Cryptocurrency payments: A practical guide
Find out about crypto for payments and how to deposit and withdraw crypto on FXTM.
Trading is risky.
Introduction to cryptocurrency payments
It’s no secret that cryptocurrencies have become more popular in recent years. Unlike government-issued currency digital currencies aren't tied to any specific country.
Cryptos operate without a central authority and don’t need an intermediary like a bank to process payments. In our more connected world, this makes them a quicker, easier, and cheaper payment method than traditional money.
In this article, we'll explore the basics of crypto wallets and payments, and offer step-by-step tutorials on how to deposit and withdraw cryptocurrency on FXTM.
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What is a cryptocurrency wallet?
A cryptocurrency wallet is a tool or application designed to store and manage cryptocurrencies like Bitcoin (BTC). Wallets that support the storage of stablecoins like Tether (USDT) are also available. You can think of a wallet as your personal digital ‘bank account’ for cryptos!
A cryptocurrency wallet is made up of a public key and a private key.
The public key is also called the wallet address, which acts much like your traditional bank account number. You can safely share this address with people so they can pay crypto into the wallet. It offers no access to the wallet.
The private key, on the other hand, can be thought of as your online banking password, confirmation code, or secret PIN. The private key is used to sign (confirm) transactions, so it should never be shared. Without a private key, the coins in a wallet become useless, so it’s critical to take extreme care with it.
Several types of cryptocurrency wallets are available. The best one for you will depend on your personal preferences, crypto usage, and technical ability.
Types of cryptocurrency wallets
Here we break down the various types of cryptocurrency wallets, with the characteristics, advantages, and risks for each.
Custodial and non-custodial wallets
The first category is whether the wallet is custodial or non-custodial when it comes to the control of the private keys
| Custodial wallet | Non-custodial wallet | |
|---|---|---|
| Definition | Third party holds and manages private keys. | Users have full control over private keys. |
| Advantages | User-friendly, easier recovery options. | Greater control, higher security. |
| Risks | Reliant on custodian's security practices. | User responsible for security and complex recovery, which may be seen as difficult or technical. |
Hot wallets and cold wallets
The second category to think about is whether the wallet is online and connected to the internet, or offline.
| Hot wallet | Cold wallet | |
|---|---|---|
| Definition | Online wallet, connected to the internet. | Offline wallet, not connected to the internet. |
| Advantages | Convenient for processing of transactions, access from multiple devices. | Less vulnerable to online hacking, higher security. |
| Risks | More susceptible to hacking. | Less convenient for transactions, may require more steps to process. |
Software wallet, hardware wallet, and paper wallets
The third category for crypto wallets is the type of wallets they are, depending mainly on how or where you access it.
| Software wallet | Hardware wallet | Paper wallet | |
|---|---|---|---|
| Definition | Applications to access wallet on desktop, mobile phone, or via web browser. | A physical device that stores private keys offline. | A physical document of public and private key. |
| Advantages | Convenient for everyday transactions with easy access. | High security due to offline storage. | Offline storage, so immune to hacking. |
| Risks | Susceptible to malware and hacking. | Costly to purchase device, may be lost or stolen, and less convenient for frequent transactions. | Permanent damage, loss, or theft of the document. |
How safe are cryptocurrency wallets
The safety of cryptocurrency wallets depends on various factors, including the type of wallet, your security measures, and backup and recovery practices.
Types of wallets
Cold wallets that aren’t connected to the internet are generally considered more secure than hot wallets, which are online and vulnerable to phishing, malware, or other hacking attacks.
Hardware wallets offering crypto storage are typically thought of as more secure than software wallet options, as they store your private keys offline.
Security measures to keep your crypto wallet safe
- Always use strong, unique passwords for your wallets.
- Be cautious of phishing attempts and only use official wallet websites or apps.
- Enable two-factor authentication (2FA) whenever possible.
- Make sure your operating system, antivirus, and wallet software are up to date.
Backup and recovery practices for security
- Regularly back up your wallet's seed phrase or private keys in a secure location.
- Ensure that you can easily recover your wallet in case of loss, theft, or hardware failure.
Overall, you need to be cautious when using third-party services or wallets, as they may have different security measures. Stick to reputable and well-established services.
Ultimately, no wallet is completely immune to risks, and security is an ongoing process. Stay informed and be vigilant. Additionally, it's advisable to keep only a small amount of cryptocurrency for daily use in hot wallets, while the majority should be stored in more secure, cold storage options.
What’s the difference between crypto and stablecoin wallets?
Essentially, there’s no real difference between a crypto wallet and a stablecoin wallet as far as functionality of being able to store and move coins goes. The primary difference will be in the blockchains or networks that are supported by the wallet.
