How to get started in Cryptocurrencies
So you know that one person who retired early, because they invested in Bitcoin. Now you are asking yourself how to get started in cryptocurrency?? The world of cryptocurrency can be overwhelming when you first get introduced, since there is so much you need to know before you get started.
What is Cryptocurrency?
Cryptocurrency is a digital or virtual currency designed to be used for the purpose of exchange. It uses cryptography to provide and verify transactions as well as to control the creation of new units. By using digital currencies, you can pay a hotel service, buy applications or even pay your tuition fee. After the technological boom in the 1990’s, there were several botched attempts to create a digital currency. Some of us still can remember the currencies like Beenz, Flooz, and DigiCash. The main reasons why these currencies did not survive were scams, financial problems, and conflicts between employees and their bosses.
In 2017, acceptance of cryptocurrency increased massively, thanks to bitcoin. At one point there was almost 800 billions dollars shoveled into the market. Even though the market leader was Bitcoin, there were many other digital currencies utilizing blockchain technology in hopes of making its variations the best. Many flopped at the hands of hackers and pump and dump schemes, proving its technology to be subpar to its peers. What are these other digital currencies?
What is a Altcoin
By now you had to have heard of other cryptocurrencies besides Bitcoin, most notably referred to as altcoins, but what are they? An altcoin represents any cryptocurrency that is not bitcoin. Altcoins are created most often to make improvements on Bitcoin, whether it is decreasing the average block time or length, so transactions can be much quicker or changing the mining algorithm, so less power is needed to mine the coin decreasing the average mining price per coin.
Now how to get started?
Exchanging Fiat currency to Crypto
First thing to do is acquire your Crypto. Coinbase offers a perfect platform for beginners. It was created in 2011 and is considered to be a one of the most secure platforms. The platform is easy to use and allows you to buy and sell Litecoin, Ethereum, and Bitcoin Cash. By using a credit or debit card, you can deposit your funds to a bank account. If you are looking for cheap withdrawal fees, excellent security, and good customer support, this is the right option for you.
But you can lower your fees even more, here’s how most crypto gurus convert their fiat money….
- Open a Coinbase account and add USD to the account
- Open a GDAX account and link it to Coinbase (Coinbase owns GDAX)
- Exchange your USD to your preferred Crypto on GDAX
This is thought of as the cheapest way to exchange your fiat money to digital currency, otherwise your see will be much higher fees.
What happens if the coin you want is not on GDAX?
Altcoin Exchanges
The altcoin market has exploded alongside with Bitcoin, and many investors have made high returns. According to the CoinMarketCap, there are over 1500 altcoins on the market, but people are not sure what is the best altcoin exchange. If you want to start buying, trading and selling altcoins, you need to choose the right exchange. When considering what to look for in an exchange – the daily volume (high volume makes better pricing), security, and listed coins are most important factors. There are some smaller coins that people want to invest in, which are not listed on major exchanges – you can think of these small altcoins as penny stocks and the more popular altcoins like Ethereum and Ripple as the blue chip stocks of the crypto world. How do you acquire these coins? Based on volume, security, and coins offered the top contenders are Gemini, Bittrex, Poloniex, and Kraken.
Gemini
Gemini- Whose founders, Cameron Winklevoss and Tyler Winklevoss became famous after they sued Facebook founder Mark Zuckerberg for stealing their idea. In 2015, they created Gemini. Gemini has a good relationship with regulators which means that you can use a bank account to deposit and withdraw your funds. You can make up to 30 bank withdrawals and 10 Bitcoin or Ethereum withdraws per month.
Bittrex
Bittrex, a Seattle-based cryptocurrency exchange founded in 2013, but former Microsoft security professionals. There are currently 200 different coins listed on the exchange, where they are consistently adding more. Currently Bitrex yields a daily trading volume of $90 million.
Kraken
Kraken, allows using bank accounts for deposits and withdrawals. You can use this option if you are a citizen in Japan, Canada, United States and most parts of Europian Union. It is very similar to Coinbase, because it offers a basic platform for beginners. The other advantages are low trading fees, good security, and live chat support.
