The Ultimate Cryptocurrency Guide – Everything You Need to Know
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A cryptocurrency is peer-to-pee r digital money that is created from code (usually C++) and is decentralized (free from all governmental oversight). They work sort of like traditional stocks, the value of the coins will increase and decrease mostly due to supply and request and trending news about the coin.
The very first, and most well known cryptocurrency is Bitcoin. It was created back in 2008 and the very first coins were mined in early 2009. Back in June 2009 (when almost nobody knew about Bitcoin), 1 BTC = 0.0001 USD. Lets put this into perspective. If you bought just $1 worth of Bitcoins in 2009, today they’d be worth over $27,000,000 USD!
How Cryptocurrencies Work
Every computer that is connected to the network is called a knot . Whenever a transaction is made, the data gets sent to the knots. The knots are responsible for verifying that the transaction is legitimate using elaborate algorithms. The process of verifying transactions is called mining . If the transaction is valid, it is combined with other transactions and added to a block .
Once the block size limit is reached (for Bitcoin, it’s presently 1MB) the finished block gets added to the Blockchain , which is just a ledger of all the transactions for that coin, ever. At that time, the original transaction is confirmed and finished. The blockchain is permanent and unalterable.
What are Confirmations?
You may notice that when you transfer your coins, the transaction will be pending until a certain number of confirmations have been reached.
Confirmations represent the number of blocks in the block chain that have been accepted by the network since the block that includes the transaction.
In simpler terms, it represents the difficulty of a dual spend attack (dual spending is the result of successfully spending the same coins more than once). With zero confirmations, no proof of work has been done, so you can’t tell if anyone considers the transaction valid. Even with a single transaction it is possible for an attacker to pre compute a single block.
With zero or even one confirmation a dual spend is very possible since the next block that is solved may confirm a different block instead of the one that has the transaction. That different block my demonstrate the coins being spent elsewhere. The odds that a dual spend has occurred gets exponentially smaller with each confirmation.
An attacker must match the power of the entire network to keep up with block creation so as time goes by it becomes increasingly difficult to forge a transaction.
It is generally accepted for most transactions that 6 confirmations represent enough security to assure the transition is valid.
How Cryptocurrencies Work – Source: BlockGeeks
It’s always recommended that you only download and use the official wallet of the cryptocoin you’d like to store. However, If you want to hold more than one coin in the same wallet, there’s other solutions out there.
Before we begin, there are a few significant things that I need you to know. There are risks to storing your coins in smaller, unknown wallets because bad things happen, such as glitches and scams. Secondly, you are obligated to TEST YOUR WALLET before sending a big amount to it. Do this by sending a puny amount to your wallet. If everything is good, you can transfer the rest. I’ve heard numerous horror stories about people losing hundreds or even thousands of dollars because they didn’t test their wallet before sending all their coins to it. Glitches do happen and because of that, sometimes cryptocurrencies vanish into skinny air.
I’ve put together a list of the safest wallets. Most of them are Ethereum based since many altcoins are created using Ethereum’s blockchain and wise contracts.
Best Offline Wallets
When it comes to safety, having a physical wallet is one of the most secure ways to store your bitcoins, ethereum and altcoins. Presently there are Two reputable physical wallets you can get. The Trezor (€89) and the Ledger (€58.00 – €229.00). The Ledger Wallet is superb for anyone who is on a budget, but would still like maximum safety for their coins.
Best Online Wallets
Most online wallets are just as safe as the offline wallets, but online wallets are prone to phishing scams and hacks. If you are brainy enough to spot the common cryptocurrency scams, you should have no problem with a free, online wallet. Here are the top choices, in my opinion (in no particular order).
Coinbase is one of the most well known place to buy, sell and store Bitcoin, Ether and Litecoin. It’s a hosted wallet and Coinbase possesses the wallet. If coinbase goes down, you will not have access to your funds until they comeback. With web wallets, they have the right to terminate accounts for violating their TOS and hold your funds until you accomplish certain procedures. So If you are planning to hold a larger amount for a long period of time, it would be better to hold them elsewhere such as a Ledger Wallet for maximum security.
Blockchain.info Wallet is the worlds most popular Bitcoin wallet. It’s ordinary, safe and secure. They have over 14 million wallets with more than 100 million successful transactions.
Bitcoin Core Wallet – Bitcoin Core has a built in wallet with graphical and guideline line/API modes. It can also at the same time support numerous lightweight wallets with similar security and privacy to its built-in wallet. Bitcoin Core ensures every block and transaction it accepts is valid, enlargening not only your security but also helping prevent miners and banks from taking control of Bitcoin.
Ethereum and Altcoin Wallets
MyEtherWallet is a Free, open-source, client-side instrument for lightly &, securely interacting with the Ethereum network. You have utter control of your wallet and MyEtherWallet neither holds nor has access to your funds. Everything is stored locally. In my opinion, MyEtherWallet is one of the easiest wallets to use. Simply inject a password, download the keystore file provided and save your private key somewhere safe. You will need one of those every time you want to access your wallet.
