Welcome to Crypto, where to begin and how to NOT get got!

7 min readMay 11, 2021

Let us start from the beginning…

What is crypto?

According to Investopedia, cryptocurrency is: “A digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralised networks based on blockchain technology — a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.” In addition, this digital currency requires no bank to verify any transaction, enabling anyone anywhere to send and receive payment for goods and services. The blockchain is the underlying technology upon which cryptocurrency runs. It is decentralised and is spread across computers around the world making it anonymous and secure. Every time a new transaction takes place, it is recorded on the blockchain.

How to trade Crypto?

1. Make an account on a crypto exchange.

Before choosing the exchange, you’ll need to decide whether you want to trade on a centralised, or decentralised exchange.

Centralised exchanges are very common in the space. They are essentially private companies that provide people in the space a platform on which to trade crypto. During the registration process, they will ask for identification verification — Know Your Customer or Know Your Client (KYC) rule.

Although convenient, centralised exchanges are not true to the ethos of the crypt space. The exchanges run on private servers, which are susceptible to attacks. If the private company’s servers are attacked and taken over, everything on the exchange is up for grabs, including your identity and investments. As a side note, this is why it is recommended to NOT leave your crypto on exchanges if you are wanting to HODL (long-term hold). When you purchase crypto using these exchanges, you are doing so using their custodial wallets and not your own. You don’t own the private keys to these custodial wallets and many argue you, therefore, do not own the crypto. This is another argument against leaving your crypto on exchanges.

A decentralised exchange has no central point of control. Think of it as a server, but each computer within that server is spread across the globe. What this means is if one of these computers turns off, or is attacked, it will have no effect on the rest of the server, or exchange as a whole because there are other computers that can continue to run the network. Due to the nature of a decentralised exchange, it cannot be subject to the rules of any regulatory body, those using the exchange do not have to verify their identification and can come and leave as they please, whether their usage is legal or not.

In short:

The best exchange for newcomers is, Coinbase.

The best exchange for altcoins (anything not Bitcoin) is, Binance

The best decentralised exchange is, Bisq.

2. Pick a crypto to invest in

DO YOUR OWN RESEARCH (DYOR)! This cannot be emphasised enough. It is your money and only you truly know what you can comfortably invest. Only invest what you are comfortable losing. If it’s $50, then $50 it is. There is no undo in the crypto space, so every trade/transaction is irreversible.

Here is a list of things to take into account when investing in a coin:

The tech
Read the whitepaper if you can
The team
What problem are they trying to solve? Is there even a problem? Does their solution make sense?
Their vision
Credibility
The roadmap and have they stuck to their previous timelines
The community
Reddit
Telegram
Discord
Twitter
Market analysis
Pricing history
Is it at an all-time high?
Has there been a dip?

3. Store your crypto

Wait, can’t I just leave my crypto on the exchange I purchased them on? Well, that depends on a few factors, but let us start from the beginning.

What

Your crypto wallet is what you use to interact with a blockchain network and falls under one of three categories: a paper, software or hardware wallet. Now, there are different use cases, but the tl;dr is hardware wallets are the most secure method of storing your crypto, with software being the most convenient and paper wallets being widely considered obsolete/unreliable.

How

The first thing to understand about wallets is that they don’t actually store your crypto. They are merely vessels through which you can interact with a blockchain allowing you to send and receive the required information in order to perform transactions on the said blockchain.

Examples of this information include:
1. Your public keys.

2. Your private keys. Never share this with anyone as it will mean they are able to access your crypto. Also remember, if you don’t own the private keys, you don’t own the crypto. Looking at you, Robinhood!

Your private keys (or seed phrase) will also allow you to access your crypto on any device and that’s because your crypto never actually leave the blockchain, they just change from one address to another.

An assigned address that you will use to receive or send crypto to and from your wallet, which acts as a location on the blockchain. It’s okay if your address is public. When sending or receiving crypto, always ensure you are sending crypto to the right address.

Hot wallets are any wallets that are connected to the internet. Your crypto is very accessible and trading with your crypto is convenient.

Cold wallets have no connection to the internet making them less likely to be compromised by those evil people who want your precious crypto. Cold wallets usually come in the form of a USB drive device that stores a user’s private keys securely. If you’re a loooooooong-term HODLer, this may be the option for you.

A cold wallet is a physical device that uses a random number generator (RNG) to create public and private keys. The device, which is not connected to the internet, is home to these keys, making it a cold wallet and as a result arguably the most secure methods to store your crypto.

Software wallets

Web wallets

Web wallets make it possible to access your crypto, without having to install software — think metamask (browser) and your exchange wallet. You create a password to access your crypto, but in some cases, the provider will hold the private keys. Again, if you don’t own the private keys, you don’t own the crypto. If you’re leaving your crypto on the exchanges, set up multi-factor authentication, anti-phishing code, and withdrawal address management.

Desktop wallets

If you opt for a desktop wallet, you will be installing software onto your computer and you’ll be able to manage your crypto through that. You will have your private keys, which are stored locally on your computer. Encrypt it with a password as an extra precaution. BACKUP YOUR PRIVATE KEYS AND PASSWORDS because by doing so, you will be able to access your crypto on another device. Scan your computer regularly for viruses, malware etc.

Mobile wallets

These are very similar to desktop wallets but operate on…you guessed it, mobile devices making it incredibly convenient to send, receive and spend your crypto on the go. Again, BACKUP YOUR PRIVATE KEYS AND PASSWORDS.

Paper wallets are exactly that — pieces of paper with a crypto address and its public and private keys printed on it in the form of a QR code. A major flaw to this option though is that you are only able to transfer the entire balance to an address, making it the wrong option when wanted to send a smaller amount to an exchange to trade or to another address to purchase something. As stated above, this method is somewhat dated and is considered dangerous.

Finally, BACK UP YOUR SEED PHRASE AND PASSWORDS!

4. Beware of scammers!

Pump & Dumps

These are run by a small group of people who create telegram or discord groups and encourage the hundreds or thousands of eager followers to invest in a certain coin. The admins have already invested heavily in said coin for a fraction of the price. Once the other group members have invested in it, the price is artificially pumped up. It’s at this moment the admins sell their coins after making some crazy gains. They don’t tell the other group members, who get burnt when the price inevitably dumps as people sell-off. Avoid these at all costs! It is not worth it.

Twitter crypto giveaways

Certain people will create fake accounts with usernames deceptively close to verified accounts and use the same profile picture. They’ll then tweet with a username similar to Elon Musk’s official account with a tweet like, “I want to give back to the community. Send me one BTC and I’ll send back two.” Some hackers were even able to hack official accounts and post tweets like this:

The above is the actual account of Barack Obama, so it’s easy to see how some people were duped into sending them crypto. Common sense would tell you that Obama would never tweet something like this. Don’t let greed blindsight you.

Fake apps and websites

When using a service, be it their site, or phone app, double and triple-check it is the official page/app coming from official channels.

Emails & DMs

If you receive a message from someone you don’t know, promising you crypto wealth, don’t respond. Instead, ask yourself:

Who is this person?

Why are they messaging you directly?

Can you verify what they’re saying somewhere else?

How does this person benefit from you doing what they ask?

Other Great Resources:

Coindesk — How to Spot a Crypto Scam

MyCrypto — MyCrypto’s Security Guide For Dummies And Smart People Too

Gemini — Fake Cryptocurrency Exchanges