Getting Started with Cryptocurrency

I like investing in Cryptocurrency, but it hasn’t been easy getting started due to many exchanges not accepting new accounts. I am new to this and no expert, but I want to share how I have been going about things. I also want to share how to avoid the things I have done wrong (and cost me money). Here’s my disclaimer:

  • This is not intended as investing advice and I am not responsible for any loss of funds.
  • I am not a cryptocurrency expert and do not pretend to be. I am a novice and still learning. Take this information lightly and do not rely on it for investment purposes.
  • Do not invest anything you can’t afford to lose. Think of it like gambling in Las Vegas. You can be rolling in money one minute and have nothing a few minutes later. If you cannot stomach gambling, you may not do well with this.
  • Don’t complain if something here turns out to be incorrect! I already said I am no expert. Things also change quickly with cryptocurrency. Something that is good advice now may not be tomorrow. If I realize something has changed, I will try and change this page. However, I may not be able to get to it immediately.

Getting Started on Exchanges

To trade (buy or sell) cryptocurrency, you need to be on an exchange. Think of it like a stock exchange where you buy or sell stock. These exchanges are located around the world and often allow people from anywhere to join. The process to join will vary by country and some may ask a lot of questions, such as all of your identifying information and even want copies of official identification and even copies of utility bills. They will also want to be linked to a bank account. I recommend opening a bank account dedicated to trading and seeding it with an amount of money you can afford to lose.

I prefer using Coinbase as my main exchange. They are US based and have a pretty solid reputation (other than the Bitcoin Cash insider trading rumor). Though it can take days to complete a purchase from your linked bank account, Coinbase will lock you in at the purchase or sell price at the moment the transaction is initiated. This means that if you decide to sell your valuable coin, it will take a few days for the money to reach your bank account. If this coin value severely drops before then your money is safe. It also means that if the value increases, you don’t get the appreciated amount.

However, I am not too impressed with how long it takes them to complete an ACH transfer from your bank to Coinbase. I did this so I could avoid credit card fees, but it has taken far too long (and the money still is not in my Coinbase account). This is not a viable way to buy cryptocurrency if you are in a hurry – and when are we not in a hurry since the market rises so quickly!

If you want to buy cryptocurrency on Coinbase, credit card is the only option. This method is immediate, other than the time it takes for the cryptocurrency verification time. The big drawback is the fee. A $500 purchase has over $25 in fees. If a cryptocurrency is quickly on the rise, you may make up that amount in no time. However, if the cryptocurrency value is falling, it just makes the fee feel that much worse. I experienced this with Ethereum, which after fees and loss in value made my $500 purchase worth $454.

I have emphasized on needing to make quick transactions. This is because I often buy cryptocurrency on Coinbase and transfer it to other exchanges overseas to get cryptocurrency Coinbase does not support (e.g., buy Ethereum on Coinbase > send to Bitstamp to buy XRP). I can buy directly from Bitstamp, but this cost me way too much last time because I discovered my credit card company charged me a $25.75 international fee. Another $500 purchase that cost over $50 in fees.

What I don’t like about Coinbase is that they only offer a few cryptocurrencies and Ripple (XRP from now on) is not one of them. It was rumored that they would offer XRP in January, which fueled a huge surge in the value of XRP, but a recent blog post from Coinbase denied they would be adding any new cryptocurrencies at this time. People freaked out and articles appeared saying Coinbase would not be adding XRP. The price dropped about 1/3 soon after the blog post on Coinbase appeared, but the price is recovering and stabilizing to a respectable amount. There is more about this below.

Go to https://www.coinbase.com/ to sign up.

I also use Bitstamp, which is located in the United Kingdom. They offer all the coin on Coinbase and more, included XRP. This exchange asks a lot more questions than Coinbase. You either answer them or don’t use the exchange. Since this exchange is outside of the United States you may have to pay an international fee to use a credit card or to wire money. My credit card company charged me $25 to use my credit card. This was in addition to the normal fee. This meant a $500 purchase cost me $50. I was not pleased with this so I now buy either LTC or ETH on Coinbase and then send it to Bitstamp. I then sell it and then have USD funds in my account ready for use. This costs significantly less. Go to https://www.bitstamp.net/ to sign up.

Cryptocurrency is in extreme demand at the moment and this means the exchanges are having a hard time keeping up and their services are strained. It is not uncommon to see outages because their servers cannot deal with the traffic. It can also take weeks to get verified on Bitstamp. I would sign up with them as soon as possible.

Once you are setup on an exchange, you will need funds to start trading. Transferring money often takes days to complete so it is a good idea to do this as soon as possible. I would send just a portion of what you are willing to trade because I do not trust keeping too much of any currency on an exchange. You may also wire money, but this has a fee. Credit cards are often the quickest way to immediately purchase cryptocurrency.

Digital Wallets

Once you have cryptocurrency, you need to store it somewhere. You can keep your coin on an exchange and hope they don’t get hacked (it happens). If they do and you lose your money, you will [likely] not get reimbursed. I keep a limited amount on exchanges just to use as needed.

Another option is to create a “wallet” on a computer. I don’t recommend this unless your computer is regularly backed up, very secure, and properly maintained. Your wallet on your computer can be deleted or have the coin stolen by a hacker and there’s nothing you can do to get it back. They do make hardware devices to use as a wallet, but I have no experience with those. You may need to trust an exchange until you research wallets.

