What is the cryptomarket and how is it different from stock exchange? Why aren’t traditional markets getting along with cryptomarkets? How to buy and store your first e-coins? Here is a full compendium of the basic information about the cryptocurrency market.
Cryptomarket – what it actually is
Cryptomarket is a platform, which allows its users to deal in cryptocurrencies or exchange digital assets for others, like fiat currencies or other e-coins. Cryptocurrency market usually accepts the buy-sell spreads as provisions or simply charges a fee for using the platform.
Digital currency exchange can be a stationary business or a strictly online venture. A stationary market exchanges traditional money for digital currency. Online markets, on the other hand, exchange money electronically.
Cryptomarkets are often registered out of USA or European Union to bypass regulations and taxes. They do, however, accept Western currencies and own bank accounts in a few countries to easily pay out money in local currencies. Most cryptomarkets accept payments through credit cards, bank transfer, or other payment methods in exchange for cryptocurrency.
Exchanges usually send cryptocurrencies to the user’s personal e-wallet. Some also offer the option to convert the digital balance into anonymous prepaid cards that can be used to withdraw assets from ATM’s all over the world, while other cryptocurrencies are supported by physical assets, like gold.
What to look for while choosing a cryptomarket?
Let’s say you were convinced by a text about high cryptomarket returns. What should you pay attention to before you begin investing?
Market’s reputation – the best way to find out some reviews for a cryptomarket is to look for opinions of concrete users and known branch websites. You can also post questions on forums like Wykop or Reddit. Fees – most websites should have the info about payments readily available. Before you join, make sure you understand deposit, transaction, and withdrawal payments. These prices can differ significantly depending on the exchange. Payment methods – What payment methods are available on the exchange? Credit or debit card? Bank transfer? PayPal? Does the exchange accept Polish cards? If the payment methods are limited, using it might not be very convenient. Remember that buying cryptocurrency with a credit card always requires ID verification and often means premium price, as the probability of a scam is higher, and higher transaction cost. Paying with a bank transfer will usually take longer, as processing it by the banks takes time.
Verification requirements – most Bitcoin transaction platforms require some sort of identity verification in order to make transactions and withdrawals. Some exchanges allow you to stay anonymous. Although the verification, which can take up to a few days, can seem inconvenient, it shields the market from various scams and money laundering.
Geographical limitations – some user functions offered by the platform are only available in some countries. Make sure that the exchange you want to join allows for full access to all of platform’s functions and tools in the country you currently reside in. Exchange rate – different markets have different rates. Differences reaching 10% are not uncommon, and are sometimes even greater.
Buying, storing, and selling cryptocurrency
Start with buying Bitcoin – then you’ll be able to exchange it for other currencies. There are two types of exchange – fiat to crypto and crypto to fiat. Both can be done directly on the cryptomarket.
First you have to set up an account on the exchange platform. Next, you verify your identity – it’s required due to the regulations against money laundering. Charge your account with the currency you’ll be using, but not before checking if direct exchange using this currency (i.e. PLN) is possible. There isn’t any golden rule as to when you should buy cryptocurrency. Usually it’s not a good idea to buy during the height of a speculation bubble or when the exchange is down. One of the best times to buy is when the price is low, but stable.
Alright, so you bought the tokens, but where should you store it? Well, first of all, away from the market. There is no real reason to store your cryptocurrency on the market. There is a long history of breaches and bankrupcy on the cryptocurrency markets, one of the most famous of them being the hacking of Mt.Gox, which caused its clients to lose millions of dollars. But where should you store the crypto if not on the market? You should think about online and mobile wallets (which is any e-wallet, that exists on a device that was ever connected to the internet) as a “hot” type cryptocurrency wallet. It’s easy to access the funds on a “hot” wallet – so you should only store part of your crypto there, which you will use in the internet or real life. While transactions with the use of a a”hot” wallet are very simple, they have a big disadvantage – they can be easily hacked. The latest ransomware attack and past fiascos of big exchanges should be enough of a signal for new users.
Although you shouldn’t keep too much money on your hot wallet, it’s important to make copies in the backup section of the wallet to avoid losing money due to an error. You should be able to restore your wallet with your private key.
If you store your cryptocurrency completely offline, it’s called a “cold wallet”. They are the best solution for people who are looking for the safest storing options. Cold wallets are also good for long-term investors, who don’t need access to their assets for many months or years. Cold wallets aren’t free of their own risks and issues, but if you follow instructions and take the available precautions, they can be greatly reduced. Taking into consideration how much attention cryptocurrency attracted in the recent years, it unfortunately also attracted thieves. With this in mind it’s much safer to store your money on a cold wallet. Now you know what is the correlation between cryptocurrency market and traditional stock exchange, and why we probably won’t be seeing them joined. You also know the way pick a cryptomarket, basics of investing and storing cryptocurrency tokens. It’s time to begin exploring this topic on your own – as we wrote before, investing on the cryptomarket requires a certain level of knowledge and it quickly punishes people who approach the topic too flippantly.