Crypto — Beginner’s Guide
(Updated 04/03/2020)
What is Crypto?
Crypto is the field of using cryptographic technology for currencies that can be used to buy and sell goods. Getting started in crypto is pretty easy if you already know how to use bank accounts and trade securities. The main difference is that you are trusting cryptography and distributed computing to keep track of your balances and transactions instead of banks. This means that most services that banks provide, there would be some equivalent services in crypto. So if you know how to install software/apps and signup for accounts on websites, it should be easy for you to get started in crypto. In this article, we’ll go through the basics of opening an account, buying crypto, transferring crypto and trading crypto. So anyone that’s been using online banking and trading can easily transfer those skills to crypto.
Warning: Make sure that you are browsing to the official websites and not on a spoof site. 1. Check that you are using https. 2. you see a lock icon by the URL. 3. No typo in the url.
Getting Crypto
The easiest way to get some crypto is go through retailers such as Coinbase. You can easily buy some crypto on that website to get your hands one some cryptocurrency.
Warning: Make sure that you are browsing to the official Coinbase website and not on a spoof site. 1. Check that you are using https. 2. you see a lock icon by the URL.
- Create New Account for Coinbase. By following this link, you can sign up for a new account: https://www.coinbase.com/signup.
- Transfer Money to Coinbase. Once signed up, you need to transfer money to the account. You can link any US bank account with your Coinbase account. Once linked, you can transfer money, just like another bank.
- Buying Crypto. You can click on the left navigation bar and click on the word “Trade”. A popup will appear. Select the crypto that you’d like to buy and the method of payment (Google Pay linked debit card, bank account transfer or wire transfer).
- Free Crypto. In order to promote some lesser known crypto, Coinbase has some learn and earn modules (left nav bar’s “Learn and earn”) for coins such as Stellar and AMP. You can also try out their wallet app and earn $4 in ETH.
There you have it. You are now a proud owner of crypto! It is similar to how you would buy anything else on the internet. In the next section, we’ll go over the high level concept of a wallet and how to transfer cryptocurrency to your wallet.
Transferring Crypto
One of the common standard to safely store your cryptocurrency is to create your own wallets so that you can protect yourself from vulnerabilities of exchanges, your computer or your mobile device. So most long term investors or hodlers “store” their cryptocurrencies in their own software wallets. For the most security conscious hodlers, they use hardware wallets. We’ll go through the steps in using a software wallet, which is easier for beginners.
In this example (Feb 2022), we’ll use one of the popular multicurrency wallet, Exodus. It is available on all desktop OS, iOS, Android. It supports 150+ cryptocurrencies and tokens. You can also buy and swap right in the wallet in certain countries/states and you can stake some coins as well.
- Installing Soft Wallet. You can download the software for your desktop (https://www.exodus.com/download/) or just install it on your mobile device from the respective stores. Part of this installation will require you to enter a password to unlock Exodus. There’s an option to generate and restore your wallet in case your computer dies. This is a set of “seed” words. Make sure to store this in a secure place (such as on paper, encrypted file in the cloud, etc.). If you lose this you’ll lose access to your Exodus wallets, i.e. you’ll lose your crypto assets.
- Transferring Basics. First, you have to understand that a wallet is just a number that is managed for you by the wallet application. In order to send and receive crypto coins, you need to have a sender address and receiver address, just like bank account numbers. Second, you have to ensure that you are using the right blockchain, e.g. Bitcoin or Ethereum. This is equivalent to a routing number. So you are essentially selecting the blockchain (routing number) and then pasting (or QR code reading) the destination wallet.
- Sending Coins. For the receiving address, select the currency that you’d like to transfer and there’s a button to receive. You can copy the receiving address by clicking on the copy icon. Then go to Coinbase and click on “Send / Receive”. A popup will appear. Click on “Send”. Here, you can select the crypto (“Pay with”), paste your wallet address (“To”) and enter the amount.
- Verifying Transactions. You should be able to see in Exodus that there’s a transaction for your wallet. You can also verify your transaction in any number of public block explorers, e.g. coinmarketcap’s explorer.
Now you have successfully completed your first crypto transaction! your cryptocurrency from Coinbase to your personal wallet
Other Popular Wallets
- Coinomi — A mobile app with up to 1770 crypto asset support. This is great to research by using different crypto assets.
- Metamask — A web3 wallet to use with web3 websites, such as Sandbox and Decentraland to log in with your wallet instead of email or 3rd party SSO (Google/Facebook).
Trading Crypto
Cryptocurrency trading is the same as trading any securities and commodities. If you have traded stocks, the terms and UIs would look familiar as they’re the same. There are a couple of regulations to watch out for and nuances to keep in mind. In this section, we’ll go over these.
As with any trading, you need to sign up for a platform. Since we used Coinbase earlier, we can go through Coinbase Pro, which is the trading platform from Coinbase. It is compliant with US regulatory bodies and follows all regulations. For you, it reports sales of your crypto to the IRS so you’ll need to report those in your taxes.
- Advanced Trade. The advanced version of Coinbase has all of the familiar securities trading tools, plotting prices, add trends, indicators, etc. Click on the left nav “Trade” then click on the drop down menu at the top “Trade”. You can now select “Advanced Trade”.
- Selecting Trading Pair. You can either select one of the default pairs or search for a custom pair.
- Placing Orders. On the right side of the page, you’ll see where you can either Buy or Sell the selected pair. As of Feb 2022, you can place limit or market orders.
- Price Chart. Just like on any online trading platforms, you can select chart type (line/candlestick), select interval (1 min to 1 day), add indicators (such as EMA, MA, Bollinger Bands), and the range (1 day to 5 years).
Now you know the steps to trade crypto on Coinbase! You can start buying the dip and sell on spikes or just HODL by moving the crypto to your Exodus or another wallet.
Conclusions
In the beginning, getting into crypto seems to be complicated with many unfamiliar terms. However, there’s only a small number of terms to get you started. Furthermore, many terms in crypto have similar role in how banking and trading platform work (e.g. routing number -> network, account number -> wallet address). Hope this has been useful in getting into crypto. Please comment if this has been helpful or you have suggestions on improving this beginner’s guide.
