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Cryptocurrency - Important things to keep in Mind...!

Pan0ramix The DruidFeb 7, 2018, 8:03:47 PM

Below I attempt to present some of the key observations I've made throughout my interactions with cryptocurrencies, hoping to help other Minds learning by theory and not by practice.


Fees on exchanges

There are exchanges who charge for just holding coins with them. It is very important to understand fees of each exchange before even bothering yourself to register with them - let along executing a transaction. 

I've read reviews on Google appstore about decent apps; people were blaming the app for 'stealing from' them 'almost 3% from each order' - it was funny and sad! The app was independent from the exchange and the exchange was clearly stating on their website a 3% charge per order. Always read the Fees section before even register on any exchange.

Another important aspect to take into account when trading on exchanges is the maker/taker fees. In most cases, the maker pays the least fees in a trade and the difference with the taker's fees can vary as much as 0.1%!

Lastly, do not buy from brokers. Do buy from exchanges. And when you do so, show patience and use limit orders, where you can set the exact selling price and work better towards your strategy, and avoid market orders where you'll sell to whatever price a buyer is willing to buy at that particular moment.

Fees on Transfers

Besides taking into account the fees an exchange/wallet provider charges to transfer (or withdraw) coins elsewhere, you also need to take into account the current network fees for the coin you are considering to transfer. 

For example, say you want to change position in your coin portfolio and you are thinking to use BTC to acquire XRP, but XRP is not listed on the exchange you currently have your BTC. Is it really worth to pay the fees BTC network currently requires, or could you also do your acquisition using ETH? Why not exchanging BTC for ETH within the exchange you currently hold your BTC, and then transfer the ETH to the exchange where you can acquire XRP. You can save a significant amount of money from these network fees.

Another benefit that comes out of this decision-making process is the time it will take for your coins transfer to be executed. In the above case, if you would transfer your BTC you would need to wait a much longer time than if you had use your ETH. In certain cases, this time difference is crucial when you want to enter a position as quickly as possible.


Cryptocurrency needs to be treated as real money when it comes to securing them. One very critical fact to always keep in mind is that cryptocurrency is still widely unregulated meaning, among others, you will not be getting any compensation in case of you losing access to your coins - for any reason!

Triple-Check the address you send/deposit your coins into

If you make a mistake and you use an invalid or a wrong address to send coins, you will lose them and no recovery can be guaranteed.

Do not use Web Wallets

Web wallets are a magnet for hackers, hence they should be avoided as much as possible. If it is really necessary to use one, then do your research well and choose the company that can provide the highest level of security and safety. Look for online reviews from other users who have tried using the web wallet. 

Separate your Bitcoins to Hot and Cold Wallets

Wallets that stay on machines which are connected to the Internet are called hot wallets, since they are at high risk to network based attacks, as opposed to wallets that are offline in nature. Ideally, you should keep the bulk of your cryptocurrency funds on the offline wallet or the cold wallet. This can even be stored on a safety deposit box if you prefer. Then you can keep just a small float of your coins on your online wallet or web wallet and this is what you are going to use for your day to day transactions and/or trades.

Make Use of Hardware Wallet

A hardware wallet is one of the best options currently available, if you are after the security and safety features of cryptocurrency. This wallet effectively makes use of a USB key that comes with an on board computer running on its own special operating system, which is dedicated to operating a cryptocurrency wallet (or more than one cryptocurrenies).

Securing your software wallet is similar to protecting any data on your computer. Therefore, it wouldn't look paranoid to make habits the following suggestions too:

1) If you use a mobile device, then do take advantage of Google authenticator with a single IP in its whitelist, which should be the VPN to access the online exchange. Use it not only for login but for any transaction procedures too.

2) It is important to select an exchange that is not only flexible and easy to use but also reputable and secure. Try to follow the news. If industry leaders disengage from a project it should be a worrying signal. Repeated technical problems and strange policies are additional points of concern. Withdrawal difficulties will always be a red flag also.

3) Do create backups. Kept in a secure place, a backup of your cryptocurrency wallet may save you from hardware failures and a lot of human slip-ups. It will also let you restore your wallet in case your PC or telephone gets stolen.

4) Although passwords and encryption can protect from thieves, it is not able to put a stop to key-loggers or another malware. It is important to install and keep up-to-date leading antivirus and antimalware solutions. 

5) Prior to creating an account on any exchange, set up a new email box that you will be using for that specific exchange account.

6) Be sure to choose a very difficult and lengthy password, desirably a passphrase. Write it down on paper and store that piece of paper in a secret place.

7) While on social media or forums, do not mention what cryptocurrency exchange or wallet you use.

8) Contact your phone carrier and order all possible levels of security they can offer. Add passcodes, secret questions, pins, etc. 

9) For trading activities, consider examining decentralized exchanges. The difference between decentralized and centralized exchanges is that decentralized exchange does not store your funds. Nobody can gain access to your money except you.

10) Tell your peers and especially close friends and relatives to embrace the same attitude and mindset. Ecosystems, where all participants treat security seriously, are less attractive to malicious users.

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