A Beginner's Guide To Crypto Investing By Blockgeeks

Cryptocurrency is a digital asset that uses cryptography to secure transactions, which are then verified and maintained by a decentralised blockchain system. Bitcoin is the most popular cryptocurrency today, with a market capitalisation of over 674 billion USD as of May 2021.

Cryptocurrency is seeing a massive surge in popularity. The global cryptocurrency market was valued at 332 million US dollars in 2017 and is projected to reach 394.60 billion by 2028.

There are several ways to invest in cryptocurrency, including:

- Using a centralised exchange

- Using a decentralised exchange

- Buying publicly traded crypto assets

- Buying shares of stock in publicly traded companies with significant exposure to Bitcoin

- Investing in publicly traded Bitcoin mining companies

How to set up an Ethereum wallet

An Ethereum wallet is similar to an online bank account. It allows you to send, receive, and manage your coins. There are different types of wallets, each with its own characteristics. Here are the steps to set up an Ethereum wallet:

• Register a free account: Choose an Ethereum wallet that suits your needs. Some popular options include MyEtherWallet, MetaMask, and hardware wallets such as Ledger or Trezor.
• Create a new wallet: Visit the website of your chosen wallet provider and create a new wallet. This usually involves setting a strong password and, in some cases, downloading a JSON file.
• Back up your wallet: It is crucial to back up your wallet and store your seed phrase (recovery seed) offline, such as writing it down on paper. This will help protect your wallet in case of loss or theft.
• Send and receive ether: Each wallet has its own receiving address, which is a unique sequence of numbers and letters. To receive ether, provide the sender with your receiving address. To send ether, you will need the receiving address of the recipient.
• Secure your wallet: Keep your digital wallet safe by enabling additional security measures such as two-factor authentication. Store your seed phrase securely and never share your wallet information with anyone.

How to keep your cryptocurrency safe

As cryptocurrency is a fully digital asset, protecting it requires some technical know-how. Here are some tips on how to keep your cryptocurrency safe:

Choosing a Wallet

The first step in keeping your cryptocurrency safe is to choose a secure wallet. There are several types of wallets available, each with its own advantages and disadvantages. Here are some options:

• Hardware Wallets: These are physical devices, such as the Trezor or Ledger, that store your cryptocurrency offline. They offer a high level of security but can be more complex and expensive.
• Software Wallets: These are usually free and easily accessible, but they are less secure. Examples include desktop, online, and mobile wallets.
• Paper Wallets: Paper wallets are a safe and free option, but they require in-depth knowledge to set up properly.

Security Measures

Once you have chosen a wallet, there are several security measures you can follow to keep your cryptocurrency safe:

• Be cautious of any online service, as any device connected to the internet is vulnerable.
• Encrypt your wallet with a strong password.
• Use a hardware wallet that is disconnected from the internet whenever possible.
• Regularly back up your wallet and store your backups in multiple locations.
• Use multisignature security to maintain control of your coins even if one of your devices is compromised.
• Generate, write down, and hide your wallet's mnemonic seed, which can be used to restore your wallet in the event of a hardware failure.
• Never share your private keys or passwords.
• Be aware of scams and remember that if something seems too good to be true, it probably is.

How to buy and sell stuff with Bitcoins

Bitcoin is a cryptocurrency used as a form of payment for many different things. Here are some ways to buy and sell stuff with Bitcoins.

Travel and tourism

Some companies allow their users to pay for their travel bookings using Bitcoins. For example, Expedia, one of the largest travel booking agencies, accepts bitcoin payments for online hotel bookings made through their website. Similarly, CheapAir accepts airline bookings through bitcoins. Virgin Galactic, Richard Branson's brainchild, accepts payments for seats on its space voyages in bitcoins.

Food

Pizzaforcoins is a California-based service that allows you to purchase pizzas from major pizza chains such as Papa John's and Pizza Hut using bitcoin. If you are not based in the US, you can try Lieferando.de, a German food delivery service, or a Russian food delivery service with over 90 restaurant partners that also accept cryptocurrency payments.

Gaming and entertainment

Microsoft's Xbox store and Windows Store allow you to purchase games, movies, and more using bitcoins. For smaller niche players, you can buy games and redeemable gift cards from platforms such as BitPlaza, Coinmall, and Zynga, using Bitcoin as money.

