Disclaimer: By no means do I claim to be a financial adviser or expert. I wrote this guide initially to help friends with limited or no experience in crypto to acquire currencies for long term investment. Always do research before investing and never invest what you cannot afford to lose. I welcome feedback and will make corrections and updates as needed.
The portfolio we will build will consist of 5 different cryptocurrencies. The reason we choose to invest in more than one currency is to diversify our portfolio and minimize risk. Even though it’s quite unlikely, imagine putting all your money only in Bitcoin and tomorrow it becomes obsolete - you will lose everything you’ve invested and we don’t want that. We want to buy Lambo’s and watch our monies go to the moon.
The 5 currencies for our portfolio are:
Why these coins? These coins are in the top 5 in terms of market cap, apart from Neo that is now in the top 10. They have proven to deliver on their technologies and promises and higher market valuation ensures that it is more difficult for crypto whales to manipulate the price.
In order to own any crypto currency you first need to buy it. There are many ways to acquire crypto currencies but we will cover only buying it from exchanges for now. Not all exchanges sell all currencies but most of them sell Bitcoin.
To acquire our cryptocurrencies we need to register with the following two exchanges:
Because your money will be stored on the exchange until we move it to a wallet (later), we need to make sure our money stays safe and that nobody can log into our accounts. One measure we should always use is 2FA which we can set up using the instructions below. But first we’ll need to install Google Authenticator on our Android’s or Iphone’s.
Bitstamp:
Bittrex:
You now have 2FA set up on both exchanges and will have to always enter these numbers when logging in and making deposits or withdrawals. IMPORTANT: It’s important that you don’t uninstall the Google App or lose your phone. In this event you won’t be able to log into your account and you would have to contact Support to have it reset. Alternatively you can use an app called Authy which allows you to backup and use on multiple devices. Getting it reset could take forever as we’ll soon find out with verification. Verification can take a long time due to of the number of daily requests that are increasing as more and more people are entering the crypto space.
Getting verified does a couple of things:
To get verified follow the following steps:
Bitstamp:
Bittrex:
After you have sent your verification documents through it could take a few days, sometimes even 2 weeks or more. Do write to support if it takes more than 2 weeks and complain as it might help speed up the process.
After the smooth and definitely non-frustrating verification process we are finally ready to purchase our coins. You will first need to decide how much money we can afford to lose - yes, that’s right “afford to lose”. Because we only invest money that wouldn’t force us into a deep depression or commit hara-kiri should we lose it all tomorrow. We would never invest our life savings or our entire salary because we are responsible investors after all. For the remainder of this tutorial and to make it easier to calculate I will use an investment of 1000USD as an example.
Bitstamp:
Whenever you make a deposit to Bitstamp they will automatically convert your USD or EUR deposit to Bitcoin once the transaction is verified. So to start we’re going to buy 1000USD’s worth of bitcoin and split it up.
Note that credit card is the easiest and quickest but also charges the highest fees. It is important for us to calculate fees into our equation as it will leave us with less spending money. We can determine fees using the Bitstamp fee schedule but again for the sake of not making this a mathematical tutorial we will assume that we have paid no fees and we’re left with a grand’s worth of Bitcoin to spend at our leisure.
So, now we have the Bitcoin in our account. If you don’t see it in the top info bar on the site, make sure you select the correct currency pair BTC/USD on the left hand side in blue.
Now we can see that our USD has been converted to 0.2390 BTC (This number will change as BTC becomes stronger or weaker to the dollar).
NOTE: As we’re buying long term to hold (hodl) and we are confident that over a period of several months or years our investment will grow, we will not be buying at the most optimal price. We could! By using technical analysis and checking every day when the price drops we could buy at the most optimal price at the time. For now let’s continue and get some coins for fear of FOMO!
It’s time for us to diversify yo!! First we’re going to buy:
And we’re going to use this currency convertor to help us do that.
In the top right menu click on “Buy/Sell”:
Bittrex:
Currently there is no option on Bittrex to fund your account with fiat currencies. This means we cannot use a credit card or a bank transfer to send the money to our account. But this is OK because we now own Bitcoin and because of that we’re kind of a big deal. We’ll just send some Bitcoin from Bitstamp to Bittrex.
To do this we do the following:
Now back to Bitstamp:
IMPORTANT: It is always good practice to test a wallet address before sending any big amounts to it. Bitcoin transactions are irreversible and if you make a mistake you will lose all the funds you have sent to the incorrect address. Always double check the address a few times and always send a very small amount like 10USD’s worth before sending the full amount.
Once the Bitcoin shows up in your wallet on Bittrex it’s finally time for us to buy some NEO. I know that we could have said screw NEO by now because this is way too much effort, but NEO has so much potential to move right now and could increase in value in the coming months more than any of the other coins in our portfolio and we simply HAVE TO HAVE IT!!! Remember Lambo’s and moon rockets!! **(Update: The Chinese government has imposed bans and regulations on ICO’s. There will be follow up info and we’re still not sure how this affects NEO. I suggest being cautious when buying NEO at this time!)
To buy NEO:
If the order executes you would have purchased NEO at the last available market price for the NEO/BTC currency pair. Where NEO is the base currency and BTC the quote currency. Not only did we just buy NEO, we also did our first ever trade. Congratulations to us!!!
You are now the proud owner of a solid top 5 cryptocurrency portfolio and also some of the best performers in terms of growth. But it is very important to move our coins from the exchange to an offline wallet as exchanges get hacked and people lose funds all the time. More on this in the next tutorial.
Coming up:
