I traded my first cryptocurrency Ripple XRP through the Bitstamp exchange on the 10th of July 2017. A mere 3 months ago. I bought $121 worth of XRP, which cost 0.20668 pennies per coin. It got me 588.83 coins. A week earlier I had read through their FAQ pages on their website to find out how to get started. Somewhere in all the help pages it mentioned I should transfer some cash via an international wire to their bank account. I researched them and made sure they were not fraudsters. They weren’t 🙂 I went ahead and transferred some cash. It took roughly 2 days to appear in my Bitstamp account. My journey into cryptocurrency had begun.
Disclaimer: As a cryptocurrency noob I am aware that what I write on my blog might be seen as ‘giving advice’, so let me put the following message out there; Everything I have written in this post are my past and current experiences as well as observations. I am not advising you to buy Bitcoin or Ripple XRP or LiteCoin or any other coin, as I am not a financial advisor. Everything I have bought I am prepared to lose and will put it down to learning. Everything else (links, images, knowledge, advice where to look for information), you can find on the web yourself, or you can read my post. I am LONG on all my purchases, meaning everything I have bought to date is sitting in my wallet. I have no interest in selling any of it in the short term. If you have invested in something I wrote about and lost your money because the price went up or down, then that is your problem not mine.
Blockgeeks summarises cryptocurrency perfectly in this info graphic
Blockgeeks explains cryptocurrency in a lot more detail, so visit their website if you are after more information.
As a cryptocurrency noob, I needed to do a lot of research. There is so much information out there, it can be quite overwhelming sometimes, but one has to start somewhere. Next up I started to read about the various coins. I was shocked to discover there were over 900 alt.coins (alternative coins to Bitcoin). At the time of writing this post there are now 1176 cryptocurrencies and new ones are coming out all the time. (Remember the DOT COM era, it is like that now with cryptocurrency and yes there will be many bubbles burst).
Learning about cryptocurrency markets
There is a great website called Coin Market Cap (https://coinmarketcap.com/) which lists all the coins. The best known coins with the highest market caps are at the top (Bitcoin is first of course followed by Ethereum, Ripple, Bitcoin Cash etc). There is a ton of information on this website, each with links to the coins website, graphs, market details, statistics and even forums where one can go to communicate with others.
I didn’t want to muck around with the unknown coins, so decided to stick with the top 5. The problem was the one making the most gains (and in the news all the time) was also the most expensive. Bitcoin was $3000+ at the time and I wasn’t about to part with that much cash into something I didn’t understand. It was also very volatile with hundreds of dollars swings up and down each day.
Then I discovered one could purchase fractions of a coin. All coins are broken down to 8 decimal places, meaning the costs are sometimes fractions of the original price of a coin in whatever currency (USD/EUR/YEN/*). This makes it really easy to get involved. Just enter in how much you are prepared to buy or trade and once the trade is placed the system will tell you the fraction of Bitcoin owned. So I have a piece of bitcoin. 😀
I signed up on the Bitstamp exchange, because it is run from the United Kingdom and is one of the most popular fiat currencies to Bitcoin exchanges. (Fiat currency is legal tender whose value is backed by the government that issued it. The U.S. dollar is fiat money, as are the euro and many other major world currencies).
I have also signed up to some other top exchanges (Binance, Coinbase, Cryptopia, Bittrex) as my research and knowledge improved. A lot of exchanges require key bits of personal information from you, bear this in mind when signing up. Bitstamp doesn’t have a large choice of coins. There are only 5 currently available (Bitcoin, Bitcoing Cash, Ripple XRP, Ethereum and LiteCoin), which has been fine for the time being, but I would like to explore other coins. Other exchanges such as Binance, Bittrex, Cryptopia offer a lot more coins.
Visit a website called CryptoCompare.com https://www.cryptocompare.com/exchanges/#/crypto to see the pros and cons for each of the exchanges. You want an exchange that has excellent security, that requires you to login with strong passwords and Two Factor Authentication support at the very minimum. 2FA is an extra bit of security. It is a pin number of six digits that can be sent to your cellphone/mobile via SMS or the pin number can be generated automatically every 20 seconds from your Smartphone. There are various apps that can achieve this task, but I use Google Authenticator and LastPass Authenticator as they are the best.
I also read that when picking an exchange to trade on, to make sure you are able to withdraw your coins and store them in a software or hardware wallet. Bitstamp met this criteria.
Types of wallets to store cryptocurrency
There are three ways to store coins once they have been purchased.
- Buy coins on the exchange and store them on the exchange. I read this is okay on most exchanges rated high, but exchanges in the past have been hacked and coins have been stolen. Do you want to risk something like that happening? If you are holding coins after purchasing them, then it makes sense to move your coins. If one is going to day trade cryptocurrency then it makes sense to leave your coins on the exchange for easy access in your account.
