The idea of buying cryptocurrency can be daunting. After all, it's not like going to a bank and opening a checking account.

But for most people, setting up a cryptocurrency account is actually easier than going to a bank. This guide will help you purchase and send Bitcoin for the very first time.

I'll also show you the benefits of using cryptocurrency and give you a basic idea of how it works.

To buy Bitcoin for the first time, open an online account with a reputable cryptocurrency exchange. Link a payment method to your account, such as a bank account, PayPal or debit card. Most exchanges will require you to verify your identity (KYC or Know Your Customer) before you buy. Once you're approved to buy, click the buy button in your account and enter the amount of Bitcoin you want to buy, in your local currency. 

More detailed steps and tips are provided below.

The Benefits of Using Cryptocurrencies Like Bitcoin

Before we get started on how to buy Bitcoin, let's take a quick look at why Bitcoin is useful.

The biggest benefit of Bitcoin is that it's decentralized. 

That means that no central authority controls it, so gatekeepers cannot control who you send money to or receive money from.

You don't have to pay a bank a huge fee to screw up your money wire, or wait 7 days for your money to be sent between banks.

Your cryptocurrency will be sent within about 30 minutes or less and you don't need to ask anyone for permission.

How Bitcoin Works (Layman's Version)

Now that you understand the benefits, you're probably wondering how it works.

I won't bore you with the unnecessary details, but the Bitcoin blockchain is a database. This database stores all of the Bitcoin transactions ever done on the blockchain.

Banks use their own databases to store your account information. But that database is stored on their servers.

The Bitcoin blockchain is stored on thousands of computers across the world.

This may seem unsafe, but it's actually safer.

Every time a transaction happens on the Bitcoin blockchain, all of the copies of the database get updated. You can think of it as the database getting backed up on thousands of computers.

If someone wanted to alter Bitcoin transactions, they would have to change at least 51% of all of the copies out there.

This is because the Bitcoin network is built to use the version of the blockchain that most of the computers on the network agree on. So the more copies if the database there are, the harder it is to hack the blockchain.

Just like with your online bank account, the “password” to each wallet, also known as the private key, is only known to the owner of the wallet.

So although the database is on multiple computers, the passwords are secure.

Now that you have a little background on Bitcoin, let's jump into how to do your first Bitcoin buy.

Step 1: Find an Reputable Exchange in Your Country

To get started, find the best exchange in your country.

It might take some time to do the research, but it's worthwhile to deal with a reputable company.

Coinbase is one of the top websites to get Bitcoin in the US.

You can also check out Binance if you want to exchange your Bitcoin for tokens on the Binance network.

If you are in another country, check to see which websites are available to you. Before you open an account do your due diligence and find out which services are reputable.

Step 2: Get Verified

Any reputable website will have to verify you, in order to keep accurate records of your transactions. This is to comply with Anti Money Laundering (AML) laws.

In order to get verified, you will usually have to send in a copy of your driver's license or passport. Other information may be required, but that is generally the minimum.

To withdraw money, you'll probably have to give up a social security number.

That's just the way it goes for any type of financial account, even your bank account.

Step 3: Connect Your Debit Card or Bank Account

Now it's time to connect your debit card or bank account to your Coinbase account.

If you have a debit card that gives you miles or rewards, this can be a great way to do some travel hacking.

Coinbase also now offers PayPal and money wires and funding options.

Adding your bank account or debit card to your Coinbase account is just like adding your credit card to an ecommerce website.

Step 4: Buy Bitcoin

You are now ready to buy some Bitcoin.

If you're using Coinbase, simply enter the US dollar amount that you want to purchase.

Then click the Buy button.

That's all there is to it!

Congratulations, your account will now show that you own some Bitcoin.

How to Store Your Bitcoin Safely

After you celebrate your first Bitcoin purchase, it's time to think about securing your investment.

Never keep your Bitcoin at an exchange or in an online wallet. Your account could be hacked or if the company goes out of business, you could lose your Bitcoin. 

When you put your cryptocurrency into a hardware wallet or non-custodial app, you control the private keys, or passwords.

I would suggest using a hardware wallet like the Ledger Nano. It will greatly reduce your risk of having your Bitcoin stolen.

To get more information on how to store Bitcoin safely on a Nano, read this post.

How to Send Bitcoin

To send Bitcoin to someone or to pay for something with Bitcoin online, all you need is their public key. 

This is like an account number for a traditional bank account.

The public key can be really long and difficult to enter into a website or app, so QR codes are an easy way to enter the key.

Just scan the QR code with your mobile phone or laptop camera and the public key will appear on the screen for you to use.

A QR code looks like this. It's a fancier version of the barcode that's used in stores.

Once you have the recipient's public key entered, enter the amount of Bitcoin you want to send them and hit the Send button.

How to Buy Altcoins With Bitcoin

Now that you have some Bitcoin, you might want to buy some other cryptocurrencies too.

Having some Bitcoin makes it super easy to buy altcoins.

First, do your research and identify the altcoins that have the most potential. If you want to learn about what to look for in potential altcoin investments, read this article.

Once you find a coin that you want to invest in, sign up with an exchange that has the coin you want.

Then send some Bitcoin from your Coinbase account by following these steps.

1. Select your account
2. Click on the send button in your Bitcoin (BTC) wallet
3. Enter the recipient's public key, also known as the public address
4. Enter the amount of BTC you want to send in US Dollars
5. Click the continue button to send your Bitcoin

The Recipient Address will come from the exchange that you signed up with.

In your exchange account, find your Bitcoin wallet address.

Then copy that address into the screen above. Click on the Continue button and verify the transaction.

Be patient, the transfer can take up to an hour.

Once you have transferred your Bitcoin to your exchange, you can buy any altcoin that is available on that exchange.

Cashing Out Your Bitcoin

If you want to turn your Bitcoin into cash, then the easiest way is to simply use Coinbase to convert your Bitcoin to your local currency.

You just have to connect your bank account to your Coinbase account.

When you are ready to cash out your Bitcoin, simply convert your Bitcoin back to cash.

Avoid PayPal

There are some companies that allow you to buy Bitcoin, but you cannot actually transfer it to your own wallet. You have to sell the Bitcoin and turn it back into fiat currency on their platform.

Remember, that if you don't own the keys to your wallet, you don't actually own the crypto in the wallet.

So avoid using services like PayPal, that don't allow you to move Bitcoin into your own wallet.

There is also the chance that they don't actually own all of the Bitcoin that they say they have on their platform.

If you cannot transfer the Bitcoin off their platform, then they don't actually need to have it.

They could be acting like a “bucket shop” that only accepts trades, but doesn't actually own the underlying asset.

I'm not saying that PayPal is doing this. All I'm saying is that companies that don't allow you to move your Bitcoin could be doing this.

Beware.

Conclusion

That wasn't so bad, now was it?

Once you make your first purchase, I think you will find that it is easier than you thought it would be.

