Crypto Quick Start Guide For Beginners
You have most likely heard of cryptocurrencies and how they are making investors super wealthy. In the last one year alone, the two foremost cryptocurrencies, Bitcoin and Ethereum, have generated returns of over 600% and 4000% respectively. Essentially, if you had bought $1000 worth of Bitcoin at the start of the year, you would have made $7000 by now. Quite lucrative, right? So how do you go about it?
Getting Starting in Cryptocurrency Trading
The first step to investing in cryptocurrencies is to register with a cryptocurrency exchange. A cryptocurrency exchange is simply a platform that allows you to buy and sell your cryptocoins. There are numerous exchanges out there, but don’t just rush to create an exchange account. That’s because, there are several factors you need to look out for before putting your money in an exchange. Some of the factors to consider are as below:
Different exchanges charge different transaction fees. Go for one that has favorable transaction fees, though fees should not be your only consideration factor.
Cryptocurrency exchanges are susceptible to hackers. Several exchanges have been hacked and millions lost. That’s why you need to check out the security features of an exchange. Some of the features to look out for include two factor verification, and google authentication.
Once you select an exchange that’s favorable to your needs and bought cryptocurrencies, you need to store them in a secure place. Though there is an option to leave your cryptocurrencies in an exchanges, this is never advisable, as they can be lost in case of a hack. That’s why you need to create an account in a safe crypto storage. In crypto world, that storage is called a wallet. The transfer process is simple. You just copy you wallet cryptocurrency address into your exchange, then click send, and that’s it.
There are three types of wallets that you may choose to store your cryptocurrencies. These are as below:
These are online based platforms where you can store your crypto coin private keys. The advantage of online wallets is that they allow you to access your coins from anywhere, provided there is an internet connection. The problem is that they are susceptible to hackers.
These are some of the safest cryptocurrency wallets out there. They store your coins private keys offline and are safe from malware attacks. The only drawdown is that you have to be on your computer for you to access them.
These operate the same way USB storage works. You transfer your cryptocurrency keys to a USB-like device, and keep them away from the computer. This protects your coins from hackers since they are away from any computer networks. However, you should always ensure that your hardware wallet is safely stored. Otherwise, you will lose your cryptocoins for good.
For information on what cryptocurrencies to buy at any one time, join crypto trading groups and forums online. These forums and real-time crypto chat groups give you a chance to interact with experienced traders, who can give you insights on the best cryptocurrency opportunities out there, and increase your chances of profit.
What are the top 10 Cryptocurrencies?
If you are looking to make money from cryptocurrencies, then Coincap is the best place to get informed on how they perform. To give you a better idea of some of the best Crypto’s, let’s go through the 10 most popular ones.
Bitcoin is the foremost cryptocurrency. It works through a decentralized payments ledger, where different people from all across the world make entries into the system. Bitcoin is the most popular cryptocurrency, and has appreciated by more than 600% in the last 11 months.
Have you ever heard of ICOs and how they are generating crazy amounts of wealth for investors? Well, they are based on the Ethereum smart contracts platform. Ethereum is a decentralized platform that runs on blockchain technology to ensure that smart contracts can work cost effectively and with minimal downtime. To learn more about Ethereum you can check out this article from Coincentral: https://coincentral.com/what-is-ethereum/
Bitcoin cash was created a few months ago after a Bitcoin hard fork. The whole idea behind Bitcoin cash was to make Bitcoin more usable for day-to-day transactions. Merchants find Bitcoin cash useful because it has low fees and has fast transaction speeds. The defining feature of Bitcoin cash is an adjustable block size, making it possible to scale as demand grows.
Ripple is all about convenience and prides itself as one of the best currency exchange and remittances network. Ripple allows for instant and secure global transactions with low transaction fees. Ripple is anchored on a shared public ledger where transactions have to be verified through consensus. When compared to Bitcoin, Ripple has an advantage of speed and efficiency in transactions.
Litecoin is very close to Bitcoin, the only difference being that Litecoin has lower transaction fees and higher speeds. Litecoin operates on an open source protocol, which means everything about Litecoin has to be determined through consensus. Since its creation in 2011, Litecoin has aimed for lower block processing times.
This is an open-source cryptocurrency whose key selling point is scalability. Dash has all the key features of Bitcoin but has instant and secure transactions on top of it. This cryptocurrency’s open governance system makes it possible for businesspeople to make money by adding transactions into the system without the need for expensive GPUs.
This is one of the best cryptocurrencies when it comes to secure transactions. The privacy that Monero offers is based on a major difference that this cryptocurrency has with Bitcoin and many other cryptocurrencies. That difference is the fact that every unit of Monero can be substituted for a new one at any time. It can also be mined more efficiently than Bitcoin with ordinary GPUs.
This is a Chinese Cryptocurrency that was formerly known as AntShares. It is an improvement of the Ethereum platform which makes it possible for it to support decentralized ecommerce. NEO has had a phenomenal year and looks set to continue growing. One of the things that have pushed NEO’s value is its ability to bypass the security loopholes that plague Ethereum.
This cryptocurrency is designed to deliver private transactions at affordable rates. This coin has an advanced consensus system that allows NEM to grow without creating instability. It also allows individual users to customize how they use this currency on the blockchain.