Poloniex
Poloniex, a US-based cryptocurrency exchange platform. The company was founded in January 2014. There are almost 100 tokens listed and a daily trading volume of $70 million. A large portion of the deposits are stored in cold storage (explained later). The platform has some of the best technical analysis charts for account holders to use.
GDAX to Altcoin exchange
Sending coins to one of these exchanges is really simple. For example, if you want to transfer coins from GDAX to Kraken, you need to go to Bitcoin/USD tab, select Withdraw and select BTC address. After that, go to Kraken, select BTC wallet and deposit. This will open a window that gives you a BTC address to send coins to. In the end, select amount you want to send and that is it.
Altcoins that look promising for 2019
When you analyze altcoins, you need to be sure that you have a basic knowledge of blockchain technology, so you can evaluate the types of algorithm that it utilizes for mining. Because, many coins are similar, but have minute variations that might make them infinitely better than its peers. Next, you need to know how to store altcoins and which method is the safest one or at least suits your needs the best. It is crucial to understand how cryptocurrency exchanges work and how to convert a cryptocurrency to money.
Even though 2019 hasn’t even moved out of first quarter some of coins were too weak for the market. Still, there is plenty of room for improvement in terms of creativity and vision. 2019 brings us exactly many opportunities and a better understanding of markets, where some projected winners according to the GoodAudience, EOS, Ripple, and Stellar. So start your research and hope to moon. Don’t forget about Stablecoins and using them to shield yourself from the extreme volatility.
Cryptocurrency Tax Laws for Capital gains and Capital Losses
Basically, anything other than purchasing, holding, and transfer of cryptocurrency is a taxable event. This means that you can realize a capital gain/loss at fair market value at the time of the event (when you use, trade, or sell cryptocurrency). Due to a sharp rise in the value and popularity of some cryptocurrencies, individuals stand to make substantial returns by purchasing these crypto assets for investment purposes. It’s imperative to understand how capital gains and capital losses work should your investments grow in value. Make sure to read the full guide on Cryptocurrency tax laws in the US if you have any cryptocurrency capital gains or losses.
WHAT IS A STABLECOIN?
By now you have heard the buzz going around about cryptocurrencies and how it’s supposedly the key to fixing our financial systems. By now you probably understand how to buy, sell, and hold crypto. But what is a Stablecoin and why have Stablecoins become such a hot topic lately? Well to say the least, Cryptocurrencies have been quite volatile since their inception in 2008. And a stable coin is an attempt to combat all of that volatility and well.. Make cryptocurrencies stable, hence the name stable coin. But how does this stablecoin help make the cryptocurrency market more stable? A stable coin is a cryptocurrency that provides price stability, usually being pegged to another asset. Read more on Stablecoins and why they are the future of crypto.
OK, so you have your crypto… GET IT OFF THE EXCHANGE
You have now made the decision to invest in crypto, but first how do you keep it safe from hackers? As of October 2018, it has been estimated that $1.1 Billion has been stolen in 2018 alone. It is important to make sure your cryptocurrency is stored in a safe place while making sure that you are practicing good computer habits, so that you do not become a part of that growing list of people who have been hacked. How does it get stolen??
For those who have been in crypto for the passed couple of years know that you do not keep your crypto on the exchange!!! Time and Time again, these exchanges get hacked and that’s right…you guessed… your hard earned crypto is now in the hands of hackers AKA you will not get it back nor will you be reimbursed by the exchange. This is why you need to have your own method of storage, but how?
A Cryptocurrency Wallet is a special address that you can use to store your cryptocurrencies. Anyone can have as many addresses as they wish. The concept is similar to the email inbox, except that everyone can read the message, but only the owner can write the answers. Finally, whatever you do in the world of cryptocurrency, you need to have a wallet.
