This is not financial advice.
Do your own research.
Only invest what you’re willing to lose.
Understanding cryptocurrency may seem daunting at first, but it’s quite simple when you get the basics and know what questions to ask. This article is intended to give you the minimum information in very basic layman’s terms to make your first investment, as well as provide resources I’ve found helpful.
Bitcoin and Blockchain
Bitcoin is the currency. Blockchain is the technology. In my opinion, every great cryptocurrency has a useful underlying technology. Bitcoin is the granddaddy (although struggling with speed, scaling issues and high transaction fees).
Blockchain = a chain of blocks
Each block contains data.
What kind of data?
Transactions to be specific.
How do they get into a block?
Well, each time you send a transaction, you transmit it to the network.
Your transaction goes into a queue to be “mined”.
Miners are people who voluntarily “confirm” transactions, bundle your transaction with a bunch of others to create a “block” and attach it to the chain.
Because mining requires compute power (literally machines running 24/7 using electricity) miners are rewarded with Bitcoin.
That’s it. Unless you plan on getting into mining you don’t need to know any more.
The blockchain is public and every transaction is there as a public record.
This is critical.
The invention of the Blockchain allowed Bitcoin to be born.
Until the Blockchain, smart people had tried for decades to invent digital currencies but there was no universal public ledger to prevent fraud.
A universal and “always true” public ledger changed everything.
No one can fraudulently produce value (i.e. Bitcoin). Every wallet (more on wallets later) and every transaction can be inspected without revealing the personal details of the owner.
Decentralisation
Decentralisation is another word you’ll hear a lot. That means what you think it means and it’s great for a couple of reasons. Without getting too philosophical, these include:
- No central authority controls the Blockchain. It’s by the people for the people.
- Central banks/governments can’t use simply “print more money” meaning cryptos are deflationary rather than inflationary (they are worth more over time, not less).
OK enough waffle I want to know how to buy Bitcoin
You need to understand 3 things:
- Exchanges – where you buy and sell
- Wallets – where you store
- Security
1. Exchanges
Exchanges are governed by financial regulations. KYC stands for Know Your Customer, and requires them to ask you for proof of identity.
You’ll need:
Driver’s license
Utility bill
Selfie
Coinspot.com.au
Nice user interface and approval is pretty quick.
Coinbase.com
Sign up to this one and when you’re ready to buy, check the price on both exchanges and just buy the cheapest available.
There are others but that’s all you need for now.
IMPORTANT: When you buy, your coins will be available in the built-in wallet on your dashboard. DO NOT leave them there. Exchanges are still centralised (meaning you are not the authority, someone else is). Immediately transfer your coins to a wallet to which you hold the private keys.
HUH?
2. Wallets
Blockchain.info
Click “Get a free wallet” and follow the prompts.
WRITE EVERYTHING DOWN. TWICE.
I can’t stress this enough. There is no way to recover lost keys. There is no backup if you don’t make a backup copy.
I’d also drop a hundred bucks on a Ledger Nano S or Trezor – these are physical hardware wallets that basically “take your coins offline” so they can’t be hacked.
MyEtherWallet.com (MEW)
Enter a password and click “Create a new wallet” then follow the prompts. Again, write everything down. Twice.
Download and save your JSON file in a safe place if you don’t want to type your private key each time you want access to your wallet. You’ll notice each time you switch tabs it will prompt you to log in again.
3. Security
Google Authenticator
Download the Google Authenticator app.
Then setup 2 Factor Authentication (2FA) for your:
• Exchange
• Wallet
• Email account
You'll need to go to your account or security settings for each one, and follow the instructions.
WRITE EVERYTHING DOWN! You will need a way to recover accounts if your phone is ever broken/stolen/destroyed by a toddler.
Key Resources
Buzzwords you’ll see a lot:
DYOR
Do Your Own Research.
FUD
Stands for Fear Uncertainty and Doubt. Don’t spread FUD and don’t listen to FUD. DYOR.
FOMO
Fear of Missing Out – don’t act out of FOMO. It’s dangerous.
JOMO
Joy of Missing Out. Ok this one is not very common but it’s the sense of euphoria you get after not investing in a project that fails.
HODL
A misspelling of HOLD that has become crypto lore. Some say it stands for Hold On For Dear Life. Either way it means don’t sell, especially in a panic.
MOON
When a price goes shooting up.
BULLISH
Optimistic (basically).
BEARISH
Pessimistic (basically).
VOLATILITY
The gap between a price high and price low is the measure of volatility. The higher the high and the lower the low, the more volatile (basically).
WHO TO FOLLOW
Here are just a few good ones to get you started. Your recommendations will kick in after your subscribe and you’ll find more. There are plenty of great voices and I’m discovering new people all the time.
Ready Set Crypto
This is your brain on blockchain. ReadySetCrypto uncomplicates cryptocurrency.
https://www.youtube.com/channel/UCLVg3gS_lVVWhr23omBwAKg
Cryptocurrency Australia
Aussie engineer who covers crypto in general really well but also Australian related topics like tax and legislation.
https://www.youtube.com/channel/UCVQJXvrcil-95HcnSiUjNmg
Data Dash
My daily go-to for info, updates and analyses.
https://www.youtube.com/channel/UCCatR7nWbYrkVXdxXb4cGXw
Crypto Rich
Great deep dives and CEO interviews.
https://www.youtube.com/channel/UCNZb8eUomqPYgrdVeOn4eZA
The Crypto Lark
Good analyses and interviews. Does regular live chat Q&As with followers.
https://www.youtube.com/channel/UCl2oCaw8hdR_kbqyqd2klIA
Haejin Lee
Great technical analyses – particularly Elliot Wave analysis.
https://www.youtube.com/channel/UCpAXWMbMUv4P5R-15kHYFJw
Ivan on Tech
Programmer who explains crypto in layman’s terms. Good interviews and deep dives.
https://www.youtube.com/channel/UCrYmtJBtLdtm2ov84ulV-yg
Boxmining
Analyses, interviews and deep dives.
https://www.youtube.com/channel/UCxODjeUwZHk3p-7TU-IsDOA
ESSENTIAL APPS
Telegram
Talk to CEOs and the teams behind cryptos. Go to their websites to find their official TG channels. Mostly investors and influencers in the chats. Some are non-official channels run by community managers.
Slack
Not one I frequent. Mostly used by developers to discuss technical matters but it’s worth having in case you ever have a question you need answered urgently.
Blockfolio
Simple portfolio tracking app.
Discord
Community driven chat.
ESSENTIAL WESBITES
Coinmarketcap.com
Birds eye view of the entire crypto market.
Cryptocompare.com
Similar to Blockfolio but you can sign up with Facebook and create portfolios to monitor holdings, or even create fantasy portfolios to test your strategies.
Tradingview.com
Interactive charts where you can do your own technical analysis.
Coincheckup.com
A crypto research platform.
That’s the basics – enough to get your started. Have a blast!
