Well, I have been trying to write this from long but my current job was not allowing this. Luckily I left the job and all the miseries associated with it. Anyway, Just a little background, I am an ex-banker and been in crypto from past few years; Have seen ups and downs, pumps and dumps, all the HODL MOON and rekt, and what not. Lately, I am getting lot of requests from people asking about cryptocurrencies or Bitcoin in general. So, I am writing a fully fledged guide here on how you buy, store, transfer and make money out of cypto; Last part is very subjective though..hahah.
Just to be clear, I will focus more on providing relevant resources to learn rather than bullshitting my own advise.
Why Crypto?
Biggest question is why one should ever buy crypto. why one should spend money on something that they can't even touch or feel.
Well, before answering that, let me tell you that we do not live in an Utopia. We live around mean and selfish people, corrupt politicians, filthy rich people who wants to control and peek into every aspect of our life. And Our current system consists lot of intermediaries which result into extra cost, time and chances of fraud.
Bitcoin just came to get rid of such people. It works on a decentralized mechanism where we cut the middleman or centralized institutions out of the system and transfers the trust from humans to computers(nodes), rendering the chances of error and fraud while offering secure and seamless transactions.
Imagine sending millions of dollars from one country to other in real time with fees as low as few dollars. Not to mention, payment is only one use out of thousands that the underlying technology of crypto-currencies blockchain offers. Besides, in terms of investments, it has outperformed every other asset class imaginable in the last decade.
- If you want to dig deeper into technological aspect of bitcoin, there is free online course by Princeton University on youtube- Princeton-Bitcoin
- Also look at the work of Andreas M. Antonopoulos, he is highly sought expert in bitcoin and blockchain technology, known for making complex subjects easy to understand-Aantonop crypto
- If you're a book person- Books to lean about crypto
How to buy Bitcoin
Now that you know bitcoin and how it works, how do you become part of this revolutionary currency. There are crypto exchanges in almost all the countries and it's easy to buy from your native currency-I am going to list some of India's most popular exchanges:-
Wazirx
( Signup- wazirx.com )
Well, this is my personal favorite. CEO Nischal Shetty is an amazing person. It was the only exchange that was running during the hard times of 2018 when RBI brought circular prohibiting Banks to provide services to individuals or any company dealing in crypto-currencies, especially exchanges. Started it's legendary P2P service during the ban and soon outperformed the every other exchange in terms of users and trading volume in India. Ban was removed and wazirx emerged as a unconquered champion. Currently Wazirx is acquired by Binance and leading as biggest crypto-currency exchange in India.
Step by step guide to sign up- wazirx guideHow to deposit INR- Wazirx deposits
Binance
( Signup- Binance.com )
Binance requires no introduction. It's the biggest crypto currency exchange in the world in terms of trading volume. CEO Chengpeng zhao is a visionary person and is one of the fastest person to become Bllionaire on face of the Earth. It has also launched its p2p trading service in India where people can buy major cryptocurrencies through INR. Without a shadow of doubt, it's the most trustworthy and credible exchange out there. It also offers various other products including Margin trading, futures & options, staking and other investment instruments. Won't be wrong to say, it's a complete crypto ecosystem on it's own.
Not to mention, native exchange token BNB( used to save fees) has skyrocketed 150 times from $0.5 in 2017 to $75 recently.
Educate yourself with binance- Binance Acadamy
Zebpay
( Signup - Zebpay.com )
Zebpay is one of the oldest crypto exchange in India. Started back in 2015, it used to be one of the most popular exchange in India. Although they ran away with their bag and baggage in 2018 after the govt. regulations but they got back in business recently. Well, Zebpay is not my first choice but it's still better than some other shady exchanges. Besides they have a decent looking app with easy interface.
Not to mention, having an account on multiple exchanges might come handy in a situation of arbitrage. Indian exchanges tend to provide lot of such opportunities ,especially in days of volatility. Step by step guide- Starting with Zebpay
p2p Exchanges
singnup- Localbitcoins.com
There are people basically who don't trust exchanges and rather prefer to trade more privately. On LocalBitcoins, you are dealing with humans. Unlike centralized Bitcoin trading websites, LocalBitcoins allows you to trade directly with another person. It allow users to create advertisements where they can choose the payment method like CASH/PAYTM/IMPS/NEFT and their own exchange rate for buying and selling bitcoins from and to other LocalBitcoins users. LBTC acts as an Escrow and protects both buyer and seller by keeping the bitcoins safe until the payment is done and the seller releases bitcoins to the buyer.