- Buy coins on the exchange and withdraw them to your software wallet. A software wallet is a program running on your PC. One logs in securely and the wallet has an unique account address. It is normally a random thirty plus character account. Copy the account from your wallet and on the exchange go to Withdraw, paste in the account address, enter how many coins you want to withdraw and hit enter (those aren’t the exact steps but close enough). It takes a few seconds to a minute for your coins to transfer from the exchange to your software wallet. You’ll see the balance and the transaction when done. Your coins are now stored in your wallet. There are lots of different wallets available and not all wallets support all coins. Of course if your PC or laptop is stolen or breaks, then your wallet is lost as well, so this is not always the best solution. In most cases a backup can be taken, provided you can store this somewhere safe.
- Buy coins on the exchange and withdraw them to your hardware wallet. A hardware wallet is a physical device based on robust safety features for storing cryptographic assets and securing digital payments. It connects to any computer via (USB). Secrets like private keys are never exposed, sensitive operations are isolated inside your hardware wallet within a state-of-the-art Secure Element, locked by a PIN code. Transactions can’t get tampered with, they are physically verified on the embedded screen with a simple press of a button.
As I was only buying RIPPLE (XRP) coins at the time, I downloaded the Ripple Desktop Wallet on my Surface Pro 4. It is a secure program, which gives you a unique account address, which can be used for sending or receiving XRP coins.
In the program I have the option to turn my account on or off. By turning my account ‘on’, I’m making my wallet available online to receive coins from the exchange or anyone who wants to send me XRP, likewise I can send XRP to the exchange or others if I have purchased something from them. Whether I am online or not, anyone can look up my account and see my balance transactions (provided they have my account address). No other details are visible, which is the whole point of cryptocurrency, its private and secure. I used this program for a month or so without any problems, but there was always that risk my laptop could crash or it could be lost or stolen. So I decided to buy a hardware wallet. I did some research and found the Ledger Nano S to be the best on the market as it supports multiple cryptocurrencies.
As you can see from the image above it is quite small and light, and has two buttons on the side, which control the menus. There is also a small blue LCD screen, so one can see the menus and or transactions that have occurred. On the one end is a standard micro USB port. When plugged into a computer it switches on and asks for a pin code. One can set up a 4 to 8 digit pin code. There are also some programs that need to be downloaded and installed on the PC for the various coins that the Ledger Nano S supports. Below you can see all the popular coins. This list is growing all the time, which is great.
There is also a ‘twenty four’ word recovery password in case you lose Ledger Nano S. Even if someone picks up your hardware wallet, they need to get through the 8 digit pin code, but then they still won’t have access to your wallet unless they have your 24 word recovery password. If I replaced my Ledger Nano S with another one, I can simply enter a new pin and my twenty four word recovery password and my coin balance will appear on the new device. If the pin code is entered incorrectly a number of times, the device will reset or wipe itself, so really it is pretty much impossible to hack, unless I am dumb enough to leave those recovery words lying about, which I haven’t 😉
Real time information on cryptocurrency
There are a number of great websites for keeping track in real time the prices for all these coins. The best one I have found so far is Cryptowatch. One can monitor loads of coins at the same time and see history, charts, prices and loads of real time information. Plotting charts, setting position lines are all possible. It is free to use but if one wants to trade, then you have to sign up for a 14 day trial and a monthly fee (more details on the website).
Another good site is Trading View. It covers everything including normal stocks. Just look at how many exchanges exist for Bitcoin below image. Anyone, anywhere in the world can trade Bitcoin at the moment. One can build watchlists and portfolios, read news and articles, build charts as well.
Other sources of information
In closing, there are tons of places one can find information on cryptocurrency and blockchain, here are few places that helped me a great deal:
- Websites such as Coin Market Cap https://coinmarketcap.com/, Bitcoin News https://t.me/www_Bitcoin_com, Bitcoin Signals https://t.me/bitcoinsignalsfree, Bitcoin Trading Guide https://www.buybitcoinworldwide.com/trading/
- Ripple Reddit https://www.reddit.com/r/Ripple/, Bitcoin Reddit https://www.reddit.com/r/Bitcoin/
- Telegram groups, yes, telegram is huge for all kinds of shit including cryptocurrency.
- Blogs such as Trading Heros https://www.tradingheroes.com give a great insight into trading and have well written posts, videos, etc. Chris Dunn https://chrisdunn.com/ is another great website with plenty of awesome videos.
- Youtube – get ready to be bombarded with all sorts of information. Some good, some bad and some downright dangerous.
There is a lot of positive and negative news in the world about cryptocurrency and that is fine by me. People like to spew negative thoughts and comments because they don’t understand or have ulterior motives. News affects markets just like it does with the stock market. Research is key to everything, but there is no denying that the world will be using some form of digital currency or blockchain going forward. It is already happening. It might be Bitcoin, it could even be something that hasn’t been invented yet. The future is now, which is why this experience has been so helpful.