As a beginner, you are sure to have a lot of questions when it comes to using these cryptocurrencies. These currencies are pretty new and many people are not sure how they work or all of the parts that come with these currencies. The good news is that once you get into the network of your choice, you will find that it is actually pretty easy to work with them, whether you want to be a seller and receive the coins or you are using this as a place to shop. Here we will take some time to look at a few of the basic parts that beginners can follow when they first get into the cryptocurrency network. So, let’s take a look at a beginner’s guide to cryptocurrency.
Web Wallets
Web wallets are often managed by third parties who will hold onto the public and private keys for all your coins. These often help you to keep track of the coins that you are using and will ensure that your transactions stay safe. There are a few different types of web wallets that you can choose from, such as the one available from Coinbase, but you should do some research to figure out which one will provide you with the right security and features that you are looking for.
While these web wallets are going to help you to manage your cryptocurrency, the trade-off is that you need to be able to trust that third-party with your personal information. They are responsible for keeping your private cryptocurrency keys safe and for maintaining the integrity of your wallet. You have to pick a good one or they are able to just run off with your money and there aren’t any regulations or rules that keep you safe.
There are a lot of advantages to using these web wallets. You will find that they are easier to use compared to holding it all yourself. It also gives you the ability to bundle together transactions before they are pushed out into the blockchain, which can lower a number of fees that you pay for these transactions. These wallets will perform some internal transfers for zero fees, which is an attraction that many will offer to get more customers in.
Before you pick out a web wallet to work with, make sure to do some research. You want to make sure that they are going to take good care of your coins and that they are secure. If a web wallet wants you to give a lot of information, you should be careful because the more they have about you, the harder it is to keep your information safe.
Web wallets are a great option to work with, but you may want to consider working with some other options as well, such as hardware wallets and cold storage. This will be helpful because even secure web wallets can be attacked by a hacker and it is a good idea to have a backup option to keep your coins safe online.
Protecting Your Privacy
One of the reasons that so many people like to use cryptocurrencies is because it allows them to remain anonymous and keep their personal identity safe and secure. Unlike other online transactions, the blockchain is set up to help you protect your personal privacy. It is important to realize that there are a few steps that you need to take to protect that privacy.
Many beginners believe that these cryptocurrencies are completely secure and that they never have to take another step outside of signing up for the network. But, it is still possible for others, if they want to put in the effort, to figure out who is doing each transaction and can get ahold of your information in that manner. There are a few things that you can do to help with this.
First, make sure that your address doesn’t relate back to your personal information. Signing up for an address that has your first and last name and other identifying information will make it easier for a hacker or someone else to link you back to your transactions.
Also, if you plan to do quite a few transactions, you may want to consider having a few different cryptocurrency addresses. According to the white paper that was released with Bitcoin, it is recommended that you set up a new address for each transaction that you do on the network. This is not always necessary, especially if you are only doing a few transactions on occasion, but for those who plan to be busy on these networks, it can help to keep you safer because it becomes a lot harder for someone to track you.
Cold Storage
Cold storage is something that you should definitely consider when it comes to using cryptocurrency. This storage is important because it adds a level of security to your coins, making it harder for hackers to get ahold of your information and use it how they wish. Since these cryptocurrencies are still pretty new, there isn’t a lot of regulation in place for protecting users against theft or fraud. These are not all that common yet on these networks, but as Bitcoin and the other online currencies grow, it is likely to become a bigger problem.
And this raises the question, where should you store your coins to keep them safe? Technically, you are not able to store these coins since they are all digital and there aren’t any paper versions available. Rather, they are going to be accessed through keys, which are codes and addresses, that are kept in your wallet. Thus, you need to keep your digital wallet, the part that is holding the private and public keys, safe from others.
There are a few methods that are available for securing your wallet, including cold storage, multi sign, backup, and encryption. Of course, the first thing that you should do to keep this wallet safe is come up with a strong password and you should take the time to back-up the wallet in case something happens.
Cold storage is definitely a method you should use to help protect your wallet and the coins inside of it. This type of storage basically means that you should store your coins offline, away from any access online. When you take your coins offline, you are able to really reduce the threat you face from hackers. It is a bit less convenient when it is time to backup or encrypts, but it is really one of the safest methods for keeping your coins safe. If you do want to backup and encrypt, you can choose cold storage for the coins that you want to save for later, and then keep a few online to make it easier for regular transactions.
