Cryptocurrency Purchase: Helpful Tips
Since cryptocurrencies do not have a physical manifestation, each holder needs a special place to store them. For this purpose, a program called crypto wallet is used. Each wallet is a pair of private and public keys used to manage funds. If the keys are lost, a user loses access to their money.
There are several types of wallets with different features. Let’s find out what are they.
This is a handy program that can be of two types. A thick desktop wallet is full-functional software that requires the whole blockchain to be downloaded. It is completely standalone complex that does not need any help from other participants. A thin wallet has a reduced functionality. It does not contain the whole blockchain and takes less space. However, it delegates some functions to a third party.
This type of software is the best for flexible and active people. The application created for smartphones or any other mobile devices allows managing money on the go. However, just like a thin desktop wallet, it cannot store the whole blockchain and has a reduced functionality.
This is one of the most unreliable wallet types. All data is stored online on a server that might be easily hacked. This is the most convenient type of wallets, as it is available from across the globe if you have access to the Internet. Some wallets allow protecting your keys through encryption. However, the risk of losing money is extremely high.
These portable devices are microschemes with a minor software support. Hardware wallets are considered to be highly protected. They can store keys offline and allow managing user accounts when attached to a PC.
This is a quite unusual type of wallets, as it has neither software nor hardware components. It is not digital in its nature, thus it is the most protected wallet as it cannot be hacked. Private and public keys are recorded on the piece of paper or any other material.
How To Purchase Cryptocurrency
Cryptocurrency can be purchased in different ways. In most cases, all the methods are absolutely safe. However, the risk of coming across an unreliable service provider exists, so use given options with caution.
Crypto ATMs are common in some countries, and their number is constantly rising. There is a fee of up to 8%, still, it is a fair price for a secure purchase. There is no need to share your personal or financial data with anyone – here, you can buy a code or a QR code for cash. This purchase method is getting popular due to its convenience, anonymity and security. Unfortunately, crypto ATMs are banned in some regions.
Another way to purchase crypto is getting a gift card. Gift cards are quite popular due to their anonymity. Besides, they are usually much cheaper than any other purchase methods. Gift cards are highly protected from scam, so you be sure that nobody steals your money.
Crypto exchange platforms
Cryptocurrency exchange platforms are very popular these days. That is why it is so hard to select the one that fits your needs. A wide range of opportunities may overwhelm a newcomer who are not familiar with peculiarities and details of crypto purchasing.
Governments have different regulatory policy toward crypto exchanges. This means that you have to pay attention to many factors: the country where the platform is based, what private data it requests, terms and conditions, and so on.
Either way, crypto exchanges give a lot of benefits to their users. Moreover, they often support mobile trading, which makes things even more convenient.
A personal meeting is an old-fashion way to buy cryptocurrencies. There are specialized platforms that allow find a seller and arrange a meeting.
The very first P2P trades often took place at sellers’ homes, but today it may be too risky, so people prefer purchasing cryptocurrencies in public places with the Internet connection. The whole process is similar to the real money exchange.
It is also possible to attend special meetings devoted to cryptocurrencies. There, you will be able to find a seller to buy some coins and even expand your knowledge about cryptocurrencies.
However, P2P trades have disadvantages. A seller can set up a transaction fee on their own. Besides, conditions of each operation may be different. For instance, some sellers prefer discussing transaction terms before the actual meeting, others sell cryptocurrencies only at fixed prices.
Investment Trust. What Is That?
An investment trust in the traditional market is a form of collective investment fund. All investors get their shares, money is applied in different projects, and profit is divided. The first crypto company that started this kind of activity was the Bitcoin Investment Trust. This fund works with BTC only. It managed to raise 1600% for two years, and today it is worth of $1.8 billion.
The crypto market keeps growing and other similar funds will definitely appear soon. As this happens, cryptocurrencies will likely become more stable and lose their volatility.
Obstacles and threats
Credit cards or PayPal
It might seem weird, but the PayPal system has a very complicated procedure of buying cryptocurrencies. So do credit cards. The majority of crypto exchanges require direct bank transfer instead of these payment systems. The reason is simple. Cryptocurrency transactions are irreversible, while traditional payment systems allow returning funds to a consumer. This means that scammers may take advantage of the systems by recalling transferred crypto money after the transaction is successfully performed.
Regulative and legislative issues
Cryptocurrency as an absolutely new product catches attention of regulators a lot. Many governments considering the possibility of including Bitcoin and other networks in their current systems. A part of the world, on the contrary, have banned all kinds of crypto activity. So the problem of cryptocurrency legalization is much more important than it might seem and can become a huge obstacle if you decide to purchase crypto.
Even though blockchain technology is considered to be safe, nobody can guarantee a 100% fraud prevention. Due to the distributed nature of blockchain, you are the only person who is responsible for your funds security. No authority can roll back your transaction if something goes wrong, and no one can restore your money if it is stolen.
When it comes to crypto exchanges, the level of security there is not as high as in banks. If the platform you use closes up or gets attacked by hackers, the possibility to return money is close to zero. Sometimes, exchanges may compensate for losses, but they are not obliged to do this.