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Weve received a lot of feedback from our last few write-ups on the bitcoin and cryptocurrency market.

And because a many readers have said they are going to roll up their sleeves and enter the market themselves, we thought wed offer three simple pieces of advice to bitcoin beginners.

Speaking from personal experience, I highly recommend that folks looking to buy some bitcoin start with an extremely small amount no more than a bitcoins worth, which today is the equivalent of a couple thousand U.S. dollars. (You can use less money and buy a fraction of a bitcoin also if you prefer).The process of buying, moving and storing bitcoin is not like traditional online banking or investing. If you send bitcoin to the wrong location, for example, you cant just call up your bank and cancel your transaction. So its critical to familiarise yourself with the mechanics of buying and moving bitcoin around first with a relatively small sum, before moving on to larger dollar amounts.

The process of buying, moving and storing bitcoin is not like traditional online banking or investing. If you send bitcoin to the wrong location, for example, you cant just call up your bank and cancel your transaction. So its critical to familiarise yourself with the mechanics of buying and moving bitcoin around first with a relatively small sum, before moving on to larger dollar amounts.

Its ironic that whilst bitcoin is a highly modern technology, you must make sure you keep offline records of all your bitcoin information. That means a pen and paper, or at least using a Microsoft word document and printing it out as a back up.

Storing and sending/receiving bitcoin involves setting up a digital wallet. This is a where you keep your bitcoin.

Your wallet has a public key (which might look a bit like this: 1GwV7fPX97hmavc6iNrUZUogmjpLPrPFoE) which is where the bitcoin gets sent to. This is like an account name.

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Your wallet also has a private key. This will either be an alpha-numeric sequence that looks like the public key above, or a long sequence of random words generated by the wallet. This is the password you use to access your wallet.

Either way, secure wallets do not have an I forgot my password option.

If you lose or forget your private key, you lose access to your wallet. And you lose your investment. Period.

I write everything down, and I print out screen grabs (that is, printouts of what is shown on the screen).

In order to convert your cash into bitcoin, you need to open an account with an exchange.

This process will typically take a few days as the exchange will need to conduct KYC (know your customer) diligence on you. This means theyll do a standard identity verification so the exchange knows who you are, and that youre not a wanted criminal.

Once youve opened the account, youll be able to fund it with a bank transfer or by credit card in some cases before you buy bitcoin.

If the exchange where you bought bitcoin (and left it there) gets hacked ,then you can lose your money. This has happened in a couple of high-profile cases.

For example, in 2014 bitcoin exchange Mt. Gox, which at the tie was handling up to 70 percent of all bitcoin volume, filed for bankruptcy, saying that 750,000 of customer bitcoin was missing. Thats US$1.5 billion-worth at todays prices.

The safest place to store your bitcoin is in a wallet. Theres a good selection to choose from here.

Good investing,

Tama

P.S. I know weve been banging on about a particular stock recommendation from The Churchouse Letter for a few weeks now, but thats what we do when we find great ideas for our subscribers. Our recommendation is now up 32 percent since we recommended it at the end of April. Click here for your subscriptionand the full story.

Tama Churchouse spent nearly a decade creating and selling financial derivatives for a global investment bank in Hong Kong. As Lead Analyst he brings technical expertise across the entire asset class spectrum, from equities and index products, to interest rates and credit.

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Beginners buying bitcoins should do these three things - Stansberry Churchouse Research (registration) (blog)