Crypto Curious? Here are some easy steps to get started (Part 1)

I get a lot of questions about crypto. What's a "wallet"? Is crypto a Ponzi scheme? How do you know what coins to buy?

Maybe you're crypto curious too, but just don't know where to get started.

I thought I'd answer some of the most frequently asked questions to help those that want to start out in crypto dive in with confidence.

Believe me, if I can do it so can you.

Part 1.

TL;DR (too long; didn't read)

Crypto investing may be intimidating but it's not hard. Some crypto currencies are primarily store of value; some are store of value and tech platforms. There are three steps to getting started to investing in crypto: do some homework; open a crypto exchange account (I use Coinbase); transfer the coins you buy from the exchange to a software wallet (I use Exodus).

Q1: I want to invest in crypto - where do I start?

Disclaimer: I'm not an investment adviser by any stretch - I just spend a lot of time reading, researching, and learning through experimenting. I will outline the steps to investing but you will need to do your own homework on specific crypto coins to invest in.

Before you start investing, you need to understand the functions of cryptocurrencies. They generally fall into two different categories:

1 - Store of Value - a security or investment that holds (and hopefully increases in) value

2 - Store of Value and Technology Platform - a tech platform that provides a store of value and/or access to smart contracts (smart contracts are basically executable code on the blockchain)

Bitcoin (BTC) is the crypto currency you've heard of. It's the 900 pound gorilla of category 1. Ethereum (ETH) is the big name you've heard of in category 2 - it's a smart contract platform and a coin that you can buy to store value.

(I go into more detail about BTC and ETH in the BONUS SECTION below - I highly recommend you read up a bit on them later.)

There are many, many other crypto currencies with names you might have heard of (no, I will be discussing DOGE). Many of these can do things like provide governance, or the ability to trade non-fungible tokens (NFTs), or buy fractionalized assets - such as residential properties or the?U.S. Constitution.

But a good starting point for buying crypto is for the store of value (category 1) so we'll stick to that in this article.

Steps to buying crypto:

1. Do some homework
2. Buy the coins you want on a crypto exchange
3. Transfer your coins to your "wallet" and secure your private key

1. Do some homework

This is straight forward. Know what you're buying. Find the coins that you think are interesting or have lasting value and invest in them. Read up on the latest projects and their use cases.

Learn about Proof of Work, Proof of Stake and other proof mechanisms. I promise you that these will all be useful to you as blockchain/crypto/Web3 gets global adoption. And for you older folks, you will be able to talk with your children about something that will be very important to them and their future.

Don't chase trend charts. Some people look at the price charts on a crypto exchange andsee that many coins move up and down with BTC and start buying those because they think they're getting crypto at a discount. That's not investing in crypto - that's uniformed speculation. You could be buying shitcoins.

Check out Part 2 for more resources to help you research through podcasts, YouTube videos etc.

2. Buy the coins you want on a crypto exchange

This is really no more difficult than using your banking app or buying stocks on E*Trade. You just have to open some accounts.

I use?Coinbase because it’s streamlined for mass consumers, is a publicly traded company,?and?has an enormous valuation providing a bit more comfort that my investment will be secure in the unlikely scenario of hack. It does however have higher transaction costs than some competitors, but I'm not high volume trader so this is fine for me.

It doesn't really matter what exchange you use because, as you'll see in a minute, we don’t keep crypto in those exchanges for long.? Here are some other exchanges.

You'll have to deal with KYC (know your customer) - meaning you'll have to give the exchange your name, ID etc. to confirm that you are who you claim to be.

Exchanges use KYC to prevent illegal activities, such as money laundering, funding terrorism, tax evasion etc. I think this is a good thing, even if some people believe it goes against the ethos of decentralized and anonymous crypto.

You'll have to link to a bank account and do other housekeeping, but basically you should be up and running within a day or two.

Once you've used the exchange to buy some coins, you probably think you're done. You own your crypto!

Actually you don't.

I want you to remember this phrase as you will hear it a lot now that you're a cryptoneer:

"Not your keys, not your coins"

What does that mean?

Rather than do a deep dive into cryptography and the different functions of a blockchain, here's the most important thing to remember: every crypto wallet you own will have a public key (its address that everyone can know) and a private key (a secret password, that only you will know).