This is very popular among Tax evaders..lol! Just an tip, always choose a safe public place when dealing in cash.
Before moving further, you should be aware of public and private keys at-least.
Public key- It's large string of alpha numeric key that you use to receive funds. It's called a public key, simply because it is meant to be shared publicly and enable you to receive funds.
Private key- A private key is a sophisticated form of cryptography that allows a user to access his/her cryptocurrency.
How to store crypto currencies:-
1. Exchange Wallet
This is most widely used and convenient method of storing crypto. You buy from exchange, you let it stay there, sounds very easy. Only downside here is that it is risky. As the history dictates, exchanges are no immune to cyber attacks and there were instances of fraud and robbery with mainstream crypto exchanges like Mt-gox, Bitfinex, Bitgrail, DAO, upbit, where billions of dollars worth of bitcoin were stolen by hackers. So, it really make sense to look for safer alternatives, isn't it? There is saying in crypto, You own your bitcoin only when you have access to your private keys, and in this case, exchanges have it. Although, Exchange wallets poses incredible convenience if you're an active trader and don't want to get into hassle of transefering crypto back n forth.
Most reliable Exchange wallets- Coinbase( works under SEC regulations)
Binance(more suitable for altcoins)
just my 2 cents, always have your 2fa enabled for withdrawls.
2. Hardware wallets
This is one of the safest way of storing crypto-currencies. Hardware wallet is basically a USB device which saves the private keys securely in an offline manner. It has serious advantage among others because it never allows your private keys to come in contact with internet connected computer or any vulnerable software or attack. Ledger and trezor are some of the most reliable and popular brands, you can also look for Mycelium and
Electrum.
Ledger-https://shop.ledger.com/products/ledger-nano-s
trezor-https://shop.trezor.io/
3. Paper wallet
The idea of a paper wallet is very simple. You set up a wallet offline while following some simple instructions and then you simply print out the private and public keys in a piece of paper. The keys will also be printed in the form of a QR code which you can scan in order to get access to your funds. If you use your crypto fairly regular, go for hardware wallet. However, if you are planning to just store your funds for a long time without much interference, then, without a shadow of a doubt, paper wallet is the way to go. There are two paper wallet sites that we would like you to check out:
Walletgenerator.net
MyEtherWallet.com
How to transfer crypto from one exchange to another:-
Well, it's the simplest part considering you don't do any mistakes. To transfer any cryptocurrency all you require is the destination wallet address (deposit address). No matter which exchange you wish to transfer your funds to; the exchange will provide you with the receiving address. Make sure that you’ve copied the right address of the coin that you are looking to transfer. Sending coins to a wrong address will result in loss of coins and you have to depend on mercy of exchange to get your coins back.
In general here are the steps to transfer coins from Exchange A to Exchange B.
1)Go to Exchange B and head to Funds >> Deposits / Withdrawal section.
2)Choose the coin and copy the deposit(receiver) address provided by the exchange.
3)Now come back to Exchange A and head to Deposits / Withdrawal section.
4)Choose your coin that you are looking to withdraw. Then paste the recipient address that you copied from Exchange B.
5)Next enter amount to send and click withdraw. Now you’ll be asked to complete the validation process. It can be either OTP/2FA or email verification depending on what you chose for your account security. Once this step is complete your coins will be sent to Exchange B.
Ways to make money out of crypto:-
HODL
Most easiest way to make money in crypto is simply buy and forget you ever had bought anything. HODL or Hold On for Dear Life is coined for long term investors who beleive in underlying technology and won't sell until the mainstream adoption. It's not just a notion, actually it holds a strong premise. Speaking of which, no one has ever lost money by holding crypto in long term. It's the most volatile market ever existed and can drive people nuts, but only the visionary people with strong will power gonna survive in this mayhem. God bless panic sellers and faint hearted people, bruh this market is not for you.
you bought the peak of 2013? no problem, it made another one in 2017. Now you bought at 20k and crying over your miserable life, no issues it doubled again in 2020. If you really believe in a decentralized society where no one else controlling your money but you , then you're a true hodler.
Trading crypto
Well, this is tricky and I won't suggest you to jump into this right away. As the trading is slightly different from conventional markets and highly influenced by sentiments, news & events, supply ,adoption, unlike other markets where fundamental and technical analysis plays a major role. It might as well seem a bit confusing initially but believe me this market offers plethora of opportunities, only if you have the patience and determination to find any . I will try to enlist some steps that can come handy in the process.
