Today, (December 17, 2018), the price of Bitcoin is now almost $20,000. At the start of the year, the price was just under $1,000. There is a lot of hype not just around Bitcoin but the cryptocurrency market at large. Ether, Litecoin, XRP, MIOTA, and BTG are just some of the cryptocoins that are making headlines with their prices and growing market capitalization. This year has also seen the emergence of ICOs as the preferred crowdfunding means for most blockchain-based startups. Putting all of this together, the cryptocurrency market has never been far more of an attractive proposition as it is today.
With all of these stats and figures that show the crypto market to be booming, there are no doubts some people who haven’t got much of a clue where to begin from. Sometimes, the sheer volume of technical and business information on the Internet can discourage some people from taking up an active interest in the market. As a potential investor, you don’t need advanced degrees in computer programming or business administration to get into the swing of things. All you need are a few basic things and some vital pieces of information.
Getting Started: Creating your Crypto Wallets
A cryptocurrency wallet is the basic entry requirement for participating in the market. No matter what sector if the market you an individual wishes to invest in, having a wallet is the number priority.
A cryptocurrency wallet is simply a storage medium for cryptocurrencies. There are four types of wallets namely:
1. Hardware Wallet
Hardware wallets are thought to be the most secure of all the wallet options. They look like USB devices and can be used to store cryptocoins offline. Once you plug these devices into a computer, you can access the cryptocoins that have been stored in them. Popular brands include the Trezor and Ledger hardware wallets.
2. Software Wallet
These are computer programs that provide storage for cryptocurrencies. They are usually client software that can be downloaded and installed on a computer. Software wallets are a cold storage option since the coins can be stored on them offline.
3. Paper Wallet
A paper wallet is a piece of paper that holds information pertaining to the private and public key of a cryptocurrency address. Think of a cryptocurrency address to be like a bank account number. The private and public keys are then like access codes. Paper wallets can be created from a number of website services like Bitaddress.org and Liteaddress.org.
4. Online Storage Wallet
While the other 3 storage methods are considered cold storage options, online wallets are a hot storage option. They are basically web-based services that provide storage for cryptocurrencies. Online storage wallets offer faster transaction speeds but they are susceptible to being hacked. Some of the popular service providers include My Ether Wallet and Coinbase.
· Purchasing Your First Cryptocurrency
To participate in the cryptocurrency scene, you must acquire some cryptocurrencies. One of the ways to go about this is to purchase them from an online exchange service like Coinbase, Gemini or Bittrex. Most of these online services have a number of payment options that they accept such as bank transfers and credit/debit card payments. If you have a friend or a relative that has some cryptocoins and can spare you some or is willing to sell, you can also buy from them.
· Investing in ICOs
ICOs are a veritable means of gaining a foothold in the market. By investing in an ICO, you become an early adopter of what can possibly turn out to be the next Bitcoin or Ethereum. Great care must be taken here though as there are many fraudulent ICO campaigns that offer absolutely nothing in terms of future economic potential.
If an ICO develops into a viable project, the tokens that you have bought will increase in value and they may even become at par with the value of the big players like Bitcoin and Ether. It is a bit like betting or to use the more technical term, speculating that a token will appreciate in value over time thus making it a good investment.
· Getting Involved in Mining
An individual can also choose to get involved in mining cryptocurrencies. There are some Bitcoin whales today that got to that position by being one of the first people to actively engage in mining Bitcoins. Back when it was still possible to mine Bitcoins using a normal everyday laptop or desktop. These days, there are integrated mining facilities running state-of-the-art ASIC units. However, there are also pool mining services that people can sign up to in order to participate in decentralized mining and earn commissions.
There are also other mineable cryptocurrencies like Ether which do not require advanced hardware setups in order to successfully mine them. Investors on a tight budget can go for such cryptocurrencies and make good profits from mining them.
It is a good idea to have more than one type of wallet. For ease of transaction, an online wallet is a must-have resource. However, it is not advisable to store your coins in online wallets for a long time or to even store large deposits of coins on them for any period of time. This is where having a companion cold storage option for bulk storage and secure protection comes in handy. When you wish to make a transaction, you can transfer from your bulk storage to your online wallet.
Be wary of fraudulent ICOs and Pool Mining Services. Ensure that you do your due diligence when analyzing an ICO offering to make sure that it is worth investing in. As for pool mining services, some of them are nothing but Ponzi schemes. Scouring the net for information about these services before signing up is a good idea.