How to Get Started in Cryptocurrency
(Pro tip – you don’t need a lot of money or tech knowledge to do well)
The buzz around cryptocurrencies has been growing steadily since the inception of Bitcoin in 2009, and the growing popularity of other cryptocurrencies and tokens means the fervor is unlikely to die down anytime soon. Despite the frequent chatter you’ve likely heard about cryptocurrency, the general public remains mostly uninformed on the subject. Cryptocurrencies might seem much more complicated than the physical currencies people carry with them every day, but the learning curve isn’t nearly as steep as you may think.
Crypto is here to stay and I predict that most paper currency will be phased out and governments will use cryptocurrency in the future. This is already happening in Venezuela. Therefore I recommend that you get ahead of the curve and get your feet wet by acquiring and using some cryptocurrency.
I previously broke down the different types of wallets. If you haven’t read it, check it out here. I am a bit of a wallet nut, having tested 60+ mobile cryptocurrency wallets examining their ease of use and dissecting their security, etc (I will publish a guide on these soon). We took all of the good parts from these wallets and built our ZILLA wallet. Check it out, it’s free and we don’t make any money from our wallet. We built it as a service to you. You’re going to need a wallet if you want to hold cryptocurrency.
*When receiving cryptocurrency from someone, always give out your wallet address from a wallet that you control, not your exchange wallet address!
This can quickly get complicated, but I will try to keep it simple. Also before I begin, it is extremely important that you remember to transfer your cryptocurrency off of an exchange and into your wallet. Cryptocurrency exchanges are basically online cryptocurrency banks, and they pool customer funds and hold the crypto in their vaults. They are constantly under cyber attack from hackers, and sometimes those hackers win. When (not if) that happens you will loose your money. Keep your crypto in your wallet, and off of exchanges.
There are 2 basic types of cryptocurrency exchanges.
Type 1: Cash to crypto exchanges
These tend to be regulated (at least with a money transmitter license), and require you to register your ID and proof of address. After doing that, you transfer money to their bank accounts, and then you can exchange your money for cryptocurrency.
Cash to crypto exchanges tend to have a comparatively small cryptocurrency selection, but they are the major onramp for newbies to get their first cryptocurrency.
Type 2: Crypto to crypto exchanges
These types of exchanges are shall we say, a bit more loose regarding regulations. They tend to be the wild wild west of the crypto world. Many crypto to crypto exchanges don’t even require you to register your ID or proof of address. Despite this, they are popular because trading various cryptocurrencies can be extremely lucrative.
How do I get cryptocurrency?
Step 1: Open an account at a domestic cash to crypto exchange. Then verify your account. This usually takes 7-10 days to complete.
Step 2: Deposit funds from your bank account to your crypto exchange account. This takes about 1 day for the funds to be reflected online.
Step 3: Start buying Bitcoin or Ethereum. These are the two major cryptocurrencies that are accepted at all exchanges worldwide.
Step 4: Transfer your cryptocurrency on to a wallet that you control. (See our article on wallets here for more information on this)
If you are interested in buying other types of cryptocurrency, you need to open an account at a crypto to crypto exchange. Then you need to deposit your Bitcoin or Ethereum on that exchange in order to trade it for other cryptocurrency.
*When depositing money on an exchange, make sure you understand their withdrawal policy. They may allow you to deposit money but not withdraw it without providing identity documentation or paying a fee!
There is a bit of a learning curve when buying and handling cryptocurrency, since their properties are unlike any other digital item such as mp3 files or jpg images which you are probably used to buying/renting/downloading/saving. I recommend you buy a small amount at first for learning purposes. 10 USD is more than enough to get you started.
Bonus:There’s one other method to acquire cryptocurrency that I didn’t mention.
Invest in an ICO
An ICO is a fundraising method for blockchain companies. They issue cryptocurrency that you can buy. In our next entry will go in to a bit more detail about ICOs, and how they are different from an IPO etc.
I get asked rather often to help with evaluating the viability of ICOs. I should tell you that I participate in ICOs from time to time however I don’t consider it investing.
ICO stands for Initial Coin Offering. Despite the name it doesn’t actually have much in common with an Initial Public Offering (IPO). It’s a new way for cryptocurrency companies to raise money.
The buzz around cryptocurrencies has been growing steadily since the inception of Bitcoin in 2009, and the growing popularity of other cryptocurrencies and tokens means the fervor is unlikely to die down anytime soon.
A cryptocurrency wallet is your first step in order to send and receive cryptocurrencies. You can think of a crypto wallet like an email inbox. There are many types of emails accounts, but most people that I know go with Google, Microsoft, Apple, or other online free email services.
Bitcoin was invented in 2009 (just after the financial crisis) by somebody (or a group of people) who goes by Satoshi Nakamoto. Satoshi’s goal was to create “a new electronic cash system” that has no central authority.