Many people who are interested in getting involved into digital currency market often ask questions such as “How to buy Bitcoin?” and “Where to buy cryptocurrency?” The truth is that you can obtain cryptocurrencies in many different ways.
Bitcoins and other altcoins can be bought from either cryptocurrency exchanges or directly from other digital currency holders on numerous online marketplaces. There are also many ways to pay for them, when buying Bitcoins. It can be paid with cash, credit and debit cards, wire transactions, and even exchanging with other cryptocurrencies if you possess them (Ehter, Litecoin, Ripple, Zcash, etc).
Those who wish to buy cryptocurrencies with a credit card or via Paypal, must know that it is still a difficult process which largely depends on buyer’s jurisdiction. This difficulty is still present because these transactions can be reversed with a simple phone call to the company issuing a card. As it’s quite hard to prove any items were exchanged in this money transfer model, the majority of exchanges and private sellers tend to avoid this payment method.
In recent years, the number of crypto users has grown more than expected which changed a situation in some countries. In North America, Circle and Coinbase offer buying services by using credit cards, without any problem. Coinbase, CoinCorner, and Bittylicious provide the same kind of purchases in the United Kingdom, where they approved 3D secured debit and credit cards on numerous MasterCard and Visa networks. Underbanked users from North America have the option to use the Expresscoin, which took an important role in the market, by approving money orders, checks and wire transfer options.
Two most important things that new digital currency users should learn about are cryptocurrency wallets and cryptocurrency exchanges.
After buying some Bitcoins, new users need to store this new cryptocurrency somewhere. In the digital currency world, these places are called “wallets“, which is quite similar to having a traditional bank account. Depending on the desired security levels, users can choose between different wallets, each having different security preferences. While some are pretty similar to traditional everyday accounts, just like the wallets in our pockets, the others have top-class protections.
There are three main options that new users can choose:
– Software wallet, which is located on the HD on user’s computer
– Online service, which is based on web
– A “vault” service offering user to protect his cryptocurrency offline or a multisig wallet which uses several different keys in order to protect the funds.
It’s important to know that most of these methods are known for having certain vulnerabilities. If users decide to store cryptocurrencies on their personal computers, they must back up their wallets on regular basis. It’s essential because, at some point, the drive may be corrupted and all the data vulnerable. Moreover, online wallets have varying degree of security from cyber-attacks and hackers, which goes from quite good, heavy-protected ones to some weak identification and password mode.
Most new users soon realize that there’s a variety of wallets and exchanges competing for their spot in the market, which can make a choice be a bit hard. Some are fully developed, sophisticated exchanges for established traders, while others are in a form of simple wallet options where buying and selling are mostly limited. The majority of wallets and exchanges are made to contain certain amounts of both digital and fiat currencies for all users, just like traditional bank accounts as we know today.
However, wallets and exchanges are the most common choice of those who wish to get involved in standard trading, and do not seek for total anonymity. These users must be aware of the lengthy bureaucratic procedures where the ID proof must be provided, as well as some all-inclusive contact info. In many countries this is determined by the law, so the regulated exchanges cannot really avoid it. This means that each company must respect the KYC and AML requirements.
The best exchange choice for many new users largely depends on where they are located. In recent years, the biggest exchanges by trading volume are Bitfinex, Poloniex, Bitstamp, Kraken, BTC-e , Huobi, BTCC, and OKCoin.
Coinbase is a well-known wallet and exchange that accepts the exchange of USD and EUR for BTC, also offering mobile applications to users. This US company recently started to operate in a significant number countries in Europe as well.
Circle offers services of sending, receiving, storing, and trading cryptocurrencies. At the moment, only citizens of the United States can link their bank accounts, but using credit cards and debit cards are an option as well.
Xapo is also a wallet and card provider that entered this area of market. They offer services of depositing in fiat currency which can be later converted to BTC in user’s account.
Coinjar is another exchange and wallet company, mostly concentrated on the Australian market. This company raised a significant sum in venture funding and later launched a debit card, “Coinjar Swipe”, two years ago.
Once the new account has been set up, the users must link their bank account and the exchange account via wire transfer. This usually includes a fee.
For those who prefer anonymity and wish to avoid bank procedures, it’s best to obtain a cryptocurrency by making a face-to-face trade with local sellers. LocalBitcoins is the well-known website where these transactions are arranged and all the prices negotiated as well. This site has also an escrow service, an added layer of protection for both parties.
