6 Things You Should Know Before Sending Crypto

With the mainstream adoption of cryptocurrencies surging, more and more people are learning more about the underlying technology and how they can use it to their advantage.

But understanding the concepts behind the technology is not as straightforward as it seems. Whether you're just getting started or have been involved with cryptocurrencies for some time, here are some things you should know to help you along your path.

What Is Cryptocurrency?

Before going into too much detail, it is wise to have a firm understanding of what cryptocurrencies are. The concept of cryptocurrency basically refers to a system in which encryption techniques are used to control the generation of units and verify funds transfers. Crypto coins are virtual currencies that allow peer-to-peer transactions verified by cryptography. In order to keep these transactions anonymous, cryptocurrencies use private cryptographic keys and public addresses and rely on encryption techniques to regulate the generation of units of currency. The decentralized nature of cryptocurrencies allows them to be easily exchanged without going through a bank or an intermediary.

What Is A Blockchain?

Blockchain can be defined as a record of transactions or events which are grouped into blocks. There are chains of these blocks that form a chain of ledgers and cannot be changed without changing all subsequent blocks in the chain. The data stored on a blockchain is distributed among many users who have access to this data via public keys, to which different users have contributed. Various blockchain technologies are used to facilitate cryptocurrency trade.

Before You Send Cryptocurrencies To Someone Else, Here Are Some Things To Consider

If you plan to send cryptocurrencies to someone else, be sure to do your research. This is not a decision you should make lightly. There are always security and personal information concerns with this type of transaction.

Make Sure You Know To Whom You Are Sending It

The first step in knowing who you are sending cryptocurrency to is checking their public blockchains. You can do this by entering their address on a blockchain explorer. A great example of ensuring you know who the recipient is, comes from the great Twitter hack of 2020 whereby a young man from the UK hacked the Twitter accounts of several famous celebrities. Then he persuaded people to send a certain amount of Bitcoin to his address with the guarantee that the celebrity would return double what they sent. With this in mind, you should understand the importance of who you are actually sending your tokens to as there are no refunds in the world of crypto, which leads nicely onto the next point!

It Is Important To Remember That You Cannot Get A Refund

Cryptocurrency transactions are non-refundable, so there is no way to request a refund after sending the transaction if the receiver does not wish to refund you. This isn't like fiat money, where you can open chargebacks and get on the phone with your bank. Having sent the money from your wallet to another is the end of the transaction, and unless you know the person, it is almost impossible to get it back if you make a mistake.

Make Sure You Understand Any Sending Limits

There are no restrictions on sending cryptocurrencies. You can easily send your cryptocurrency anywhere in the world using a wallet or an online exchange. But there are limits on how much you can spend, and you should be careful with the fees that may be charged on each transaction. However, while there are limits on the highest amount you can send, there might be limits on the minimum amount to send. For example, the smallest unit of Bitcoin is known as a Satoshi (named after the enigmatic creator of Bitcoin and the underlying technologies of the blockchain). It is equivalent to a hundred-millionth of a Bitcoin and, depending on which wallet you use, might be the minimum amount that you can send at any given time. Furthermore, different tokens will have different limits, so you should take this into account. 

Always Attempt To Trade Using Your Own Wallet

Many novices will opt to keep their cryptocurrencies on the exchange they bought them from. Although this is generally considered bad practice due to various reasons, you can still transfer to another wallet directly from your exchange. However, the best option is to trade using your personal wallet. An excellent digital wallet will usually have features that make trade more efficient and allow you to keep track of your transactions better than you could if you were to do it via an exchange.

Make Sure The Receiver's Address Is Correct

A cryptocurrency wallet address is a unique identifier that you use to send or receive Bitcoin, Ethereum, and other tokens. A wallet address consists of alphanumeric characters. It is also known as an account number. These addresses are usually a long and complex string which can be tricky to get right if writing them down by eye. Therefore, you should attempt to copy and paste the address to increase the chances of getting it correct. As mentioned in the second point, you will not get a refund if you send it to the wrong address.

Consider Transaction Fees

Cryptocurrency transaction fees are related to the amount you send or receive and the type of cryptocurrency you send or receive. There are different types of cryptocurrencies, such as Bitcoin and Ethereum. Cryptocurrencies can be cheaper or more expensive, depending on which one you use. These fees are typically higher when sending and receiving via an exchange than a wallet, but even specific wallets charge a fee to perform a transaction. Therefore, if you are sending any amount to another person, you should always factor the cost into your amount.

With this guide, you now have all the tools you need to send crypto confidently. LUckily, sending crypto is far more straightforward than buying it in the first place. So if you have bought some Bitcoin or Ether, you should have the requisite skills to send it with confidence.