The cryptocurrency market is a massive entity that includes various investment solutions like decentralized finances, tokens, coins, and mining. But in order to join it all, you have to go through one step that sometimes becomes a massive barrier for unprepared newbie investors: buy cryptocurrency.
But before buying cryptocurrency you should choose the way or a place to store it and most importantly – find out how to do it properly.
What’s a cryptocurrency wallet and how to use it?
Cryptocurrency largely differs from a regular digital fiat currency or digital form of money. Cryptocurrency is strictly tied to the specific network that’s being called the blockchain. Every bit of information about each and every coin is contained inside of the blocks that are being mined in the blockchain almost every minute. In order to access your own coins, you need to be in sync with the blockchain. That’s is why there is no way of using cryptocurrencies physically or offline as we do with fiat money.
To solve the availability problem modern cryptocurrency wallets give you access to your funds by having a constant connection to the blockchain through the internet. After entering your wallet it syncs with the blockchain and allows you to send and receive digital funds.
Hot cryptocurrency wallet
Hot wallets are constantly connected to the blockchain hence they need a stable internet connection in order for you to receive and send funds. The main advantage of such a wallet is the constant access to your coins. The main drawback of some of the hot wallets out there is the place where private keys are stored.
Private keys allow you to spend your coins when your wallet is connected to the blockchain. By using a private key you receive a right to make transactions of funds that you own. Some wallets allow you to store private keys wherever you want but some of them store them on their own storage or servers which creates additional risks of your funds being stolen if serves faces a hacker attack.
Cold cryptocurrency wallet
For that particular case, there are private cold wallets that allow you to store your funds on a physical medium that is not constantly connected to the blockchain. In that regard funds on your physical or cold wallet are not accessible without physical access to it. In order to receive or spend funds from it, you have to connect it to the PC and start sending or receiving funds.
Once you’ve opened your cold or hot wallet just use the public address to receive funds on it. For example, if you are willing to receive Ethereum, use the public address of your ETH wallet. If you send the wrong public address to someone who’s sending you funds the transaction won’t go through or you are going to lose your money.
Where and how to buy cryptocurrency?
There are a lot of ways of buying and selling cryptocurrency. For the easiest solutions, the only things that you’ll need are a debit or credit card and passport or driver’s license.
You can buy crypto on:
Cryptocurrency Exchanges. Cryptocurrency exchanges like Binance usually also offer you the ability to buy or sell currencies with others. By using a bank card you can almost immediately receive cryptocurrency on your wallet.
P2P Exchange Websites. On P2P exchanges you are able to buy cryptocurrency from other people that are willing to sell it. The main drawback might be the elevated exchange rates that won’t be in your favor.
OTC trading desks. If you are willing to buy a large amount of cryptocurrency you may use the over-the-counter trading desks designed for clients with large buying volumes. Various services allow you to settle high-profile deals and then receive crypto to your wallet.
Most services require a basic KYC procedure in order for you to buy or sell crypto.
After buying cryptocurrency you are able to send it to the exchange or just hold it. In both cases, you will need an initial wallet to then manage your funds as you wish.
