If you are new to cryptocurrency, there are a few ways to obtain it. No matter which method you choose, the following steps are usually standard.
- Choose a platform
- Create and verify an account
- Deposit cash to purchase
- Place your cryptocurrency order
- Select a storage method for your cryptocurrency
Choosing a platform from which you can buy a cryptocurrency is the first choice you have to make. While the process can be quite complex, especially for a beginner, we will explore some of the available options and hopefully help narrow down your search.
Participate in cryptocurrency mining
Crypto mining is the process of generating new coins and verifying new transactions on a blockchain network. Mining can earn one a cryptocurrency without needing to pay directly for it. However, to participate, you may need a powerful computing system or dedicated mining hardware which can cost a lot upfront. Bitcoin mining requires powerful ASIC machines which can be purchased from places like https://www.bitmain.com/. Other cryptocurrencies, like Ethereum, can still be mined using your computers graphics card. Check out https://www.nicehash.com/ to see if your rig is adequate. There are also a few unique currencies, like Helium, which can be mined using radio signal transmitter boxes as can be seen at https://www.helium.com/mine.
Buying cryptocurrency from an exchange
A digital marketplace where you can buy and sell a cryptocurrency or trade one crypto for another defines a crypto exchange. They give provisions for account creations from which you can buy and sell cryptocurrencies with features such as crypto staking and crypto loans that let your crypto assets accrue interest.
Exchanges come in two types: centralized or decentralized. The centralized exchanges act as a third party to the buyer and seller. They are usually managed and operated by a corporate entity. Some examples are https://www.binance.com/, https://ftx.com/, and https://www.coinbase.com/.
Decentralized exchanges allow traders to trade directly with one another in what is called a peer-to-peer trade with no third party involved. They, however, do not facilitate the trading of fiat currencies for cryptocurrencies. Some examples are https://uniswap.org/, https://sushi.com/, and https://pancakeswap.finance/.
Centralized exchanges are user-friendly and offer a familiar style of trading that is reliable, but charge relatively higher fees and are more prone to hacking issues and company issues. On the other hand, decentralized exchanges offer a safety net from scammers as there is no middle-man. On top of that, it doesn’t require users to disclose their identities. However, they are sometimes faced with liquidity issues due to a lack of volume. They are also complex and do not allow trading fiat currencies for digital ones making it less convenient.
You will want to look out for the following when choosing a cryptocurrency exchange:
Your digital assets are not protected the same way money is protected in the bank for the obvious reasons that the crypto market is not regulated by a central structure and therefore is prone to fraud. It is advisable to look into how they store their assets; are they all kept in hot wallets, always accessible or do they use more secure offline storage. Also, the more popular an exchange is, the larger the user base and the more secure it may feel as you hope that they invest more in security.
- Transaction fees
“The easier they make it for you to buy it, the higher the fees that you’re going to be paying,” Spence Montgomery, founder of Uinta Crypto Consulting. The higher the fees, the greater the protection and insurance of your cryptocurrency. Exchange fees may be fixed, but given the volatility of cryptocurrency, some exchanges base their prices on the volatility of the market.
You should be able to sell your crypto whenever you want to. The exchange you choose should have enough trading volume to ensure that your assets are liquid, otherwise you may be having to wait a long time for orders to get processed.
You should consider your location before you choose an exchange platform. Some locations are bound by regional regulations that may not favour cryptocurrency as a whole. China, for example, declared a ban on crypto markets. You may therefore have to take it upon yourself to gather as much information as you can. That will include knowing the service limitations of an exchange and the currencies accepted on the platform.
Buying cryptocurrency from PayPal
Recently added to the popular payment platform, PayPal now lets you purchase crypto. It is as easy as logging into your PayPal account and selecting a cryptocurrency you would like to buy. Most people have their bank accounts linked to their PayPal accounts, but they provide a few other options. Available in the US.
Buying cryptocurrency from ATMs
These ATMs are similar to traditional ATMs, with the difference being that cryptocurrency ATMs are used for buying and selling Bitcoin or Ethereum (the two choices seen most often) using cash, while the other allows only withdrawal and deposit of cash. So those that wish to buy cryptocurrency with cash, an ATM comes in handy, but expect to pay high service fees.
Usually, an ATM transaction involves scanning QR codes using your smartphone’s wallet app and either inserting paper money or a credit card into the machine to supply funds (if purchasing crypto). The whole process will differ from machine to machine and it could take a minute or an hour for your transaction to become finalized.
Buying cryptocurrency from a peer-to-peer trade platform
A peer-to-peer (P2P) trade is one that allows traders to trade directly with one another and hence does need not a centralized third party to facilitate the transactions. Individuals get to decide the price and the payment methods and the method of making the exchange (either in person or online). https://localbitcoins.com/ is amongst the largest of this type of trading platform. It requires you to create an account from which you get to decide to trade as an individual or as a company. Depending on whichever your choice is, giving details such as email address, username, and password will be required. Once your account has been verified, you place an order for a currency of your choice, and it is matched against pending orders from other users.
