Getting Started In Crypto-Currency

I've highlighted critical rules in the brightest red possible.

1) Let's be honest about what it is and isn't.

Today, crypto-currency is more of an investment, than a currency. While progress is being made in accepting popular crypto like Bitcoin in exchange for goods and services, the value is so volatile, that people will hesitate to spend it, since it could rise in value the following day. A majority of investors are still more interested in selling it for fiat (cash) currency as an exit strategy.

Why fiat still wins? A US dollar today, will very much likely still be worth about the same, a month later so holders of it are more likely to spend it on goods and services.

Crypto markets are similar to stock markets, but way less regulated and way more volatile. When you invest in Crypto, at times, its more like a gamble.

Pay your rent, and feed your kids before you invest. NEVER TAKE ON DEBT TO GAMBLE IN THESE MARKETS. IT CAN LEAD TO DARK PLACES. Actually, just count the money as lost before going into it. And then be pleasantly surprised when your investment launches to the moon. 

2) Way less regulated?

•  One of the foundational allures of most crypto currencies is decentralization. No one authority controls most of them (there is a BUT here). Some are centrally controlled for specific Business and political reasons (see Digital Yuan).

• Aside from those exceptions, transactions are highly verifiable, but mostly anonymous. Depending on the purpose and diligence of those involved in a transaction, details can sometimes be used to trace the identity of those involved.

• Transactions are usually final and cannot be reversed. This is where protecting your crypto currency is highly important and is covered below.

3) Crypto markets can be manipulated, especially lesser known ones. just over 2% of the owners of bitcoin own more than half of it. If any of those majority owners (also called "whales") were to sell, the price can drop significantly and ruin a lot of peoples investments by triggering a mass sell off. However, the opposite effect happens when a whale buys. People see the jump and get FOMO (fear of missing out) and pile on driving it up higher.

4) Lesser known crypto currencies. A majority of them are copies of another coin, most commonly bitcoin, with some slight differences (but sometime none at all). These coins can have quick and erratic returns or losses. Be wary. Many of these are use for pump and dump schemes.

5) Pump and Dumps? These schemes are when someone with a large social media presence, usually on Telegram, Reddit, or Discord lure people to their cause with the promise of a sure bet to be announced at a given time. The leader is the first to put money into the coin to be announced. That person then announces and people buy into it pumping it up. Once the leader sees a significant jump, they sell, others follow and things come crashing back down. The problem is - the people who bought last, lose. Its a huge risk. Stay clear of these. 

6) DO YOUR RESEARCH - Before investing in any crypto currency, go to the developers website and social media accounts and see what they are up to. Are they changing the world or do they have a mission you believe in? when was the last time they posted any progress towards that mission? Ask questions. 

DON'T LISTEN TO RANDOM PEOPLE ON THE INTERNET - Social media is full of idiots trying to speculate and most of the time have 0 knowledge of what will happen, only guesses. Do your own research. Avoid any caption that ends in a question mark. "ADA to $10 in 10 days?!?" Is a red flag.

7) Lets Talk Safety. When you buy your crypto currency, it lives on an exchange. You aren't actually in possession of it, the exchange is holding it for you. Sometimes, exchanges go down, freeze your transactions, or get hacked. And then, you are out of luck (See Mt Gox). You only possess it if it is sitting in a "wallet" you control. There are 2 primary types of wallets: software and hardware. Hardware wallets are hardware devices that makes its extremely difficult for people to steal your crypto. They would need physical access and a decryption key. Software wallets are a little less secure because they live on your computer, and there is malware that will actively steal them and try to steal your decryption keys as well. They aren't bad, but don't keep your decryption key or recovery passwords on your computer. MAKE MULTIPLE PHYSICAL COPIES. Put them on thumb drives, in safes, hidden in books, or where ever you put important things. Don't be that guy who lost the decryption key to his 50,000 BTC wallet.  

SO, if you will be trading, move your crypto to a reputable exchange while you are trading. If you will be holding long term, put it in a wallet, and keep your recovery keys somewhere safe.

A word on scams:

NOTHING IS FOR FREE - Any message that says: "Congrats, you've been selected for free <insert coin here>" is a scam to steal your crypto. Many times people impersonate celebrities in the crypto community such as Elon Musk. JUST REMEMBER: ANYONE OFFERING FREE CRYPTO CURRENCY - IS TRYING TO STEAL FROM YOU NO MATTER WHO THEY SAY THEY ARE.

8) Ready to invest?

1. Find a reliable crypto exchange. (Binance, Kraken, etc)

2. Sign Up. Get Verified. Most won't let you invest until your identity is verified. This can sometimes take up to a week. You will need to provide pictures of a government issued ID and other information to prove your identity.

3. Deposit fiat money into your account.

4. Convert your fiat money to the crypto currency of choice.

5. Congrats, you have now invested in a crypto currency. 

A word on taxes: Assume that any gains made are capital gains if you convert back into fiat or another coin. See your local laws regarding capital gains tax. In the US, that usually means 15%. So far enforcement is extremely difficult, but this is quickly changing as governments crack down on tax avoidance in this space.

9) Lets talk trading pairs and fees. Each exchange allows certain trading pairs. Lets say I have 100 AD, and want to buy Doge with it. I will usually have to convert it to bitcoin, and then from bitcoin to Doge. This is because there is not a trading pair offered by the exchange directly from ADA to DOGE, but all coins have a trading pair with bitcoin. In the process of doing these trades, there will likely be fees involved that differ widely by the coin being traded. Keep an eye on this as frequent trading can cost a lot in fees.

10) Want To Be A Day Trader? STUDY. Discover reliable sources of news regarding buying and selling activity, learn how to use the advanced trading tools on crypto exchanges, and study the patterns. Do all this first, otherwise you will likely lose. Remember, this market is highly volatile. You won't always win.

11) Hold or Sell? Most well established crypto currency goes up over long periods of time. When you play the markets daily, you will win some and lose some. You can make a lot with some lucky bets, but you can also lose. If you put money into a well researched coin with a strong future, you will likely do well if you forget about it for a few months and check in every once in a while. a few years later, you can be surprised. 

Here is my example of this: To learn how mining works in 2014, I mined 155,000 doge coin. I stopped because my graphics card got fried in the process. The mined coins were worth around $150. I was very surprised in January 2021, when I saw Doge on a top ten list. It climbed so high in price, that my $150 was now worth close to $10,000. 

That's it for the basics - I will keep adding to this over time so check back as needed. Feel free to ask me questions or recommend content via my email provided.