The Basic Of Bitcoin Exchanges

Have you always been a bit curious about cryptocurrency and how you can trade it? If so, it helps to know the basics of using a bitcoin exchange so you can decide if cryptocurrency trading is something that you want to get into.

Selecting A Cryptocurrency Exchange

The first thing you'll want to do is decide which cryptocurrency exchange you want to use. However, with so many exchanges out there it can feel a bit overwhelming to make a decision. It is always a good idea to start by looking at the exchange's reputation. Do other people speak highly of the exchange online, or are there plenty of bad reviews? You should also consider the fee structure, since each exchange will take a small fee just as if you were dealing with a stock brokerage account. Security is also important, and you should look for features like two factor authentication as the bare minimum to keep your account safe. 

Signing Up With A Cryptocurrency Exchange

It is normal for a cryptocurrency exchange to want to verify your identity before you can use their services. Be prepared to show proof of who you are, which can be done by sending a photo of your ID or providing similar information. This is a normal part of the process, and you'll find this with any exchange. 

Funding Your Cryptocurrency Account

You will need to fund your account so that you can make your first purchase on the cryptocurrency exchange. This can be done by making a transfer with your bank account so that you have the funds available in your native currency to exchange it for a cryptocurrency. Once again, this is similar to using a stock exchange, since you will see the current price of the cryptocurrency based on what people are willing to sell it for. 

Selecting A Wallet

You can now keep the cryptocurrency you purchased in one of two places, cold storage or a hot wallet. The hot wallet is not the safest method, but is convenient and gives you easy access to your cryptocurrency. This will be what the cryptocurrency exchange creates for you when to make a purchase. The safety of the hot wallet is as strong as your password and two factor authentication method, since someone that has access to both can gain access to your cryptocurrency. 

Cold storage is like a savings account, which is always offline and makes it impossible for hackers to gain access to your account. You essentially put the key for your cryptocurrency on a flash drive or even print out the key on a sheet of paper. Consider that drive or paper like physical money, where if you lose it or it becomes damaged you will lose your cryptocurrency. Keep it someplace safe to ensure that it cannot be accessed by others.