A Crypto Beginner’s Handbook
Starting out in blockchain isn’t difficult, but it can be helpful to have all the steps in one place! With this quick start article, hopefully, you can get up to speed and trade as soon as possible.
This article covers briefly the steps that a beginner would find useful. It does not go in-depth on each aspect, but rather provides the resources to kickstart your crypto journey. For a deep dive into the specifics, I highly recommend reading Binance’s Complete Guide to Cryptocurrency Trading for Beginners.
Last Updated: June 11, 2021
Content:
Getting Started
- Acquire Cryptocurrency from an Exchange
- Setup Wallet
- Transferring funds
- Analyzing Markets and Trends
Advanced
- Staking
- DeFi
- NFTs
- Stable Coins
Getting Started
To get started, an individual needs to first purchase their cryptocurrency through an exchange. After acquiring their cryptocurrency, it is highly recommended to set up a wallet and transfer your funds to your wallet.
Why use a wallet? You can think of your wallet as your own bank. You fully own it and solely you own it. An exchange could always get hacked where your funds would be lost. Examples of exchange hacks in the past.
Let’s dive into it.
Acquire Cryptocurrency from an Exchange
The first step for any individual looking to get involved in the cryptocurrency space is to acquire funds. To do so, you would find an exchange and link your bank account or purchase via debit/credit. Some popular exchanges include the following for fiat to crypto purchases and also vice versa:
When purchasing, do take a look at the fees and the number of coins listed. Crypto.com is a really large exchange and trustworthy. I recommend Canadian users to use it. (This is if you cannot access Binance in your area as Binance has been restricted for Ontario-based users.) Binance is usually recommended and in my opinion is a go-to exchange due to its huge number of listings, Binance SAFU fund, and numerous platform features.
Upon purchasing your cryptocurrency, you can either leave it in the exchange or transfer it to your wallet. Transfering to your wallet is highly recommended as it would enable you to truly have full control over your funds. Sometimes if you leave it on an exchange you may lose access to your funds if the exchange has an outage for example.
For security, a wallet is recommended. However, sometimes, keeping it on the exchange also has its benefits. Exchanges like Binance are highly recommended due to the variety of different investing tools and options they provide such as the standard trading (margin, spot, P2P, stock tokens), derivatives (futures, options), and Binance Earn (interest accounts, staking, swaps).
Setup Wallet
For many decentralized applications, initial dao offerings, and staking — you would need a wallet to connect to the website or application in order to access your funds. A supported wallet would be required and thus, it is often recommended to set up your wallet, back it up so you don’t lose access, and use it to store your crypto.
There are many different types of wallets. Typically for storing large amounts of crypto, it is recommended to purchase a hardware wallet such as Trezor, Ledger, etc.
There are many wallets out there, so be sure to find the wallet that supports the type of coins you are wanting to store. For example, an Ethereum wallet wouldn’t be able to store your Bitcoin or Litecoin as they are on a different blockchain. Thus, if you send Bitcoin to an Ethereum address, you will lose those Bitcoins. Investopedia has a nice list of Bitcoin wallets that are popular.
In my opinion, some popular wallets that are used include the following:
- Metamask (https://metamask.io/index.html): Supports Ethereum and Binance Smart Chain, all tokens on Ethereum. This is the recommended wallet for accessing swaps (Uniswap, Pancakeswap, Sushiswap, etc.), initial dao offerings (SuperStarter, Polkastarter), marketplaces (https://opensea.io/), and NFTs / Ethereum based tokens (ERC20, ERC721, ERC11551).
- Enjin Wallet (https://enjin.io/software/wallet): Supports Bitcoin, Ethereum, Polkadot, Litecoin, Binance Coin, Dogecoin, ERC-20 tokens, and ERC-721 & ERC-1155 NFTs. Features built-in marketplace, exchanges, and dApp browser. A nice multipurpose wallet that is incredibly useful for NFTs/claiming NFTs from QR codes and accessing dApps.
- Trust Wallet (https://trustwallet.com/): TrustWallet is owned by Binance and supports Ethereum (and all ERC20 tokens), Bitcoin, Bitcoin Cash, Litecoin, Ripple(XRP), Ethereum Classic, Tron, Dogecoin, Cosmos, Binance Coin.
Transferring funds
Transferring your cryptocurrency is currently a pain point in the crypto space. This is where many individuals can lose some of their coins as they are not careful. It is incredibly important to be focused when transferring funds.
If you send your crypto to the wrong cryptocurrency address, to the wrong type of wallet, etc. — you lose your coins.
When you send crypto, you have to pay a gas fee. According to Investopedia, “Gas refers to the fee, or pricing value, required to successfully conduct a transaction or execute a contract on the blockchain.” The gas fee is what you pay miners to validate your transaction. The speed of your transaction depends on how much gas fee you would set. Miners set the price of the gas fee based on the supply/demand of the computational power of the network needed to process transactions.
