cryptocurrency basics — a guide
how to buy, sell, and store crypto, plus crypto/blockchain info resources
*disclaimer* I hereby state that nothing in this post is intended to be investment advice ;)
How to buy and sell cryptocurrency
Services
- Coinbase is something between an exchange and a wallet and provides an excellent, relatively easy and cheap (low fees) way to buy and sell bitcoin, ether, and litecoin via a fiat (traditional, government-backed money) bank account or bank card. They have limits on your first few purchases, but once you get past those, this is probably the most convenient way to buy. The only thing is they don’t provide their buy/sell service in every country. You can see if your country is supported here.
- LocalBitcoins is a service that lets you make over-the-counter trades of your local currency for bitcoin.This is basically a peer-to-peer service, so it’s more flexible — there are various ways you can choose to transfer your fiat money to the person you’re buying bitcoin from, but it’s usually via bank or card transfer. This seems to be not a super popular service in the US, namely because Coinbase is supported there.
- Changelly is a crypto-crypto exchange. However they also let you buy various cryptocurrencies with fiat money via a credit card. This process is super easy, but the fees for buying via credit card are very high, so you end up paying for the convenience.
Exchanges
Buying and selling cryptocurrency for fiat money is possible on some exchanges, but it can be it is a fairly complex, multi-step process of registration and identity verification (KYC).
Generally how it works on exchanges is that you buy bitcoin by sending money from your fiat bank account, and vice versa for selling.
A couple exchanges where you can buy/sell bitcoin with fiat : Kraken, CEX.io
Mining
There is such a thing as cloud mining, which is basically like purchasing a share in an existing mining farm and collecting a percentage of their profits. I personally don’t believe this is a good way to go about getting crypto, but if you want to try, here are some services I’ve heard of: Genesis Mining, Hashflare, Hashing24
How to store cryptocurrency
Once you buy crypto, you’ll need a place to store it. Cryptocurrency is stored in what is called a ‘wallet’, which technically is just a unique address associated with a given sum of cryptocurrency. You can think of it as a bank account, only not in a bank. Wallets come in many forms, namely desktop, mobile, hardware, and web.
Mobile wallets are probably the most commonly used type, though admittedly not the most secure. A mobile wallet is just an app you download on your phone like any other. You can use the wallet/app to receive/send/store crypto. Many wallets only support one cryptocurrency, such as bitcoin or ether. But there are also wallets where you can keep multiple currencies at once.
When you read about crytpo wallets you’ll see alot about ‘controlling your private keys’ for security. A ‘private key’ is a unique string of numbers and letters associated with your wallet address that you need into order to send any money from your wallet. Obviously your money is more secure if only you know this private key, because then only you can send your money somewhere.
Recommended wallets
1. multi-currency wallets
Jaxx is a solid multi-currency, multi-platform wallet.
So is Coinomi.
Both Jaxx and Coinomi claim that your private keys are NOT stored on their servers, but remain only on your device, so that’s good.
Coinbase lets you send/receive/store bitcoin, ether, and litecoin. You can access your wallet via their website by logging in, or you can download their mobile wallet app. Technically, storing on Coinbase is less secure, because they keep your private keys (though they claim to securely store everything offline in so-called ‘cold storages’). Bottom line, it Coinbase was forced to close or chose to disappear, they could theoretically take all your money with them :) It’s just a matter of trust.
2. bitcoin wallet
If you’re looking to easily transact in bitcoin only, I would recommend breadwallet (mobile wallet app). You can check out more recommended bitcoin wallets for various platforms here and read more about securing your wallet here.
3. ether wallet
For transacting in ether only, I would recommend using MyEtherWallet (MEW), which is a web-wallet. With MEW, only you know your private key, which means you fully control the ether you store there. Yay.
4. altcoin wallets (altcoin= any currency that is not bitcoin)
Often altcoins have their own official wallet, so it’s worth googling for whatever specific coin you want to buy to see what the best options are.
You can also store altcoins altogether in a multi-wallet such as Freewallet’s
Remember! In general, if you store your cryptocurrency on third party services, like wallets or exchanges, that have access to your private keys, it is possible that your money could be lost if the service is compromised.
Exchanging crypto for crypto
As a general rule, it is much easier to exchange from one cryptocurrency to another than it is to exchange between cryptocurreny and fiat. So once you get some bitcoin, for example, you can use it to buy any other cryptocurrency fairly straightforwardly.
The easiest and fastest way to exchange one cryptocurrency for another is using Changelly or Shapeshift. These services scan prices across major exchanges and pick the best rate for the given currency pair you want to exchange.
You can also use said major exchanges yourself. The largest and most popular exchanges to compare exchange rates on are Bitfinex, Bittrex, Poloniex, HitBTC, Kraken, and CEX.io.
Media/info resources
Media
Sites: Coindesk, Cointelegraph, Cryptopanic (news aggregator)
Telegram channels:
- In Russian: https://t.me/DeCenter, https://t.me/BitLenta, https://t.me/cryptojournal, https://t.me/forklog
- In English: https://t.me/DeCenterOrg
Statistics
Coinmarketcap (For cryptocurrency rates and other market stats)
Forums
People discuss cryptocurrencies, tokens, and blockchain tech actively on Bitcointalk and on the following subreddits: r/Bitcoin, r/ethereum, r/CryptoCurrency, r/altcoin, r/BitcoinMarkets, r/blockchain, r/icoCrypto(many if not most altcoins and tokens have their own subreddits also)
Listen to our full episode on crypto and blockchain technology in Russia.
