Ok, let's say you heard a lot about all this cryptocurrency fever and you decided to give it a shot and invest: it's a great idea, indeed.
BUT
Before you do it, since your money is at stake, please read this carefully.
The great thing about cryptocurrency is that the whole network is completely distributed and there isn't any kind of central authority to regulate what happens to the money involved in the game. This is the main point, right? Yes, it is.
For this same reason, if something bad happens to your money, you cannot file a complaint to anybody: you are on your own. So before you start investing in crypto currencies, just follow my train of thoughts that will help you avoid beginner's mistakes :
- If you want to buy Bitcoin you will need a "wallet" where you can "store" them
- If you are familiar with Bitcoin you know already that a wallet does not really "store" coins but it's a "code" that allows you to use the coins: to spend them, to use them or to sell them.
- To keep it simple, every wallet has a Public Key that everybody knows and use it to send you money (lucky you!). The same wallet has a Private Key that nobody (I can't stress this enough) should know but you. This Private Key gives total access to the money stored in your wallet
- If somebody finds out what your Private Key is, then you are done. There are plenty of ways somebody who knows your Private key can move your money and it would be impossible to trace down. You don't want to be in that situation (also because you cannot write to a central authority asking for help).
- There are different types of wallets: the easiest that you can get and use are the so called "Hot Wallets". It's basically very similar to your online banking: you have a nice interface where you can see your coins, buy and sell. Nice, right? Yeah.
- BUT if a hot wallet is a good start you definitely do NOT want to keep your money there because you do NOT OWN the Private Key of your account (if you don't remember how bad this is go back a couple of bullet points).
- Nowadays with the boom of the crypto market, many companies are offering hot wallet services. BUT these companies are definitely NOT banks, may not comply with federal regulations or with basic security standards or, even worse, could just be scam sites that stay open for few months and after are gone (with your money).
- I don't want to generalize: some of them are serious companies. BUT when it comes to your money you should trust nobody. Seriously. So you can use a hot wallet, especially from coin exchange sites, but do not keep your money stored on an exchange site.
- ...some of you are thinking: "crap, I have done it already...". Yeah, I've been there. If you want to fix the situation in just a couple of days I would strongly suggest you this (what I've personally done).
- If you are not in a rush and you can reach the end of this article, then that's the story: you should store your coins in a "Hardware Wallet". Without going too much into complicated technical explanations, let's just say that this is the best way, even for beginners, to have a wallet where NOBODY else controls your Private Key but you.
I would personally suggest one of the following 3:
- Ledger Nano: this is the one I'm using. It can store not only bitcoins but also other currencies
- Trezor: this would have been my second pick. Pretty similar to the first one but a bit bigger (if you are thinking to hide it, the Ledger Nano is a better fit)
- KeepKey: looks easy to use but (in my personal opinion) the higher price is not justified.
Good crypto-investments!
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