The process for sending coins is quite simple:
- Open your wallet and find the send button or go to your exchange and select the withdrawal option. For some wallets/exchanges which support more than one blockchain, you will need to go to the type of coin you are sending and send from there.
- Copy and paste your recipient’s wallet address into your wallet app or exchange (withdrawal)
- Enter how much you want to send.
- Triple check that the amount and the recipient's wallet address is correct.
- Also, check gas fees / or exchange fees.
- Send. Check your transaction using an explorer.
Popular explorers for checking transactions and wallet address:
- Blockchain Explorer (https://www.blockchain.com/explorer)
- EtherScan (Ethereum-based tokens/NFTs)(https://etherscan.io/)
- EnjinX (Ethereum-based tokens/NFTs) (https://enjinx.io/)
Analyzing Markets and Trends
Great! You now have crypto, a wallet, and can send/receive tokens.
There are many useful tools for you to begin your cryptocurrency investing journey. Below are a few that I have come across that are very useful.
- CoinGecko (Cryptocurrency prices) — https://www.coingecko.com/en
- CoinMarketCap (Cryptocurrency prices) — https://coinmarketcap.com/
- Bitcoin Rainbow Chart (https://www.blockchaincenter.net/bitcoin-rainbow-chart/) — shows the Bitcoin price chart over time in a Log scale. Interesting to see the previous price history.
- Altcoin Index (https://www.blockchaincenter.net/altcoin-season-index/) — shows based on current market data if we may be in a Bitcoin season of Altcoin Season index.
- EthGasStation (https://ethgasstation.info/) — Ethereum gas transaction calculator for price and a variety of other consumer-oriented metrics.
- TradingView (https://www.tradingview.com/) — Go to charts and prices for traders. Live quotes, stock charts, and expert trading ideas.
- Crypto Twitter — Many updates from cryptocurrency/blockchain projects all are on the Twitter and Telegram platforms. For updates, it’s important that the cryptocurrency investor spends some time on Twitter to stay up to date on the teams which are developing their coins.
- Telegram — The number one platform for cryptocurrency trading groups. Most projects in the blockchain space have their own cryptocurrency Telegram group. So, it’s best to create one and stay up to date in the space. Be wary though as there are numerous scams, fake Telegram groups, etc. Make sure to remember to only join the Telegram groups from the official website and that crypto project staff will never DM you first.
Advanced
At this point, if you had read until this point— you should have a pretty good grasp of the fundamentals. The blockchain space is incredibly fast-paced and very interesting. Always be wary and if it sounds too good to be true, most likely it is a scam. Also, always do your own research, read whitepapers of promising projects, research the team behind the coins, etc.
The following concepts will be more advanced and cover briefly stacking, decentralized finance, non-fungible tokens, and stable coins.
Staking
Staking in crypto refers to locking up digital access to act as a validator in a decentralized cryptocurrency network. By doing so, you are actively participating in validating transactions on a proof-of-stake (PoS) blockchain.
CoinMarketCap has an article on where to stake: https://coinmarketcap.com/alexandria/article/crypto-staking-guide-2021
DeFi
DeFi is short for Decentralized Finance. A term that is used to refer to financial applications in crypto or blockchain geared for disrupting financial intermediaries. In the blockchain space, there are many DeFi applications such as
- Decentralized Exchanges (DEXs) — Some popular DEXs include Uniswap, PancakeSwap, SushiSwap, etc.
- Stable Coins
- Lending platforms
- “Wrapped” Bitcoins (WBTC)
- Prediction Markets
- Yield Farming
- Liquidity Mining
- Composability
- Money Legos
For a more in-depth discussion, check out CoinDesk’s article: https://www.coindesk.com/what-is-defi
NFTs
NFTs is short for non-fungible tokens. So, what is a non-fungible token? Non-fungible tokens are unique, identifiable digital assets stored on the blockchain which are certified to be unique and not interchangeable. Typically, they can be used to represent digital assets / digital files.
The Verge has an excellent article covering this topic in depth. https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq
Most NFTs are on the Ethereum Blockchain and are typically ERC721 or ERC1155 tokens. They are purchasable at OpenSea — https://opensea.io/
Stable Coins
A stablecoin is a type of cryptocurrency which offer stability and pegged to an external asset’s value. They are backed by a reserve asset and have gained popularity due to less volatility and the ability to access the typical blockchain benefits (security, instant processing, etc.)
They are cryptocurrencies which are pegged to a market value of an external asset. For example, some stable coins like USDT are pegged to a USD.
A nice explanation of stable coins can be found by Investopedia here: https://www.investopedia.com/terms/s/stablecoin.asp
Common stable coins
- USDT
- BUSD
- USDC
- DAI
Hopefully, you had found this quick start article helpful! If you would like to contribute or if you think that I’m missing anything resources, feel free to reach out.
Twitter: mrbenc88
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