A beginners’ guide to how to buy, store and sell.
Rachel Black works at Yoti, building a trusted identity platform, a secure way to prove your identity online and in person.
Having banged on relentlessly about cryptocurrency for the last 6 months, I decided I could not let my family off the hook at Christmas. Nope, I was going to buy them some cryptocurrency. Gifting Ethereum (and Ethereum-based tokens) was simple enough using Ether Cards. But I knew they would need some pointers as to what to do with their new found cryptocurrency. As I’ve had a few people ask me about this topic recently, I’d like to share my beginners’ guide to crypto.
*Please note that this is not financial advice. Buying cryptocurrency is obviously risky. Don’t spend what you can’t afford to lose.
They easiest place to buy cryptocurrency is Coinbase (author’s referal discount with this link). Unusually for crypto, Coinbase has a fairly useable website and app. The on-boarding process is not horrendous. Certainly the best place to start when you are new. You can buy Bitcoin (BTC), Ethereum (ETH), Litecoin and Bitcoin Cash.
Coinbase is not necessarily the cheapest. It’s worth shopping around for a cheaper rate (Local Bitcoins is a good place to start). But I still use it to buy my Bitcoin and ETH, mainly because it’s easy and I’m too lazy to shop around.
Once you have been bitten by the crypto bug, you will probably want to buy some more exotic altcoins. Here, you will need to use one of the various exchanges. Typically, you will need to buy either BTC or ETH with regular cash, then trade this to buy your chosen altcoin (I’m currently favouring buying ETH as the transaction fees are lower than BTC at the moment). Again it pays to shop around as prices can vary across exchanges. Popular exchanges include Bittrex, Poloniex,Cryptopia amongst others.
Now your have your freshly-minted crypto, there are a number of options of how to store it. None of these is perfect. What’s the best solution for you will depend on the amount you hold, and your risk tolerance.
Store it on the exchange, or in a wallet provided by the exchange. By far the easiest way to store your crypto, but there are security issues. Holding the coins this way, although straightforward, means you do not hold the wallet private keys. As many in the crypto community will tell you, that means you don’t truly own the coins. If the exchange is hacked (or if they go out of business, or change their withdrawal process) then you will be left with nothing. Essentially, you are trusting the exchange to hold them for you.
In addition if a currency forks ( essentially when a few crypto miners decide to mine in a different way, resulting in a bonus of a new coin to all holders, ie Bitcoin Cash) , you will be at the mercy of the exchange, as to whether you gain the new forked currency. However, for small amounts storing in this way is probably fine (especially if you are using one of the larger names like Coinbase) but for larger amounts you will want to store them in your own wallet
On a wallet on your computer. Downloading a wallet onto your computer will give you access to the private keys, so you are not dependent on a third party to hold the coins for you. You will need to be careful with your password, and keep a copy of your seed in case you need to back up. There are a number of different wallets available, it’s worth doing research. However, I have used and can recommend Exodus. It’s simple to use and has a slick interface.
Something to note here — which I wish I’d known when I bought my first crypto (a litecoin) — is that unlike real wallets, crypto wallets do not hold just any type of cryptocurrency. In sending a litecoin to a bitcoin wallet, I was essentially throwing crypto cash away — don’t do that kids! 🤦 . To get a currency off another wallet (i.e. if you are my family transferring from an Ether.cards wallet) here is a handy video explaining how to import private keys from another wallet.
On a hardware wallet. So once you have bought enough crypto to get paranoid (computer wallets can get hacked, laptops break and get stolen). The most secure place to keep your crypto is on a hardware wallet. These are never directly connected to the internet, so it’s impossible to hack in and get the private key. The two most popular brands are Nano S Ledger and Trezor.
Paper wallets. You can print off a paper wallet to store crypto, or if you are a member of my family, and you received your crypto on an ether card, you can keep it on there, just don’t reveal the private key to anyone!
The security here depends on the security of the computer the wallet is printed from (if it’s corrupted then your wallet is also corrupted). Providing the private key was not captured in printing, this is a secure way to store, as again the wallet is not connected to the internet.
Selling crypto to fiat (any traditional currency in crypto speak). Like so many others in this highly speculative industry, this is not something I have done a huge amount of. But when you do want to cash out you can sell for pounds on Coinbase or Local bitcoins (among others). There are also more and more opportunities to pay for things straight in crypto (usually bitcoin) with sites like Expedia, Lush and Overstock. You can even pay direct with cryptocurrency using a card from Wirex.
That’s pretty much all you need to buy, store and sell crypto. Wishing you another crypto crazy year in 2018!
New to Crypto?
New to crypto, and don’t know how to buy it, or don’t have the money spare to do it? You can apply for MissBlockchain’s free token airdrop here.