If you are new to cryptocurrency, this guide will help point you in the right direction to start your research, while making you aware of the pitfalls that are out there.
What to consider before you purchase any currency.
In all honesty, you have to be careful with what you choose to read and believe out there. There is a lot of hype on all sides over the viability of cryptocurrency, and even more hype around each and every coin out there, so don’t just follow the crowd. As with any type of investment, you have an obligation to protect your assets and the key to that is to get educated and do your own research.
This industry is relatively new and no one is a professional expert at this point and no one should advise you, especially wannabe financial advisers. There are very few regulations related specifically to cryptocurrency and thus there are very few qualifications anyone can legitimately point to.
As for me, I’ve been a computer scientist and business person for the last forty years, so I’m no financial advisor. My real credentials to write on this topic are that I spent 10 years in the banking industry at the top of the technology pyramid, and actually worked with cryptography, network security, and transaction processing for. I wrote my first internet shopping cart in 1996 (way back!) and have processed millions of dollars in transactions on the web ever since.
Research, research, research!
CoinMarketCap.com is probably the best known coin listing website today, so it is a common starting point for an overview of coin names, symbols, and current valuation.
Looking at a current market listing can be daunting if this is all new to you since there are literally thousands of individual coins out there. The focus of your early research should be understand who the Major Coins are and why they are valued where they are.
There are REAL differences between the major coins and how they are positioning themselves for actual use in the real world. In many cases, these coins are competing against each other to deliver payment processing and other solutions into the exact same markets, using completely different methods and delivery systems. Not everybody can win in that environment, and this presents another level of risk that you have to educate yourself on.
How to get started
Before you can take your “real” money and exchange it for “virtual” cryptocurrency, you have to do two things:
- Sign up with a Cryptocurrency exchange that trades in the coin you are interested in purchasing.
These are two very important decisions that are right up there with chosing which Bank you are going to use, so don’t take it lightly. Security and trust essential. This is not a recommendation, but I will point you to Coinbase.com as an example of a Cryptocurrency Exchange. They are the largest exchange, but there are others that you should look at and understand differences in their terms and fees.
Using an Exchange will be pretty much what you expect. Once you sign up and create your account, there will be a txt or email verification process and then you’ll be in business and can start purchasing Cryptocurrency.
When you first get started there will probably be purchasing limits on your account. That’s a normal protective measure, and you can often improve on that limit with things like verifying addresses and adding bank accounts. It should also improve over time as you avoid account issues and demonstrate responsibility.
- Set up a digital WALLET where you will keep and access your Cryptocurrency.
Crypto Wallets generally come in tow flavors: Hardware or Software based.
Hardware wallets are physical devices like USB sticks that have their own security built-in to access the currency stored on them. Software wallets are the more popular option today because they are generally free and more convenient, but Hardware wallets are generally considered safer because they guard against hackers by not being connected online.
When deciding on which type of Wallet to use, you have to make sure that the Wallet supports the currency you intend to purchase. This is another area where you have to do some online research.
Buy Major coins first!
Starting with a Major Coin first is the conventional wisdom for a lot of reasons. Everything may be volital at any time, but there are a few coins that have weathered the test of time at this point. Bitcoin stands on its own with over a Trillion dollars in market capitalization. Number two, Ethereum, comes in at $238 Billion and number three, Binance, is sitting at $54 Billion Market Cap. Below these top three, today there are 12 other coins that have Market Capitalizations in excess of 10 Billion dollars.
With a major coin, you can:
- Hold on to it in the hope that it goes up in value.
- Use it as a currency to purchase items.
- Use it as a means of buying and speculating in the Alt-coin market.
- Use it as a means of funding Staking ventures in other coins, .