I like the Exodus wallet, which supports a variety of currencies (but not XRP.) I like the Ripple Desktop Wallet to store XRP.  *Be advised it costs 20 XRP to create a wallet. This is a requirement by the XRP creator (Ripple) and there is no way around this unless you keep your XRP on an exchange. It was less than $5 when I created my wallet, but that is not the case now.

Treat cryptocurrency like physical money. Few exchanges will offer any type of reliable insurance. If it is lost or stolen you do not get it back. This is not like money being stolen from your bank that is federally insured.Coinbase does offer some types insurance without a fee, but you will need to read their disclaimers.

If you keep your money in a digital wallet on a computer, it can be lost due to viruses, hard drive failure, user error, theft, etc. I treat my computer with my wallet like a vault. I backup my encrypted wallet a few different ways, I keep my antivirus updated, I keep Windows updated, I do very little on this computer, and I avoid browsing the web. I am even considering using an old laptop as just a wallet and nothing else. I will only connect to the internet to transfer coin and little else.

Extra Tips

  • My top pick for a coin investment is XRP. However, not a lot of exchanges offer XRP and therefore is difficult to acquire. If you can get on an exchange that offers it (and be verified for purchases), go for it! I also like Stellar (XLM) and Tron (TRX), but these are harder to get than XRP! I plan on buying these if Coinbase ever makes my ACH transfer available.
  • Diversify! Don’t put all your eggs in one basket. I have most of my investment in XRP, where it will likely stay for a while, but I will be buying XLM and TRX.
  • If you really want a hard to get cryptocurrency and you cannot get on an exchange that sells it, check out Binance. This exchange is located in Hong Kong, which may make some people uneasy since they may not be familiar with the local laws and therefore the reliability of that exchange. I have used Binance to convert ETH to XRP before I could get an account on Bitstamp. I have not kept cryptocurrency on Binance, but I know people that do.
  • Don’t invest anything you can’t stand to lose. Think of cryptocurrency investing like gambling in Vegas (with better odds though). I have mimicked what I have done in Vegas, where I cash out my initial investment and work off of the profit. If I lose it, I never really had it to begin with (it still hurts though).
  • You can directly convert cryptocurrency to other types of cryptocurrency online to avoid cashing out to US currency and having a potential tax liability. You cannot do this on Coinbase, but you can do it elsewhere. Binance is just one of the exchanges that do this. I wish I would have not cashed out my Bitcoin and just converted it since all I did was reinvest it!
  • cryptocurrency investing is subject to huge losses and gains in much shorter times than almost any other type of investing. Often times in just hours. You need to be patient and understand that there are often dips after highs (called a correction). Corrections often do not drop too low or even down to the prior opening price when a cryptocurrency is on the rise.
  • Climbing values cannot last forever, though it can seem like it. Betting on the trends is what makes the money. You need to educate yourself or else these bets will likely lose.
  • Cryptocurrency is still rather new (at close to a decade old), so there are still a lot of unknowns. Some may rise to crazy value and what happens from there is still unknown. Some may stay around for many years and some will fail. It is a bit like natural selection. Only the strong may survive.
  • Research how to invest in this craziness. I am new to this so there is not much more I can tell you. I am conservative and have made modest money and potential money. The profit margin has been high, but I have not invested large sums of money. I will not get rich the way I invest, but it is nice doubling or tripling money, even if it is modest amounts.
  • Though things move fast with cryptocurrency, be patient! If you move money too soon you may lose out in potential profit.
  • Keep an eye on values, but don’t become obsessed. I sometimes sit and watch the real time trading value and it gets me stressed. It also leads to bad trades. I will see the value start to drop too much and I will sell. All of a sudden the value jumps and goes far beyond the original amount I had. This happened to me with one XRP purchase when it was $1.26. It did not look good for several minutes so I thought it was going to drop. I sold and just held my money in the exchange. I checked back later that same day and the value was $1.67. I didn’t lose money, but I did lose potential money due to stress trading. Even after the recent Coinbase dip, my XRP is worth around $2.75 per coin.
  • Learn how to read the real time trading views. This video will help to understand candlesticks.
  • If you lose money, it’s not my fault. Do your own research and invest wisely!

XRP – Coinbase Update 1/5/2017

XRP had been on a major uptick, which I think was fueled by rumors Coinbase was going to support it by the end of January. Now, the internet is going crazy with articles saying Coinbase will not support XRP and the price took a big hit in the last day. The main part of the Coinbase blog post that has fueled the panic is, “As of the date of this statement, we have made no decision to add additional assets to either GDAX or Coinbase. Any statement to the contrary is untrue and not authorized by the company.” You can see the entire post here.

Do I see this as XRP is never coming to Coinbase? No. It does make me believe that maybe we will not see it as soon as we thought. I would like to see it happen as soon as possible, but I plan on holding my XRP for quite a while so it does not matter if it is next month or six months from now. Will I stop buying XRP? No. I want to buy more now that the price is correcting! I wanted to get in at $2.25, but Coinbase still has not posted my ACH money transfer from my bank account! Now it is around $2.45.

I wanted to sign-up for Bittrex and Bitfinex because both support XRP and many more currencies than Coinbase, however, both exchanges are not allowing new accounts due to the high volume. I’m hoping that when these do allow new accounts, XRP gets a boost.

UPDATE 3/25/2018

Prices have been down, way down. I admit it is making me nervous; however, I invested a little more. I figured the bubble is bursting (not too likely, I hope) or it’s all on sale! It won’t take much recovery for me to break even or make a little profit if it is too much for my nerves. I still believe cryptocurrency is the future, but the future may not be ready. This has happened with other tech…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.