Remember that getting Bitcoin is the easy part.

Keeping it safe can be a little more difficult.

But if you take the right precautions, your Bitcoin will stay safe until you are ready to cash it in.

Disclaimer: Some links on this page are affiliate links. We do make a commission if you purchase through these links, but it does not cost you anything extra and we only promote products and services that we wholeheartedly believe in. TradingHeroes.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

The post How to Buy and Send Bitcoin for the First Time appeared first on Trading Heroes.

Cryptocurrencies are an exciting emerging market and Ethereum has a ton of potential.

But these new currencies come with their fair share of risks. In order to keep your Ether safe, an Ethereum paper wallet can be a good place to store your Ether.

But how do you create one, is it safe and what are the risks?

In this post, I'll show you why you might want to create a paper wallet. Then I'll give you the exact steps on how to do it securely. I'll also show you how to transfer your Ether in and out your newly minted paper wallet. 

Remember, no storage method is 100% safe.

But if you understand the risks, take the proper precautions and diversify your storage methods, you greatly reduce your chances of losing your investment to the bad guys.

Storing your Ether on the exchanges is generally the worst place to store it because the exchanges are susceptible to hacking and the exchanges maintain control of your private keys…not you.

Therefore, cold storage is a must for anyone who is serious about keeping their money safe.

A paper wallet is one cold storage option.

What is an Ethereum Paper Wallet?

If you are totally new to cryptocurrencies, I'll quickly go over what a paper wallet is.

If you know this already, then skip on to the next section.

First, some terminology…

Ethereum is the network or the “software” and Ether is the cryptocurrency that is used for transactions on the network.

That might be a tad simplistic, but that's pretty much all you need to know.

A wallet, digital or physical, is simply an address on the Ethereum blockchain. A blockchain is a type of database.

You can think of an Ethereum wallet address like a website domain name. It's an address that tells you how to find a website on the internet.

So when you create a paper wallet, you are using a piece of software to do two things:

• Generate a private key, which is essentially the password to your wallet. This password allows you to spend the funds in your wallet and is very secure. Do not expose this key until you are ready to spend the money in your wallet.
• Generate a public key, which is a public address on the Ethereum blockchain. You will give this to people to send cryptocurrency to. It's like your mailing address where people send physical mail to.

You can also send Ethereum ERC20 tokens to your Ethereum paper wallet. I'll get into that more in a bit.

Now let's talk about the advantages of a paper wallet…

Why Create an Ethereum Paper Wallet?

This storage method is more for long term Ether investors, not ETH traders. But even as a trader, you can store a percentage of your Ether in a hardware or paper wallet, until you need it.

Here are some reasons why you might want to use a paper wallet to store your Ether or Ethereum-based token.

It Cannot be Hacked

Since a paper wallet is not connected to the internet, there is no way that someone can hack your paper wallet.

This assumes that you have followed the correct steps in creating your paper wallet.

I'll discuss that more, later in this guide.

Keep ERC20 Tokens Separated

If you want to separate your ERC20 tokens from your Ether holdings, then creating paper wallets is an easy way to do this. There is an added layer of protection, in that you can easily send your tokens to a paper wallet. But to transfer the token out of the wallet requires a small amount of Ether in the wallet to pay for the transaction.

This is the Ethereum “gas” or fee that is required to execute the transaction. So if there is no gas in the wallet, that is another step that someone has to go through to get the money out of the wallet.

Also, if a would-be thief does not know about ERC20 tokens, then they might only scan the wallet for Ether. If there is a zero Ether balance, then they may just leave the wallet and move on to the next one.

Storage Diversification

Keeping all of your Ether in one place is generally a bad idea. So if you can keep some of it in a bank safety deposit box, some in your safe house and some of it in a safe in your home, then you greatly reduce your risk all of your money being stolen, in the event that one of those places are compromised.

Paper wallets make it easy to do that.

Full Control of Private Keys

This is especially important with Ethereum.

Why?

Because of Airdrops.

Who knows if this will be a big thing in the future, but there are cryptocurrencies that are giving away some of their tokens to people who already own Ether.

This is called an Airdrop.

They do this because they want to raise awareness for their token. OmiseGO is an example of one of the big early Airdrops.

I don't think that you will make a ton of money with Airdrops, but you never know. There might be a token that becomes quite valuable one day.

Here are some ERC20 tokens that I have already received in one small wallet.

The important thing to understand is that these Airdrops only go to the owners of the private keys. If you keep your money on an exchange, the exchange owns the private keys.

So the exchange will usually get the Airdropped coins, not you.

That's even more reason to stay in control of your private keys!

You Don't Have to Move Large Amounts of Money

Another benefit to paper wallets is that you don't have to keep all of your money in one wallet. You can generate several wallets and spread your money out.

If you only use one cold wallet solution and have to replace it, for whatever reason, it can be scary to move all that money at once. If you mess something up, all could be gone in one fat-fingered keystroke.

Having multiple wallets means that you have the ability to only move a portion of your funds.

Of course, this also creates more work. But it can be a small price to pay for peace of mind.

Easier to Use

If you don't like dealing with a lot of device setups and online accounts then a paper wallet can be much easier to use than a hardware wallet device. It just depends on what you prefer to use.

Inexpensive

Once you have the basic tools, paper wallets are very cheap to make. So you don't have to spend another $100+ on a Trezor or Ledger to get a second or third wallet.

Just fire up your printer and print out more wallets.

Easy In-Person Transfer

If you like how cash can be transferred from person-to-person, then a paper wallet might be for you. You can just print out a paper wallet to pay for something.

Presumably this would be for a higher ticket item. People will look at you weird if you try to buy a coffee with an Ether paper wallet.

The person you are paying can just scan the paper wallet into their app, verify the transaction and you are done. If it is a fairly big translation, then you don't have to carry around a briefcase full of cash handcuffed to your wrist.

Anyone who has watched any spy movie knows that you should target that guy.

Paper Wallet Risks

But a paper wallet is not all sunshine and roses. There are certainly risks involved with this storage method.

Paper Damage

If you are actually printing your paper wallets on paper, with an inkjet printer, then stop right now.

Seriously.

Otherwise, your paper wallet is vulnerable to water, fading and any 5-year old child. In the tools section below, I'll show you how to create a paper wallet that is much, much more durable.

But even then…fire, and a sharp pair of scissors are big threats to even the most robust paper wallets.

So be sure to store them in a safe place.

Transferring From a Paper Wallet

Putting money into a paper wallet is easy. When you want to withdraw your money from a paper wallet, you have to take an extra step and use an app or a site like MyEtherWallet to spend the money in a wallet.

You also have to “sweep” all of the money out of that wallet, for security reasons. I'll get to that later in this guide. The money you don't spend has to be moved to another cold storage wallet, to keep it safe.

So there are some extra steps that come with spending money from a paper wallet.

But this can also be seen as a extra layer of protection.

