
With Trump's arrival at the White House and the ongoing reshaping of the financial landscape by cryptocurrencies, it's crucial for people to understand how to manage their digital assets securely and efficiently if they plan to venture into this ecosystem. At Calea Digital, we are committed to helping you navigate this complex world, delving into the key aspects of good and secure crypto asset management.
To keep your cryptocurrencies secure, it's necessary to follow a series of fundamental steps:
1. Study the cryptocurrency that interests you
2. Sign up for an exchange compatible with your chosen cryptocurrency
3. Create your account and verify your identity
4. Load money into your account
5. Buy your favorite cryptocurrency
6. Store it securely
Steps to keep your cryptocurrencies secure
Let's develop each of these steps:
1. Study the cryptocurrency that interests you
The first step is to research and select the cryptocurrency you wish to acquire. Use platforms like CoinMarketCap or Coingecko to obtain detailed information about different cryptocurrencies and the exchanges where they are available. It's important to thoroughly study the projects behind each cryptocurrency, as some have high potential while others are simply smoke and mirrors. In future posts, we will address investment concepts in the world of cryptocurrencies and how to identify both promising projects and scams.
2. Sign up for an exchange
Cryptocurrency exchanges are digital markets where you can buy, sell, and trade cryptocurrencies. However, not all exchanges are equal. The collapse of FTX in 2022 serves as a clear reminder of the importance of choosing wisely.
Look for exchanges with a solid track record, regulatory compliance, and robust security measures. It's also advisable to check if they have insurance policies to protect users' funds.
Remember the golden rule: "Not your keys, not your coins." Although it's convenient to keep some assets on an exchange for trading, you should transfer any significant amount to your personal wallet where you control the keys.
My recommendation is to use these exchanges only for operating or trading and not to store large amounts of money in them. Coinbase, Binance, and Kraken are examples of well-established and regulated exchanges.
3. Create your account and verify your identity
When creating your account on an exchange, you'll need to go through an identity verification process (KYC). This step is crucial for security and regulatory compliance. It's important to implement additional security measures, such as two-factor authentication (for example, Google Authenticator).
With the implementation of MiCA (Markets in Crypto-Assets) in the EU, crypto service providers will be required to verify the identity of their users. While this improves security and helps prevent illicit activities, it affects the anonymity once associated with cryptocurrencies.
Be prepared to provide identification documents when using regulated services. This may include government-issued ID, proof of address, and sometimes even a selfie.
There are also decentralized exchanges, which do not require identity verification (KYC), but I recommend that if you operate on these types of platforms, you do so with good guidance.
4. Load money into your account
You can fund your account via credit card (fast but with higher fees) or bank transfer (takes 24-48 business hours, but generally with lower fees). All exchanges offer the option to deposit money and provide you with the necessary bank details.
It's important to mention the fiscal aspect: if you enter this sector, you'll need to stay up to date with your tax obligations. Cryptocurrencies may be digital, but they are very real in the eyes of tax authorities. In most jurisdictions, crypto transactions are taxable events, including:
1. Selling crypto for fiat currency
2. Exchanging one cryptocurrency for another
3. Using crypto to purchase goods or services
4. Receiving staking rewards or mining income
Keep detailed records of all your crypto activities and consider using specialized crypto tax software to simplify the declaration process. In future blogs, we will address in detail the fiscal aspects of the Web3 industry.
5. Buy your favorite cryptocurrency
Once your account is funded, search for the cryptocurrency you previously chose on the exchange and buy the amount you want with the fiat money you've transferred to your account. At this point, it's crucial to take fees into account.
In the crypto world, every transaction has a cost. These fees can significantly impact your returns, especially if you're an active trader. There are several types of fees to consider:
1. Network fees: Paid to miners or validators who process transactions on the blockchain. These can vary widely depending on network congestion.
2. Exchange fees: Charged by the platform for facilitating operations.
3. Withdrawal fees: Charged when you move crypto from an exchange to your personal wallet.
For example, during peak hours, sending Bitcoin could cost between $2 and $20, while Ethereum gas fees can sometimes spike to over $100 for complex transactions.
6. Store your cryptocurrencies securely
The last step, and in my opinion the most important, is to store your cryptocurrencies securely. To do this, transfer the cryptos to a cold wallet.
Imagine your crypto assets as digital gold. You wouldn't leave gold bars lying around, would you? This is where cold wallets come in. They are physical devices, about the size of a USB drive, that store your crypto keys offline. Think of them as a high-tech safe for your digital wealth.
When you set up a cold wallet, you'll be provided with a recovery phrase, usually 24 words (although the number can vary). This phrase is like the ultimate password for your digital vault. It's crucial that you write it down on paper (never store it digitally) and keep it in a safe place, or even split it between multiple secure locations. If your device is lost or damaged, these words are your only way to recover your assets.
Companies like Ledger or Trezor offer popular secure cold wallet options. Before choosing one, verify that it has the capacity to store the cryptocurrency you want.
Conclusion
The world of cryptocurrencies is complex and constantly evolving. It's essential to thoroughly study projects before investing. In future blogs, we will address topics such as cryptocurrency investment strategies, fiscal aspects, and other topics of interest.
If you need help with crypto asset management or are considering integrating blockchain technologies into your company, don't hesitate to contact us at Calea Digital. We are here to guide you every step of the way on your journey into the fascinating world of Web3 and blockchain.
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