Getting my feet wet with cryptocurrency (A beginner’s perspective on delving into the blockchain market)
***I will admit I barely know anything about investing and cryptocurrency so this is probably not the best place for advice. I started reading into this closely on July 8, 2017 so I’m a complete beginner. My blog is to note down my thoughts as I learn this emerging technology and write down what I am thinking as I see the volatile market, opportunities within it, and fears in investing with weekly crashes. There are probably more “professional” blogs out there, but hopefully this can give insight into those who want to get started and learn form basics since you can learn from my mistakes and find out the best resources for help. There are many speculators and no real formal news outlet for this, so be extremely careful on where you get information from.***
So last week, one of my close friends told me he was going to be working full time with cryptocurrency. He always told me Bitcoin was going to be huge way before the recent rampup to ~$2700, and even gave me some BTC on my birthday last year when it was worth only ~$40 to encourage me to learn more about cryptocurrency. Of course, I decided I was too busy with my PhD research and ignored his advice to buy more, but after his decision to make this a career choice — I decided to take a closer look at this.
Understanding the fundamentals
Before you get on the hype train and start investing, I would highly recommend sitting down and understanding what the technology actually is. Sure, you can just buy/sell based on profit, but it would be ignorant to trade without any knowledge. This is the best video (~25 min) I found on cryptocurrency for beginners, and I would then follow up with this video on some more technical details about the blockchain (another ~25 min). Make sure you understand terms like blockchain, hashes, what exactly mining is and why this takes computing power, why banks and wire transfers are not a great approach in the digital age as we move towards a more global economy, and what alternative coins (list of the entire cryptomarket) are and how they depend on BTC. If you do not understand these fundamentals, you are basically going to be at a huge disadvantage and trading completely based on speculation which ensures you will eventually lose your money. For mobile, download “Blockfolio” to follow current trends in the market (has a news section built in), and the Cryptocurrency News app (alerts of news). Again, I’ve been reading all these articles closely and most are speculation and many of the authors seem to be really biased and not real professionals.
After learning about the tech, the next place to research is how trading these coins actually works. The system is quite convoluted and there are many exchanges — each with their own pros/cons. Choose carefully, check the fees, the rates at which they trade, etc. (I followed up with a detailed blog about choosing my exchange website). Then, if you think BTC is not for you and you want a more volatile coin — look up altcoins and what they stand for. Some of these are literally memes such as “Dogecoin”, “Potcoin”, etc. They might be used for pump and dump schemes for a quick profit, but think about what you are actually investing and what that means if you want to hold longterm. After learning about all of these, look up what coin wallets are and why people use them to store BTC and what options you have.
I tried searching for genuine ‘professional’ articles on cryptocurrency, but they are pretty scarce. A lot of Youtube videos for BTC or other blockchains are severely biased by an agenda of people who are investing and therefore trying to moon/crash the market. In addition, the lack of regulation by a central agency has made the exchanges extremely volatile since giant “whales” that have huge chunks of the BTC or other coin markets can basically inflate/deflate the value by coordinate “pump and dump” strategies.