If many would call me an early-adopter of Bitcoin, the reality is slightly different: when I got into cryptocurrencies in the middle of 2011, this was almost 3 years after the release of the elusive Satoshi Nakamoto’s paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. At this point in time, Bitcoin was already way past the proof-of-concept stage and was rapidly becoming the currency of choice of the deep web. If a lot has been written about cryptocurrencies and their history, especially since their late 2016 stratospheric rise, there is still a huge learning curve for people interested in the blockchain technology behind digital currencies and a lot of pitfalls to avoid when investing in the crypto world.
The Crypto A, B, C…
If you’re interested in digital currencies, you’re bound to encounter an endless series of buzzwords and acronyms that seem very technical and quite complicated to understand but this is just a facade.
Fiat currency refers to legal tender backed by a central governing body and its own banking system such as the US Dollar, the Euro, the Japanese Yen, etc.
A cryptocurrency is an exchangeable digital resource that uses strong cryptography to secure financial transactions, control its inflation via the creation of additional units, and verify the transfer of assets.
A blockchain is a continuously growing universal public ledger listing all transactions in records called blocks, which are linked and secured using cryptography.
Forks, or chain splits, is a term used when alternate versions of a blockchain are created, leaving two blockchains to run simultaneously. This occurs when there is no consensus on the future development and evolution of the blockchain.
Altcoins stand for Alternative Coins. Originally, it was used to refer to all cryptocurrencies that weren’t Bitcoin; however,t its meaning has evolved to mean any cryptocurrency that isn’t one of the most prominent ones.
Initial Coin Offering (ICO)
An ICO is a type of crowdfunding campaign in which cryptocurrencies are pre-sold as a means of raising capital for startups. Unfortunately the ICO market is currently marred by questionable endeavors, so do your research.
The Most Established And Widespread Cryptocurrencies
There are many altcoins but the cryptocurrencies below are the ones I personally trust: they are the most used, they have a development track record that has consistently improved their efficiency, and how widespread the reliance on their blockchain among industry-leading tech companies is. Even if certain currencies like Bitcoin Cash are older than some on this list and still popular; I have personally lost confidence in its future since it forked into Bitcoin Cash ABC and Bitcoin Cash SV.
Bitcoin BTC is the world’s first cryptocurrency, a form of electronic cash. It is decentralized which means the system works without a central bank or administrator.
Ethereum ETH is an open source, public, blockchain-based distributed computing platform and operating system featuring smart contract functionality.
Litecoin LTC is a peer-to-peer open source software project under which creation and transfer of coins is based on an cryptographic protocol and decentralized.
Ripple XRP is a real-time gross settlement system, currency exchange and remittance network created by Ripple Labs Inc., a US-based technology company.
A Good Place To Start
Once you understand the basics of the crypto world, it’s time to jump in and acquire your first crypto assets. Where to buy? Where to store? Can coins be acquired without being purchased? This section will answer these basic questions.
Cryptocurrency exchanges (sometimes called digital currency exchanges) are online hubs for trading cryptocurrencies for fiat money or other cryptocurrencies. Not all exchanges carry each coin and they are not meant to be used as cryptocurrency wallets. In other words, don’t leave your digital there.
A cryptocurrency wallet is a secure digital wallet used to store, send, and receive digital currency, and are divided into two categories: hosted or online wallets usually a phone app or computer software and cold or hardware wallets which are not connected to the internet.
Mining is a process during which blocks are added to a blockchain using computer power, verifying transactions. It is also the process through which new bitcoins or some altcoins are created. Miners are rewarded with newly created cryptocurrency for each block they process.
How To Choose The Right Exchange And Appropriate Wallet
The most important is to do research and find enough information to build trust. A close second is finding an exchange that matches your need: do they support the currencies you would like to trade; do they provide a good customer experience and is their interface user friendly to you; have they ever been hacked, etc. The same goes for cryptocurrency wallets; if you hold over $20K in assets, I would definitely recommend investing in a hardware wallet; I personally have been using Trezor products for my cold storage assets but find there are several options out there. For anything under, a digital wallet is more than enough.
I’ve been using Coinsquare.io for a few years and have had a really good experience with it; it supports the coins I trade and has added over the years the one that came to the forefront of the crypto world; it provides the services I require while feature a very user friendly interface. If you’re looking for a US-based exchange, Kraken is the one I like the most these days. Binance has been hacked and Coinsquare has taken some questionable decisions lately from its acquisition of Neutrino to its involvement with Facebook’s Libra; so even if they are more popular; I wouldn’t recommend them.
When it comes to a digital wallet I use BlocPal, which is doing everything right when it comes to security, legal compliance, and the most important, being super easy to use. For people starting with crypto, this is a wallet that is much more intuitive and faster than most of the ones I’ve tried before and that has a strong feature set that will satisfy even the most dedicated crypto-enthusiasts out there. They seem to be growing at a rapid pace and adopted by technology providers which is always a good sign that shows confidence and trust in the project. The BlocPal team has answered all my questions in a trustworthy manner that’s why I invested in this company.
The Dos and Don’ts Of Investing In Crypto
When it comes to investing and tinkering with cryptocurrencies there are best practices that will keep you safe and save you a lot of headache.
Like any investment or financial product, you need to know beforehand how much you are willing to risk, what you want to gain from it, and how much you are ready to lose. This will help not making hasty and unwise decisions.
HODL stands for Hold On for Dear Life; it is the practice of holding on to your coins and not selling when the market experience a severe downturn. The acronym may also be a typo turned meme coming from a drunken post on a cryptocurrency forum.
Follow what’s going on in the crypto world
The crypto world is fast paced, following its evolution and knowing the latest development will help you recognize emerging patterns and trends in the marketplace.
FOMO is an acronym for Fear Of Missing Out and in the crypto context of investing, refers to the feeling of apprehension for missing out on a potentially profitable investment opportunity and regretting it later.
DON’T GET SCAMMED
If a website promises abnormally high returns, this should raise a big red flag and is a common indicator of a scam. The same goes if the About page doesn’t provide any details about where the company is registered and little to no information about what it does.
Don’t be a fickle investor; the worst any investor can do is sell at the first sign of the price of currency going down. Until the prices of cryptocurrencies stabilize, it might be a roller-coaster; remaining calm and letting the storm pass is often the best thing to do.
Don’t ever Share Your Private Key
Never ever share this; it is the one key that protects and can unlock your wallet giving 100% full access to your cryptocurrency.
What Do Smart People Say About Crypto And Its Future?
The best piece of advice I could give anyone is to listen to what the brightest minds on the planet are telling about technology and investing; you’ll always find sound advice worth thinking about. Even crazy geniuses, like John McAfee, should be listened to but take their predictions with a grain of salt.
“It cryptocurrency bypasses currency controls, paper money is going away. And crypto is a far better way to transfer values than a piece of paper, that’s for sure.”
Like I mentioned early on, there’s a never-ending stream of news articles written about cryptocurrencies and blockchain technology; if some are very meticulous and put forward interesting insights, most are downright atrocious filled with factual inaccuracies and have ambiguous motives when it comes to the editorial decision to publish them. So here are my thoughts about some widespread misinformation about the cryptocurrency space.
More Fake Than Real News
Exchanges get hacked! It happens but it hardly ever affects well-established exchanges and more than often involve sketchy ones located within tax havens. Another prominent type of negative article, is the story with an improbable premise that is accepted as truth by the media without any fact-checking its veracity or considering that the reality of it is much more mundane. Following Occam’s razor, what is the more likely: the password of a multi-million dollar company resting in the hands of a single person or a group of people taking advantage of tragic circumstances to embezzle customers’ assets?