, we will provide a tutorial on how to purchase cryptocurrencies and how to store them safely in your own wallets.
For our previous articles, click here!
How to buy cryptocurrencies?
Practically, there are two ways to obtain cryptocurrencies. One way is to buy them from exchanges, another is by mining yourself. Today, we will focus on the former way and we may talk about mining in the following days.
There are numerous exchanges available in the market today and many of those have developed for years. In the following, we will introduce some of the largest exchanges and you may decide which to use at the end.
Bitfinex is a cryptocurrency exchange platform based in Hong Kong and it is the largest Bitcoin exchange platform in the world. It offers normal trading function and also margin trading function. Also, it offers a peer-to-peer financing feature, which allows you to earn interests everyday by lending your cryptocurrencies to other users. One of the advantage of a large exchange is that the liquidity is always high, which means you can complete the transactions quickly. Trading pairs include BTC/USD, ETH/USD, LTC/USD, ETC/USD, BCH/USD etc.
However, in August 2016, Bitfinex was hacked and $72 million Bitcoin was stolen from the company’s customer’s accounts. Also, in April 2017, users can no longer withdraw USD from their accounts, right after Wells Fargo placed limitations on Bitfinex’s wire transfers.
Bittrex is a cryptocurrency exchange platform based in the United States and they claim to have the industry-best security practices. Despite some small scale hacking incidents, Bittrex hasn’t suffered from any large hacking activities. Apart from the popular trading pairs, Bittrex also offers some less common pairs such as BLK/BTC, GAM/BTC, UBQ/BTC etc. One important point to note is that Bittrex has the largest volume of trading Bitcoin Cash, the cryptocurrency that splitted from Bitcoin on 1 August. It is also one of the few exchanges that offer USDT(aka Tether) pairs instead of USD pairs. USDT belongs to cryptocurrency and practically its value is always equivalent to that of the USD. We will have to detailed introduction to USDT in the coming days, stay tuned!
Bitmex is an exchange platform offering derivatives products on top of Bitcoin. It is for advanced traders who have developed basic understanding and experience in trading cryptocurrencies. For BTC/USD pair, you may apply up to 100x leverage and for ETH/BTC pair, you may apply up to 50x leverage. All trades are carried out using Bitcoin so that the traders only have to deposit Bitcoin into their accounts. Future and swap contracts are available in Bitmex, which are quoted in USD and settled in Bitcoin. Always remember, investments involve risks and never invest before conducting researches and analyses.
How to keep my cryptocurrencies safe?
Even though the exchanges always claim their platforms as the safest in the market, it is always safer to store your cryptocurrencies in your own wallets.
Hot wallets are connected to the internet and thus they are riskier. However, keeping small amount of cryptocurrencies in hot wallets allows you to conduct quicker transactions. Examples are the wallets in exchanges, where hackers can have easier access to compared with cold wallets.
Cold wallets are not connected to the internet and there are two main types of cold wallets: Paper wallet and Hardware wallet. There are two important terms here, the public key and the private key. The former is the address you use to receive crypto and the latter gives you the access to that particular address.
Paper wallets are wallets that store your private keys offline, while you may recover the keys by using the 12-word seed you noted at the very beginning. Private and public keys are printed on a paper which you have to keep it safe. Electrum is one of the examples and you may find its detailed introduction here.
Hardware wallets are wallets that store private keys in a secure hardware device. They cannot be accessed by malware and users can use them securely and interactively, as opposed to paper wallets which must be imported to software at some point. Examples are Trezor and Ledger and usually you have to pay for hardware wallets.
Disclaimer: We do not endorse the aforementioned products and this article is solely for academic purpose.
We will keep posting articles related to cryptocurrency in the following days. Feel free to leave a comment and follow us!
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