However, there are some security issues for buyers and sellers, especially when dealing with a big amount when trading. It’s highly recommended to meet in the public space with a lot of traffic, far from private homes in order to take all the precautions when carrying large amounts of cash. When meeting face-to-face, users always have the access to their cryptocurrency wallets, whether it’s a laptop, tablet, or smartphone. Internet connection is important for confirming the transaction.
For those who are suspicious about these personal meetings, it’s advised to check out MeetUp.com, to see if the local area has a Bitcoin meetup group. This is the place where people can do it all in group setting and learn a lot of new stuff from other users.
Depending on the seller, new members usually have to pay a premium of around 5%-10% over the exchange price for a face-to-face trade, privacy, and convenience. Reputable traders often negotiate the price before the meeting, but many don’t want to wait too long in case of the dramatic shift in Bitcoin’s value, which is not uncommon. While most of sellers prefer non-reversible cash payment, some of them still accept the payment via PayPal. It’s also important to check if such trades are legal in local area before meeting with traders.
Investing is one risky but very profitable model cryptocurrency users. There are many startups that offer people to invest money in their new projects, or to be supporters of their campaigns.
The ICO campaigns are dominating the investment world in last two years. These new cryptocurrency projects raise money by selling some new printed coins, trying to include them in the market. ICO investing is the most popular choice of startups which tend to avoid the complicated and regulated modern economy processes. In these campaigns, those who supported the project get a percentage of the cryptocurrency that has been sold. At the end, the project backers mostly get BTC or ETH. Many ICO campaigns ended in just minutes after exceeding their goals, such as Gnosis, Golem and Waves.
When it comes to Contract For Difference (CFD) trading, users are able take a position on the price of an asset without literally owning it. The thing that is special about CFDs is that users can earn money from both rising and falling values. The advantages of this trading model can be seen in fast transactions, low fees, leverage, high-frequency trading, and automated strategies. It’s also important to know that there are no hidden fees for holding a wallet, no theft risk when holding an asset, and users are able to buy a big volume of coins with fix price.
In this type of trading, there are several essential things you should respect in order to be successful:
– Preserving Precious Capital
– Ensuring you have an edge
– Controlling the CFD leverage
– Establishing realistic goals
– Keeping a CFD trading journal
– Having a well defined trading plan
CFD trading has some quite appealing advantages, but also some disadvantages that all traders must be aware of.
– When the traders have a feeling that the price of BTC will fall, they can open a sell short trade. Opening short trades is not possible when traders have an actual Bitcoin, but this method opens a lot of options when making a trading strategy.
– Brokers with a good development experience can create custom scripts that help them trade. It means having the automated strategy.
– CFD trading enables very fast execution in general. However, this enormous speed of execution plays a significant role only when the trade volume on exchanges is high. Some brokers even offer instant execution, relying on the liquidity providers. It allows trades make their moves very quick as the market values constantly change.
– CFD trading leverage helps users to handle a large position with smaller funds. Those with trading experience can use this to make a huge profit with just one trade. However, traders should be careful as this is quite risky.
– As in the whole cryptocurrency trading world, CFD method is also based on trust. In the past, many exchanges suffered huge losses because of hackers and cyber-attacks. In CFD trading, the majority of brokers are regulated, which helps keeping the users’ funds safe.
– Traders can expect some pretty low fees, but it still depends on the chosen broker. In general, closing and opening trades doesn’t require any payment. However, there are brokers who tend to charge traders with financing fees, so it’s important to be cautious.
– Many brokers who offer cryptocurrency trading services must subtract some charges, which often comes in a form of a commission or a spread. In some cases, brokers put a spread on all trading assets, without an extra fee to be paid. It means increasing the cost of trading. There are some additional charges that new traders are not aware of, such as those for holding trades overnight.
– Every time the trader wishes to deal with BTC directly, it’s essential to choose the right exchange, as the value of Bitcoin is quite different on each exchange. This difference can significantly lower the profit.
As Cryptocurrencies are slowly dominating over the modern-day market, there’s a large number of shops and services that included the most powerful digital currency, Bitcoin, as the payment method. There are also numerous large corporations that now accept cryptocurrencies as a legal way to pay for their products and other services. Nowadays, the products can be easily purchased with Bitcoins and other cryptocurrencies online. The good thing about this payment method is the speed of transaction when sending and receiving the cryptocurrency, so many companies are willing to accept Bitcoins in exchange for cash.