So in the most basic terms - if you don't know the public and private key associated with the purchase of that crypto you just bought - you don't really own it. It's in someone else's wallet and you're using another system (in this case the exchange's web interface) to access an account that is a representation of that wallet.

So now let's get you your own crypto wallet - so you can REALLY own your coins.

3. Transfer your coins to your "wallet" and secure your private key

First thing you want to do is set up a crypto wallet to transfer that crypto you bought on an exchange.

I use the Exodus software wallet to hold my coins because it supports hundreds of different cryptocurrencies, has a nice interface, has native (integrated) support for hardware wallets (more on those in another article - just know that they're the safest form of wallet, also known as cold wallets) and has both a desktop and mobile version.

(Also, see the BONUS SECTION at the end of this post for other products I use, such as hardware wallets, browser extension wallets, etc.)

When you pick a wallet and open an account, you'll need to write down a "seed" phrase. This is anywhere from 12 to 24 words that directly correspond to the private key of the wallet that you just opened.

IMPORTANT: The seed phrase is the most important part of this entire process and you must make sure you copy it down correctly and secure it. If anyone gets access to this seed, they will be able to fully access your account and do whatever they want with your crypto. Treat this like a combination to a virtual safe that holds a lot of money - figure out a very safe place to put it.

Now that you bought your coins on an exchange and set up your software wallet, the rest is easy. Go to the exchange you used and go to the menu where it allows you to "Send" the coins you just bought. There will be a spot for an "address" to send the coins to.

Your software wallet has that address, sometimes labeled as the "receive" section of the interface. It will be a long string of characters that look like this:

WPFA66VN5M3AMZ2U5GYF7ZD44ZQ6GB6MESWTFGORTCBPDFCWCQX2ITD

This is the public key of your software wallet – your wallet's unique address. Copy and paste that into the exchange,?fill out a few more fields, and press send.

One more time because it's so important: All you'll need to send and receive coins is your public key (the address). You will never need to enter or reveal your private key to anyone.

To summarize:

• go to your software wallet
• copy the 'address' of the wallet (sometimes listed under 'receive')
• go to the exchange where you bought the coins
• go to the 'send' section and paste the address from your wallet
• enter how many coins you want to transfer to your wallet and press send (you'll have to pay transaction fees)

That's it - depending on what coin you sent, they should show up in your software wallet either instantaneously or within a few minutes.

Congrats! You own your coins because they are now in your own wallet. Tell your friends!

(Once you get this meme ???????? you are ready to own your own wallet and secure your private keys)

Part 2 coming soon, where I'll answer:

• I want to buy BTC but it's too expensive - am I too late?
• I want to learn more - what are the best resources?

Par 3 sometime in the future

• Is all of this safe?
• And what the hell is an NFT?

BONUS SECTION:

Bitcoin and Ethereum

The Bitcoin network is relatively slow (low number of transactions per second), but very secure (thousands of miners all over the world ensuring its stability and accuracy). Currently there is no real "smart contract" capability on the Bitcoin blockchain.

However, it has the market cap of a small country and there is an enormous amount of effort and capital being invested in making Bitcoin a true, global currency. (Disclaimer: I own BTC)

You should read the Bitcoin white paper that started all this. It's very easy to digest and you don't need to be a technologist to understand most of it.

You can "do" more things on the Ethereum blockchain than just exchange ETH between one party and another because it has smart contracts.

It is sometimes referred to as the World Computer because it can process code on the Ethereum nodes that are distributed all over the world. The Ethereum white paper is much more technical but has some great nuggets. (Disclaimer: I own ETH)

Also helpful: Bitcoin vs. Ethereum: What's the Difference?

Other Wallets

You'll probably want to eventually have more than one wallet to keep from having all your crypto in one place and to easily use crypto in different ways.

For holding crypto long term in the safest way possible, I use the Trezor hardware wallet because it works well with Exodus.

To use ETH day-to-day, I have a couple different Metamask accounts (its browser extension) for purchasing NFTs on platforms like OpenSea and starting DAOs on DAOstack.

To use my ALGO day-to-day (which is a cryptocurrency and platform built out of MIT and a favorite technology of mine) I use MyAlgo wallet, for buying NFTs on AB2, and staking on Yieldly.

Here's Investopedia's Best Bitcoin wallets of 2022