1) Picking an Exchange- It should have the maximum trading pairs with highest liquidity. Binance certainly rings a bell in this category. It's way ahead of it's competition. Some of the major trading exchanges:-
- Binance
- Bittrex
- Kucoin
- Huobi
- Bitfinex
- Wazirx-Indian
2) Finding an information source :- It's imperative to have information about the coin before jumping into the buying spree. It really boosts the confidence and prevent panic selling in days of bloodbath. Not necessarily to become a blockchain expert here but fundamental knowledge of the premise behind a coin, need it serves, supply and knowing about it's use case would suffice. Listing some of the major information source:-
- Coinmarketcap - It's a go to place for all the crpto information. A website where you can find information on every coin and token available. The data includes market capitalization, supply, trade volume etc. It also show you the historical data and a link to the official website of the coin. So the site can even be used for cryptocurrency comparisons.
- Coindesk - One of the major crypto news source. Cover all news around bitcoin and aother cryptocurrencies. Be it events, adoption or a recent rally, coindesk writers will always keep you updated.
- Coinmarketcal- CoinMarketCal is the leading economic calendar for cryptocurrency news. It covers all events that help crypto traders make better decisions. There are events in a coin life like supply decrease, coin burn, major partnership, product releases that could have imapct on its price action. So, coinmarketcal lists out all such events and allow traders to speculate on price around these events. Kryptocal is another website for the same purpose.
- Reddit- Without a shadow of doubt, it's a great place to find information and hangout with people having mutual investment interest. Every coin have their official subreddits (can find the link from coinmarketcap) where people talk and post about the things happening around the cryptocurrency. Just to let you know, sentiments plays a major role in deciding the price for a given cryptocurrency. Positive sentiments alone could take a coin to MOON. Look what happened to GME and XRP.
- Twitter- Since the price is highly influenced by the news, Twitter would definetely keep you up to date. All the crypto currencies, exchanges and their Founders have Twitter handles where they post about all the major updates including partnerships, new releases, upgrades, personal opinions and what not. Always turn on the notification for the coin you're trading. No matter what strategy you were building, a single tweet from their founder can change it's price action beyond imagination. Doge is the most recent example for this correlation. A single tweet from Elon Musk took the coin price up 50% in minutes.
Now, just a tip- Don't chase pumps and dumps. They might look fascination from the surface but beleive me, it's a slippery slope. If you entered at the bottom, then it's well n good, otherwise just be a spectator.
Passive income from crypto
- Staking- Staking is the most simple way to earn passive income, as the market pays you for holding cryptocurrencies for a certain period of time. Let me explain you this a bit. All blockchains have one thing in common: transactions need to get validated. Bitcoin for example does this in a process called mining which is known to use a lot of electricity (Proof-of-Work). There are other methods that are used for validation. Proof-of-Stake (PoS) is one such consensus mechanism where people get decesion power in the network by staking coins. By staking , you gain the ability to vote and generate an income. It is quite similar to how someone would receive interest for holding money in a bank account or giving it to the bank to invest. There are plenty of coins to stake with variable rate of interest. Checkout- https://www.binance.com/en/pos
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Airdrops, forks, and buybacks-
Airdrops-This is cheapest or free way to earn money from crypto. The concept of airdrop refers to the
widespread distribution of cryptocurrency in free to the public in order to gain the userbase.
Recently Binance airdropped 100 TWT tokens for all the holders which is around 50 usd as of now.
Even the popular coin TRX was given as airdrop which now worth in thousands of USD.
You can keep track of Airdrops here:- https://airdrops.io/
- Hardfork- Hardfork happens on blockchain. Sometimes it's hard to put an update on existing chain due to the lack of consensus. So developers split a totally different chain and investor receives equivalent holdings on the new chain. (it’s like benefitting from an error). Ethereum classic forked from Ethereum. BCH for example is the biggest of it's kind, which is forked from the Bitcoin and given as free in same amount to people as per their Bitcoin holdings. They keep happening from time to time and even have positive impact on price action.
- Buybacks or coin burn- It means a cryptocurrency is bought to be destroyed or ‘burnt’ afterward. It decreases the supply and hence directly increasing the price. Basically it was brought to adjust with the inflation. BNB coin burn is the classic example.
Read here- coin burn
So that's it guys, hope you've learned something here and wish you good luck in your crypto pursuit. And feel free to drop any questions or suggestions.
