A Guide to Cryptocurrency

Written By: Owen Retzlaff and Holden Ziels

If you have been paying attention to the news the past 4 months you have probably heard about Bitcoin and its astronomical 1,500% rise to almost 19,000 USD per coin. If you had invested $30 into bitcoin in early 2011, you would have purchased around 120 bitcoins –  if you were to have sold just 3 weeks ago you would of made about $2,339,760. Now that is life-changing money, and if you were like me, you probably wondered: “How do I get in on this?!”. Before you know how to buy it, you have to know what it is..
Bitcoin, the most popular and first major cryptocurrency in the world, was created by an anonymous user(s) under the name Satoshi Nakamoto. Nakamoto started the Blockchain, a ledger that uses cryptography to connect blocks containing a transaction and a timestamp. The ire behind cryptocurrency and the blockchain is due to the unregulated and decentralized character of its economy, unlike the federal reserve which enforces strict government oversight and the printing of fiat currency. The fact that it is unregulated and decentralized has caused some despise from governments and economists stating that because these exchanges are not connected to banks, tax evasion is easier.

 

A quick glance at a popular crypto exchanges like Coinbase or Binance would probably make you think, hey, this doesn’t look too different from stocks? You would be right, for the most part; cryptocurrency trades similarly to how stocks would, you place a order for a coin and then you are invested in that coin. Except, Crypto markets are running 24 hours and prices are changing every second compared to the New York Stock exchange, which opens 9:30 am local times and then halts all trades and closes at 3:00 pm local time. That is where the similarities seem to end.

 

Due to the anonymity of cryptocurrency it has been used for some malicious things, the most notable being the deep web marketplace known as the Silk Road which sold some illegal drugs and only accepted bitcoin as its currency. In October 2013 the founder of the site, Ross William Ulbricht was arrested and the FBI seized about 144,000 bitcoins from Ulbricht worth 28 million at the time, now worth over 2 billion dollars. Ulbricht would be the 370th richest man in the world today, except he is currently serving a life sentence without a possibility of parole, which some have argued was a very unjust sentence.

 

Modelling after precious metals, cryptocurrencies are designed to reduce production of that currency over time which places a cap on all circulation of that currency. While the main focus of crypto is on Bitcoin, there are many other choices. On Worldcoinindex the total market capitalization is around $734 Billion, Worldcoinindex includes over 100 different coins ranging from Bitcoin at $14,000 to Paccoin at $0.000125. This year in crypto has been the rise of altcoins, otherwise known as all other coins besides bitcoin. Bitcoin cash, a variant or fork of bitcoin surged up to almost $9,000 after being added to the largest crypto exchange, Coinbase, leading to allegations of insider trading. XRP or Ripple, a system that it is meant to replace SWIFT which is currently used by the world’s largest banks to transfer money, is another altcoin that is growing in popularity and has surged in the last month to #3 on market cap rankings at around 77 billion dollars and has had nearly 3 billion worth of USD ripple traded in the last 24 hours. Cryptos are a growing market with nearly 20 billion USD being traded throughout 72 exchanges in the last 24 hours, the future is uncertain for many coins as governments will decide whether or not they will be forced to regulate or even ban this booming market.

 

With all the gaining popularity and buzz of cryptocurrencies you may be wanting to get in on this yourself. Trading altcoins is similar to trading penny stocks in that there are thousands of them and they are all relatively cheap. There are currently 1386 altcoins listed on coinmarketcap.com and that number will continue to grow.

 

With all the gaining popularity and buzz of cryptocurrencies you may be wanting to get in on this yourself. Trading altcoins is similar to trading penny stocks in that there are thousands of them and they are all relatively cheap. There are currently 1386 altcoins listed on coinmarketcap.com and that number will continue to grow.

 

You may be asking yourself: where do I start? There are numerous amounts of exchanges for these altcoins and not every exchange has every coin which is why if you want to dabble in a broader amount you will need to set up multiple exchanges. It ultimately starts with Coinbase, an app/website which carries the top four cryptos: bitcoin, ethereum, bitcoin cash, and litecoin. Being the easiest exchange to use Coinbase has over 13 million users across several countries. You can buy these four coins on Coinbase by linking your bank account or with a credit card. Once you have purchased your bitcoin/ethereum/litecoin on coinbase you will see it appear in your Coinbase wallet. You can either leave it in Coinbase or you can transfer it to another exchange to trade the alt coins.

 

Now you will need to set up an account with one of the altcoin exchanges which include bittrex, binance, kraken, cryptopia, and poloniex just to name a few. Keep in mind a lot of exchanges are starting to deny new users due to the extremely high demand, Binance is one that is open at this time so I will refer to that in this example. Once you have your exchange account setup you will need to transfer your coins from Coinbase to this new exchange (transfer fees in litecoin are significantly cheaper than bitcoin). You transfer your coins from one exchange to another by sending your desired amount of coins to the other wallet using an address that exchange will give you. After the transfer is initiated it can take up to 30 minutes to fully process and get to the new wallet.

 

Most altcoin exchanges allow you to buy altcoins using bitcoin and sometimes Ethereum or litecoin. Once your wallet in the new exchange is loaded up with bitcoins you all ready to go buy altcoins. To buy altcoins you need to select the one you want, check the price in bitcoin (ex. 0.000156) and place your buy order. Different ways to do this are setting a bid which is where you set the price you want to buy at and once the coin hits that price your order goes through. Another way to do this is to just buy at the current price that people are selling theirs for. Once everything goes through your wallet will now be filled with whatever altcoin you just purchased.

If you plan on investing in cryptocurrency, you have to know the risks. ONLY put in money you could be willing to lose, prices fluctuate on coins every second and research what coins you want to buy before hand unless you are absolutely sure about what you are investing in. Exchanges for cryptocurrency are unregulated and you should be slightly weary about keeping coins on exchanges for long periods of time, We recommend doing research on digital or paper wallets that you can keep coins in if you plan on pursuing long term investments.  Exchanges have been hacked in the past and people have lost coins, and most likely if a exchange is hacked and you lose your coins, they are gone for good. Taxes also apply to crypto trades, while minimal amounts of money shouldn’t be a big deal, if you plan on selling large amounts of crypto for USD make sure to do research on digital asset taxes. Make sure to know what you are getting into beforehand. Have Fun!

https://coins.newbium.com/post/7282-the-altcoins-take-control-of-the-market

 

https://support.binance.com/hc/en-us/articles/115000497111-Binance-Coin-BNB-

 

 

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