I’ve created a step-by-step guide with screenshots to help those who are new and looking to dabble into crypto-investing, but before we dive in deep — let’s start off with the basics.
What is cryptocurrency and how does blockchain work?
Cryptocurrency is a digital or virtual currency that uses cryptography for security. Unlike fiat (e.g. USD, CAD, EUR dollars) it is decentralized, transparent, and uncontrolled by government or financial authorities. It exists on a computer network called the blockchain. Every transaction is recorded and confirmed through miners who verify transactions in return for digital currency.
What should I look for before investing?
I wanted to share the steps that have worked for me that I look for before investing into cryptocurrencies and Initial Coin Offerings. This also includes questions that I’ve seen several people ask in the blockchain community social channels:
- INVEST ONLY WHAT YOU CAN AFFORD TO LOSE — Set long term and short term goals. Know your risk.
- Diversify your portfolio — Do not put all of your eggs in one basket.
- Read the whitepaper — Does the business model make sense? Look at the token economy, distribution and use of tokens.
- Does the project have an existing and working product that solves a real world problem?
- Look at the team & advisors — What skill sets and experience does each member have?
- Is there a road map — Has the team delivered and executed timelines?
- Look at the market cap — How much is the team trying to raise?
- Milestones — Look at partnerships in place, agreements, PR, and marketing.
- Community — How large, knowledgeable, and supportive are the admins and community? Look at the social media channels.
- DO YOUR OWN RESEARCH — Surround yourself with people who are smarter than you — Join blockchain communities/articles and ask questions (Reddit, Telegram, Discord, LinkedIn groups, CoinTelegraph, Coindesk, etc.)
- Add value to the community of projects you believe in — Write articles, create videos, welcome and educate newcomers, and correct misinformation spread by others with sources.
- Do not trust media and headlines (Fear. Uncertainty.Doubt. & Fear Of Missing Out) — Media is uneducated in the space and as you’ve seen has caused people to panic. Do not trust random links, unfamiliar emails, and social accounts on any platforms — There are several scams. Protect your accounts, back-up all of your private keys, and get a hardware/cold storage wallet like Trezor or a USB. (I recommend a cold storage wallet)
- Remember why you got into crypto in the first place.
- BE PATIENT — The end result will be rewarding. We are part of a movement that will change history forever. The market is emotional — If you truly believe in the projects you invested in — stick to your gut.
How do I start?
Step 1: Set up a MyEtherWallet (MEW)
MEW is a secure, free, open-source, client-side interface for generating Ethereum wallets. You can store Ethereum (ETH), Ethereum Classic (ETC), and any standard Ethereum token (ERC-20). Once you visit the website it will give you a basic walk-through on how to get started and how MEW works.
Step 2: Buy Ethereum (ETH), Litecoin (LTC), or Bitcoin (BTC)
You cannot buy most cryptocurrencies with fiat (USD, CAD, EUR dollars etc.) You have purchase crypto like ETH, LTC, and BTC, but I use ETH for all of my trading because the transactions are faster and the fees are lower comparing to BTC. I’m based in Canada so the platforms that have worked the best for me are:
- Coinsquare: Works well for e-transfers, bank drafts, and wires. Great customer service based on my experience.
- Coinbase: Works well for instant base currency purchases. The only downside is the limit to how much you can purchase per day, but the interface is simple and user-friendly.
- QuadrigaCX: Works well for e-transfers, EFT, and bank transfers.
Step 3: Sign up on trusted exchanges
- Binance: The number one and most trusted exchange used by everyone. They’ve done a great job on keeping their users safe. They are quite engaged with the community as well.
- Kucoin: Well known and trusted exchange with a simple user-friendly interface.
- Hitbtc: Has been around since 2013. I personally like the interface which you can customize. Customer support is a hit or miss.
Step 4: Set up 2-factor authentication with Google Authenticator
Download the Google Authenticator app on your phone. The majority of exchanges require you or have the option to activate a 2-factor authentication. This is another form of security to protect yourself from having your account hacked (I highly recommend. Make sure to back-up your keys provided if any).
Step 5: Transfer your Ethereum (ETH)
To transfer your ETH from a platform to another exchange or to your MyEtherWallet (MEW) you just need to get your ETH wallet address. Each platform and exchange will have aunique ETH wallet. Think of it as transferring funds from one bank to another. I’ll use Binance as an example with screenshots.
a. Log in to Binance
b. Hover over “Funds” and click on “Balances”
c. Find Ethereum by either typing in “ETH” in the search box or scrolling down until you find it
d. Click on “Deposit”
e. Viola! You’ll find your ETH wallet address for Binance that looks something like the example below
Let’s say you want to send ETH from your Coinbase account to your ETH wallet on Binance, you would:
a. Log in to Coinbase
b. Click on “Accounts”
c. Find “ETH Wallet” and click on “Send”
d. Enter your Binance ETH wallet address where it says “Recipient” (If you can’t remember how to find your Binance ETH Wallet refer back to “Step 5: Transfer your Ethereum (ETH)”
c. Enter the amount of ETH you want to send and click “Continue”
e. Congrats, you have done your first ETH transfer!
**Note: When transferring ETH to another exchange/wallet/platform make sure it’s to another ETH wallet.
e.g. Make sure to send ETH to ETH. If you were to send BTC to an ETH wallet by accident you will lose your funds. Same applies to other cryptocurrencies.
Step 6: Exchange your ETH for your desired coin
Let’s say you found a coin you love on Binance (let’s take BLZ for example)
a. Login to Binance
b. Hover over “Exchange” and click “Basic”
c. Click on “ETH” and either type “BLZ” or scroll until you find the “BLZ/ETH” pairing
d. Put in a buy order of BLZ tokens you’d like to purchase at a bid price — Click “Buy” and viola!
- *Note: For those of you who don’t understand “Buy” and “Sell” orders — here’s a simple breakdown
- Numbers in red — Sell Orders: These are orders that people are trying to sell BLZ
- Numbers in green — Buy Orders: These are orders that people are trying to buy BLZ
- Trade History: It will show you the most updated Buy & Sell transactions that have occurred
- If you’d like to see what cryptocurrencies are available at what price or are unsure on what coin you’d like to invest in — here’s a tool called coinmarketcap:
- It’s a great tool to see what exchanges each coin is listed on
If you have any other questions or if you would like me to walk you through specific steps please feel free to contact me. Thanks for reading 🙂
Featured Image: depositphotos/ nils.ackerman.gmail.com
Originally posted on hackernoon.com