This article is going to go over some of the basics of setting up an account at an online cryptocurrency exchange and how to generate a wallet address that you can deposit coins into. While it is always a good practice to setup your own wallet on a PC that you control for maximum security of your coins, a lot of times those starting out just want to get going quickly and figure out the harder steps later. This article is written with that type of audience in mind, but should still contain some useful information for more advanced users.
An online wallet at an exchange offers several benefits to someone just starting out in the world of cryptocurrencies, in not only that it can provide you with an address where you can send coins to, such as from from faucets or mining, but it also allows you to exchange your coins from one type of cryptocurrency to another, which also known as trading. At some exchanges you can also convert to fiat currencies, such as US Dollars.
For this example we will keep it simple and choose an exchange with a fairly straightforward registration process, Poloniex.
As you can see, when you first arrive at the Poloniex site you are greeted with a “Create your Account” link prominently displayed in the center of the welcome page. On later visits you can also just click the “Sign in” links and sign in with your credentials. So go ahead and click on the “Create your Account” button and you should be presented with the screen shown below.
While the signup process is fairly straight-forward as I mentioned earlier, while tempting there are a couple of important considerations to keep in mind before just blindly filling out the form and continuing on into the site.
Poloniex details these steps along to the right of the sign up fields and there importance might not be immediately apparent. The first is the email account you choose to use. Poloniex even spells out to “Protect your email account like you would your Poloniex account“. The email address you choose will become your key into you account and funds.
Let me explain a bit further. While I know that this article is aimed at people just starting out, as often happens as you gain more experience with cryptocurrencies and your account balance grows, by ignoring basic security when setting up new accounts, you put your account, and thus funds at risk. The first instinct for most people here may be to use an email account you already have and are familiar with. While this may seem like a good idea, the fact is most account compromises occur not because of the exchange getting hacked, (while this does occur it is not the most common method) but through a compromised email account.
One of the steps Poloniex uses to verify you are who you say you are, is to not only use your email address for signing in, but to also verify withdrawals from your account. So what all this means is that you should strongly consider setting up a dedicated email address for your Poloniex account. In fact, when dealing with cryptocurrency, or any online financial accounts actually, dedicated email addresses for each account is ideal. For this tutorial, we will be setting up a new account over at Google, as they offer multiple free accounts as well as providing a means of additional security.
I have broken setting up a secured email account into another article to keep this one on-task, so if you need assistance setting up a new secure google email account to use, please see my article How To: Setting up a Secure Google Email Account.
Ok, now that you have your brand new google email address, which should be secured via two-factor authentication, let’s continue with the sign up process at Poloniex. Go ahead and begin filling out the form, please use your real first and last name. Again if your account grows substantially, you don’t want to later find yourself in a position of trying to explain why your not really Fred Flintstone when trying to get at your money.
Using the drop down, select your country. Even though it is optional, please enter your real phone number as well, as explained in the text to the right this will further assist you should you need to verify your account at a later point in time. Now you get to enter your newly created email address from above and choose a password.
Let me take a minute to discuss choosing a password as well. While it should be obvious, you will want to chose a unique password just for this account. Password re-use is another common vector for compromised accounts. As Poloniex outlines on the page. this password is recommended to be at least 32 characters long. While this may sound extreme, tools and algorithms for cracking easy to guess passwords grow by the day. In addition you should use upper/lowercase characters, numbers, and symbols in your password. Passwords such as “Mydogisbrown” won’t cut it here, you should choose something more along the line of “I9BXyFsH%1@’x.L9%fY.rXMTk9+@+~CU” for a proper password.
Steve Gibson at his site GRC Research has a great password generator. It generates a random password on every refresh. For maximum security use the characters from the “63 random printable ASCII characters” box. Pick at least 32 characters, and perhaps regenerate the page a few times and use snippets from each refresh to stitch together to create an even more unique and secure password. Say use 6 characters from each of 6 different page refreshed to create a 35 character password. If you want you can always change a few characters with your own too if you want, just try to keep the randomness factor intact, i.e. don’t substitute with all one letter or number.
My personal belief is that it is better to record hard to guess passwords in a secure text file or even written down on paper, than it is to not record them and use easy to guess passwords because you can remember them. If you choose to do this, please store it on a secure USB drive, or for paper put it in a safe or somewhere not immediately accessible. While some may argue against this, unless you live with people who you do not trust or in an area subject to people rifling through your stuff, this is probably more secure than relying on easy to remember password that a hacker can crack. The online threat seems to be greater with cryptocurrencies, but you should practice good security all around.
Now that you have come up with and entered a good, hard to guess password, please do the captcha and accept the terms and conditions. At this point you should have your form filled out and ready to submit.
Once you submit the form, you should get a notice that you will need to verify your email address to continue creating your account. Go ahead and log into your new account and click the link. Thsi should complete the registration process and let you sing into your newly created account.
