Tips for crypto newcomers It can be both exciting and intimidating when first getting into cryptocurrencies. I asked people in the crypto community to share the one thing they wish someone had told them when they first got into cryptocurrencies. Hopefully the following consolidated list will be helpful for those that are looking to go down the crypto rabbit hole.
1. Dive into learning about blockchains and cryptocurrencies
Before you start investing in cryptocurrencies it is critical that you build up an understanding of the space. A few good places to start:
2. Try using a small amount of cryptocurrency
Once you’ve read the basics of cryptocurrencies it’s helpful to understand them further by getting a small amount and actually start using it. Coinbase is the place where I refer my friends and family to easily link up a payment method and buy a small amount of bitcoin or ether to play around with (disclaimer: I used to work at Coinbase). You can also sign up for an account at Earn to receive bitcoin from responding to messages or completing tasks. Here are a few different ways you can use your newly obtained cryptocurrency:
- Make a donation: A number of organizations accept bitcoin donations. For example, you can follow Wikimedia’s online instructions to send bitcoin to their donation address.
- Buy a digital collectible: CryptoKitties, where people can collect unique digital cats, is a fun way to play around with Ethereum.
- Pay in person: Yelp has a feature where you can filter for places that accept bitcoin payments.
3. Do your own due diligence before investing
Keep in mind that if others are telling you to buy or sell a coin they might have a vested interest so it’s important to always do your own research. There are many scams, projects without a working product, and projects that are marketing heavy rather than focused on building the technology. Make sure to review how the technology works by reading through the white paper, blog posts, and forums. Here are a few resources for diving into and keeping up with projects:
- Token metrics: OnChainFX has some of the best data out there. Pay particular attention to the Y2050 marketcap (implied) as each coin may have a different inflation rate and schedule.
- Research reports: Smith + Crown has detailed research coverage of select token sales and industry trends.
4. Make security a priority
Once you purchase any cryptocurrency, it’s important to take security seriously. Try your best not to leave coins on any exchange as there is always the risk of the exchange getting hacked, having issues withdrawing funds, or your account itself getting hacked. It may seem intimidating but security can be very straightforward once you get used to it. Here’s a few recommendations:
- Get a hardware wallet: I have had a very positive experience using a Ledger Nano S and many of my colleagues have also recommended using a Trezor. Be careful when purchasing from somewhere that isn’t the company directly as the hardware wallet could be compromised.
- Use the Coinbase vault: If you absolutely must leave your cryptocurrency on an exchange, the safest way to store it is to move it into a Coinbase vault which requires multiple approvers and time delays in order to withdraw funds.
5. Only invest what you’re willing to lose
I can’t stress this point enough. The crypto space is still new and very volatile. If you’re interested in investing in cryptocurrencies, be sure that you can stomach the major fluctuations that come with it. If you find yourself feeling physically sick when you’re checking the prices on Coinmarketcap(https://coinmarketcap.com/) when the markets are down, you likely put in too much.
A common theme around many people I know in the industry is they consistently regret selling their coins at $X. If you put in what you’re willing to lose and hold onto it for the long run, you could find yourself in a better position, especially when you factor in taxes. The term for holding onto your coins in the crypto community is “hodl” which came from a typo on a bitcoin talk forum post.
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Originally published on medium.com