all right so you've watched mining adventures part one two and three you've
got your dank mining rig and an asic or two and you are well on your way to
becoming crypto rich but how do you keep those sweet bitcoins
and altcoins safe and for that matter if you're not necessarily into buying a
bunch of hardware how do you just speculate on the coins buying and
selling them let's find out
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so if you've already been mining you're likely withdrawing your rewards to an
exchange be it gdax kraken binance or
any of the other few hundred exchanges out there
or you might be using a wallet on your pc
now most casuals will probably stick with the former because being able to
sell without moving your funds from your local wallet to an exchange can actually
save both time and money in transfer fees
however there are some serious drawbacks
to this approach first and most importantly you are not
in control of your private keys
what's a private key ah i thought you'd never ask
okay so i'm gonna use bitcoin as an example
in layman's terms a bitcoin address that
string of numbers and letters is kind of like a see-through donation container at
the local mcdonald's there's a slot in the top so anyone can see how much is in
it and anyone who knows the address can put money in
but if somebody wanted to get money out like to transfer funds to a friend or to
buy something they would need the private key to open up the box signing
the transaction now there are a couple of exceptions to
this for example monero makes use of ring signatures to hide balances and
transaction amounts but most cryptocurrencies are fundamentally
similar in this way so then when your funds are in a wallet
on your pc the private keys are owned
and can be encrypted by you so if there
is a fork a duplication of the existing
blockchain with whatever new and different features that the duplicator
may desire you can export your private keys and then import them into the forks
wallet to get access to the duplicated funds
if your funds are on an exchange however support for forks is completely up to
them because they are in control of the private key so let's look at bitcoin
gold as an example of why this matters
many exchanges chose to not support this fork outright so many people missed out
on what was essentially free bitcoin gold because they were not holding their
own private keys at the time of the fork
now either of those approaches though even with those drawbacks is probably fine
for casual miners who aren't holding more than a couple hundred dollars worth
that is as long as they can afford to lose what they have more on this later
for larger scale miners and investors though something called a cold wallet is
basically an essential tool now to be cold a wallet cannot have an
active network connection this makes it nearly impossible to hack
now some people will just use a network gapped computer so it's unplugged with
no wi-fi with normal software wallets
and then a system of either webcams and qr codes or thumb drives to complete
their transactions but this method can be kind of a hassle so many people with
large crypto holdings are using what's called a hardware wallet these come in
the form of little devices with physical security prompts like the ledger nano s
or tresor once this device is plugged into a pc
you enter a pin code open up a companion app and then you go about your business
now it should be noted that even the methods that we just outlined do carry
some risk but if you think about it so does
putting money in a bank so you know your your pc's drive could die
you could lose your hardware wallet or
in both cases you could forget your password but
as long as you back up your wallet and you keep your backup codes somewhere
safe a safety deposit box in a bank is a pretty good bet you should be okay
all right then so now that your cryptos are safe let's talk about buying and
selling though i really need to preface
this with a quick warning we are not endorsing any of the exchanges that i'm
about to mention and i personally would not recommend buying cryptocurrency
unless you know what you're doing and you are comfortable losing literally
all of the money you spent like literally like this
gone alright there is a very public history of
exchanges disappearing overnight or being hacked and losing anywhere from a
lot to all of their users money so be
safe with that out of the way there are a ton
of exchanges out there let's look at one of the most mainstream ones coinbase
it's fairly limited in features but should work pretty well for casual
buyers the process is pretty simple just hook up your bank account debit card or
paypal account and you are free to buy
and sell cryptocurrency up to your limit
and you can raise your limits by doing additional verification with the
exchange but this simplicity comes at the cost of
pretty high fees nearly four percent for debit and credit transactions and i
should also point out that coinbase has a history of freezing trading during
high traffic times so take that as you
will some of the more pro oriented exchanges
will charge a small fixed fee of a few dollars for bank transfers in and out
and then cryptocurrency transfer fees are typically dependent on that
currency's specific network fees so bitcoin will likely have a fee of a few
dollars while something like zcash will have almost no fee at all
these exchanges like binance gdax bittrex poloniex cryptopia and bitfinex
also have crypto to crypto trading pairs
so you can actually take uh your bitcoin and then turn that into litecoin without
having to first go to a fiat currency this helps you save some fees and is
pretty snazzy now if you're not super concerned with getting the best possible
rate a market trade can be a pretty easy way to go you just
pick how much you want to buy or sell
and then the trade will transact at the current market rate
just remember that especially for very large amounts that that rate can
actually change literally as your transactions are going through so you
might end up paying more or getting less than you initially expected
now limit trades these allow you to set the price point
that you want your trade to execute at meaning that you may actually be able to
get a slightly better rate or if things go the other way you might
end up with nothing going through at all some exchanges allow what's called
margin trading in this situation you can auto magically
borrow money from the exchange to leverage your bet based on a multiplier
so let's say you wanted to margin trade a thousand dollars with a leverage of
two to one you would essentially be trading a thousand dollars plus another
thousand dollars borrowed from the exchange and then you would be charged
interest on it in most cases and the benefit is that you could double
your profit or the drawback is that you could still
lose all that money and still need to pay the stuff that you borrowed back so
unless you're a seasoned gambler excuse me uh trader we would recommend staying
away from margin trading in conclusion trading can be a fun way
to play around with some disposable income but again i think i've said this before
but i would caution against using any money that could seriously negatively
impact your life if you were to lose it so be safe and probably don't buy any
so yeah
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video sucked you know what to do but if it's awesome get subscribed hit that
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