It's a Bearer Bond

When you create a paper wallet, you are essentially creating a bearer bond. Whoever has possession of the paper is the owner of the money in that wallet.

Since the private key to the wallet is printed on the wallet, anyone can transfer the money out of the wallet into their account. Keep your paper wallets in your possession, hide the private key from plain view and only give them to people you absolutely trust.

You will learn how to hide the private key, later in this guide.

Look-Alike Websites

One way that the baddies can take your money is by creating their own websites that look like legitimate paper wallet generators. When you create a wallet on one of these sites, they can see your private keys and will have access to your funds.

They can send you a link to these bogus sites in and email or put it on a website. People think that they are going to the legit site, when they are actually going to a cloned site.

That's why it's so important to use the method that I outline below.

Software Hacking

Yes, a paper wallet cannot be hacked online. But if you create the wallet with software that is hacked, then the software can potentially transmit your private keys back to a hacker. Also, if you have malware on your computer, it could track your actions and send that information to a hacker too.

I'll talk more about how to avoid these scenarios in later sections, but just be aware that this is a threat.

Hardware Hacking

The printer that you use to create your paper wallets is a potential vulnerability too. If the printer is too “smart” then it can store your previous printouts in its memory, which can be downloaded.

This guy was able to hack 150,000 printers remotely. He did it to raise awareness about printer security. But the bad guys aren't going to be that nice.

Your documents can also be intercepted when you transmit to wireless printers. So while wireless printing is super convenient, you should not use it for printing paper wallets.

The Tools You Need to Create a Secure Paper Wallet

Here are the tools that you need to create a secure Ethereum paper wallet.

1. Synthetic Paper

Rule #1: Contrary to the name, you should not actually use paper.

One spilled beer and all of your money is toast.

If you want to store your money as securely as possible, then synthetic paper is the only real option. It is tear proof (by hand) and waterproof (if you use a laser printer).

There are a few synthetic paper options out there, but here are the two that I recommend.

The first one is Teslin. You will hear about it on many cryptocurrency forums and it is supposed to be the very best synthetic paper available.

I'm sure it's great and all, but I personally think that's overkill for a cryptocurrency paper wallet.

It's also pretty expensive.

One reason is that it is so durable and costly is that it is really thick, 10 mil to be exact. For reference, the average sheet of paper is 2.5-3.5 mil thick. At a little over $1 per sheet, it is cheap, compared to other cold storage solutions. But the cost can add up.

Another option is TerraSlate. It can be about half the price of Teslin, depending on how much you buy. It comes in different thicknesses, but the 4 mil version is a good option, in my opinion.

I've tried to tear one sheet of TerraSlate paper with my bare hands. I'm obviously not the strongest person in the world, but I could not rip it.

These suckers are strong!

Whichever one you choose, be sure to choose the version that works with laser printers.

Here's why…

2. A “Dumb” Laser Printer

Rule #2: Don't use a “fancy” or inkjet printer.

Inkjet printers use a liquid-based ink, which means that they will probably fade. Even so-called waterproof inks may not stand the test of time.

Don't take that chance.

Laser printers on the other hand, essentially melt plastic on paper.

This is completely waterproof.

So the combination of synthetic paper and waterproof ink will give you the most durable paper wallet possible.

“Fancy” printers are also security liabilities. The signal to wireless printers can be intercepted by anyone who knows how to decode these things.

Yes, that is not highly likely, but do you really want to take that chance?

Use a hardwired USB laser printer to prevent this.

Printers with a lot of internal memory are also potential targets for thieves. This internal memory is great if a print job fails in the middle because the printer can simply reprint the job from its memory.

However, this also means that someone could possibly download your previous print job and create a duplicate of your paper wallet. Therefore, the fewer bells and whistles on your laser printer the better.

Good news! That also means that won't have to pay a ton of money for a new printer.

Something like this printer is a good option, but do your own research before you buy.

Finally, for good measure, unplug your printer from the power and your computer, after you are done using it. This is to ensure that nobody can get access to it, online or in-person.

Paranoid? Maybe.

But safe?

Totally.

3. A Paper Wallet Generator

Next, you will need a paper wallet generator. This is usually done via a website.

It will generate the public and private keys for your wallet and give you a physical wallet design to print out. Some designs are cool, some not so much.

There are a few different options out there. But here's the most important thing that you have to keep in mind.

The biggest risk with using a wallet generator is that it may transmit your private keys back to a hacker. 

So you have to trust the source of the website that you use to create a paper wallet. You should also generate your wallets offline.

More on how to do that in the step-by-step guide below.

But the best paper wallet generator right now is MyEtherWallet. You can download the website to use offline here.

If you aren't sure about a website, do your own research and find out what other people are using and why.

4. A QR Code Scanner For Your Computer

You will also need a QR code scanner for your desktop or laptop computer. This will make it much easier to scan the QR codes on your wallets.

Of course, this is assuming that your computer has a built-in camera. If it doesn't, then consider getting a USB connected camera or scanning device.

If you type in the key manually and you make one mistake, all of your money could be gone. That is why it is so important to scan QR codes.

Just be sure that the QR code scanner you use does not transmit any of your scans back to a central server. This could expose your private keys by accident.

Here are few options to get you started:

• Mac: QR Journal
• Windows: CodeTwo Scanner and Creator
• Linux: ZBar Bar Code Reader

5. A Copy of Linux Running From a USB Drive or Virtual Machine (Optional, But Highly Recommended)

If you want to be extra secure, then you should only create your paper wallets from a brand new installation of an operating system. Since that may not be realistic for most people to do on their main computer, the next best thing is to put a fresh copy of Linux on a USB drive and run MyEtherWallet from there.

There are several flavors of Linux out there, but Ubuntu is one of the most popular and well supported.

The complete guide on how to install Ubuntu Linux on a USB drive can be found here.  It works for Windows, Ubuntu and macOS.

Once you have Linux installed on that drive, you can just plug it in and you will be able to use Linux for printing out your paper wallets.

As an alternative, you can also install a virtual machine like VMWare and install Linux on the virtual machine.

Using Linux to print your paper wallets may seem like an unnecessary step. But an ounce of prevention now, can save you from a mountain of hurt later.

This is especially true if you are running Windows, which is the least secure operating system. 

I highly recommend using Linux to print paper wallets. So in this guide, I'm going to be using this method. 

6. Tamper Evident Stickers (Totally Optional)

You might also want to purchase tamper-evident stickers to put on your paper wallets. This doesn't offer any physical security, but it can make it easier to tell if someone has peeked at your private key.

Notice how the paper wallet above is folded to protect the private key. The stickers simply help to keep it hidden.

Note: the paper wallet design above is no longer available, but I will teach you how to use another design.

One of the worst things that can happen with a paper wallet is that you lock it away somewhere safe, only to discover later that there is no money in it. So if you can see that someone has tampered with the wallet beforehand, you can at least try to track down the culprit right away.