To narrow down your choices for choosing a peer-to-peer trade platform, you may have to consider the following;
- Platform activity – The more users are on the platform, the more activity and the better the offers. The more convenient it is as well.
- Payment methods – These may include things like cash or gift cards, conducted via in-person transactions.
- Security – Look out for the security measures in place that prevent fraud.
- Privacy – In a given platform, you may be able to trade without having to reveal your identity, but certain users may not want to trade with unverified users.
Participate in cryptocurrency games
Some people prefer to get cryptocurrency via play-to-earn (P2E) gaming. They are similar to the traditional video games in operation but are hosted on different blockchain networks. They provide the possibility for gamers to receive payments for their gameplay that come as crypto token rewards. There is usually one big catch. Unless you got in early after the game’s release, the upfront cost to get involved tends to go up exponentially over time as the game gets more popular. Other types of web-based games (which act more as crypto faucets) like https://madxfield.com/ sometimes give rewards in the form of Bitcoin, Litecoin, Solana, Fantom, and Cardano. All you have to do is move, build and attack your opponents.
Buying cryptocurrency in developing countries
As cryptocurrency is taking the world by storm, its receptivity in third-world countries has not been that welcoming. Many people associate it with a scamming scheme which, to some extent, can be true. Many get scammed out of sheer ignorance by fraudsters. Some countries have put a ban on the whole idea. Certain initiatives have sprung up or have been extended to facilitate crypto trading. In circumstances where you do not have a credit card to transact with or are from a third-world country and would like to buy some cryptocurrency, you may use some exchanges or payment services such as https://chippercash.com/. Common services like Binance, Bybit, Kraken and FTX are still usually available as well.
Storing cryptocurrency in an exchange (custodial solution)
Exchanges have shared wallets that are accessible via website or phone app interfaces and act as digital banks. With a wallet on the exchange, you can easily access all your crypto account information, such as balances and transactions, which makes management easy. You need to create an exchange account and sign in to access your wallet.
Custodian solutions usually use a combination of hot (immediately accessible) and cold (not directly accessible) wallets to address safety concerns and thus provide storage and security for your digital tokens.
The security of your wallet in an exchange is not always guaranteed, and here is why;
- Storing your cryptocurrency in an exchange for a long period of time may not be a good idea given the history of cryptocurrency theft by hackers from many platforms. It is reported that about $1.65 billion dollars worth of crypto assets have been stolen since 2011.
- An exchange may mismanage your assets or participate in fractional reserve banking where only a portion of the deposits are backed by actual cash on hand and made available for withdrawal.
- Exchanges may store billions of dollars worth of cryptocurrency, which is an enticing target for scammers and hackers.
Storing cryptocurrency in a local wallet (self custody)
A cryptocurrency wallet is a program where you can store all your cryptocurrency on your computer, smartphone, or hardware device. Whenever your computer or smartphone wallet is connecting to the network, it is considered a “hot” wallet. “Cold” wallets, provided by hardware devices such as Ledger or Trezor, are only connected for brief moments when transactions are required.
Keep your crypto and seed phrases safe
Keeping your cryptocurrency safe should be at the top of your priority list. Whereas there is no 100% guarantee in the security measures listed below, they will greatly decrease your risks.
- Enable two-factor authentication on all your accounts.
The two-factor authentication requires you to input a code from your phone every time a withdrawal is to be made, and that involves the use of software, SMS and hardware devices. Having your email address and password as the only security to your crypto can make hackers work easy. With two-factor authentication enabled, it requires a lot more hacking efforts and in most cases, will deter the bad guys from completing the process.
- Withdraw your crypto to your local wallet.
Withdrawing your crypto makes your cryptocurrency less of a target than when it is in an exchange. Exchanges store millions of dollars worth of cryptocurrency in them, and it makes it an enticing target for hackers and so to mitigate this threat, you are better off just withdrawing your cryptocurrency if you are not going to be actively trading it.
- Back up your seed phrases properly.
The seed phrase, also called a recovery phrase is a 12, 18, and 24-word sequence that stores all the information needed for you to access your cryptocurrency wallet. When you lose your device or forget your pin, you can use your seed phrase to recreate your wallet. The seed phrase is the only backup to your private keys, meaning if you lose it, you lose access to your crypto as well. Also, make sure to store seed phrases offline, preferably on paper in a vault or safe.
Madbyte does have its own token called MADX on the Fantom and Ethereum networks and under the symbol Madbyte on the Waves network. The tokens are interchangeable on Madcapx.com.
Disclaimer: Nothing in this newsletter is intended to serve as financial advice. Therefore, do your own research and due diligence before applying any of the techniques highlighted in this post. Any risks or trades based on this newsletter are committed at your own risk.