How to crypto?

Our series of articles about “How to crypto” arrived at the final chapter. We talked about blockchain, and saw how it has applications in so many fields that require better data management. There are now over 1600 cryptocurrencies on coinmarketcap.com but we talked about the main projects in this ecosystem and Proof of Work vs Proof of Stake differences. But still we know the crypto world can be confusing for newcomers, and it takes time and research to understand how to begin, and learn how to avoid costly mistakes. We’ll attempt to present the major things every investor should know. What to look for in projects, what crypto wallets are and how to use them, how to get started on popular exchanges, keeping track of your multiple coins and general advice that we think might help you in the process.

1. Research

Before getting into purchasing details, choosing a good project has greater importance in the long run. Here is a link to an article that answers a fundamental question of the investing process: “What makes a good ICO?

2. Wallets

The next step of the process: depositing our currencies or tokens. To trade any cryptocurrency, you first need a wallet for to store them. Wallets are like your crypto bank accounts, and different wallets store different tokens.  Wallets are currency specific, meaning, they only allow sending and receiving of their own token! In the crypto world, you cannot send different coins to different wallets (there are exceptions)

Coinbase gives you a wallet for Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.

There are several types of cryptocurrency wallets that differ from each other in terms of usability and interface capabilities, as well as the level of protection. Let’s make a distinction:

  • Hardware wallets (local / physical device / paper)
  • Soft wallets (web / software)

All exchanges offer online wallets, to allow you to send and receive tokens still it is highly recommended to store tokens offline to reduce risks of hacks, phishing attempts, and also the collapse of exchanges.

3. Exchanges

A few key points about trading with cryptocurrencies:

  • Only a few exchanges allow you to buy Bitcoin with Fiat currency.
  • Bitcoin is currently the most common trading pair, meaning in order to invest in other tokens or projects, most likely you’ll only be able to trade/buy it against Bitcoin. So, you will need to hold Bitcoin to make most trades. Ethereum is also starting to be more widely accepted as a trading currency.
  • Most exchanges are not regulated, invest at your own risk!
  • Crypto exchanges have no opening and closing hours, they are open: 24/7, all year round, globally.

Keeping all this in mind, the most popular crypto-exchanges are :

Coinbase

Located in the United States, Coinbase is one of the largest Bitcoin exchanges in the world. Coinbase allows you to buy four cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. You can buy them directly with your credit card with a $250 weekly limit. This limit can be increased if you complete some identity verification requirements. They charge a 4% processing fee.

Bittrex

Also a US based exchange, Bittrex is one of the more popular ones for crypto, as it trades a handful of the 1300+ alternative cryptocurrencies out there. You cannot deposit Fiat currency directly into Bittrex, so you’ll first need to buy Bitcoin or Ethereum, and transfer them into Bittrex before you can start trading.

Binance

Based in Hong Kong, Binance was only launched in early 2017 but they’ve managed to become one of the largest exchanges by volume. Binance is highly prefered because of their superior user interface, ease of use, lower fees (with the use of their Binance token to facilitate trades), and the selection of tokens/alt coins they trade.

4. Managing your portfolio

Now that we’ve talked about the first steps, let’s move on with how to manage your portfolio. Beyond reducing risk, it’s also important to diversify your portfolio to ensure you don’t miss out on any opportunities.

Remembering which tokens you’ve invested into, how much you bought, what price you bought in at, across a multitude of addresses and locations can be a major task. Luckily, there are a few apps out there that can help you log your investments and/or trades to show you your gains/losses.

Blockfolio

Blockfolio was one of the first apps that were released specifically for managing and tracking your crypto investments. It’s one of the more popular options as it’s been out for a while, and it’s available for both iOS and Android. Once setup is done, it’ll show you your portfolio balances and gains/losses, and you can switch between viewing the values in BTC or in your default fiat currency. You also have the ability to set up price alerts, and it ^also notifies you the latest news from crypto related news sites.

Delta

Delta is a newer app that’s also manages your crypto investments and shows you your gains and losses. Like Blockfolio, you’ll also need to manually enter your transactions for it to calculate your profits. Delta’s UI is generally more user friendly. it shows you the profits per token upfront, without needing to tap into a few screens.Security & Safety

Many people complain about lost private keys, stolen Bitcoins, hacked exchanges, etc. When there’s money at stake, it’s important to take every security measure possible, even if it may add some additional inconvenience. Here’s a few things every investor should do to keep their investments secure:

Enable two-factor authentication (2FA)

This is the first thing any investor should immediately enable after you register on an exchange, or any wallet where you store your tokens. All exchanges have this option, 2FA ensures that even if your login and password is compromised, hackers cannot get into your account unless they also enter a time-sensitive 6 digit code, that only you can access on your phone.

To setup two-factor authentication:

  1. Download either Google Authenticator or Authy
  2. Search where you can enable 2FA for your account on the exchange/website
  3. You should see a QR code, simple scan it with the app
  4. That’s it!

We presented few things to consider before starting to spend your savings. Since at the moment the crypto-market is mainly unregulated, there are a lot of scam projects or get rich schemes out there. It’s in your interest to do your own research and educate yourself before investing your hard earned money.