The Step-By-Step Process for Creating Your First Ethereum Paper Wallet

Now that you understand the basics about paper wallets and the tools you need to create one, it's time to get to work. Here are the steps that you have to follow to create your first wallet.

Note: Some of these steps may seem like paranoid precautions. But remember that the Ether you store in these wallets could be worth a lot of money one day. 

Act accordingly.

Step 1: Setup Linux

The first thing you have to do is to install Linux. I'm going to use a virtual machine in this example, but you can also use the USB method mentioned earlier in this guide.

Either way, get Linux installed and download the latest updates. Then make sure that you can print to your laser printer, from Linux. If you cannot print, then download the latest drivers for your printer.

Do not download anything else!

No games or any other nonsense that you have on your primary computer. The more things you have installed in Linux, the higher the probability that you will download something that can steal your Ether.

Step 2: Download the Wallet Generator

Next, you need to download the offline wallet generator from MyEtherWallet. Do this from inside Linux.

First, click on this link.

Then click on this link to download the file.

Now double click the zip file to unzip it. Once you have successfully created this folder, you are ready to move on to the next step.

Step 2: Start Printing

Before you start printing, be sure to disconnect your computer from the internet. Turn off your internet from inside Linux by unchecking the Enable Networking option from the networking menu in the upper right corner of the screen.

If you want to be extra cautious, disconnect your wireless router and turn off your modem to be absolutely sure that there is no internet traffic going to your computer. If you are using a virtual machine, shut off the internet connection on the host operating system too. 

Then go into the folder you unzipped and double-click the index.html file.

This will open a browser with an offline version of the MyEtherWallet site. Since you are not connected to the internet, this site is only running locally on your computer.

This ensures that the site is not passing back any information over the internet and nobody can intercept any information that is accidently transmitted between your computer and your wireless router.

First create a password for your paper wallet. Make sure it is more than 10 characters.

Remember that password length is very important.

The longer your password, the more secure it is.

Keep this password stored in a secure place, you may need it to access the money in your wallet later.

Once you have created your password, click on the Create New Wallet button.

The next screen will tell you to download a file. Click on the Download button to get the file.

This file is another way that you can use to get into this paper wallet, so keep it somewhere safe. It is an alternative to a private key, so treat it accordingly.

Once you have downloaded the file, the “I understand. Continue.” button will become clickable.

Click on it to continue to the printing phase.

The next screen will show you your private key for this wallet. Obviously, I don't intend to actually use this wallet, so that's why I'm showing the private key here.

Never share this private key with anyone.

You don't have to copy this key and save it anywhere. That's what the paper wallet is for.

Click on the Print Paper Wallet button.

Then you will be taken to a screen with the paper wallet. Print it to your laser printer and you are done.

If you want to have a backup, you can also print a copy to a PDF and store it on an encrypted USB drive. Remember however, the more copies you have floating around, the more potential for theft.

Repeat that process as many times as necessary to generate the number of paper wallets you need. Remember to keep your passwords and any other information about each wallet safe and off public servers like Dropbox or Evernote.

Also keep them organized. Make sure you know which password and keystore file goes with which wallet. You can write a number on the paper wallet and use that as a reference number in your digital files.

At this point, you probably have a question…

Why Do I Need a Password and Keystore File? 

There are two ways that you can spend the money in your Ether paper wallet:

1. Use the private key.
2. Use the password and the keystore file together. You need both to access the funds in the wallet.

You can use either of the two options.

So if you are going to only use the paper wallet for storage, then you might not need the password and keystore file. However, they are good backups and are totally different from the private key.

If you don't want to have paper lying around, then you could just store the password and keystore files somewhere. Presumably not in the same location. But again, the paper wallet is a good backup.

Step 3: Shut It Down

When you are done printing your paper wallets, shut down Linux and unplug your printer from the power source and your computer. Now it's safe to connect to the internet from your primary operating system.

Step 4: Fold Up Your Paper Wallets

The biggest issue with the physical design of the MyEtherWallet paper wallet is that it does not hide the private key. Even if you don't show your wallet to anyone, the private key could accidently be photographed or scanned.

Some camera apps automatically detect barcodes and store them, so you have to be extra careful.

Here's how you can hide the private key with this paper wallet design.

Get ready for some origami.

When you print out your wallet, it will look like this.

You can easily fit three wallets on one sheet of paper. So after you cut out the first wallet, save the paper and use it again to print your next wallet.

First, cut out the outline of the paper wallet, like so.

Again, I'm not actually going to use this wallet, so I'm showing you the private key. But when you do this, you will want to hide the private key.

Don't post it on Instagram

Cut off a portion of the left tab above the public key address or address. See the red line below for reference. I'll show you why this is important in a minute.

Then cut off the “My Ether Wallet” part of the left tab. It will look like this.

Next, fold the private key on the bottom of the wallet under, so it is hidden. Make sure that the public key/address text can still be seen.

Then fold the private key QR code under, to hide it. Be sure that the entire public key address text is still visible.

Next, flip the wallet over to the back.

Fold the private key QR code in half so it is hidden.

After that, put on a sticker or piece of tape on the fold like this. The tape or sticker should not cover the public key text on the front.

Now fold the left edge to the right edge, not including the tab. It looks like this. Notice how the sticker doesn't cover the public address.

Next, fold the tab over. The entire public key text is visible so you can double check the public address text after you scan the QR code. This is why we made that weird first cut.

Now you can use one more sticker or a piece of tape to seal the deal.

You now have a paper wallet that is easy to store and transport. Notice how it is impossible to see the complete private key QR code or text, from any side, without breaking the seals.

Since you have also covered or removed anything saying “Ether,” it's tough to tell that it's an Ethereum paper wallet, unless you know that the 0x prefix of the public address is an Ethereum address. If someone doesn't know what Ether or a paper wallet are, they won't have any reason to believe that this piece of paper is valuable.

Step 5: Buy Some Ether to Send to Your Wallet

This is the fun part. Now that you have some paper wallets, it's time to put some Ether in them.

First, buy some Ether from a site like Coinbase. They make it easy to buy Bitcoin, Litecoin or Ethereum with a credit card or bank account.

Here's what it would look like if you wanted to buy $100 of Ether.

After you purchase the Ether, it will be available in your Coinbase wallet.

Then use the QR scanner on your computer to get the public key from the first paper wallet you want to transfer Ether into. Make sure that the public key text on your computer matches the text on the paper wallet.

Once you have copied the public text address, go to Accounts > ETH Wallet > Send in Coinbase. Paste the paper wallet public address into Coinbase as the send address, chose how much you would like to send and hit the Continue button.

If this is your first send, you should test the process with a small send, before committing to a larger amount.

There will be one more screen to verify the transaction.

Click on Verify.

Now it's time to check to see if the transaction went through.

Step 6: Check Your Wallet Balance

It may take some time transfer the wallet balance to your new paper wallet, but it shouldn't take more than about 15 minutes to complete.

