Join the Future – Getting Started with Bitcoin and Crypto Currency

As of today, my crypto currency holdings have increased by 805% since I got into it in May. Whoa!!

Crypto currency = an innovative decentralized digital currency based on cryptography and blockchain technology to verify transactions, create and control supply, and secure transactions. Bitcoin was the first, and most popular, but there are hundreds of alternate crypto currencies.

They’re also called Coins. I like to call them Coinz.

I think it’s awesome, it’s the future, and it’s fun… so I made a 3 part post:

1. Intro to crypto currency
2. Step by step guide how to get in the game
3. Additional resources and ideas

If you just want to get some quick Bitcoin, you can buy it securely on Coinbase. If you want to catch more details, and see how to trade for alt coins, continue on.

Some definitions

Cryptography – The use of mathematical theory and computer science for encoding and decoding of information. Creates a foundational high level of security for crypto currency.

Alt coin – Short for “alternate coin”. Refers to crypto currencies other than Bitcoin.

ICO – Initial Coin Offering. Like an IPO, but for digital crypto coins.

The crypto coaster – the crazy ups and downs in value of crypto currencies (see screenshots above)

Crypto boner – when you get super into crypto currency and spend hours researching, checking graphs, and basically nerding out on the technology. Everyone goes through this phase at some point.

Exchange – a marketplace to buy and sell crypto currencies.

Blockchain – a decentralized and distributed digital ledger that records every transaction, across multiple computers, so every transaction and holding can be verified without corruption.

Mining – Computers solving complex problems to unlock/generate new coins for the miner. This is how the currency is generated (rather than printing money).

Ethereum – The 2nd most popular crypto currency, Ethereum is also a platform that allows developers to build applications on it’s network, opening up a world of cool possibilities. For example, what if you owned an electric car, and you stopped at a stoplight – under the road are chargers, and while you’re stopped, your car is also recharging, automatically exchanging charge for Ethereum. So you never have to stop at a charging station. That’s where this technology could be headed.

What Is Bitcoin?

Check this video for quick explanation:

A Brief History of Bitcoin

Shortly after the 2008 financial crisis, Bitcoin was created and launched in 2009 by an anonymous genius going by Satoshi Nakamoto. The tech was released open source, and has since been improved and inspired the many alt coins that followed.

It’s estimated Satoshi mined a million plus Bitcoins in the early days when it was worth nothing, and today Bitcoin is trading at over $15k / coin. Still, nobody knows who this person (or group) is… legend.

2011 Bitcoin started gaining some steam and by 2012 over 1,000 merchants were accepting Bitcoin.

2012 Coinbase, a secure online platform for buying, selling, transferring, and storing digital currency, was founded. It is now a major starting point for buying Bitcoin.

In early 2013 Bitcoin was worth about $100. It continues growing, being recognized as a currency, and becoming more cool to have some.

2014 Mt. Gox was the largest exchange for Bitcoin in the world. It got hacked and 850,000 bitcoins went missing daaaaaaaamn. Good to know that little snippet – don’t keep all your coins in 1 exchange.

Things chill for awhile, and value-wise Bitcoin doesn’t see any exponential increases until 2017, when it just starts poppin off! Alt coins and ICO’s are sprouting up left and right.

And here we are at the end of 2017, with Bitcoin and crypto currencies getting a major influx of interest and action, so much that exchanges can’t keep up and occasionally limit new users. As more people continue paddling into this wave, we should see rising values and more practical applications being use. Maintream adoption could open the doors for some cool technologies!

My Crypto Story

I heard about it a few years ago but never took the time to dive in – big mistake. I also had friends talking about Ethereum (a popular platform and coin) being the future… when it was worth a dollar. Now it’s worth over $800 per coin niiiiiiiiiiize.

I started with $100 into Coinbase the first week of May, got a little taste, learned and researched, then threw in a few hundred more. I only invested $700 total, but it has turned into over 6 G’s 7 months later and it feels like the rush is charging up again.

I think Ethereum has some great long term potential, so that was one of the first I bought in at, when it was about $90. I thought I missed out because a month earlier it was worth $10, but now it’s almost 10x’d on me again, so investment-wise I’m stoked that.

I’ve been building multiple businesses this year so with a lack of time and money, I just got in on some coins I believed in and kept it in the backburner. Obviously wish I would have invested more hah! (ROI scenarios coming further down)

There were ups and downs of course, but with the recent rush it’s got my fire stoked again!

It’s Not All About The Money

Appreciating assets are great, but this technology is also cool and it feels like the early 90’s when the Internet starting coming around, it was a cool new thing that we didn’t understand much, but started to see nuggets of potential, and then the avalanche hits and you realize THIS IS BIG!

It could be the big innovation breakout this decade – Internet blew up in the 90’s, smart phones blew up in 2000’s, 2010’s we’re seeing this new currency come up and take over, with some insane potential to shake up the entire world financial system.

This used to be the internet (dial up modems haha):

^^^ This is about where crypto currency is even though Bitcoin was born in 2009, it’s still niche and fairly early in adoption.

