Welcome to my getting started in Cryptocurrency Tutorial.
From time to time I have friends and family enquire with me about the Cryptocurrency universe.
Some common questions I hear are:
Isn't cryptocurrency just Bitcoin?
What are they?
Where do you get it?
How do you do you buy them?
Which ones should I buy?
How do I avoid the scams?
It is hard to give them a full understanding all in one verbal conversation so I have decided to make this step by step guide for anyone starting out in the Crypto Space and I will use it to send to anyone who is interested in knowing more.
My first advice after providing them the link to this Tutorial will be to tell them to join our Steemit community where they can access loads of information about Cryptocurrency, the Blockchain, advice etc.
Ok so firstly a quick overview on what Cryptocurrency is:
Cryptocurrency is a digital currency or asset that belongs to different companies/entities around the world who are operating or planning to operate on the Blockchain.
Lots of weird and wonderful projects going on out there that will bring to the world solutions to problems that will benefit a wide range of us, from commercial, industrial or regular every day people.
The SEC in the US is still debating what to officially class cryptocurrency as.
Is it like buying a Stock or Equity or Commodity?
In March this year a US judge ruled Bitcoin and other Virtual Currencies should be treated as Commodities.
I think the simplest way to look at them, is like you are buying shares in a company.
Each time you buy an individual Alt Coin, you are investing in a project and the team behind the project.
Some are already operating in real life, others have not brought their concept/product to market as yet.
If they are successful in what they set out to achieve, the coin you invested in will naturally go up in value.
Whilst I am comparing them to a share in that sense, Commodity is a more accurate term as they are a thing of value that can be traded for goods & services just like the FIAT currencies we have now.
Of course cryptocurrency is not yet a widely accepted currency that can be used everywhere like FIAT currencies as yet, however there are more and more places around the globe accepting Crypto's as payment everyday.
Most of the time, purchasing Alt Coins right now is speculating that the project/concept behind the coin will be valuable to a lot of people one day.
This means the price of the coins are heavily influenced by news in the media about them and they are also influenced by the size of the overall Crypto Market Cap.
Bitcoin has a huge influence on overall market conditions as it is clearly still the number 1 biggest Virtual Currency asset one can own and by far the most valuable.
Before we get started on Step 1 and before you invest money, understand that you will be playing in a largely unregulated (although it is coming) space that is highly speculative & extremely volatile.
Expect large price swings on the different Coins you own to be the norm.
I would advise you not to get caught up in the short term price swings and only invest in Alt Coins that you believe provide a real world solution to a problem or will benefit people/organisations in some way.
If you have invested in a good coin it's price will trend up over time regardless of what it does in the short term.
There are others that try to cash in on the volatility of Crypto and Day trade or short term trade with it.
I prefer to hold on to my coins with a view to cashing out in the medium to long term when it has hopefully increased in value.
If you plan on being more action packed than that, do understand that 9 out of 10 Day traders lose money!
Therefore I would advise you to treat any money you spend in this space as a gamble and invest in coins with a medium to long term goal in mind for them.
STEP 1: Getting a Coinbase account
If you are in Australia you need a place that will accept your AUD for cryptocurrency.
None of the big exchanges that hold lots of different Alt Coins will take AUD.
Therefore you can only purchase off big exchanges like Binance or Bitterex if you transfer Bitcoin or Ethereum to them.
Bitcoin (BTC) and Ethereum (ETH) are the two biggest forms of cryptocurrency and are accepted anywhere in the Crypto world.
Once on these exchanges you can use your BTC or ETH as your currency to spend.
You can then simply browse through all the different Alt Coins on the exchange and purchase the ones you like using your BTC or ETH.
There are a few different places online that you can use to trade your AUD to BTC or ETH but the one I prefer is Coinbase.
Coinbase is very user friendly and are one of the biggest Exchanges in the world, so are regarded as safer to use.
You just link your credit/debit card to them and then purchase the BTC or ETH you need.
So Step 1 is register at Coinbase - https://www.coinbase.com
STEP 2: Getting a GDAX account (Coinbase's other mirror/sister site)
Now you have your Coinbase account set up you can safely use your AUD to purchase your Bitcoin (BTC) or Ethereum (ETH) off them. They will charge a deposit fee each time but it is only small.
If you only wish to hold those 2 coins then you can just keep them on the exchange and you need not do anything else.
On a side note - Whilst Coinbase is relatively safe from hackers, it doesn't mean they won't one day strike!
Hackers could literally hit any exchange anytime, anywhere and are an unfortunate reality.
If you get to a point where you are ever holding a large amount of Cryptocurrency on any exchange, you should think about getting it off line. There are a few ways you can do this but that will be a Blog for another day.
For now lets just get you started.
So you have purchased some BTC or ETH off Coinbase and you now want to go ALT Coin shopping.
I am going to list a couple of secure Exchanges that you can buy your Alt Coins from but we don't want to directly transfer our BTC or ETH to them from Coinbase, as they charge a nasty fee to do this!
Fee's in the Crypto world are the devil and we want to avoid them where possible.
This is where GDAX comes in. GDAX is also owned by Coinbase and was their original Beta site.
Just register on GDAX and jump through their hoops to do it as once you have a GDAX account you will be able to send your BTC or ETH to any exchange FEE FREE. - https://www.gdax.com/trade
STEP 3: Adding Security to your Coinbase account & other exchanges
Ok, so you now have a fully registered Coinbase and GDAX account.
Before you go any further I now want you to go on Coinbase and ensure you have set up Two Factor Authentication.
You only need to set it up on Coinbase as it will double for GDAX as well.
Instructions on how to set it up are all on the site and prompt you as you go.
You just go on Coinbase to settings and press sub title security.
You will then see Two Factor Authentication there.
It will need you to download the Google Authenticator App onto your phone.
This means in the future whenever you log in to the site, an extra layer of security will appear asking you to enter a code from your Authenticator app.
This means if your Laptop/device is ever hacked or your exchange passwords fall into the wrong hands, they will not be able to get into your account.
This Two Factor Authentication is a brilliant anti hacker security measure and all Exchanges you ever register with in the future will offer this security option. ALWAYS do it.
Its a pain in the ass but you need to protect yourself!
STEP 4: Transferring BTC/ETH from Coinbase to GDAX
This part is really easy.
Once you have purchased your BTC or ETH on Coinbase you will see the balance displayed in the Dashboard home page.
Now load up GDAX and because you are logged in to Coinbase, you will be automatically logged into GDAX as well when it opens.
Now on the GDAX home page on the left side of your screen you will see BTC and ETH balances which will be zero at this stage.
Underneath those balances you will see the Deposit button, go ahead and press that.
Once pressed the deposit funds box as pictured above will pop up and the default heading you will see written is Coinbase account.
Under that is a drop down box which will say either ETH wallet or BTC wallet. It should default to the one you currently have funds in.
All you do now is type the amount you wish to transfer from Coinbase in the box next to it.
Once you have done this , just press the big blue deposit funds button at the bottom and job done.
Your BTC or ETH has now been instantly transferred from Coinbase to GDAX fee free.
You are now ready to send these funds to the Exchange of your choice without having to pay any fee's to do it.
Ok so I don't want these tutorial blogs to be too huge so that is Part 1 done.
You are now in the game as a Bitcoin or Ethereum holder.
In the next part I will get into how to send your BTC or ETH asset around the Blockchain to pay anyone with it or fuel exchanges where the Alt Coins are.
I will also provide some warnings on where NOT to send your BTC or ETH.
Thanks for Reading and I hope you can be back for my Part 2 which will be posted soon.
As per a great idea from one of my readers I have also posted a Glossary below in case you are unsure of the meaning of any of the terms listed above.
GLOSSARY Of Terms and Acronyms Above:
FIAT CURRENCY = legal tender whose value is backed by the government that issued it.
BTC = Bitcoin
ETH = Ethereum
Commodity = a useful or valuable thing
ALT Coin = All digital currency that is not Bitcoin
Cryptocurrency = Digital/Virtual Currency
Blockchain = a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly.
Crypto Market Cap = Market Capitalization is one way to rank the relative size of a cryptocurrency. It's calculated by multiplying the Price by the Circulating Supply.
