Getting started with buying Crypto is tough for newbies and non-technical people. Lots of my friends and family have heard about this Crypto project or that. Now they are asking me about Cryptos and some want to get invested. Until recently I have been reluctant to get them involved because of the volatility and the risks involved to non-technical people but I also don't want them to miss out. Rather than throw them into the deep end I’ve been urging some caution and have found myself giving similar advice each time. To the point where I can now detail my advice as a distinct Step-By-Step process.
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This is probably the hardest point to get across because particularly younger people have heard about some exciting Crypto project and just want to jump in head first. They often have FOMO (Fear Of Missing Out) and want to start investing or using Crypto before they really know what they’re doing but it is a huge mistake. The most important thing to understand is how Private Keys and Public Keys work. It is absolutely critical that Private Keys are kept secret and not shared with ANYONE or your Cryptos will be lost. There is no bank or middle-man to re-imburse you if you make a mistake so it is very, very important not to make mistakes or you will get burnt. Reading this post is a good start but this is just a start.
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“What’s a Fiat Exchange?” You ask. Sounds like you should go back to Step 1! Fiat is your government money. US Dollars, Australian Dollars, whatever your local government issues is called Fiat Currency but most mainstream people just call it “Money”. You need a place to convert your Fiat Currency into Crypto Currency. Now there is a good chance that the Crypto you’ve heard about is not available for sale at your local Fiat Exchange. That’s OK. What you need is what I call a “Gateway Crypto” and at time of writing I personally recommend Ethereum because it is widely accepted and has lower transfer fees than Bitcoin. Once you’ve got an account at a Fiat Exchange and deposited some Fiat Currency you can trade it for your Gateway Crypto. You will probably need to provide Identification documents as most countries have regulations that Fiat Exchanges need to follow for anti-money laundering, terrorism etc.
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Now it starts to get harder and riskier. There are a lots of different types of wallet but they fit into two main categories - Hot Wallets and Cold Wallets. Hot Wallets are connected to the internet and Cold Wallets are not. Obviously Cold Wallets are safer but a good Cold Wallet can cost a bit to buy and so it is an extra expense for a newbie. Hot Wallets can be a good place to start while learning the ropes but my advice is to only use them for very small amounts while you learn. If you’ve bought ETH like I suggested in Step 2 then a good hot Wallet is MetaMask, which is a Chrome browser plug-in or possibly My Ether Wallet. Set up your wallet and identify your Private Key and Public Key. Make sure you make a backup of your Private Key that is not on your computer but is kept in a secure place (in case your computer dies).
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Log into your Fiat Exchange and select the Withdraw option. It will ask you for the address you want to withdraw to. In here you put your Hot Wallets Public Key address and again (I can’t stress this enough) just transfer a very small amount, especially on your first time. The exchange may have a fixed transfer fee or you may be able to specify a fee. You should be aware of how much this transfer fee will costs and also know that if your fee is too small it may get stuck on the “backlog” of transactions and take longer. Once your transaction is sent you will have to wait a bit before the balance on your Hot Wallet will update. This can be a nervous time and if you are transferring Bitcoin it may be 10 minutes or an Hour. If it’s Ethereum it will be a lot quicker but still could be minutes.
This is where you can trade some of the big, well-known Cryptos (like the one you have in your Hot Wallet) for some of the alternative Cryptos that you might be interested in (called alt-coins). There are literally thousands of alternatives so make sure that the alt-coin Crypto that you ultimately want is available for trade at the exchange before you sign up. At time of writing the market leading Alt-Coin Exchanges are Binance and Bittrex. Once you’ve signed up you select Deposit and find out what address you need to transfer the Cryptos in your Hot Wallet to. Double check this address and also make sure you have the matching Crypto name and code. If you have Ethereum (ETH) make sure you’re depositing to Ethereum (ETH) address and not Ethereum Classic (ETC). If you’re using Bitcoin (BTC) make sure you’re not accidentally depositing to a Bitcoin Cash (BCH) or Bitcoin Gold (BTG) address. If you make a mistake here, you guessed it, your Cryptos are gone.
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This is similar to Step 3 but you may have to do a LOT more research because different alt-coins use different wallets. If you’re buying an ERC20 compliant token that is recorded on the Ethereum blockchain (there are a lot of these) then you might be able to use the same wallet from Step 3 but you need to figure this out. The best advice I can give you is to go to the web site of the alt-coin you have bought and see which wallet is recommended and see if they have any guides or documentation on how to use the wallet. I can’t stress this enough – you MUST research this and learn all about it before proceeding with this stage.
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Once you’ve set up your alt-coin wallet you should know what your Private Key and Public Keys are. You can then log into your Alt-Coin Exchange and withdraw your alt-coins to your alt-coin wallet using your Public Key. Again it is hard for me to advise you on specifics here as different Cryptos have different address formats and different block times which you should have learnt about by now. But once you’ve got your alt-coins in your alt-coin wallet you can HODL – which is Crypto slang for HOLD or Hold On for Dear Life. You might have a bumpy ride as the prices will probably be volatile but you’ve reached your destination.
Remember, I am just giving you the basic steps here. It has been the hardest article to write because on the one hand I don’t want it to be a wall of text that will be daunting. On the other I don’t want to trivialise or skip vital information in the descriptions that could lead to a mistake. That said there are obviously some omissions and generalisations but if you do your research and follow Step 1 and learn as much as you can before you begin then you’re giving yourself every chance of success. Always remember to never invest more than you can afford to lose and do your own research.
DISCLAIMER – This information is for general information only and should not be taken as financial advice. I am not a financial adviser and I encourage all readers to seek independent financial advice before investing in any Cryptos.
http://www.ronkitchens.com
https://www.leftovercurrency.com
https://metamask.io
https://feemhq.wordpress.com
https://www.binance.com
https://bittrex.com
https://www.coinfeeds.com
https://www.reddit.com
https://ftalphaville.ft.com