Cryptocurrencies are ideal for sending money from anywhere to anyone, at a much lower cost and greater speed than bank transfers or other traditional channels. If you’ve never made a transaction with crypto before, we’ve got you covered.
This beginner’s guide to sending money with crypto using either bitcoin or stablecoins will help you get started.
To send and receive bitcoins and stablecoins, the first thing you need is a wallet like the Bitspark mobile app. A cryptocurrency wallet is essentially a software programme that stores your private and public keys. Those keys are needed to interact with the blockchain and complete a transaction. Money is sent to a wallet’s address, which can be generated at no cost using an account at an exchange or online wallet service.
While a physical wallet is where you keep your dollar bills, a crypto wallet does not actually store the crypto coins. All that exists are the records of transactions committed to the blockchain, and it’s the keys in your wallet that allow you to take part in those transactions.
When someone sends you bitcoin for example, they are signing off ownership of the coins to your wallet’s address. If you want to spend your bitcoin, the private key stored in your wallet needs to match the public address the coins are assigned to on the bitcoin blockchain. When the keys match, your balance will decrease and the receiver’s balance will increase. With crypto transactions, there is no physical or digital exchange of real coins, but rather a record of transactions on the blockchain and a change in the respective balances of the wallets involved.
Bonus tip: Hot and cold wallets
Hot wallets are always connected to the internet and therefore more susceptible to hacks. Cold wallets are not connected and offer greater security when it comes to storing your crypto. If you need access to your funds frequently and can’t go completely cold, maintain a ratio of 20% in hot and 80% in cold wallets.
Now that you have a wallet and an address, it’s time to fund your accounts. The most common and easy way to buy crypto is at an exchange. There are many different crypto exchanges out there, but a good place to start is to find one that can serve you in your jurisdiction – some governments have taken a very restrictive approach to crypto and as a result not every exchange will be available to you. Check out this guide to see where and how you can buy crypto in Hong Kong.
If you buy from a centralised exchange, the coins you buy will first be stored in a wallet associated with the exchange itself. They have the power to freeze your accounts and worse yet, if you leave your bitcoin or stablecoins in that wallet you are trusting them with securing your funds from exchange hacks. When you buy crypto from a centralised exchange, it is advised you move the coins to a wallet that you own independently. That’s puts you in charge of your own coins.
For security reasons, it is always safer to buy and sell crypto on a decentralised exchange. On a DEX, you interact with other traders directly using a wallet that you own. In keeping with what crypto is all about, you are the only one in control of your funds. As an added bonus, transaction fees are typically far lower on a DEX than on a centralised exchange.
Most exchanges often rely on bank transfers to buy coins, but there are also ways to buy crypto using cash. For example, Bitspark runs a network of Cash Points where you can exchange cash to top up your balance of stablecoins in your wallet. If you want to buy the Hong Kong Dollar stablecoin, you can simply do so by walking into one of the shops in Bitspark’s network and use HKD cash to buy Sparkdex.HKD instantly. You can then exchange between different currencies straight from your Bitspark mobile app. Next to Bitcoin and Ethereum, popular coins are stable.PHP, BitCNY and BitUSD.
While bitcoin is the most talked about cryptocurrency as it’s the one that sparked the crypto revolution, it is not necessarily ideal for making payments. Simply put, the volatile price fluctuations make bitcoin unsuitable for small and frequent payments.
Stablecoins on the other hand are perfectly suited for making payments. A stablecoin is a cryptocurrency based on a public blockchain which ties its value to another asset such as a fiat currency. When you buy stablecoins, it is advised you buy trustless stablecoins such as BitAssets (BitCNY, BitGold, BitUSD, etc.) or stable.PHP for example. Trustless stablecoins are collateralised with cryptocurrencies, which can be proven on the blockchain. This eliminates counter-party risk as the peg does not rely on the integrity of any one central entity.
Buying cryptocurrencies with Bitspark is convenient and effortless. You can deposit $USD, $GBP, $EUR, $HKD, $SGD and $AUD to your account and buy your first crypto. Visit the sign-up page and create a free account on the Bitspark platform today.
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Bitspark is a bankless money transfer ecosystem that enables businesses and people to cash in and cash out cryptocurrencies across Asia and Africa.