This is the original Ethereum. When the Ethereum smart contracts platform was first created, it was hacked, and $50 million of Ether was lost. This led the Ether community to come up with the decision for a hard fork that would give new Ether to people who lost their coins. The new coin was named Ether (ETH), while the people who did not want to participate in the fork were left holding Ethereum Classic.
Comparing Bitcoin and Ethereum
If you have followed Cryptocurrency news for the last 11 months, then you have probably heard about Ethereum. That’s because just like Bitcoin, the world’s most famous cryptocurrency, Ethereum has experienced tremendous growth having shot up by over 4000% since January. Amazing returns, right? But what exactly is Ethereum? Ethereum is a decentralized platform that allows people to create and run smart contracts using blockchain technology. Ethereum is open source, which means anybody can create their own modifications on the system depending on what type of smart contract applications they want to run. Ethereum smart contracts have made to possible for startups to raise funds through the internet, through the now infamous initial coin offerings (ICOs).
IS ETHEREUM DIFFERENT FROM BITCOIN?
While both of them are cryptocurrencies running on blockchain technology, they are fundamentally different. One of the key differences between the two is that Ethereum block time is between 14 and 15 seconds, thanks to its application of a system known as the ghost protocol. On its part, Bitcoin’s block time is around 10 minutes. This means that Ethereum transactions are way faster than those of Bitcoin, making it more efficient.
The two cryptocurrencies are also different in their operational models. While Bitcoin block rewards after every 4 years, the Ethereum platform produces the same amount of Ethereum annually forever. This simply means that there is a cap on the number of Bitcoins that can ever be mined, but Ethereum will always be produced.
Bitcoin and Ethereum also differ in the way they started. While Bitcoin was developed and implemented by a small group of individuals, Ethereum was crowdfunded. This means that over time, most of the Ethereum in circulation will be in the hands of miners, while a significant number of Bitcoins will always be in the hands of the people who first developed it.
The two also differ in the way mining is done. Bitcoin is mined through ASICS which means that mining is largely concentrated in the hands of a few individuals. This is in stark contrast to Ethereum which is mined utilizes a memory hard mining algorithm, which makes mining highly decentralized GPU mining.
HOW CAN ONE START TRADING IN ETHEREUM?
There are two fundamental ways of getting started with Ethereum. The first one is to buy it through an exchange. Most of the major cryptocurrency exchanges out there allow traders to buy and sell Ethereum. This way, you can buy or sell Ethereum depending on the prevailing market sentiment. To make the best decisions on when to buy and sell Ethereum, you can join online platforms like Hashtag investing, where traders and other cryptocurrency experts discuss Ethereum prices in a real time chat room.
You can also get started in Ethereum through mining. To make money through mining, you need to get the latest GPU hardware. You also need to familiarize yourself with the prove-of-stake mining protocol which is the mining protocol that Ethereum wants to transition to. However, as a beginner, buying Ethereum through an exchange is the easier and more profitable option.
WHAT IS AN ICO?
If you have been following financial news in the last one year, then you know that cryptocurrencies have been generating hefty returns for investors. In the same breath, you may also have heard of ICOs and how they are creating wealth for both investors and entrepreneurs. So what exactly is an ICO? It is simply an unregulated way of raising capital for companies. A company that wants to raise capital creates a token and sells it to investors in exchange for mainstream Crypto’s such as Bitcoin and Ethereum. If the company is successful, the token value increases, giving a return to investors. On its part, the company behind the ICO uses the capital raised to finance its projects, and create value.
WHAT’S THE DIFFERENCE BETWEEN AN ICO AND AN IPO?
The primary difference between the two is that IPOs are regulated while ICOs are not. Unlike an IPO that requires government regulatory approval, anybody with an idea can come up with an ICO. The only danger to this is that many ICOs out there are scams. There are numerous cases where people have invested in ICOs and lost their money to online scammers.
HOW CAN ONE TELL A GOOD ICO FROM A SCAM?
To avoid falling victim to an ICO scam, there are a number of factors that you should consider before investing in one. These are as follows:
Read through its whitepaper: Before they launch, ICOs usually release a whitepaper detailing what exactly they are about. Before you put your money in an ICO, read through the whitepaper and feel convinced that the value proposition is worth it. If the whitepaper is all about how you will make money, don’t invest in it. That’s basically a sales pitch that doesn’t offer any clear roadmap as to how it will create value for investors.
Scrutinize the team behind the ICO: All ICOs have a founder team and an advisory team. Evaluate the professional skills of the founder team relative to the product they want to launch. If the team’s skills don’t match with the product they are offering, take that as a red flag. As for the advisory team, lookout for the inclusion of well-known entrepreneurs and other successful people on the list. That’s because, a well-known entrepreneur would not risk their reputation just to take part in a scam ICO. In short, before investing in an ICO, make sure the people behind it have something to lose if it goes wrong.
SO HOW DOES ONE INVEST IN AN ICO?
To invest in an ICO, you just need to check online for the latest ICO news. There is always an ICO being launched at one point or the other. Once you find one that you are convinced is a good buy, subscribe to its email updates, and wait for the launch date. Most ICOs accept Ethereum payments, so it’s best that you open an account with a relevant Ethereum wallet. My Ether Wallet is one of the most convenient and secure Ether wallets out there when it comes to ICOs.