Many cryptocurrency users usually ask: “Which online shops accept BTC in exchange for their products and services?” In the short list below, there are some of the most popular places and companies where you can shop with BTC:
Microsoft was always supporting the development of cryptocurrencies and Blockchain technology, so it was just a matter of time when they will include it as a mean of payment. Even if they had some complications regarding the digital money in early 2016, the company finally confirmed that Bitcoin was a regular part of their payment system on the official website. People can now find many items on X-Box and Windows shop, purchasing them with Bitcoin.
Eveybody who wishes to create blogs and sites for free know about the famous WordPress. Not long ago, the company enabled users to operate with Bitcoin on WordPress. As there are countries where credit cards and PayPal are not an option, WordPress decided to help by creating a platform where BTC payments are supported.
Overstock is known by being the first retailer to accept Bitcoin payments, which began in early 2014. They soon entered the collaboration with a well-known BTC exchange, Coinbase. This partnership enabled people to buy computers, laptops, and other home equipment with Bitcoins. The official web page has the “pay with bitcoin” button for each item customers wish to buy.
Shopify is an e-commerce platform that allows merchants to set up their own online shops in order to sell their products similar to eBay. Since this all started in late 2013, more than 75,000 Shopify merchants were able to accept Bitcoin payments with a help of BitPay.
Cryptocurrency is maybe the safest instrument for transacting values between anonymous users. However, storing and trading cryptocurrencies can be quite risky. As this is a digital currency, there are no problems that usually occur with traditional currencies, but it still have some issues that are unique for the Fintech industry.
The most common way of storing coins is having a software wallet. Digital wallets are surely user-friendly and practical, but how safe they are? If you choose to store your coins on the desktop computer, then they are as safe as your computer. In general, you protect your software wallet the same way you protect the data on your computer. It is advised to be a little more cautious when surfing the Internet and to avoid saving passwords in non-encrypted files on the same device where your wallet is located.
It would be ideal to store your passwords offline or not to put them into your computer at all. You should also consider setting up your wallet on the device that you’re not usually using on daily basis, for surfing and downloading.
Another good solution is to use Linux operating system, which is considered to be fairly resistant to hackers and malware. You don’t have to bother yourself with removing Windows in order to set up Linux, because you can simply activate it on your computer from a simple USB device.
Then, there is a cold storage. Cold storage raises the security level by storing the bitcoin in an offline wallet, efficiently limiting the possibility of any unauthorized access to it. Cold storage is often set up on devices that were never connected to the internet, such as USB devices or older laptops. Many people don’t know that cold wallets can be also created and maintained offline. This way, you don’t have to access the Internet in order to install wallet, generate keys or send coins.
When it comes to offline wallets, hardware wallets are the best possible solution. Hardware wallets are mobile and specially designed for storing cryptocurrencies. They are basically USB devices with simple and safe software, having several layers of cryptographic protection.
Many users choose to create hot wallets for routine, everyday transactions and cold wallets for storing the larger amount of their property. Whatever you choose to do with your cryptocurrency, at some point you’ll have to exchange your coins, so dealing with exchanges is almost inevitable.
Online wallets, processing systems and exchanges all have their security problems. Some experts think that there are some security measures which should be known by all cryptocurrency traders, when using the online services, and that they should be all aware of the necessity and importance of those measures.
You should also pay attention on the security of your email. It is advised to use unique passwords, protect your email with multi-factor authenticator. It is known that 90% of hacking starts by accessing your email address in order to change the address on your account or to retrieve your password. You should also be cautious with your smart phone, especially if it’s an android with Google authenticator installed.
Whether you choose to trade coins on the market or to simply store them in order to avoid risk, you should find the exchange that is safe and reliable. It is because exchanges are usually centralized entities that can be hacked. Moreover, they can sometimes disappear together with your coins.
For example, the sudden step down of MyCoin executive, William Dennis Atwood, should have raised some concerns among bitcoin users, but it was unnoticed. Several months later, this Hong Kong exchange collapsed, leaving a huge number of unsatisfied users behind. The downfall of Cryptsy was maybe more predictable, because this exchange had numerous technical problems and contentious administration policy. In early 2016, they proclaimed bankruptcy as a result of a huge hacker attack, where $7.5 million disappeared. The court later determined that the owner had probably transferred too much money to his own account.
So, the most important things on which we should pay attention in the crypto-world are trust and reputation. Whenever some notable person from the crypto-world leaves the project that you’re also a part of, you should take extra caution. Often technical problems and suspicious rules are another reason to be cautious.
Conclusion? You shouldn’t put all your money in one place.