Retail

Etsy, a globally renowned e-commerce platform, allows sellers to accept bitcoin as a method of payment from their purchasers. Reed Jewelers, a renowned name in the American jewelry and accessories industry, accepts bitcoin as a form of payment in both physical and online stores. Another major player in the shopping industry, Overstock, also accepts bitcoins as a form of payment.

Miscellaneous

Dish, a satellite TV and internet service provider, started offering bitcoin payment options as early as 2014. A company called Bitcoin Real Estate allows you to sell and purchase properties using bitcoins. APMEX and JM Bullion allow users to purchase gold, silver, and similar precious metals through their websites and pay for them using bitcoin. Bloomberg and Chicago Sun-times are among the online news platforms that offer bitcoin as a payment option for their subscription models.

How to store cryptocurrencies

There are two main types of cryptocurrency wallets: hot wallets and cold wallets. Hot wallets are those used by online exchange platforms, and they manage private keys on behalf of users. Cold wallets, on the other hand, are wallet solutions that are not connected to the internet, or those that can be disconnected from the internet.

Hot Wallets

Hot wallets are best for those who want to use their cryptocurrency frequently. They are easy to access and, if you live somewhere that accepts cryptos for micropayments, there is nothing wrong with using one for day-to-day spending. However, hot wallets are easily hackable. Even if you don't store a great deal of value in your hot wallet, it's vital that you follow the backup steps within the restoration section of your wallet to avoid losing funds through human error.

#### Types of Hot Wallets

• Online Wallets: These are cloud-based and are accessed through a web browser. They are easy to set up and can be accessed from multiple devices and locations. However, they are more vulnerable to hackers and are dependent on a third party, which means you don't have full control over your funds.
• Desktop Wallets: These are downloaded and installed on a PC or laptop and are only accessible from the single computer on which they are installed. They are more secure than online wallets but still vulnerable to malware and viruses.
• Mobile Wallets: These are apps that can be downloaded onto your smartphone. They are convenient for making in-person payments but are vulnerable to hackers and, if you lose your phone, you could lose your funds.

Cold Wallets

Cold wallets are best for those who want to store their cryptocurrency for a long time. They are more secure than hot wallets but are not suitable for quick and daily transactions.

#### Types of Cold Wallets

• Hardware Wallets: These are physical devices, often in the form of a USB stick, that store your cryptocurrency. They are considered the most secure way to store your cryptocurrency as they are not connected to the internet and are therefore not vulnerable to hackers. However, they are still prone to compromise, and you must be careful to buy them new as it is possible for second-hand hardware wallets to have been tampered with. Examples of hardware wallets include Ledger Nano S and Trezor.
• Paper Wallets: These are physical pieces of paper that contain printed QR codes of your public and private keys. They are considered the safest way to store cryptocurrency as they give you complete control and there is no risk of hacking or malware. However, there is a risk of losing your investment through theft, fire, or water damage. Examples of paper wallets include Wallet Generator and My Ethereum Wallet.

How to buy cryptocurrency on a decentralised exchange

Decentralized exchanges (DEXs) allow users to buy and sell cryptocurrencies without the need for brokers. Users can connect their crypto wallet to a DEX, select their crypto-crypto trading pair, enter the amount, and hit the swap button.

• Download a self-custody wallet: You can find many reliable self-custody wallets online or on the Google Play Store. These wallets are available as mobile apps or browser extensions.
• Give your wallet a username: This makes it easier for other crypto traders to send you funds. Although you can hide your username, you will need one to set up your crypto wallet.
• Store your recovery or security phrase: Most digital wallets will provide you with a secret security or recovery phrase to access your wallet or recover your account. This is usually a twelve-digit phrase that should be kept secure and away from others.
• Buy Ethereum (ETH): If your DEX is based on the Ethereum network, you must first buy ETH to use it to buy the decentralized crypto assets you want. You can transfer ETH to your self-custody wallet if your account is linked to the wallet.
• Buy crypto tokens: If you are using a mobile app wallet, you can buy the crypto tokens right in the app. Tap on the "Trade" tab, swap ETH for the token, choose the crypto token and amount, confirm the order, and follow the on-screen instructions.

Frequently asked questions