What are cryptocurrencies?
Cryptocurrencies or digital currencies are digital assets designed to work as a way to exchange value.
Digital currencies use cryptography to secure all transactions and to limit the creation of additional
units of the currency. The most commonly known cryptocurrency is Bitcoin, a worldwide digital payment
system.
Most digital currencies rely on a technology called blockchain which was first pioneered by Bitcoin. The
blockchain is a immutable set of transaction records. This means that every transaction made on the
blockchain is saved indefinitely in a publicly available database. As a result, the blockchain enables
two parties who never met to make trustful transactions, without the need for an intermediary like a
bank or payment processor.
What is Bitcoin (BTC)?
Bitcoin (BTC) is a worldwide digital currency and digital payment system. Bitcoin works works without a
central repository or single administrator. It was invented by an unknown programmer, or a group of
programmers, under the name Satoshi Nakamoto and released as open-source software in 2009. Bitcoin
transactions take place between users directly, without an intermediary. These transactions are verified
by network nodes and recorded in a public distributed ledger called a blockchain.
How to buy Bitcoin (BTC)?
Bitcoin is traded at so called exchanges. Exchanges are platforms that allow the
exchange of
fiat currencies such as Dollars or Euros against digital currencies. Besides exchanges, there are so
called broker services, which aim to facilitate the buying process for non-experts. These brokers
allow the purchase of
Bitcoin at a fixed price and often feature more payment solutions and are easier to
use for
beginners.
Look out for the following conditions before you select a marketplace to buy Bitcoin
:
-
Fees: Exchanges usually charge a relatively low trading fee between 0.1 and 0.3
percent on every trade, whereas broker services usually charge higher buying fees of up to 10
percent. Besides trading fees there are often fees for deposits and withdrawals.
-
Verification: Most exchanges and broker services require you to verify your
identity before you can start depositing fiat currencies like Dollars or Euros. The verification
methods vary among different providers, but usually you will be required to upload a copy of your
passport (or other identity document) and a valid proof of residence (e.g. a utility bill). The
verification process may take between 10 minutes (using video conferencing tools) and several weeks.
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Payment Methods: To buy Bitcoin, Ethereum or other currencies you need to deposit
money on a marketplace. Most exchanges only offer you the possibility to deposit money using wire
transfer, which can take up to 5 days. Broker services, however, often offer additional payment
methods such as VISA or MasterCard at an additional payment fee.
-
Security: Security also plays a major role when trading cryptocurrencies- There
have already been several hacks of cryptocurrency marketplaces. Cryptoradar helps you filter
providers by offered security features such as 2FA, cold storage or multisig wallets. We also
encourage you to not keep significant amounts of fiat or digital currencies on exchanges as these
might be affected in case of an hack.