Unless you’ve been living under a rock the past few years, we’re sure you’ve definitely heard of cryptocurrency and bitcoin. But with lots to learn, it can be difficult to know where to begin when you’re first getting started. Let’s take a look below!
Unless you are a highly skilled trader, the safest way to purchase crypto is to buy them in regular chunks. This is the premise behind dollar-cost-averaging, an investment strategy in which a person divides up the total amount to be invested across periodic purchases in an effort to reduce the impact of volatility on the overall purchase. By purchasing small regular chunks of Bitcoin, with its long-term potential in mind, it becomes less important whether the asset is in the short term going up, down or sideways.
There are great applications such as Amber, that make purchasing Bitcoin simple for the everyday user. Through a mobile app, you can make instant purchases or set up recurring investments.
MOVE YOUR COINS ONTO A HARDWARE WALLET
Once you’ve purchased crypto, it’s important to ensure you’re storing it safely and securely. There’s no doubt that exchanges and third-party applications are a convenient way to buy and manage cryptocurrency: you simply have to log into your account via an application or website in order to view your account balances and make transactions. But when you decide to leave your cryptocurrency on a third-party application such as an exchange, you’re trading safety for convenience.
You see, because exchanges hold billions of dollars worth of cryptocurrency, they are enticing targets for hackers. Overall, it is estimated that at least $11 billion worth of cryptocurrencies have been stolen since 2011.
This is where a hardware wallet comes in handy. Cold storage hardware wallets allow you to move your assets offline AND keep ownership of your private key. Your private keys are generated and stored on the hardware wallet which is then protected by a PIN and an optional passphrase. The keys are never exposed to the internet so they can’t be stolen or copied. That’s why it’s known as cold storage.
STORE YOUR RECOVERY PHRASE SAFELY
A recovery phrase, or seed phrase, is the 12/18/24 words generated by your hardware wallet during the initial setup process. It is used to encrypt your private key into an easier-to-understand format (i.e. instead of a string of letters and numbers) which can then be used to identify, authenticate, and grant you access to the cryptocurrency in your wallet. Therefore, anyone who knows your recovery phrase can access your wallet and funds.
Not to mention that if your hardware wallet breaks, is stolen, or is misplaced, your recovery phrase can be used to restore it. But if your recovery phrase is stolen or misplaced, there is no bank or institution to back you up or give you a replacement. And because of the secure nature and random mathematical sequences used to generate the private key, there’s no way you or anyone else can recover it, so you will lose access to your cryptocurrency.
So, it’s vital that you keep it private and secure.
But what are the best ways in which to protect your recovery phrase?
- Never share your recovery phrase with anyone
- Never store your recovery phrase on a computer or smartphone
- Never store your recovery phrase online, where it can be easily hacked
- Never rely on your memory alone to remember your recovery phrase
- Store your recovery phrase on a device such as the Billfodl, which is virtually indestructible
- If you ever have to restore your wallets/accounts, only enter the recovery phrase into the physical device
If you are new to the world of cryptocurrency, you may have recently encountered this word in some form and are not aware of its meaning. The term was accidentally created when an online forum post back in 2013 went viral after a bitcoiner tried to say — supposedly drunk at the time — that he would be holding on to his coins. HODL quickly became an official term for not selling your crypto and rather holding onto it as an investment, even when the market dips. If you had purchased Bitcoin at the very start and HODLed your coins, your profits would be extraordinary. In the 13 years since its inception, Bitcoin has climbed exponentially from $0.08 USD to a high of over $65,000 USD, now sitting at just over $45,000 USD. Luckily, many believe that Bitcoin is still in its infancy and you will still be early if you buy & HODL now!
Let’s go over that one more time. Start purchasing Bitcoin in periodic purchases using the dollar-cost averaging method, move your coins onto a hardware wallet and your recovery phrase onto a seed storage device, and then settle in and HODL for the long run. It really can be that simple!
With cryptocurrency, you can own your hard-earned money rather than leave it to the mercy of a financial institution. And here at Coinstop, we want to help you secure your future! That’s why we stock the very best in digital security. From hardware wallets to recovery seed phrase storage devices, our products will help you to become your own bank. Cryptocurrency is the future, and it’s time to start securing yours!