I have decided to write a "how to" guide to help new investors interested in buying crypto assets. There are many reasons I am doing this, but the primary one is I am new myself, having only entered the space in February 2018. So my journey is recent and easy to remember. Considering the challenge and complexity to simply buying, selling and storing crypto assets today, perhaps this will simply chronicle "what it used to be like" as a future investor might have a completely different experience. Nonetheless, here are the few steps I took to enter investing.
First, was and is research. I have spent countless hours reading materials, talking to investors and enthusiasts (online and/or in person), attending seminars, watching videos, joining telegram, twitter, Reddit and Medium groups. As any new investor will quickly discover, crypto is 24-7. It never sleeps and if you catch the bug, you will likely find yourself sleeping far less as well. And you will love it! This coming from a person who's favorite pastime is a good nap.
Second step for me was coming up with and answering questions. For instance, how can I buy crypto currency? What is it? What do I do with it? Where do I put it? There is a fundamental shift a person needs to make in learning how to purchase coins online without any sort of physical item other than being able to look at an exchange account or wallet and identify "ok I own 100 xyz coins". It is very abstract and there is no greater fear initially than when you make a transfer from one account to another with nothing other than a public key (address) and then you cross your fingers that it shows up on the other end.
After addressing these two subjects in length, I had amassed enough confidence in my decision to invest in and buy some crypto. Anyone in the space will tell you to not invest what you can't afford to lose and this is completely true. There are so many risks and variables with buying cryptocurrency that a person must come to grips with the fact that there is significant risk in investing. Risk goes beyond a coin going to 0, it includes the possibility of regulation or the lack of it, the chance of being hacked, sending your funds to the wrong place and being unable to reclaim them and the threat of constant schemes and ploys to trick you into giving away your crypto to name a few. On that note, I will remind you what you must have heard a million times by now, NEVER EVER GIVE SOMEONE YOUR PRIVATE KEY. NEVER. That is the key that claims your crypto.
Without further ado, here are steps I recommend.
How are you going to store/secure/protect your crypto? This was the first question I had to answer once I decided I was going to participate. There are 3 kinds of wallets. Cold wallet, Hot wallet and paper wallet. A cold wallet is an offline storage device such as a computer disconnected from the internet or a trezor/nano ledger hard wallet device. The latter two devices should be purchased directly from the manufacturer to ensure no tampering. If you buy these devices online via amazon or another site, you run the risk that your wallet might have already been setup with the scheme being for you to load your coins on it and then the thieves will remote access your device. Buy these new from the manufacturer which will ensure the safety of your assets. The package should arrive in a clearly sealed way such that you will be confident no foul play has occurred. These are not referral links, here are websites to the trezor https://trezor.io and to the nano https://www.ledger.fr. Both are highly respected and industry standard storage devices as of the date of this blog post. The other options are a paper wallet where you write down or print out your public and private keys and keep them stored in a safe, safe place. A hot wallet is also an online wallet which is secure but is also susceptible to the possibility of being hacked. A person needs to determine which option is best for them. Personally, I bought a trezor so I could store coins offline. The challenge is that these devices don't work with all the coins so sometimes your best option is a paper wallet or online wallet. In those cases, I've opted typically to setup a wallet native to each coin (such as NEON for Neo and other Nep5 based tokens) and MEW (My Ethereum wallet) which is a decentralized wallet on a public blockchain which is not centrally managed, thus you retain your private keys and simply have a place to keep your funds. This site as it sounds only supports ETH based tokens (ERC20) and you must be diligent in how you access this and set it up. Personally, I bookmarked it and only access my account with my trezor, that way I am never inputting my private key and I know the website I am going to is correct. Recently there was a scam where scammers setup fake websites that looked just like the real thing and then worked to get users to input their private keys so they could steal the coins. This is another reason I use the trezor, I never use my Private keys so it is an added layer of security. Here is a link to MEW, again, not a referral link. https://www.myetherwallet.com/. It will walk you through the steps to set yours up.
Now that we have addressed what you do with your crypto when you get it, let's get some! Most people start by going to Coinbase https://www.coinbase.com/ (not a referral link). Now for me, this was the catchy part as if the previous details weren't already enough. I used a credit card to buy my first small portions of Ethereum and Bitcoin. What ensued were credit card fees issued by Coinbase, my Credit Card, as well as "money transfer fees" on my CC as they interpreted the purchase as a "cash advance". I also got charged foreign exchange fees for buying a "foreign currency". I then began incurring interest charges on the cash advance fees even though I didn't get my CC bill for a few weeks. Even after I paid my CC bill in full I had interest charges the following month for additional interest that occurred between my bill and the time my payment posted. All these fees were tacked on to two simple purchases, one for a small amount of BTC and the other for a small amount of ETH. Suffice it to say, this was shocking and such a racket.
The reason why I initially chose to use a CC rather than linking my bank account is because my bank is a smaller, regional bank. You will find when you look for your bank on Coinbase, there are a limited number of options. If you bank with large national ones such as Chase, BOA, etc, then you should be able to link your bank account and then you will just have to wait for that approval process which I think takes up to 7-10 days. I don't remember specifically. After my initial CC experience, I realized that I had to find a better solution.
So I ended up setting up a new savings account with BOA. This doesn't incur fees as long as my balance is $500. If you setup a checking with them that has direct deposit I think they wave fees but don't quote me on that. All this to say I HIGHLY RECOMMEND LINKING A BANK ACCOUNT! Otherwise, you will find a CC significantly eats into your investment funds. There is another trick to reducing your fees once you join Coinbase. They have a sister site called GDAX and if you simply type in GDAX once your Coinbase account is complete you will find you have a GDAX account as they are the same company. The GDAX option has far lower fees for buying as of the time of this writing.
Once your bank account is approved you can either transfer funds and wait another +/- 5 business days for the funds to post or do a wire transfer. If you are looking to work with slightly larger sums of money, a wire transfer is much quicker. Once the funds show up you are ready to purchase some crypto! Be sure to ladder in your purchases, in other words, break your purchase up into smaller chunks. As you will quickly discover, the market fluctuates significantly and learning to spread your purchases out will help you to cost average your position entries.
I'm going to leave it at this for now. The next step is adding other exchanges, transferring BTC, ETH, BCC or LTC to those accounts to trade for Alt coins. Perhaps if there is any interest level I will follow this up with steps to purchasing and storing those ALT coins. Happy investing!!
For anyone curious, I took the picture of the car above in the Dallas/Arlington Texas market!! The owner has setup a building with a Bitcoin ATM and some other cool features. Let me know if you are interested and I'll add some more pics!!