Once inside your account, hop on over and look at your profile quickly. This can be accessed by clicking on the person icon found on the toolbar at the upper right of your screen, and selecting My Profile.
You should get a screen similar to the one shown below. This shows your basic information and also how much you are allowed to withdrawal daily. This may not be showing verified at first, but if not it should confirm within a day or two. I believe they do some basic checks to make sure there are not duplicate accounts and also that you are not using obviously fake names. For the most part, Poloniex is fairly simple to get going and has decent daily withdrawal amount with minimal hassle, thus one of the reasons I chose Pononiex for this beginners guide.
One thing to note though, is that Poloniex does not trade directly in fiat currencies. You can use USDT or Tether, which is based on USD, but it is not actually fiat. I will put up another article on using Tether at a later time, but for now just keep in mind you can only deposit and withdrawal your find in cryptocurrencies, which should be more than adequate for use with this beginner guide.
Now that the profile is taken care of there is one last thing to check before moving on. Go to the tools setting, which is the wrench icon at the top left of the screen, and select Two Factor Authentication. Here you will add an additional layer of security by linking you account with the Google Authenticator Application you can install on your cell phone. Be sure to record the 16 digit key somewhere safe. This is in case you would lose access to the phone or device you use Google Authenticator on and need to access to your account. Guard this number as you would your password.
The easiest way to do this is to scan in the code with your phone, click the + icon within the Google Authenticator app to add a new account and select scan bar-code option. This will create a new Google Authenticator account and you should see a six-digit code displayed. Back on Poloniex, enter your password in the form, check the box that you recorded your key, and hit Enable 2FA. You will then be asked for the 6-digit code from the Google Authenticator app. Once this is complete, you will need to enter both your password and the six-digit authenticator key to login and more importantly withdrawal funds from your account.
I will also point out, that Poloniex allows you the option to disable email verification on withdrawals once you have two factor authentication enabled. I would highly recommend to NOT do this and leave it enabled. After all, we went to the work of creating a secured email account for this purpose, and as long as you only use this email account for accessing your Poloniex account, it should remain secure and offer an added layer of protection from someone else gaining access to your account and funds.
Ok, now that all that is taken care of, it is time to create some deposit addresses. head on over tot he deposit page by clicking on the (you guessed it) Balances tab and selecting Deposits and Withdrawals. The page that loads may look a bot overwhelming, as Poloniex trades many currencies. Once you have a few wallets set up with balances, you can filter this list to show only those amounts, but for now we will sue the filters. You will probably want to at minimum a have a Bitcoin (BTC) deposit wallet. I would recommend you als setting up any other coins you are interested in, for this article we will set up both a Bitcoin (BTC) and Ethereum (ETH) wallet.
Making sure Hide zero balances in unchecked, type in BTC in the search field as shown below.
This should sort the list and bring you to the BTC wallet. Right now you do not have an deposit address, so go ahead and click on Generate New BTC Address.
This process might take a few moments, but when it is complete it should look similar to the one shown below. (In case you are wondering, yes that is a valid BTC deposit address from one of my accounts, feel free to send a few satoshis if you so desire. 🙂 )
Now that we have a valid BTC address, we can do the same with Eteherum, or any other currency for that matter as the process is similar for all coins. For this article we will go ahead and enter ETH for Ethereum in the search field and we should get the Generate New ETH Address button for Etheruem. Go ahead and press it and wait for your new address the same as we did for BTC above.
One thing that you will notice that is a bit different for Ethereum is that the address is in hexadecimal format, thus it starts with “0x” The rest is your actual address and the 0x indicates that it is in hexadecimal format. For most transactions with Ethereum you can leave the 0x on the front of your address, but in some cases in may be missing. Once example of this is when mining at Dwarfpool, they will show you the address without the 0x prefix. Just something to keep in mind, but I have found for sending and receiving Ethereum most applications prefer it to be entered with the prefix. Ethereum also has a non-hexadecimal address format as well, but I will leave that for another time. For now its enough to note that differences exist and that the more common hexadecimal format begins with a 0x prefix.
The other thing to note with Ethereum deposits into Poloniex is that as shown in big red letters above, you will not see any balance until your deposits total 1 ETH or above. I always like to test any new addresses with a small transaction, say 0.1 of a coin, or with BTC even 0.001, just in case there is any mistakes it doesn’t cost me a lot in lost coins. With ETH, you will need to at least test with 1 ETH, actually make it 1.1 or something to make sure any fess do not reduce the amount to under 1. With Ethereum currently trading at around $2.50 even usign 1 ETH for a test transaction isn’t too much of a risk.
Well there you have it, the rest you can probably figure out on your own. Continue to create additional wallets for any coins you are interested in. These can then be used to receive coins from faucets, or mining, or other transactions without cluttering up your PC with dozens of wallet clients. Later on I will show you how to setup your own wallet on your PC for when you are stating to accumulate large amounts and we will mainly be looking at the big ones, such as BTC.