The Complete Crypto Starting Guide

Introduction To Cryptocurrencies

Ok, so you've heard about Bitcoin (BTC) and how people have made insane amounts of money by investing in BTC. "The price of BTC rose from $1,000 at the start of 2017 to $20,000 by December 2017," said one financial guru. The teenage Bitcoin millionaires who proved their parents wrong and the lucky people who have retired early because of Bitcoin. 

Now chuck these thoughts aside. These were stories that the media has presented to you. The early days of Bitcoin investments are over, but you can still get rich with cryptocurrencies.

Cryptocurrencies are a form of digital currency. Most organisations (like this) classify cryptocurrencies as a form of currency, security, or token. Imagine the Stock Market and Forex combined and made more accessible to the masses.

Without delving into too much into the technical details about how and why cryptocurrencies work, you should keep a lookout for cryptocurrencies because it is the next big investment vehicle. Picture gold when it was first traded or when the stock market was first introduced; cryptocurrency is the next revolution and it pays to get in early i.e. you can make money with it.

Being early can be profitable but it comes with tradeoffs. You run the risk of being hacked or scammed (if you are not careful), your invested cryptocurrency might become worthless, and regulations might tighten up and affect your investment.

Dangers lurk at every corner. This guide will help you get started.

How and Where To Trade Crypto

Overview of buying and selling of cryptocurrencies.

Overview of buying and selling of cryptocurrencies.

To make money off cryptocurrencies, you have to first buy them using your daily currency and then sell them for a higher price. This is usually done through a coin exchange who charge a transaction fee for your trades and if you withdraw the cryptocurrencies from the exchange. You can also trade cryptocurrencies with other people (P2P) or on over-the-counter (OTC) platforms.

Most coin exchanges facilitate the trading of Bitcoin, Ethereum, and other major coins. To get access to other altcoins (alternative coins) and ICO tokens, you will have to register with crypto-crypto coin exchanges. Therein, you deposit your Bitcoin or Ethereum and trade them for other types of cryptocurrencies. 

Fiat-Crypto Coin Exchanges:
CoinBase, Bitfinex, TokoCrypto (Indonesia), Gemini, Kraken, Coincheck (Japan), Coinspot (Australia), CoinHako (Singapore)

Crypto-Crypto Coin Exchanges:
Binance, HitBTC, Poloniex, OKEx, Huobi

Storing Crypto For Long-Term Investments

Once you have bought your cryptocurrencies, it is crucial to store them properly! The default wallets provided by the coin exchanges are relatively secure but you should transfer them into your own private wallet for maximum security, especially if you plan to hold the investment for a year or longer. There have been many instances of coin exchanges losing the coins of their customers (e.g. Mt Gox in 2014, BitGrail in 2017, CoinCheck in 2018), so it is best to trust yourself. 

Cryptocurrencies are extremely volatile, so if you plan to sell the cryptocurrencies in a couple of months once it hit your desired profit or stop-loss levels, it is perfectly fine to leave it in the exchange. You will incur a fee when you transfer the cryptocurrencies out of the coin exchange and the risk of holding the coins on the exchange for a short period is relatively smaller. 

Software-Based Crypto Wallets:
MetaMask, MyEtherWallet

Hardware-Based Crypto Wallets:
Ledger Nano, Trezor

What Cryptocurrencies To Buy?

You should definitely start off with buying Bitcoin (BTC) and Ethereum (ETH). Besides the fact that prices of cryptocurrencies are heavily correlated with the price of Bitcoin, these two cryptocurrencies are your gateway to most other altcoins (alternative coins).

Be careful about investing in too many altcoins. It is a lot of work to constantly monitor and research on altcoins. Furthermore, it may be troublesome to sell these altcoins as you have to first convert them back into Bitcoin or Ethereum before selling. Altcoins have the potential to "moon" (a slang for exponential growth), but it is extra work and extra risk for any investor. 

If you are unsure, you can also pick a number of coins from the Top 20 in market cap. You could also choose a more stable Top 20, much like an ETF and just buy in periodically.

Ultimately, it boils down to your appetite for risk and how you mitigate these risks. Cryptocurrency is riskier than traditional investments but it has better payouts. Altcoins are riskier than BTC and ETH but they have better potential to moon. Monitoring and research these coins help to reduce your risk but it demands a great deal of time and energy.

What To Look Out For In A Cryptocurrency?

One of my earlier articles suggests a framework to assess the functional purpose of cryptocurrencies. Using this taxonomy to classify cryptocurrencies, you can compare different coins with each category and build a diversified portfolio that spans across different functions.

Additionally, you should consider the Team, the Partners, the Development Timeline, and Community of a cryptocurrency. These can be found in the cryptocurrency's whitepaper and associated website. 

Besides the logical and hierarchical method of assessment suggested above, I also proposed a speculative method to invest in altcoins. Do note that it is meant for speculation and for a short-term (less than 6 months), and if it worked once, it does not mean that it will always work the same way. It is hard to keep up with the rapidly changing cryptocurrency market.

It is extremely important that you do due diligence on your investment.

When Is The Best Time To Enter?

This is probably one of the most asked questions. 

Yesterday was the best time, today is the second best.

You cannot predict the market to perfection but you can make best guesses. Investors use different methods ranging from fundamental analyses to sentiment analyses, and technical analyses. In my upcoming book, I cover some of these investing techniques that new traders can apply and adapt from to trade and invest in cryptocurrencies.

Investments are about risk management and you should only invest what you are prepared to lose. If we look at cryptocurrencies from a long-term time frame, we are really just scratching the surface of distributed ledger technology (DLT). I believe that cryptocurrencies are here to stay and so will fiat currencies; fiat currencies will not be replaced by cryptocurrencies.

And these are all you will need to know to get started on buying and storing cryptocurrencies for the long term.

Check out my book if you are looking for more in-depth explanations about blockchain technology and what mining is about. Besides elaborating on some of these technical details, I also share some tips and tricks for investing in the crypto market and address several critical issues like whether we are in a bubble and the implications of decentralisation.

You can also sign up for my free monthly newsletter below. I provide subscribers with a market outlook that is based on technicals and complemented with qualitative information. Lastly, if you find this article useful, feel free to share it with your friends!