So, you've heard this craze about Cryptocurrency and are interested in Investing but don't know where to start? This guide aims to help you get started!
Disclaimer : "Anything written below is based on knowledge that I have amassed about crypto over the years. This is not financial advice and you are expected to do your own research before picking out which coins you want to invest in "
That out of the way, I welcome you to the exciting world of cryptocurrency!
As a pedagogy style, the important phrases in this article are Bolded.
Tips are also provided along the way, classified in to Handy Tip, Important Tip and Pro Tip.
I am assuming you have Zero Knowledge about Cryptocurrency. If you do have some idea, or good idea about crypto, I would still highly recommend you to read this article as it will serve as a great refresher :)
As I was a beginner myself , I can understand how confusing it can be to get started investing in cryptocurrency and knowing how things work in this crypto verse. So, I want to make this as simple as possible for you, so let's get started. Here are the things you need to get started :
Wallet : Think of Crypto wallets like your normal wallets which hold currency. You need to create a digital wallet which will hold your cryptocurrency. Wallets are divided into Cold wallets and Hot wallets. For now we will stick to Hot wallets, so I would recommend you to sign up for a Digital Wallet. Popular Wallets include Coinbase or Binance. These two companies are the market leaders worldwide in crypto trading, and have a lot of options so you can start with these.
Handy Tip : Once registered, write down your password in a piece of paper securely. It is recommended NOT to use same password for multiple accounts.
Of course, you are free to choose your own Wallet but make sure you do your research, and trust the wallet provider before you begin investing. You'll need a valid email ID to register, so keep the credentials of an E-mail handy.
Important Tip: While you register, you will be provided with a Seed phrase. Write it down on a piece of paper and keep it secure and DO NOT share it with anyone. Think of this as a set of duplicate keys to your wallet, in case things go bad. In such cases, this seed phrase can be used to recover your wallet.
Great! Now you have a account setup. That's a start. What's next ? Well, its now about transferring some funds over to the wallet. Most popular way is to buy Crypto using Fiat currency. If you registered on popular wallets, they should prompt you to go ahead and add some funds. So go ahead! Use your Credit or Debit card and add an amount in Crypto that you are willing to lose.
Did I read that right? You mentioned "willing to lose"? Yes! realize Dear reader, Crypto is a high risk market and while prices appreciate, they can also fall in a similar fashion. However, as a long term investment, putting some part of your earnings in Crypto makes sense as it may bring substantial gains, especially if you invest in the right projects and over long-term. The returns can be Life altering, so it makes sense not to miss out on this spectacular opportunity!
You mentioned "Right Coins"? What are these?
First read "coins" and not "coin". Please note, I use the terms coins and cryptocurrency interchangeably. So it makes sense to not buy a coin (cryptocurrency) but 3-4 coins instead i.e. diversify your portfolio. Why this is a good idea is because it will diversify your risk. Think of a day, the price of one coin goes up and the other goes down. In such scenario, the total value of your holding will still stay the same...If you have 100 to spend, I would reckon do a 50-30-20. Invest 50 on Bitcoin, 30 on Ethereum and 20 on other Alt-coins ( Again, this is my opinion for diversification, but I highly encourage you to MUST do your own research!)
So we have the wallet and funds. Now we wish to transfer them to someone. How do we do that? For this purpose, we need to know the Public Address of the wallet of the receiver. (You have to ask the person to send you his Crypto currency wallet address corresponding to the cryptocurrency you wish to send). Crypto exchanges are Pseudo-Anonymous. So you don't need to know the name of the receiver. Having the address of the receiver is enough for the transaction to occur. But there's a point to keep in mind though. A common error that beginners make while transferring the digital currencies, which can cause losses is sending crypto to the wrong Addresses.
"A Bitcoin Wallet address will only receive payments done to it in Bitcoin. If you send Bitcoin to an address belonging to another crypto currency, say Ethereum, that Bitcoin will be lost forever!"
Same notion applies for other crypto currencies as well. So, an Ethereum wallet address will accept payments done to it in Ethereum and so on. So, make sure you are transferring to the right wallet before you confirm the transaction.
Important Tip: If payments are made to a wrong address, it cannot be undone! So, exercise caution while transferring the amounts.
Similarly, for receiving Cryptocurrencies, say Bitcoin, you would need to provide the sender the public address of your Bitcoin account. How do you do that? It's quite simple. Firstly, sign in to your wallet. Then, click on the cryptocurrency which you want to receive and there should be a "Send/Receive" option. Clicking on the option, select the "Generate Address or Show Address" option. This will give you an address that will be Alpha-numeric and longish text. Copy it and send it over to the receiver. This alphanumeric text is called as Address. To be specific, it it your Public Address or Bitcoin Address. Anyone, who would like to send you Bitcoin will need to send it to this address. The process is similar for transferring other cryptocurrencies as well, just make sure the addresses are correct.
So, as a Recap, we went over the 3 phases of Setting up, Addition of funds and transfers in cryptocurrencies. In addition to this, as you explore further you will hear people speak certain "Jargons" in the crypto space. These are covered below.
Jargons: As you explore the crypto verse, often you will hear people use terms which might seem Alien to you. These lexicon of words are regularly used by crypto enthusiasts and it helps to know something about them. Some of the popular ones are :
HODL: A misnomer on "HOLD", some people also describe it as "Hold-on-to-Dear-Life!". In simple terms, it means to hold the cryptocurrency over long term. Buy and hold. That's Hodl. Simple, ain't it?
PUMP and DUMP : Ain't that rhyming? Pump refers to the price of a cryptocurrency increasing drastically. Since the market currently is unregulated, it is Not Uncommon for Coin prices to appreciate by 2 times (referred to as 2x),5X,10X or even 20x in value. ( Although higher pump is generally observed in lower priced coins)
FOMO: Fear of missing out! Yup! Cryptocurrency has created millionaires and with such once of a lifetime opportunity knocking on the door, you don't want to miss out by not investing. FOMO refers to fear of missing out such a seemingly great opportunity. The phrase used is "FOMO in or FOMO onto" something.
For instance, you might hear people say : I heard "ABC" coin is pumping due to addition of a new feature: I better invest some money in it... I don't miss out while others rake in the gains... Smell the fear of missing out here? That's FOMO.
ALT-COINS: All coins, except Bitcoin are referred to as Alt-Coins. It is recommended to add a few to your portfolio to diversify your risk.
REKT: Something you would wish to avoid! "Getting REKT" is losing your investment in cryptocurrency. This can occur when the price of the cryptocurrency you own crashes. Ouch!
TO THE MOON: Yes, the Ultimate Dream! You would want the price of the coins you hold to appreciate. Till what amount I ask? You guessed it, your reply would be: To the MOON!
I hope you now have a better understanding about the crypto-verse. Do let me know if you found this read insightful, have suggestions or would like me to write more. If you have any doubts, list them below, and I would be very happy to help!
Thank you for reading this article!