You can check the balance of your wallet by going to Etherscan. Use the QR Code scanner on your computer to get the public key from your paper wallet.

Remember, never use your private key until you are ready to spend the money in the wallet.

Then copy and paste the public key into the search box in the upper right corner of the Etherscan page and click on the GO button.

This will show you how much Ether is in your paper wallet. If you sent ERC20 tokens to your paper wallet, then be sure to look at the token dropdown menu.

If the transaction did not go through, check Coinbase to see the transaction status. If you cannot tell what went wrong, contact Coinbase support and they will help you out.

Step 7: Find a Secure Storage Place

Once you have confirmed that your transaction was successful, it's time to secure your paper wallets. A bank safety deposit box is a very good option.

But you may want to store it in your home safe or a another secure location.

Your paper wallet could be worth a lot of money day, treat it like you would physical gold or a valuable antique.

That's it!

Pretty simple right?

Now I'll show you how to move your money out of your paper wallets.

How to Transfer ETH Out of a Paper Wallet

Getting money into a paper wallet is pretty easy.

So is getting it out.

Step 1: Use MyEtherWallet

There are several digital wallets that will allow you to sweet the money on your paper wallet into their wallet. But the easiest is MyEtherWallet.

To be extra safe, fire up Linux again and use the website from there. You have to be connected to the internet.

On the MyEtherWallet website, go to Send Ether & Tokens.

Then choose either Keystore/JSON File or Private Key. Using Private key is faster, so I would recommend that.

Break the seals on your paper wallet and scan the private key QR code. Copy and paste that into the box and click the unlock button.

Yes, this is done online and there is a bit of risk. However, the transaction doesn't take long, so it is not likely that a lot can happen during that time.

But if you would like to do this super securely, then you should do an offline transaction. The instructions for how to do this can be found here.

It's a little more complicated, but also much safer. Disconnect Linux from the internet and use that as your offline computer.

If you are going to send ERC20 tokens from your wallet, you need to have a little bit of Ether in the wallet to pay for the transactions. One wallet can hold multiple Ethereum-based cryptocurrencies.

Step 2: Sweep All of the Money From the Paper Wallet to a Digital Wallet

Now you have access to the money in your paper wallet, send it to the desktop, online or mobile wallet of your choice. Get the public address from the app you want to send the money to and put that into MyEtherWallet as the “To” address.

These wallets make it much easier to spend your money, but they are not as secure as cold storage solutions.

Here are a few options that you might want to consider:

• Mycelium
• Jaxx
• Exodus

Do some research on these solutions to see which one will work best for you. These apps give you the ability to spend your money anywhere Ether is accepted.

When you do this, take all of the money out of your paper wallet. It can no longer be considered secure because you have exposed the private key.

Step 3: Spend the Money by Using the App

Now comes the fun part. What will you buy?

Just don't spend it all in one place

Step 4: Put the Remaining Balance Back Into Cold Storage

If you have anything left over, you can send it back into a new paper wallet, or simply keep it in the digital wallet app. It just depends on how quickly you will need access to those funds again.

Conclusion

That is everything you need to know about creating your first Ethereum paper wallet. It can be a little tough to figure out the process the first time. But after you go through it once, you will be a pro at creating paper wallets.

If you understand and avoid the risks of paper wallets, then they can be a great way to store and transport your valuable cryptocurrency. Stay tuned for future tutorials on how to create paper wallets for other cryptocurrencies.

The process is usually similar, but some of them have their own nuances that you have to be aware of.

Still have questions? Leave them in the comments below…

To get more cryptocurrency tutorials and analysis, subscribe to our CoinCrew TV playlist on YouTube.

Disclaimer: Some links on this page are affiliate links. We do make a commission if you purchase through these links, but it does not cost you anything extra and we only promote products and services that we wholeheartedly believe in. TradingHeroes.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

The post The Beginner’s Guide to Creating a Secure Ethereum Paper Wallet appeared first on Trading Heroes.

In order to lock in gains that you have made when actively trading cryptocurrencies, you basically have two options:

1. Transfer the money to your traditional bank account
2. Move your money to another cryptocurrency, like Bitcoin

Well, there are some major issues with each option.

So in this post, I'll show you why each of these options is a bad idea and how you can plan ahead of time, to be sure that you don't miss another cryptocurrency trading opportunity. 

Transfer the Money to Your Traditional Bank

Let's say that you just bought some newly-minted Bitcoin Cash and have some sweet gains, after price went parabolic.

You are worried about the price dropping as fast as it has risen…which is a very real possibility. So you want to cash out of your position, to lock in your gains.

However, you also see that ETHUSD is pulling back to support near $280. So you want to be able to take advantage of that opportunity to get in, when it hits that key level.

If you cash out of your BCHUSD position and transfer the money to your bank account, then it could be several days before you can execute another trade in ETHUSD. For example, if you buy your Bitcoin through Coinbase and move it to different exchanges to trade for other cryptocurrencies, then you would have to do the following:

BCH > BTC > Coinbase > Bank Account

On Coinbase, this could take as long as 4 days. Here's a screenshot from Coinbase Support.

Then getting your cash back into the exchange, when you want to buy BCHUSD again, will take another 2-4 days.

Well, as we have seen with many cryptocurrencies, eight days can mean making 100%…or totally missing the boat. These currencies move fast and if you miss out, they may be gone forever.

In addition, getting your bank account linked to various cryptocurrency exchanges can be a major headache.

…and that goes double if you live in the US.

The Bitfinex exchange recently announced that they are not allowing US clients to link their bank accounts to do direct US Dollar transfers to and from the exchange. The only way to trade on that exchange is to transfer in cryptocurrencies.

Here's part of the official announcement:

So transferring money to your bank account is not a viable option for traders looking to take full advantage of trading opportunities in the cryptocurrency markets.

What else can you do?

How about moving out of another cryptocurrency?

Let's take a look at that option…

Move Your Money to Another Cryptocurrency

Once you have some sweet gains and you want to take advantage of another opportunity, a second option is to transfer your holdings into another cryptocurrency. For example, you could transfer your money into Bitcoin, since that is usually the strongest currency, with the most liquidity.

However, now you are exposing yourself to a different type of risk. If you look at Bitcoin's history, it has had tremendous volatility and there have been several times when price has dropped significantly.

For example, here's a chart from 2016, where price dropped by almost 50%, before recovering.

Therefore, moving your gains to another cryptocurrency can result in you losing all of your gains…and then some. So what you can you do?

Here's how to can keep those gains, but still be ready to pull the trigger, when a good trade arises.

Transfer Into USD (or your local currency)

Some exchanges allow you to trade your cryptocurrency for your local currency, without doing a withdrawal to your bank, so that is the ideal situation. Bitfinex is an example of an exchange that does this.

You can trade several currencies on the platform, from your USD account on the exchange.