There are a few methods that you can choose for cold storage. Some are easier to use than others, but all of them can be effective and the one you choose is completely up to you. Some of the options that you can pick for cold storage include:
- Paper wallet: this is a safeguard against a malfunction on your computer and against hackers. What it does is have you print off your private and public keys and the keep them on paper. In addition, these paper wallets are often going to have a QR code on them that you can scan if you want to quickly make a transaction. Since this paper is going to have all the information that is needed to spend your coins, it is going to be pretty safe and you won’t have to worry about what goes on online.
- Storage devices: some people decide to put the information for their keys on a storage device such as a USB drive. These are fairly easy to work with, but you do need to take some extra precautions to make sure someone doesn’t get ahold of them. Keep them away from the computer and perhaps leave in a deposit box or a safe.
- Sound wallets: sound wallets can help to keep your virtual currency safe. This technology is going to help keep your private keys secure by placing them in encrypted sound files on vinyl disks and CDs. You are able to get these codes of the audio files with the help of a spectroscope app.
- Hardware wallets: these are the preferred choice or cold storage. They are small devices, which are designed to be virus and water proof, and you can place the keys on there. BitSafe and Pi-Wallet are two examples of a hardware wallet.
The idea of a deep cold storage service is becoming popular as well. It was introduced as a service that is insured by an underwriter so it is going to provide protection against loss or theft. There is a drawback about this service because it requires address and identity proof of the person who is seeking this service. If you wish to remain anonymous, this service is not the best, but if you don’t mind this as much and you are more worried about keeping the Bitcoin safe, then this is the right option for you.
Backing Up
In addition to working with cold storage and trying to protect your privacy while you are on these networks, you need to make sure that you are backing up your information on a regular basis, no matter what kind of cryptocurrency you are dealing with. Unlike a dollar bill or another fiat currency, the currency that we are dealing with online is basically just lines of code on your computer. If you have coins, like Bitcoins, saved on your computer and it ends up dying, your money is gone without a trace. And with each coin being worth so much right now, it is no wonder that backing up your information is important.
You have to take the right precautions to ensure that your money is safe. Otherwise, if something happens to your computer and it ends up dying, you are going to lose all the information that makes up your currency, which could mean a lot of money. The best option is to use a backup imaging software. ShadowProtect is a good option because it is going to take a full image of the whole system and then will save that information. It can even keep the information that your cryptocurrency coins are made up and encrypt that information to keep it safe.
ShadowProtect is good because, in addition to helping backup the information that you have on your computer, it will take these backups at incremental times. This means that if you are messing around and accidentally delete the coins in your wallet, you should have them saved in one of your earlier backups so it is easier to recover them.
The trick to backups is that you need to do them on a regular basis, otherwise they do become worthless. If you are making a lot of transactions with Bitcoin, it doesn’t make much sense to just do one backup and then avoid doing this for the next year, or the information will be outdated. When it comes to your coins or any money for that matter, you should make sure that you are doing many backups on a regular basis.
Another option is to have a few formats of your backups ready. The ShadowProtect option, and other software like it, are digital formats, but it is also a good idea to have a paper trail as well. This ups your level of protection so that you can keep some physical copies of the computer and then also have the digital copies to be safe. The more proofs that you have about your coins, the easier it can be if something does go wrong and you lose the information.
Preventing Hackers
When you are working with cryptocurrencies, you do need to be careful with hackers. This method of currency is considered much safer than some of the other options out there, but it is still a place where hackers will go to try and get your personal information. There are so many people who are on these networks and if you are not careful with your information and the transactions that you use, you could have a hacker get ahold of your information.
There are a few things that you can do to prevent hackers getting ahold of your information. The first step is to make sure that your credentials for getting onto your cryptocurrency network are secure. Don’t pick a common address that will state exactly who you are and don’t use passwords that are simple or are already on a few of your accounts. If you do this, it is easier for the hacker to get onto your cryptocurrency account if they happen to hack one of your other accounts.
Using cold storage and backing up your information can work out well too. There are a lot of beginners who will keep their coins online because this is easier. But the longer that these coins are kept online, the more appealing they are to hackers to get ahold of. If you store them on your hardware or through a storage option like cold storage, they are much harder for the hacker to get ahold of.
Hackers are always trying to get your personal information and if you don’t keep that information safe, you will find that they can get your coins and use them how they want. Cryptocurrency is becoming a big market and it is really appealing to hackers to try and get this information. Leaving it all online, without the proper security, is just asking for a hacker to come onto the site and steal the information so make sure to take the precautions that you need to keep hackers away.
