So I'm going to write a bare essentials guide on how to crypto...it's a verb now.
To get into crypto there are just a few things you need to understand:
What's A Wallet
What's an on-ramp
What's an off-ramp
What's an exchange
How do I buy?
How do I sell?
I can't really tell you what to buy, nor will I attempt to. I'm pretty sure that's illegal, and if it isn't, then I don't want you being mad at me anyway. So I won't do that. But at the end, I'll explain my high level thinking when it comes to crypto, and I'll briefly explain some more advanced topics in the crypto arena around how to make money. BRIEFLY.
This is a bare essentials guide so I'm going to spare you the technical details and say that cryptocurrency is digital currency that lives on the blockchain. Not every crypto coin or token is the same and so it is extremely important to do your own research before investing, but generally speaking its digital money. Depending on the token, it has damn near all the properties of money. Cryptocurrencies generally share the same properties as traditional money:
Durable: They're non-physical and can't be altered or destroyed.
Portable: Being digital makes them easy to transfer and store.
Divisible: They can be broken down into tiny units, such as 0.0001 ETH.
Uniform: The underlying code ensures consistency, and the blockchain's security makes it trustworthy – just check the token contract.
Limited supply: Most cryptocurrencies have a capped supply, which helps maintain their value.
Acceptability is still growing, but cryptocurrencies are increasingly being recognized as a legitimate form of digital currency.
Think of it like a network that keeps track of all of your transactions. Technically speaking, it's a digital ledger. Imagine a library with a single, magical history book. Every time something happens, it's written down in this book. Once it's written, it can't be erased or altered. The book just keeps growing, page after page, as more events are recorded.
But for the sake of this conversation, let's just say it's like a network. Are you on Verizon (ethereum) or Visible (base). And they keep an unchangeable log of all of your transactions just like the phone company keeps a log of all your calls, texts, and data usage.
So, Why Do People Think Crypto Is a Scam?
People are often skeptical of things they don't understand, and cryptocurrency is no exception. The crypto space does have its share of scams, but that doesn't mean the whole system is flawed.
Some people say crypto is just "fake internet money." But what gives the US dollar its value? Exactly. Crypto is about as real as the US dollar at this point. I'm being very simplistic but the price of a token is worth the amount the next person will pay on an exchange. Just like stocks...again being simplistic here.
Just because something is new and unfamiliar doesn't mean it's a scam. The internet was once new, but now it's an integral part of our lives. With education and understanding, people can make informed decisions about crypto.
No, cryptocurrency itself is not a scam, although there are scams that exist within the space.
How Do I Get Crypto?
Now that we've covered the basics of cryptocurrency, let's move on to how to get it.
To buy cryptocurrency, you'll need to use an "on-ramp" - a service that allows you to exchange your traditional money for cryptocurrency. One of the easiest on-ramps to use is Coinbase. Ever heard of them?
Here's how it works:
Sign up for a Coinbase account.
Verify your identity through their secure process.
Use your debit card or bank transfer to buy cryptocurrency.
Simply put, an on-ramp is a way to get your money onto the blockchain. It's the process of buying cryptocurrency. On the other hand, an "off-ramp" is a way to sell your cryptocurrency and move your money off the blockchain. The good news is that Coinbase offers both on-ramp and off-ramp services, making it easy to buy and sell cryptocurrency in one place.
An exchange is a platform where you can buy, sell, and trade cryptocurrencies. Just like how stock exchanges allow you to trade stocks, and forex exchanges allow you to trade currencies, crypto exchanges allow you to trade cryptocurrencies.
Some popular crypto exchanges include:
Coinbase
Crypto.com
Gemini
Binance
To use an exchange, you'll need to:
Sign up for an account
Verify your identity through their secure process
Once you've completed these steps, you'll be able to:
Buy cryptocurrencies using your local currency
Swap one cryptocurrency for another
Sell your cryptocurrencies for local currency
Think of an exchange like a marketplace where you can trade cryptocurrencies with other users. By using an exchange, you can easily manage your cryptocurrency portfolio and make transactions.
When you buy cryptocurrency, it's a good idea to store it in a safe place. That's where a digital wallet comes in. Think of it like a virtual wallet that holds your crypto, similar to how Apple Pay or Google Pay holds your debit card info.
The whole sorta schtick about crypto is about self custody, meaning you hold your own money and not some bank or middleman. But remember, with great power comes great responsibility! If you lose your wallet's passphrase or private key, nobody can help you get it back.
There's not necessarily a right wallet to use, but some wallets are easier to use than others. Metamask and rainbow wallet are the two wallets that I've enjoyed the most, but try them all out and see what you like. As long as you have your special words (called a seed phrase) or private key, you can switch wallets and keep your same address. It's like moving your cards from one physical wallet to another.
When you create a wallet, you'll get a special set of words (usually 12) or a private key. These are super important, so DO NOT UNDER ANY CIRCUMSTANCE SHARE THEM WITH ANYBODY.
If someone gets their hands on these words, they can access your crypto. That's why there's a saying in crypto: "Not my keys, not my crypto."
If someone has your seed phrase or private keys they can access your crypto. Remember when I said there were scams in crypto? This is the biggest one. People trick you into giving up your keys and drain your wallet. Just imagine giving somebody the keys to your private safe filled with your life’s savings. That’s bad.
On the other hand, you'll also have a public address (starting with 0x...) that you can share with anyone. This is the address you'll use to send crypto to yourself from a place like Coinbase.
So, to sum it up:
You have a wallet address (public) that you can share with anyone.
You have a private key or seed phrase (private) that you should never share with anyone.
You should write down and lock up your private key or seed phrase to keep it safe.
You should send your crypto to your wallet address to keep it safe.
Remember, keeping your crypto safe is your responsibility, so be careful and stay smart!
There are a few different ways you can “make money” with crypto. Again, being a bit reductionist here but broadly speaking these are the ways:
You buy a token and the price of that token goes up.
You buy an NFT, and the price of that NFT goes up.
You can trade, which is different from investing and frankly not something I can explain in one bullet. (I tried, and I deleted the explanation thrice).
You can participate in DeFi activities. Again, too much for one bullet point, but imagine if you had the opportunity to loan your crypto out to others and then get paid interest. That’s DeFi. (Obviously I’m oversimplifying again).
Ultimately though, what you want to make sure you do is RESEARCH. Research the crap out of a token, an NFT, a DeFi project. Spend time understanding the big picture of what’s happening. You don’t have to get super technical, but you need to know where the value is being created. And then, when you feel confident, take a chance. That’s what I do.
Make sure you adopt some risk management strategies so that you don’t give away the farm, but ultimately, you never really know. So do as much research as you can, and then try it out. And be consistent. And then you’ll start to see your money grow.