But not all exchanges have this capability. Here's what you can do if that is the case…

The Next Best Option for Active Cryptocurrency Traders

There is a cryptocurrency called Tether USD and it is pegged to the US Dollar. At first, traders might not give this currency a second look because there is no opportunity to make money trading it.

Here's a chart where you can see the Tether price versus the US Dollar. The green line shows the price of Tether and you can see that it moves in a very tight band between about $1.05 and $0.89.

Because of this price stability, it is a great place to keep your “cash” while you wait for the next trading opportunity.

So if you are going to actively trade cryptocurrencies, keep this in mind. Find exchanges where you can trade Tether USD (USDT) with your cryptocurrencies of choice.

If you don't see the currency you want to trade, you can always do:

USDT > BTC > the crypto currency you want

But it's much better if you can trade for USDT directly because you will save on transaction costs. Not all exchanges offer USDT, so be sure to check before you start trading. 

Here's a list of a few brokers that offer USDT. Just remember to move the USDT to a wallet that you control.

• Binance
• Poloniex
• CEX

Conclusion

So that is a great way to lock in your cryptocurrency trading gains before he market drops.

Cryptocurrency is a very new market and there is going to be a ton of volatility in the coming years.

The post How to Lock In Cryptocurrency Gains Without a Bank Transfer appeared first on Trading Heroes.

As traders, our job is to take advantage of opportunities in the markets. Sometimes, these opportunities come in the form of entirely new markets.

I've been interested in cryptocurrencies for a few years now, but I've been very reluctant to trade them, much less write about trading them. I felt that there was just too much risk.

Especially for the average trader.

…and quite frankly, I didn't understand them well enough myself.

The first time that I saw them as viable for trading was when I went to this conference. I saw Chris Dunn talk about trading Bitcoin, but I was still skeptical that it would stay around for the long-term.

…until recently.

I credit my friend for talking to me about it on Twitter and opening my eyes to the potential in trading this emerging market. I'm not sure if he wants to be named, but you know who you are. I sincerely appreciate the education and helping me see the light!

This is a perfect example of the benefit of staying in touch with other traders on platforms like Twitter.

Anyway, as I have done more research and have actually started trading them, I have found that there are tremendous opportunties. With some coins, it's potentially like being able to get pre-IPO shares of Microsoft.

But there are also big risks.

Remember, the dot-com bust?

There will probably be losses of that magnitude too. That's just how these new technologies work.

So in this post, I want to share with you my knowledge of the cryptocurrency markets and give you a total beginner's guide to trading them. Be sure to bookmark this page because I'll continually update the information, as things change.

For you crypto veterans, this will be very simplified, but my goal is to make this information as easy to understand as possible so new traders can make an informed decision about the opportunities. Once people get the general concepts, then they can geek out about the details.

This is the future of FX trading. So in addition to USD/CHF, CAD/JPY and EUR/GBP, we also need to be aware of XLM/USD, ETH/BTC and XRP/LTC…

What is a Cryptocurrency?

Let's start at the beginning.

You may have heard many things about what a cryptocurrency is, but you may still be searching for an understandable definition. I hear ya, I was in the same boat for a long time.

Instead of getting too technical, here's the easiest way to think about cryptocurrencies:

A cryptocurrency is basically money on software platforms.

It's important to keep in mind that the teams/companies that are behind these cryptocurrencies are not only creating a new form of currency, but a new software platform. To demonstrate how this works, let's take a look at other software platforms that you are probably already familiar with.

Examining how these platforms work will help you understand cryptocurrencies. 

Here are a few software platforms that many people use:

• Windows: A software platform for personal computers
• Dropbox: A software platform for storing and sharing documents
• Fedwire: A software platform that sends money between financial institutions

On each of these platforms, a type of money is used, in exchange for using the platform:

• Windows: You pay US Dollars (or your local fiat currency) to buy a license for Windows to use on your computer. If you buy a computer that already has Windows on it, the license fee is included in the purchase price.
• Dropbox: You pay US Dollars (or your local fiat currency) to buy a subscription to use the software for a month or a year, depending on which plan you buy.
• Fedwire: You pay a transaction fee to use the system and you send fiat currency itself.

Each of these systems also have a database connected to it:

• Windows: Database is stored on your local computer
• Dropbox: Database is stored on the Dropbox servers
• Fedwire: Database is stored on the Fedwire servers

Cryptocurrencies essentially replace the US Dollars (or your local fiat currency) that you use to purchase these software services. The “database” that cryptocurrencies give you access to is based on blockchain technology. 

More on blockchain technology in the next section of this guide.

But wait, what are the software services that you are getting? Isn't a cryptocurrency like Bitcoin just a currency, like US Dollars?

Not quite.

The goal of cryptocurrencies is usually to improve on some type of existing software system or network. When you send money via PayPal, Fedwire or Western Union, you are basically sending fiat money electronically, similar to Bitcoin.

However, that's where the similarity ends.

Platforms like PayPal have severe limitations on what you can and cannot do. For example, you cannot send/receive money from certain countries (like Nigeria).

Cryptocurrencies like Bitcoin want to make financial transactions more open and accessible to everyone around the world.

Other cryptocurrencies solve other problems, which we will explore later in this guide.

Is Cryptocurrency Real Money?

Yes.

Since this is a new concept to most people, it will take some time to become widely accepted. This is where Bitcoin has been instrumental in paving the way for this new technology.

Websites like Newegg take Bitcoin, along with the other traditional payment methods. Here's what the checkout screen looked like after I added a drone to my cart.

Risks of Cryptocurrency Trading/Investing

Now that you understand the basics, what are the risks of trading these cryptocurrencies? There are quite a few, but here are the top three.

1. Some Technologies Will Fail

Remember that cryptocurrencies are basically software, created by people or companies. So just like Webvan or Pets.com in the dot-com bust, some of these technologies will fail.

…and they will fail spectacularly.

Right now, there is a lot of buzz around certain cryptocurrencies increasing several thousand percent, in a few months. This has a lot to do with ignorance and hype.

Just like when people found out that this new thing called the “internet” would change the world of business.

Did it change the world?

Of course.

But was there a lot of dumb money that overhyped the first wave of internet companies?

Totally.

So just remember, trading cryptocurrencies is kind of like trading a software stock. Some of the software will change the world.

Others will explode in a giant ball of fire.

There are also a lot of scam coins out there, so be careful. Like penny stocks that are just a company on paper, almost anyone can create a new cryptocurrency.

Learn how to separate the scams from the deeply underpriced currencies. Then use proper risk management and play the odds.

2. It Requires Technical Savvy

Let's face it, cryptocurrencies were created by super nerds. Like with Linux, there is still quite a bit of technical know-how that is required.

You don't need to know how to code, but if you are “not good with computers” you may want to stay away from cryptocurrency trading, at least until they start building more user friendly interfaces.

Don't get me wrong, I'm not calling anyone dumb. I'm just saying that if you don't possess a certain skillset, then you shouldn't get involved in that area. This could cause you to lose a lot of money, very quickly.

