How to get started with Crypto
This article is for education purposes only. This is not financial advice.
My first foray into crypto was in 2017. I read Julian Assange’s book, Cypherpunks: Freedom and the Future of the Internet and was hooked. I have since become a crypto-enthusiast, user, and investor.
Recently, I’ve had quite a few people ask me, “So Hemant, what’s crypto all about and how do you get started with investing?”. I thought I’d save myself repeating my standard 30-min speil, and put it all in a blog.
I have curated these resources to help beginners understand the fundamentals of crypto and navigate the space as new investors. The article is divided it into two sections:
Section 1: Crypto fundamentals
- Questions you should be able to answer before you start investing
- Coin Bureau’s comprehensive guide for beginners (20 min video)
- Coinbase’s blog: Intro to Blockchain, Bitcoin, Ethereum, and DeFi
- Crypto glossary: A-Z common terms and phrases
Section 2: Buying and storing crypto for the first time
- Which cryptocurrencies should I invest in?
- Where should I go to buy? Which exchange should I choose?
- Storing Crypto: Exchange vs. Hot wallet vs. Cold Wallet?
- How can I keep track of the market and my portfolio?
- What mistakes should I avoid?
Section 1: Crypto fundamentals
There is an overwhelming amount of information out there and starting out as a new investor can be a daunting task. To help structure your learning, here are a list of fundamental questions your should be able to answer before you start investing:
- What are cryptocurrencies? (Eg. BTC, ETH)
- How are they different from fiat currencies? (£,$,€)
- What are the key problems the top crypto projects are solving?
- Are cryptocurrencies safe? How do I spot the scams?
- How volatile are the crypto markets?
Coin Bureau’s 20-min video guide (below) will cover all these bases. But don’t stop there, dive into the linked resources — the more you know the better decisions you’ll make.
Coin Bureau: A complete beginner’s guide to crypto
Don’t let the thumbnail throw you off — Coin Bureau is legitimate. Guy is an independent crypto youtuber with integrity. He publishes high value educational content — guides, market analysis, project reviews and more. This 20 min video is one of the most efficient ways to get started.
Coinbase: Learn crypto basics
Coinbase is one of the largest cryptocurrency exchanges. Most large exchanges have amazing resources sections, dive into them here — Binance, Gemini, Kraken, Huobi.
Liquid: Crypto glossary A-Z of common terms and phrases
The crypto-universe has its own lexicon. This article will help you understand what people on twitter, telegram and discord are talking about.
Section 2: Buying and storing cryptocurrencies
Which cryptocurrencies should I invest in?
I started with Bitcoin (BTC) and Ethereum (ETH).
Why Bitcoin (BTC)?
Bitcoin is the original cryptocurrency. It’s the world’s the largest, most decentralised currency network with ~100 million users (200M+ BTC wallets) and ~400,000 daily transactions (As of June, 2021).
One of Bitcoin’s strongest value propositions is as a long-term hedge against inflation. Unlike fiat currencies (£,$,€), BTC can’t be ‘borrowed’ into existence by centralized authorities. It is scarce by design as there will only ever be 21 million Bitcoin. In principle, this makes it an anti-inflationary store of value and that’s why it’s been considered by many as ‘digital gold’.
Why Ethereum (ETH)?
If Bitcoin is digital gold, Ethereum is digital oil — powering the programmable blockchain economy. It is the second largest crypto-network after Bitcoin and builds on Bitcoin’s innovation by allowing developers to create applications on the blockchain.
This means that Ethereum can be used for more than payments. DeFi — a decentralised economy of financial services (borrowing, lending, trading) is already active and thriving on Ethereum. As of June 2021, $45 Billion is locked in Ethereum DeFi contracts.
Coin Bureau has a really good video on investing on a budget, it should help you formulate your own strategy based on your risk profile:
Where should I go to buy? Which exchange should I choose?
I bought my first cryptocurrencies on Coinbase Pro. (I would avoid using regular Coinbase, the fees are extortionate. If you create a coinbase account and complete KYC, you’ll be able to log into Coinbase Pro. Here’s a tutorial.)
If you’re in the US and are using Coinbase Pro, your funds are FDIC insured upto $250,000.
But there are other reputable exchanges out there like Kraken, with significantly lower trading fees. Here’s a video comparing Kraken and Coinbase Pro to help you make your decision.
Tip: Don’t use a debit card/ credit card to buy crypto — the fees are horrendous. Do a bank transfer.
Storing Crypto: Exchange vs. Hot wallet vs. Cold Wallet?
Once you move your money off the exchange into a wallet — you are your own bank. No one but you controls your money, the industry term for this is ‘self custody’ (one of the central tenets of DeFi).
Instead of logins and passwords, the keys to your money will take the form of a seed phrase. If you lose your seed phrase, your money is lost forever. You won’t have a ‘forgot my password’ or ‘verify my identity’ feature to save you.
So you want to really keep your seed phrase secure and have backups.
Browser wallets or Hot wallets are easy to set up, but I’d recommend keeping the majority of your funds (especially long term investments) in a cold wallet (also called hardware wallet).
I use a Trezor One cold wallet, I bought it in 2017 and it’s still a go-to choice for many. There so many other wallets out there. Trezor themselves have newer models which look really good. Here is a guide comparing some of the best ones.
How can I track the market and my portfolio?
To keep tabs of the market, I’d recommend CoinGecko or CoinMarketCap. You can create watchlists, check the prices, track your portfolio and much more.
To keep tab of you own portfolio on your mobile you can use Blockfolio. Although I’d recommend not having this on your phone — it can become very addictive and unhealthy. You don’t want to get in the habit of checking your portfolio 10 times a day. That can’t be good for your mental health.
Tip: All of these sites will give you options to buy crypto through them, I’d advise against that. Stick to the trusted exchanges.
What mistakes should I avoid as a beginner?
- Don’t rush. Educate yourself.
- Don’t leverage trade.
- Don’t pick projects and investments based on hype.
- Don’t overlook security — use 2FA, use strong passwords.
- Don’t forget to have backups of your wallet seed phrases.
If you are further along in your crypto journey —stay tuned. I will soon publish a detailed article about my crypto investment mindset, methodology and strategy. I will go into the criterea I use for assessing projects, preferred passive income strategies and more advanced resources and tools.
Before you go, follow me on twitter: https://twitter.com/hemantzeal