Some wallets will be specific to a certain cryptocurrency, like Bitcoin (BTC), or stablecoin, like Tether (USDT), while others will support multiple coins, variations, or coin tokens. The coins that a wallet can support is based on the blockchain or blockchains it’s connected to.
Tether (USDT) is somewhat unique in that it has its tokens available on numerous blockchains. For example, you can hold Tether as ERC-20 tokens on Ethereum, as TRC-20 tokens on the Tron network, and several others.
When acquiring, storing, and using Tether, or any other cryptocurrency, it’s critical that you are aware of which blockchain you’re working on and whether it accepts the coins you’re sending or receiving. For example, you can only send BTC to a wallet address for BTC. If you send USDT to a BTC wallet address, those funds may be lost!
And because we’re dealing with cryptocurrency and stablecoins here, with no central authority or financial institutions involved, there’s no way to recover them from the ‘ether’ of the internet (if you’ll excuse the pun) if they are transferred incorrectly.
Which is the best crypto wallet to use?
The best crypto wallet to use should be decided based on your own personal circumstances, knowledge of crypto, technical level and intended use.
We can’t provide specific wallet names, but we encourage you to research wallets based on the above. Wallets provided by exchanges, or third parties are a decent entry level option if you’re not confident enough to manage your own private keys or security. These are also good options for smaller balances or temporary storage prior to trading or transacting. These will typically be software or web-based wallets connected to the internet (hot), so they do have vulnerabilities when it comes to viruses, hacks, and attacks.
As your knowledge and confidence grows, or you deal with larger amounts of cryptocurrency, using a hardware wallet would be a more secure, long-term option. You’d be responsible for the management of your own private keys and seed, as well as the necessary security to keep your device and funds safe. That said, as these types of wallets are not connected to the internet (cold), they are considered the most secure if proper precautions are taken.
How to move money from a crypto wallet to your bank account
Changing from cryptocurrency to fiat currency will depend on whether your wallet or service provider offers automatic swaps between the currencies, as well as a withdrawal option to your bank account. Some wallets will offer this option, while other won’t. You’ll need to refer to the specific features of your wallet to see how to exchange crypto for fiat money to move to your bank account.
How to deposit crypto to your FXTM account
If you’d like to deposit cryptocurrency to your FXTM account, you can follow these simple steps.
Log in to MyFXTM. Click on ‘My Money’ and then on ‘Deposit Funds’.
Choose the FXTM Account or Wallet you’d like to deposit into and select ‘Cryptocurrency’ under ‘Deposit currency’.
Type in the amount of fiat currency you’d like to deposit.
Choose the cryptocurrency you’d like to use for your deposit from the list by clicking on ‘Deposit’.
Check all details are correct for the transaction and click on ‘Confirm’ and then ‘Submit’.
Use the QR code, or copy the wallet address shown, to send you deposit from your external wallet to your FXTM account.
How to withdraw crypto from your FXTM account
Follow these simple steps to withdraw cryptocurrency from your FXTM account.
Log in to MyFXTM. Click on ‘My Money’ and then on ‘withdraw Funds’.
Pick the FXTM Account or Wallet you’d like to withdraw from, and type in a withdrawal amount in your base currency.
Type in the amount of fiat currency you’d like to withdraw.
Take care to enter the cryptocurrency address (wallet address) you’d like to withdraw to. It’s best to copy and paste this from your external wallet to make sure it’s correct. Also, select your chosen Cryptocurrency from the dropdown list.
Optional: Use the Destination Tag field to enter any reference or custom information you’d like.
Click on ‘Submit’, check all details are correct for the transaction and click on ‘Submit’ to complete the withdrawal.
How crypto to fiat exchange rates work for deposits and withdrawals
The exchange rate between fiat currency amounts and cryptocurrency value will fluctuate with the market in real-time and based on the rate of exchange from our cryptocurrency payment provider. The value of your withdrawal may change between the time created and the funds received.
FREQUENTLY ASKED QUESTIONS
If you suspect someone has accessed your MyFXTM account and dashboard, we recommend you reset and change your password immediately.
As per our T&Cs, any instructions completed through MyFXTM after entering the password are considered to have been intentional and executed by the client.
FXTM doesn’t cover the network fees for cryptocurrency transactions.
Network fees vary between different cryptocurrencies and can change based on real-time demand for network processing. In general, paying a higher processing fee will result in quicker confirmation of your transaction and availability of funds. Paying lower processing fees means you may need to wait until the network is less busy for your transaction to be processed.
While the wallet address for deposits may be the same as a previous deposit, it’s highly likely that this could change from deposit to deposit. We ask that you complete a deposit request for each ne