With Bitcoin prices and cryptocurrencies surging to all time highs the hype and noise is reaching fever peach. Unbridled enthusiasm on one side and unbridled doom and gloom on the other side. With that said, those who have not invested are suffering from FOMO – the fear of missing out. Many readers continue to ask us how does one go about investing in cryptocurrencies. We have therefore put together a list of those necessary tools to get you started in building your cryptocurrency investment stash for the future.
We have also heard, firsthand, recent stories of people now placing their entire retirement or IRA savings in Bitcoin. For anyone in their twenties and this amount is small, why not … there is time in life to recover before retirement in the case things do not go as hoped. For anyone in middle age or older – well, this is probably a bit foolish. A common sense advice purported by serious and ardent advocates for crpytocurrencies is to invest 1% of assets into cryptocurrency. If it does well, great. If the whole thing comes crashing down, losing 1% would not be a disaster. As a reminder, “hope” by itself is not a great investment strategy.
In addition, the fact that cryptocurrencies are decentralized means that you are responsible for your cryptocurrency investments. If you should lose or have them stolen, there is no central authority which you can turn to. Therefore, you need to inform yourself on the proper security measures to take in order to protect your cryptocurrency investments. We have therefore provided three of the best hardware wallets on the market to help you to do so.
We would like to remind all readers that this website and content is produced for general interest, is not specific to you, is for entertainment only and is not intended to provide nor constitute financial advice. In full disclosure, the authors may or may not be holding positions in any of the vehicles mentioned. Prior to making any investment decision you should undertake your own due diligence and/or seek the advice of a qualified and registered securities professional. With the preceding in mind, listed below are some of the websites and platforms that some of our readers have indicated they are using:
Market Prices and Market Capitalizations
Coinmarketcap is probably the most trusted comprehensive index of crypto market prices capitalization ranking as well as which coins are being traded on which exchanges. The nice thing about this site is that you can easily select which fiat currency in which you would like to see the prices compared. Do note that the prices listed are the average prices across exchanges. It is possible on this platform to drill down and see the prices on each specific exchange as well. The astute individual would remark the discrepancy of prices on the different exchanges and see an opportunity for arbitrage. However, in this case one would also want to pay attention to volumes and liquidity which would impact the ability for arbitrage.
Cryptocompare also provides a comprehensive listing of cryptocurrency market caps and prices and allows different currency comparisons.
Cryptocompare USD for a listing of prices as compared to US dollar.
Cryptocompare BTC for a listing of prices as compared to Bitcoin (BTC)
Cryptocompare EUR for a listing of prices as compared to Euros.
Coinvision provides AI-powered alerts for cryptocurrency market news.
Exchanges and wallets
In order to buy a cryptocurrency you have to have an account on one of the exchanges that allows trade in the currency. Cryptocurrencies can be traded similarly to stocks including features such as limit orders. Only a handful of currencies can actually be bought directly with fiat currency such as US dollars or Euros. The most common denominator is BTC. BTC can be bought for US dollars or Euros and then BTC can be used to buy the other currencies.
Some of the exchanges also provide wallet services and vice-versa.
In choosing an exchange we would recommend choosing one that has volumes otherwise you may suffer liquidity issues. Some of the most popular Bitcoin and cryptocurrency exchanges are:
Poloniex : A US based company, Poloniex allows trades in about 107 different cryptocurrency markets, with most volumes from Ripple. Ethereum and Litecoin.
GDAX : GDAX is a US based company, and as of this writing only trades in Ethereum, Bitcoin, and Litecoin. It does facilitate fiat currency purchase in USD, EUR and GBP for Bitcoin.
Kraken : This is a US based exchange that allows trades in about 40 markets and does facilitate USD and EUR purchases for Bitcoin, Ethereum, Ethereum classic and Litecoin as well as a few other currencies.
Korbit : This is a South Korean based exchange currently only trading in Ethereum, Ethereum Classic, and Bitcoin and allows fiat purchases using South Korean Won.
Bitstamp : This company is based in Slovenia and London and trades in Bitcoin, Litecoin, Ethereum, Ripple and soon Bitcoin Cash. They facilitate fiat currency purchases in USD and EUR. For purchasing Bitcoin via Bitstamp it works very well for a variety of options including credit card, however, credit card purchase of Bitcoin do carry a 2.5% fee. SEPA (European standard) wire transfers are efficient with Bitstamp.
Bittrex : This is a US based exchange that supports over 190+ cryptocurrencies. This is the platform recommended by many of our readers. Bittrex does not facilitate direct fiat currency purchases. What some of our readers do is they buy Bitcoin on one of the other platforms that allows purchases in fiat currency and then they send the Bitcoins to their Bittrex wallet and then purchase the other currencies using their Bitcoins. The same process would be followed in reverse to extract fiat currency.
Coinbase : A US based company, Coinbase is a wallet for Bitcoin and Ethereum. It also facilitates an exchange and allows purchases for both of these cryptocurrencies in USD. Coinbase also enables the quick purchase of Bitcoin by linking your bank account or credit card account. Credit card is a more expensive option and you will pay a 2.5% fee for the transaction. Currently, Coinbase only allow a maximum purchase of $50 worth of Bitcoin a week using a credit card so if you want to buy more you would probably need to link your bank account.
Xapo : A US company, Xapo is also a wallet with exchange services as well as the ability to link a debit card. The debit card feature is pretty cool, it allows you to use your Bitcoin holdings for everyday spend, in USD for example, at any stores that accept normal debit cards. A main feature of Xapo is that it is probably the most secure online wallet in the industry. Their hardware is put together under the eyes of security and their servers are stored in protected vaults hidden in the Swiss mountains. Xapo is good as a wallet, however, if you want to buy Bitcoin Xapo may be an expensive choice. The minimum purchase amount, whether credit or debit card, that Xapo will allow is $10’000 purchase.
Trezor is a hardware, USB wallet that allows you to easily and securely store your Bitcoin and other supported cryptocurrencies yourself. There are several hardware wallets, Trezor is one of the most popular and has already, in the relatively short life of cryptocurrencies, proven itself at navigating very well the complex world of blockchain forks. In addition they are integrated with many of the major exchanges like Bitstamp (mentioned above) which makes it super easy to securely store your Bitcoin offline but move them back in within a few clicks when you want to trade or transact.
Ledger Nano S is a another hardware wallet that stores Bitcoin, Ethereum and other supported cryptocurrencies.
Digital Bitbox is a minimalist bitcoin hardware wallet packed with security and privacy that allows you safely hold and spend your coins with peace of mind. This is a very easy to use is a plug-and-play wallet also with second-factor authenticator that combines the highest security of cold storage with the convenience of software wallets.
DIY (Do-it-Yourself ) and other Wallets
The bitcoin.org site lists several bitcoin wallet solutions (https://bitcoin.org/en/choose-your-wallet). If you become adept at a specific cryptocurrency you may want to download the wallet specifically for those alternative currencies from the organization directly. For example if you are into PIVX, at https://pivx.org/ you can download the defacto PIVX wallet for your operating system directly. The advantage of using the wallet provided by the organization is that you can potentially also benefit from mining or staking and earn extra coins from the wallet. This is the case with the PIVX wallet which allows you to earn PIVX by keeping your wallet on and keeping PIVX in it. Whatever you do, be sure to make back-ups of your wallet and where possible use 2 or even 3 factor authentication.
A parting word…
You can keep your crypto-money on the exchanges directly or store it in a wallet. Exchanges are not as secure and may not support forks when they occur.
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