Note: You cannot buy or sell Ethereum here and you can only hold Ethereum and Ethereum based tokens. Also, MyEtherWallet is a victum to many similar phishing sites. The ONLY legitimate URL for MyEtherWallet is www.myetherwallet. com .
Jaxx is another open-source, client-side device for storing your cryptocoins. They are always adding support for more coins. To see the current list of supported coins, click here. You have total control of your wallet and Jaxx neither holds nor has access to your funds. Everything is stored locally on your device. Jaxx also has ShapeShift built in. This means that you can exchange your cryptocurrencies for others, almost instantly.
Exodus is an all-in-one app to secure, manage and exchange cryptocurrencies. Exodus is open-source and is said to be very secure. They have a fine support team and a beautiful looking application. Here is a list of supported and upcoming coins you can store in your Exodus wallet.
Online cryptocurrency exchanges are websites where you can buy, sell or exchange cryptocurrencies for another digital currency or fiat money (USD, EUR etc). It’s often a good idea to have accounts on more than one exchange because sometimes you’ll see that one coin on ” exchange A” is worth more on ” exchange B”. You’ll get a better bang for your buck!
The Most Reputable Exchanges
Before you can buy, sell and trade cryptocurrencies, you must very first sign up to a reputable exchange. There are so many exchanges, it’s significant you do your research before joining one to make sure it’s not a scam. Most of it comes down to preference but there are a few things to look out for and a few things to point out. My individual beloved is Bittrex (listed last) since they have the largest coin selection.
Coinbase is one of the most popular exchanges. It’s enormously effortless to use and it’s a relatively safe place to store your coins. You can buy Bitcoin, Ether, and Litecoin instantly with a bank account or credit/debit card. If you are a US citizen, you can even use Paypal as a payment method. Coinbase is available in 32 countries and presently supports selling in 30 of those countries (Canada and Australia are excluded).
- Instantly buy Bitcoin, Ether, and Litecoin with credit/debit/bank/paypal.
- Sell Bitcoin, Ether, Litecoin.
- Very ordinary and effortless to use user interface.
- Can not sell if you’re in Canada or Australia.
- Have been known to “randomly” close people’s accounts and hold funds until verification. It’s best to not hold a large amount of coins here as a precaution.
- Site goes down more often than the others on this list.
Kraken is one of the top European based exchanges and offers a multitude of fiat to bitcoin pairs such as JPY, EUR, GBP, EUR, CAD, and USD. The exchange also has 16 popular crypto to crypto trading pairs including ripple, litecoin and dogecoin. The fees depend on the trade volume and range from 0.05% to 0.75%. Like most exchanges, kraken has two factor authentication for added security.
- Funds are safe and secure. Provide numerous levels of two-factor authentication for maximum safety.
- Presently has 16 of the most popular digital currencies including the big three (BTC, ETH, LTC) and smaller ones such as ripple and dogecoin. A broad multitude of currencies.
- Can deposit/withdraw USD, CAD, GBP or EUR funds used for buying/selling your currencies.
- Takes a few weeks to verify account (needed for funding/withdrawing)
- Website is a little confusing, especially for fresh users.
Poloniex is a unspoiled crypto to crypto exchange based in the United States. They had a massive site upgrade back in 2015 where they added technical analysis charts and live talk which means it is effortless to stay aware of news flow and analyze price trends before taking a position. Trading fees are vapid at 0.2% and deposit and withdrawal fees are subject to the blockchain’s specific transaction fee.
- Has a large selection of cryptocurrencies including a lot of smaller altcoins
- Has over 60 digital currencies available for trading
- Another one of the largest cryptocurrency exchanges based in the USA.
- Detailed data/charts and a beautiful user interface
- Cannot buy digital currency, just trade it.
- Some users have reported that they have lost funds when attempting to deposit into poloniex. It is unclear whether this is an issue with the blockchain or poloniex itself.
- Slow verifications
Bittrex is one of the largest crypto to crypto exchanges. They have the widest selection of digital currency, even very volatile currencies. Because of this, you will likely see some pump and dump schemes which hurts the cryptocurrency ecosystem as a entire. Trading fees are 0.25% with no reductions like cryptsy – and withdrawals are totally free and subject only to the transaction fee specified in the blockchain of the particular crypto currency.
- Phat selection of cryptocurrencies to choose from
- Advanced charts, effortless to use user interface
- Rapid identity verification
- Little to no issues with “lost coins”
- Low, plane rate (0.25%) fee
- Spotlight of best performing coins on homepage
- Support can be a little raunchy to get ahold of
- Logs you out after a brief period of inactivity, then you have to login again. This can get very annoying if you have two-factor authentication turned on (you most certainly should!)
Now that you have created a wallet and have signed up to an exchange, you can embark buying, selling, and trading. This is where you commence making (or losing) money. In order to get embarked, you need to have some initial funding. Trading Cryptos is usually done by very first buying either Bitcoin or Ether (instantly, from a site like Coinbase) and then transferring that to your exchange account, one that is listed above. Once your balance is confirmed, you can then sell that Bitcoin or Ether for whatever coin you want!
There are two main strategies for cryptocurrency investing. Hold and Trade .
Holding (or better known as HODL) is when you buy a cryptocurrency with the intention for holding in your wallet for a long period of time with the hopes that the coin will increase in value.
Trading is the opposite. Take a look at the chart below for Ether. Notice the highest and lowest points? It’s a trader’s job to determine when the coin will go up and when the correction will happen and then buy and sell their coin accordingly, every day. If you’re good at predicting the market, day trading can yield much higher profits.
The 2nd part of this guide will instruct you some pretty good technical analysis mechanisms which you can use if you determine to day trade.
ETH: 1 Day Chart
Cashing Out Your Gains
Once you’re pleased with the money you’ve made, it’s time to cash it out, back to fiat – your native currency. There are fairly a few ways to do this, but most of them involve selling your coins for Bitcoin before you can cash out. Here a few we’ve mentioned on our blog before:
This is most likely my private dearest when it comes to exchanging altcoins to Bitcoin. Chengelly presently has 60 different coins you can exchange inbetween and you can even buy coins with USD funds. When using changelly, you automatically get the best current exchange rate. There are no thresholds and the only fee associated with this service is a 0.5% service fee that comes out of the total amount of converted coin you receive in your wallet. Once you have either Ether or Bitcoins, you can use another service on this list to cash it out.
The most popular and straightforward option is to use coinbase. You can sell either Bitcoin, Ether, or Litecoin and it’ll get deposited straight to your bank account. However, if you are in Canada or Australia you cannot sell on coinbase. Please refer to the list of supported countries for more details. However, QuadrigaCX (below) is a good alternative for Canadians.
QuadrugaCX is a Bitcoin, Ether, and Litecoin only exchange. This is a excellent option for Canadians. Some funding/withdrawal methods will only become available after you have verified your account. It took about Trio weeks for me, so be patient if you’re going to use this route. The best thing about this exchange is the plethora of different withdrawal methods.
CryptoPay.me will provide you with a plastic (and/or virtual if you want) debit card that you can use anywhere visa debit is accepted. Oh, and you can fund it with Bitcoins! When you sign up for cryptopay, they give you a bitcoin address to use to send your Bitcoins to. Once everything is confirmed you can spend those at any store you’d like and if you desired to, you can even withdraw cash from an ATM. If you sign up using this link, you will receive 25% off the price of the plastic card!
Just as the name states, LocalBitcoins lets you sell your bitcoins, locally! On localbitcoins, you will be able to sell your bitcoins for a bit higher than market value . Only deal with reputable members there. Even tho’ the transactions make use of escrow, scammers will chargeback after the coins are released (mostly with PayPal and Credit Cards). Fortunately, the rating system on the site is good so if you do some basic research you shouldn’t get burned here.
Those are some of the easiest ways to get cold hard cash for your coins. There are slew of other ways, and if you have any questions about any of them, you can ask us here.
The last part of section 1 is about ICO’s (Initial Coin Offerings). This is an significant topic and needs to be covered before you fall for the trap! An ICO is when a company that has an idea sells tokens to help fund. Much like how it works in real companies, investors take a percentage of the company for a sum of money. But with ICO’s you’re getting a token in come back.
Most people only buy ICO’s in the hopes that in the future it’ll be the next bitcoin, or simply a quick build up once that coin hit’s the exchanges since the ICO prices of the coins is usually much cheaper. The other people who invest are people who actually believe in the idea the company has. All the ideas and the road maps can be found in the companies whitepaper . You should always read the whitepaper and only invest if you truly believe in the idea, not just for the hopes of a quick build up. Don’t buy into the hype.
Most ICO’s are rubbish. That’s the fair truth. With more ICO’s comes more scams as well. Be careful and invest wisely! Here’s a more in depth article on how to invest in ICOs decently.
So by now you should have a pretty good understanding of what a cryptocurrency is and how they work. In the next part of this training, you will get into more advanced technologies that you can use to MAKE MONEY!
So, now on to part Two.
Learning how to read the charts is a big help. It permits you to make educated guesses when trading your cryptos. This section of the course will concentrate on Technical Analysis . Using the strategies below, you should have no problem making 5-15% gains daily . Since these can get a little complicated to understand, we’ve created a movie series so you can go after along.
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Introduction to Technical Analysis
Build up Focused Trading Strategy
Fundamental vs Technical Trading
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