How to Buy Bitcoin and Crytpocurrencies
This is a quick introduction guide on how to buy cryptocurrencies.
Have you missed the boat?
The 1000% gains all over the mainstream media are likely gone but this is the wild west of investing right now and with futures listing on the market leading to wall street adopting the future is unknown. As always invest only what you can afford to lose, don’t chase a profit.
What is Bitcoin?
· Bitcoin is a digital currency that is built on Blockchain Technology, it is a digital asset often referred to as a Cryptocurrency. Breaking down the term
a. Crypto — The underlying technology relies on Cryptography techniques to encrypt and secure the assets and transactions on the network
b. Currency — intended to be a decentralized currency i.e. not controlled by any government.
Is it really a Currency?
· Technically Bitcoin is not a currency it is an asset like gold as it has a defined limit of coins that can be mined (created) set at 21 million. This differs from traditional Fiat currencies which can be printed by a government. A better term for it is Crypto Asset
Alternative coins are generally Token coins i.e. used to facilitate a service rather than a currency. Many of these alternative coins are built on the Ethereum blockchain
Where to Buy
· Coinbase (www.coinbase.com)
o Pros
§ Convenience — Can purchase through App using credit card or debit card
§ Can deposit money from Current Account
§ Simple to use
o Cons
§ Fees — Premium is paid for the convenience 4% on credit card transactions 2% on Debit card. For example if you bought $100 with a credit Card you would need the price to rise 4.2% to break even..
§ Only has access to BTC, Ethereum and Litecoin
· GDAX (www.gdax.com)
o Owned by coinbase (login using same account) it is a more advanced trading platform offering limit orders etc.
o Lower fees
o My advice — Set up Coinbase account and deposit cash to that account and then transfer to here to buy Bitcoin or ETH, Litecoin
· Bittrex
o This is my current preferred exchange as it has access to a number of alternative crypto currencies. If I am putting money into the market I go via coinbase to BTC then transfer to bittrex.
How much Can you buy?
· BTC is divisible by 8 decimal places so although it trades at $10k you can buy as little as $10 or $100, the same applies to the majority of other cryptos
How to Store your coins
There are 3 ways to store:
· On an Exchange — Keep the coins on the exchange i.e. coinbase, this is the least secure, BTC is currently not able to be hacked but the exchange you store your coins on can be hacked.
· Online Wallet — places like www.myetherwallet.com allow you to store your assets which can be accessed only by your own private key
· Physical Wallet (Most Secure) — Physical digital wallet such as www.Ledgerwallet.com allow you to save your coins offline and less susceptible to hacking.
Alternative Coins
· There are a number of other cryptos out there (over 1000) with new coins being released everyday but be wary of false prophets. As of writing the total market cap of cryptos is $300 billion however Bitcoin and Ethereum account for $210bn of the market.
· Ethereum — A public blockchain with the goal of creating decentralized apps. 90% of all new cryptos are built on the Ethereum network
· Ripple — Mentioning this because it is a top 10 coin and ‘looks cheap’ however it is pre-mined which means the creator (a company) created all the coins and releases x amount publicly and kept x amount for themselves. However the use case for the technology is quite big, currently has the potential to replace SWIFT payments in banks
Hard Forks and Free Money
· The term hard fork is thrown around a lot and to simplify it means a code or version change. For example Microsoft releases a new version of windows each year but a certain amount of people keep using the older versions. In a hard fork it is when the developers decide an upgrade is necessary for the network, a new version of BTC is created lets say BTCx2.
· This creates an interesting quirk of blockchain if you own 1 BTC at the time of the hard fork you now own 1 BTC and 1 BTCx2 and that BTCx2 may become worth money this is what has happened for Bitcoin Gold, Bitcoin Cash.
ICOs
· Initial Coin Offerings — These for the most part are scams in my opinion, pump and dump schemes which lead China to ban them. My advice is to keep to the main currencies within the top 10–20 on coinmarketcap.
Useful Links
1. www.coinmarketcap.com — Track all the assets.
2. www.etherscan.io — Track Transactions
3. www.blockchain.info — Track transactions
4. www.tradingview.com — Useful for performing technical analysis and setting price alerts (paid service)
5. Blockfolio — App to track currency prices and your portfolio.
Questions
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Twitter : @andrewmul365