Cryptocurrency Wallet
People get into the world of cryptocurrency too fast without knowing the basic principles. This is considered a major problem for beginners. So if you are one of them, you need to find the right digital wallet and secure your funds. There are several types of cryptocurrency wallets such as online, mobile, desktop, hardware and paper wallets. The right question is, which is the safest one? Regarding this, there are two major types of wallets, hot and cold wallets. Hardware and paper wallets are cold wallets while online, mobile and desktop are hot wallets. You can also checkout a comprehensive guide on the best cryptocurrency wallets.
Hot wallet
You can think of a hot wallet as you would think of a traditional leather wallet. Generally, it takes place as an app on your phone or a plugin in your browser. It is connected to the internet, hence the word “hot”. Therefore, people choose this storage method, because of its ease of use and how fast you can complete transactions. This benefit can also be its downfall, because it makes them more vulnerable to hackers. But one of the most well-known hot wallets is stored through Coinbase, a US based company with some of the most secured exchanges in the industry.
Pros
- Convenient
- Cost – Free
- Mobility – can be accessed anytime
- Easy to use for less technically savvy people
Cons
- Can get hacked, if best security practices are not followed
Go here for the best Hot Wallets
Cold Storage
| IMAGE | PRODUCT | DETAILS | |
|---|---|---|---|
 |
Our #1 Choice
Trezor One |
|
Check on Amazon |
 |
Ledger Nano S |
|
Check on Amazon |
 |
KeepKey |
|
Check on Amazon |
If security is your number one priority, then a cold storage method is your best choice. Cold wallets are not connected to the internet, which makes your precious crypto much safer from hackers. Therefore, you can think of a cold wallet like a savings account and a hot wallet is a checking account where there is a debit card attached and can make transactions and pay directly from your account, where that is not possible with a cold wallet.
Pros
- Very Secure – safest storage method
Cons
- Cost – usually quite a bit more expensive
- Mobility – not always able to access, since it is not on the internet
1. Trezor One
Among the most trusted and ubiquitous hardware wallets in the world. It offers unmatched security for cryptocurrencies, password management, second-factor authentication, while maintaining an absolute ease-of-use, whether you are a security expert or a brand new user.
2. Ledger Nano S
Allows you to send and receive crypto assets, securely and conveniently. Your Ledger hardware wallet can easily be connected into a computer and managed through the Ledger Live companion app. The Ledger Nano S keeps your private keys protected Your confidential data is never exposed: it is stored inside a strongly isolated Secure Chip, and has a 8 digit PIN code. Multicurrency: enables you to manage multiple assets on the same device, and supports over 30 cryptocurrencies and all ERC20 tokens
3. KeepKey
KeepKey Bank-Grade Security that is Simple. During initialization, you are given the one-time opportunity to write down a backup of your KeepKey in the form of a twelve-word recovery sentence. If your KeepKey is lost or stolen, you can safely recover your device and its bitcoins without compromising the security of your private keys, because KeepKey does not have an operating system, the layers that viruses, malware, and key loggers infect do not exist on the device. Using KeepKey gives you confidence that hackers can’t get to your bitcoins. Supports Bitcoin, Ethereum, Litecoin, Namecoin, Dogecoin, Dash, and Testnet.
Hot Wallet vs. Cold Storage
It really depends on the use case and your personal goals for investing. For example, if you live in an area where stores accept crypto and you plan to use it as legal tender, then it makes sense to have hot wallet, so that you could spend it instantly. If you plan to HODL (hold on for dear life) and cash out in several years or store a large amount of money, then the Cold Storage is the best bet for its unbeatable security. Most experts recommend having both types of wallets (remember there is no limit on the number of addresses you can have). In that case you can store long-term funds in a cold wallet and use a hot wallet for funds that are ready to use.
Now you know the basics on how to get started in Cryptocurrency …
Just going over everything you learned so far – you now know where to exchange your USD to crypto, how to store your crypto, how to exchange your crypto to other altcoins, and several of the leading altcoins for 2019. Let us know in the comments, what makes an altcoin appealing to you!
