Investing in Crypto 101 — (note investing not trading) HODL for Mid to Long term.
Cryptocurrency has become a new trend. There are so many buzzes around the 14 letter words. Let me start by stating these facts:
The market for cryptocurrency is energetic and agitated. There are lots of self-conflicts, obscurity, and hype around it. The media is confused. The technology guys are confused. The finance industry is confused. The government is confused. Even people buying cryptocurrencies are confused.
The fact that Cryptocurrency is decentralized doesn’t mean that banks will stop working or traditional currencies will collapse.
Your point of view on cryptocurrency has nothing to do in comparison to security or traditional currencies. But it has everything to do with your view on decentralized applications and their value in relation to currency software models.
What is bitcoins?
Bitcoins is the leading currency in the crypto world. The general public sentiment on Bitcoins is stunning. Most say it’s a Ponzi scheme, others say it’s a scam. Some even call it a fad. But we see it as the future of payment through a digital asset.
In either way, you need to explore the market capitalization of cryptocurrency and bitcoins to fully understand the impact and growth of cryptocurrency. That’s what this article is all about. But just a note of warning, the cryptocurrency market is volatile. Your money can disappear into the thin air within few day of investing in cryptocurrency. The golden advice is to never invest more than you can afford to lose.
Also, you must be willing to put your butt on a chair to make long research. Cryptocurrency trading is a hot skill, and just like every other skill in the world, you must put in thousands of hours to master the skills of the trade. No one will do the hard work involved for you. You can join a paid signal group to the end, or buy a paid course to teach you the skills involved.
This involves learning the terminologies involved in cryptocurrency so that you don’t get confused when you hear the terms thrown around on bitcoin forums and cryptocurrency blogs.
Some of the terms include altcoins, the blockchain, block reward, ICO, wallets, FUD, FOMO, mining, P2P, POS, POW, Smart contract, signature… The list is endless.
Here is a brief description of some of the most command used terms
“FUD” — fear, and uncertainty
“FOMO” — fear of missing out
“Blockchain” — Distributed ledgers secured by cryptography
“Mining” — The process of trying to solve the next block
“POW” — Proof of work
“POS” — Proof of stake
Next, you need to perform deep fundamental analysis before becoming eager in a project. A simple Google search is not enough. You must check each team’s profile on LinkedIn and Twitter to see their previous experiences and achievements. Also, check out people’s sentiment about each project. How many hours does the Support team take to reply to queries? When was the last recent update? What is the current recent ICO price? And more…Reason to ask these questions — The wisdom of the crowd can save you future headaches.
One key note to remember is that people’s view on a project makes up only 50% of the whole picture. Your own personal evaluation of the project must come into place. Don’t jump on a project that makes too many promises with little implementation to avoid getting burnt. If the project aims and objectives do not resonate with you then skip that project for another one.
The next step is to purchase cryptocurrencies on demand. Purchasing on demand can help you bypass the upswings before they happen. You can simply use your debit or credit card to purchase cryptocurrency on your preferred service. It is a no-hassle process.
The only challenge lies in the numerous questions that you might encounter in choosing a service. Do you prefer the fastest, the less cost-efficient, the most reliable, and the best-supported service? It all comes down to personal preferences.
Coinbase was the best exchange service back then. It was user-friendly, painless to set up and offered a variety of payment options. But right now, coin base has high transaction fees. They charge 1.49% fee for bank transfers and 3.99% fee for credit and debit payments.
There are better alternatives to Coinbase that offer low transaction fee. Some of them are GDAX, BITFINEX, KRAKEN, and BITSTAMP… I can write a whole article listing all the exchanges; their advantages and disadvantages.
About the peering of coins, most exchanges only support BTC/ETH to altcoins and only a few supports a list of USD to BTC and a limited number of ALTCOINS.
Some of the exchange that accepts USD/EURO transfers are KRAKEN, BITSTAMP, Coinbase (GDAX), Gemini, Coinmama. The exchanges that allow cryptos are BINANCE, BITREX, and HUOBI.
The choice is limitless. You could even choose to trade face to face or use a cryptocurrency broker. Some offer multiple language support and others offer multiple currency exchanges. But, do your due diligence; check each exchange fee rate, payment methods, and security features before committing your cash to them. Also, check your country’s tax and regulations to avoid issues with the laundering agent.
The last agenda on the list is to keep your cryptocurrency safe once you get that first cryptocurrency rolling in. Never store your coins in an exchange as Scammers are out there to steal your hard earned cryptocurrency.
The surprising fact is that cryptocurrency is easy to steal. There is no financial institution to protect your earnings. Neither is there any law enforcement agency to catch criminals. The government cannot recover your stolen funds.
Safeguarding your cryptocurrency holdings lies in protecting your private key. The sensitive data is tied to your private key. Your private key is the gateway to your crypto coin. No one must gain access to it and you must keep it safe. Just as you might hoard your cash or stash your jewelry in a safe box.
You can only keep your private key safe through a wallet. A wallet is a physical device that stores your private keys.
Bitcoin wallets can be either Hot or cold. Hot wallets are wallets that are connected to the internet. Cold wallets, on the other hand, are wallets that are not connected to the internet.
Each side has their own advantage and disadvantage. One advantage of Hot wallet over cold wallet is that it is easy to setup up. However, hot wallets are prone to hackers, bugs, malicious code and possible regulations.
Cold wallets — Trezor, ledger Nano and keep key — cost about $80.
There are many types of Cold wallets; one great example is a paper wallet. Paper wallet is one of the most secured bitcoins wallets
To protect your losses, you need to backup your access keys after storing them in a wallet.
Most people fall prone to crypto scams because they don’t deploy exchange security measures. There are many security measures to follow, but the most important ones are to create a new secure email, and only use only strong passwords for your accounts. Also, avoid malicious websites that want to steal your information.
Lastly, follow each project on social media — twitter preferably — to get the latest update on each project.