For example, I don't know how to sew, so I don't make my own clothes. If I did try to make my own clothes, everyone who meets me would think I'm a weirdo for wearing fucked up pants.

You get the picture.

So if you aren't so tech savvy, but still want to get involved, find someone you trust to trade for you.

3. There's a Lot of Broker and Technology Risk

Since this is emerging technology, there are still a lot of unknowns with trading at scale and how brokers and the software will react to certain surprise events. If you think that Forex brokers are risky, then you should consider cryptocurrency brokers at least twice as risky.

Not just because they could be shady, but there a still so many unknowns with the technology.

However, I would still trust the bigger cryptocurrency exchanges over a lot of offshore binary options brokers

So the lesson is: Don't keep too much of your coinage at the exchanges.

Move them off to your own wallet as soon as possible.

I'll get to wallets later in this guide.

What is a Blockchain?

Simply put, a blockchain is a database.

However, there is one huge difference between how you probably currently think of a database and how a blockchain database works.

In most cases, a traditional database sits on one computer or in one location.

Even if a company has redundant servers around the world, the data might only be backed up between 3 to 5 locations. On top of that, these companies collectively spend billions of dollars a year on cyber security, to protect this data.

With a blockchain database, the data can be backed up on potentially thousands of computers all over the world, for a much, much lower cost. The information in these databases is heavily encrypted and sometimes files are broken up into pieces, so even if one piece is exposed, it will not expose the entire file.

If the information on one server does become compromised by hackers, the other copies of the databases have to “agree” that the compromised data was a legitimate change to the data. If the other copies do not agree, then the change is rejected and it is changed back to match the others.

Obviously, this is an oversimplified explanation of the technology, but I hope that you are starting to see the benefits.

Instead of just one point of failure, like on a single server, you now have multiple copies of the same database all over the world that is almost impossible to crack and will “fix” itself in the case of a hack. This can also save a ton of money on cyber security software and services.

Example

Let's say that a hacker gets into your bank's computer tomorrow and transfers all of your money to his account, then deletes any trace of the transaction. With today's technology, you would probably be screwed.

But with a blockchain currency like Bitcoin, if one server was hacked and a fake transaction was inserted into the database, then it wouldn't match the transaction record on the hundreds other copies of the database. This transaction would be seen as a fake and rejected.

Your money would be safe. 

This is one of the many reasons why blockchain technology is so exciting.

The Characteristics of a Currency to be Aware of

Although cryptocurrencies are all based on blockchain technology, they are not all created equal. Here are some differences that you need to understand to make informed trading decisions:

• Transaction processing speed
• Total supply currently available
• Will there ultimately be a limit on the total number of currency available?
• Will there be an unlimited supply of currency?
• Is there a real-world need for this software/currency?
• Real world adoption of the technology
• Any big investors in the project?
• Does the use of the software make sense?
• Do the founders have a reputable background?

These are just a few of the characteristics that you should look at. But once you start digging into these details, you will begin to see which projects could work for their intended purpose and which ones are probably scams.

This understanding will also allow you to assess the long-term viability of these different currencies and which ones will be more desirable in the future.

Example

Tether is a cryptocurrency that wants to be the proxy for fiat currencies. So there is a Tether USD version, EUR version, etc. But each one is pegged to the value of the currency, so you can never make any money trading it.

It is purely to provide stable and liquid transactions. So one USD Tether will always be worth about $1.

If you didn't know this and bought a bunch of it, thinking that it's cheap compared to Bitcoin, you will tie up your money in an asset that will never appreciate. Sure, you won't lose money either, but you would have lost out on other opportunties.

So understand the nuances of each crypto, it's very important.

What are the Different Cryptocurrency Use Cases?

Almost every currency software has a different intended purpose and individual implementation, with inherent strengths and weaknesses.

It's like Windows vs Mac.

…or iOS vs Android.

Here are a few examples of the different types of cryptocurrencies and what they are designed to do. This is not an exhaustive list, just a sample.

Note: I don't necessarily support these currencies, I'm just using them as examples of the different use case niches within cryptocurrencies. 

Worldwide Financial Transactions

• Bitcoin
• Litecoin
• Tether
• Ripple
• Stellar Lumens

Application Platforms

• Ethereum
• Storj
• Siacoin
• MaidSafe

Private Financial Transactions

• Monero
• Dash
• Zcash

Specialty Currencies

• GameCredits
• ReddCoin

Take a look at these different use cases and figure out which ones make the most sense to you. Then understand how each software implementation works and think about what will probably do well in the future.

To see our extensive list of cryptocurrency sectors, read this post.

How do You Buy Cryptocurrencies?

First have to go to an exchange or service that will allow you to purchase cryptocurrencies. Some of the bigger exchanges are:

• Coinbase
• Kraken
• Bitfinex
• Binance
• LocalBitcoins

Many of them will allow you to use a credit card or link a bank account. As much as possible, do not store your cryptocurrency at the exchanges because they can be hacked. See the cold storage section in this post for details on how to store you coins safely.

It's easy to get Bitcoin, Ether and Litecoin. But if you want the smaller altcoins, you will have to do an exchange.

How to Buy Altcoins

First buy Bitcoin or Ethereum because those are the coins that are most easily transacted against the smaller altcoins. When in doubt, buy Bitcoin. If you want $10 of Bitcoin for free, use this link (while supples last).

Then find out where the altcoin that you want is traded. Go to Coinmarketcap and click on the coin you want to buy.

Next, click on the Markets tab for that coin. For example, here's where you can get NEM. The Source column will show you the exchanges where this coin is being traded.

Notice how most of them are traded against Bitcoin or Ether. 

Open an account at the most reputable exchange on the list. Once you are in your account, find the “deposit” wallet address for the altcoin you want to buy.

Here's an example from Poloniex. Copy this wallet address.

Next, login to the account where you bought your Bitcoin or Ether. If you bought it from Coinbase, then you can go to: Accounts > Send and paste the deposit address into that field.

Enter the amount you want to send, then click the send button.

It may take some time for the transaction to go through, so be patient.

When you see the balance in your destination exchange account, you are now ready to buy altcoins. Here's what it would look like when you have a Litecoin balance at Poloniex. This can be found in Balances > Deposits and Withdrawals in Poloniex.

Now go to the Exchange area of the website. In Poloniex, it would look like this:

Then click on the BTC tab. These are the currencies that you can exchange for Bitcoin. Click on the altcoin that you want to trade. Here's and example from Civic (CVC).

Next, scroll down and look for the buy/sell box. Enter the amount of altcoin that you want to buy. If you want to trade all of your Bitcoin, click on the link at the top with your total balance.

Click the Buy button and you are all set. The trade might not happen right away, so check your Orders > My Open Orders page to see the status.

The exact process will be different at different exchanges, but the basic idea is the same for all exchange.

How do You Store Cryptocurrencies?

With fiat currency like US Dollars, you can store them at the bank or in your wallet. It's pretty straightforward.

But with digital currencies, there are a few wrinkles that you need to get your head around, but the idea is similar. Let's take a look at how cryptocurrency storage works.

You store your cryptocurrencies on the blockchain in a “wallet.” This is simply an address on the blockchain. It's like how the website address tradingheroes.com directs you to my website, on the internet.

Each wallet has a public address and a private address. The public address is the address that people send funds to. The private address is the “password” that you use to access and send your funds.

Never expose your private key until you are ready to spend your funds, otherwise you will probably lose all the money in your wallet.

Here's an example from a Bitcoin paper wallet:

Now that you understand the basics of cryptocurrency wallets, let's look at the different wallet options out there. Here are the different ways that you can store your loot:

• Online wallet: This is probably the easiest way to store your money. But it is also the least secure. So it's not a good long term storage solution, but it is fine for buying things and funding your trading accounts. Exchanges like Coinbase also have their own wallets built in.
• Mobile wallet: You can download a mobile app like Mycelium to store your spending money. It is more secure than an online wallet, but if your phone ever breaks or it gets hacked, everything in your wallet will be gone.
• Desktop wallet: Similar to a mobile app but just for desktop computers.
• Hardware device wallet: These are hardware devices that are built especially for storing cryptocurrency keys. They are safer than the options above, but they are still susceptible to the things that can damage all electronic devices.
• Paper wallet: You can also store your private key on paper, like in the picture above. This is the most hacker proof, but it is also the least convenient. If you are going to go this route, be sure to store them in a safe place (like a safety deposit box) and don't actually use paper. Use something like this to make sure that your money isn't lost to something as simple as a spilled beer.

Cryptocurrency Tracking Apps

Before I wrap it up, you will probably need an app to track cryptocurrency prices on your phone. So here are a couple of apps that might work for you.

• Blockfolio: A simple app that allows you to add a watchlist and add trades so you can track your portfolio, ala stock trading apps. The most useful thing about this app is that it displays all currencies on your watchlist in the currency of your choice. Some apps insist on displaying the value in Bitcoin, which is annoying.
• Coincap: This app allows you to display currencies by market capitalization, volume and other ranking factors. They also have cool charts. Very useful for seeing what is being actively traded. Also displays prices in your currency of choice.

These apps are not for storing or trading currency. They are just to check the markets.

What Can Affect the Price of a Cryptocurrency?

There are many things that can affect the price of a cryptocurrency…sometimes very quickly.

Here is what you need to be aware of when you trade cryptocurrencies.

Of course, there is no guarantee that these things will move the market. But based on what we have seen so far,

Exchange Listing

This is a big one.

When Coinbase added Litecoin to their already limited list of cryptocurrencies that can be bought, they made it easily accessible to the average person.

Their interface is the best I've seen so far. It makes it so easy for the non-technical person to buy Litecoin.

Soon after the Coinbase launch (marked with the arrow, in the chart below), the price of Litecoin started to skyrocket and it has never looked back.

Now, you might be thinking that this could simply be a coincidence.

…and it could.

But it is very, very likely that exposing Litecoin to Coinbase's user base helped boost the price.

So when a large exchange announces that they will start listing a cryptocurrency that you are trading, take notice.

Watch exchanges like Coinbase, Bitfinex, Poloniex or CEX.

It could give it the boost you have been looking for.

Software Upgrades

Over the past few years, there has been a lot of discussion in the Bitcoin community about upgrading the core software functions of Bitcoin. The primary discussion has been around the transaction speed of Bitcoin.

If you have ever funded your trading account with Bitcoin or tried to buy anything with Bitcoin, you will understand what I mean. For a digital currency, the transaction time is a little slow.

It can take about 30 minutes or more, to do a single transaction.

Upgrading this speed has been hotly debated and finally led to the creation of Bitcoin Cash. After the split of Bitcoin Cash, Bitcoin has taken off to new highs.

There will be countless other software changes across all cryptocurrencies, so make sure that you understand the implications of those changes. 

Public Hype

Just like fake tweets can affect the price of a stock, any type of hype can affect the value of a cryptocurrency.

Good or bad.

So before you dismiss something as just hype, remember that hype moves markets too. But if you do trade hype, be sure to close your trade out long before the hype has a chance to cool off.

Otherwise, it could be a very expensive lesson. 

Wallet Improvements

Since you are reading this post, you probably want to start actively trading cryptocurrencies. But there are many other people who are investors and want to buy and hold for the next few years.

This is where storage becomes an important part of the cryptocurrency valuation equation.

Unlike traditional fiat currency that can be stored in a bank, your trading account, or your mattress at home, cryptocurrencies need to have a compatible wallet (or cold storage solution) to be stored safely.

Remember that cryptocurrency is simply software. So the wallet software needs to be able to work with the cryptocurrency software.

It's like trying to use the Windows version of Microsoft Office on a Mac.

That simply won't work.

Therefore, if a cryptocurrency doesn't have a good wallet yet, that will prevent less technical investors from buying the currency.

But as soon as one is available, then it makes the currency much more accessible to the masses.

…and thus, more valuable.

If you find that a cryptocurrency does not have a good wallet solution yet, that could be one signal that it is undervalued.

Looking for opportunities to buy, immediately after the launch of the first high-quality wallet, could give you a nice short-term profit.  

Platform Applications

Some cryptocurrency platforms, like Ethereum, host other applications. These applications, in turn, can have their own currencies or tokens.

If one of these DApps or Decentralized Apps does very well, this can have a positive effect on the underlying platform currency.

The value of the tokens should theoretically be independent of the value of the platform.

However, not everyone understands this and the success of one DApp can drive the price of Ether…at least in the short term.

So if you are trading a platform cryptocurrency, watch promising apps on the platform closely. 

Government Regulation

Finally, government regulation can have a huge effect on the value of a cryptocurrency.

One example is in Venezuela, where the police have been arresting Bitcoin miners on made-up charges. This has forced miners to go underground or start mining Ether instead.

But this could happen in any country. Any decision by the NFA or SEC could affect the value of certain cryptocurrencies. The SEC has already banned certain Initial Coin Offerings (ICOs), due to the potential pump and dump situation that could happen with those coins.

Be aware of current trends in government regulation and steer clear of currencies that could get red flagged by government agencies. 

Conclusion

So that is the Trading Heroes Beginner's Guide to Trading Cryptocurrencies. I hope that it answered any questions that you may have had about trading currencies like Bitcoin or Ether.

There will be more detailed posts on specific currencies and how to do some of the things mentioned above.

If you have any more questions or comments, leave them below.

Happy Trading!

Disclaimer: Some links on this page are affiliate links. We do make a commission if you purchase through these links, but it does not cost you anything extra and we only promote products and services that we wholeheartedly believe in. TradingHeroes.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

The post The Total Beginner’s Guide to Cryptocurrency Trading (Bitcoin, Ether and More) appeared first on Trading Heroes.