What I Like About Crypto Currency

• No banks or credit cards needed – especially nice if you do international business and get nailed with constant transfer fees
• It’s fast! You don’t have to wait days for transfers. Instead, it takes minutes (well, depending on the coin now)
• New technology is fun and interesting to get into, and while initially it may be overwhelming, once you get a grasp you can see the brilliance of this system
• It’s decentralized – meaning essentially no one controls it. Transactions and holdings are verifiable on the blockchain, like a collective verification system and 1 single entity controlling it.
• Anonymity – there are different levels depending on the coin, but a general principle is that encrypted transactions are handle via long chains of characters, rather than name, address, etc like credit cards or wires.
• It’s a new promising technology that hasn’t hit mass adoption yet.

Challenges with Bitcoin and other crypto currencies

• It needs mass adoption to function as a common currency.
• Mining uses tooooons of electricity. There are alt coins working to solve this issue, but still so much mining is done by huge computer farms that.
• Bitcoin has recently become a bummer to use because of high transaction fees. Luckily there are plenty of other options.
• Security. The technology is secure, but with no 3rd party regulations, you are responsible for your own money (which is one of the benefits too)

Practical Examples Why It’s Better

Scenario 1 International Transactions. I’ve worked exclusively online the last 3 years, and part time for a few years before that. PayPal is the most popular medium for transacting with freelancers.

Before I got into crypto currency, I hired a designer in Pakistan for some work, but turns out you can’t use PayPal in Pakistan. Here’s our conversation:

Joe: Whaaaaaat come on PayPal! Ok no prob, do you have Google Wallet?
Designer: No it only works for US accounts.
Joe: Ok how about Venmo or Dwolla?
Designer: Venmo needs to be in US also, Dwolla I don’t think works.
Joe: Hmmm ya I haven’t used Dwolla in years but it was promising.
Designer: How bout Payoneer?
Joe: Ahhh ya perfect I’ve heard of them I’ll sign up for an account… (goes to sign up for Payoneer) oh wait… Payoneer not available for US citizens jeeeeeez come on banks get with the times we all live on the same planet here it’s a small world.
Designer: You could use Western Union?
Joe: Haha hmmmm I’m in Colombia, I wouldn’t know where to find one, plus do these even still exist?
Joe: Well, I guess my only option is to eat the $27 fee and send an international bank transfer. Great designs though thanks! Send me your bank details.
Designer: Thanks man.

Crazy right?! This is EXACTLY the problem crypto solves. If we had crypto currency, I could have just sent him the equivalent value in Ethereum or some other coin with low transfer fee (fyi Bitcoin transaction fees were in the cents when that happened, but now they’re pretty high).

Scenario 2 Volatile Government Currency. The Venezuelan bolivar has lost 90%+ of its value this year, and it’s been sliding for years. The currency is so inflated and devalued, people have to carry bags of cash around to buy anything.

Crypto currency solves 2 problems here (assuming a stable coin and mass adoption to trade as currency):
1) Crypto currency is decentralized, so governments can’t control or corrupt it.
2) Transactions and wallets are digital, so you don’t need to carry paper cash.

Sure, credit cards are digital too, but they’re also owned by banks and charge high merchant fees…
and credit card information is relatively easy to steal and use for fraud.

Crypto currency is a game changer, a problem solver.

Right now it’s volatile, with values significantly changing on the daily (mostly in the up direction this year), but eventually we should have stability and be able to have an agreed global currency.

Our current financial system is wayyyy out dated if you think about it like this and in terms of how our world has changed, especially in the last 20 years now we’re all interconnected digitally and international business is common amongst online merchants.

Ok if you want to get started scroll down to Getting Started, but you gotta check out these stats the returns are mind blowing.

Some Fun Coin Stats

Here is what would have happened if you bought some coins on January 1st, and what they’re worth about a year later on December 21st.

If you invested $100 January 1st…

• You got .1038 Bitcoin > now worth $1,682
• You got 12.1685 Ethereum > now worth $9,994
• You got 5,000,000 Verge > now worth $620,733

And if you put in $1,000 January 1st…

• You got 1.038 Bitcoin, which is now worth $16,817
• You got 121.0653 Ethereum > now worth $99,436 (Nice!)
• You got 50,000,000 Verge > now worth $6,207,331 (WTF!)

Daaaaaaamn Verge went off, but there are a bunch of other alt coins that blew up huge too.

You can check a running list of coins and their historical values with coinmarketcap.com

This summer I put together some coin values and history for the year, this is what prompted me to buy 10,000 Verge coins when it was worth about 1 cent. I figured why not, who knows, and now that it’s 20x’d, I’m like alriiiiiiiight.

Coin values at the start of the year – fun for hypothetical calculations

Who knows if these are all just getting started, or if they’re going to crash, or are just cruising along, but it’s fun to speculate and have some cash in the game.

I shared my excitement with some friends and fam this summer after I studied the market haaaard and watched my own holdings going up. Some got in, some didn’t, but in retrospect I wish I would have made it easier and just had a step by step guide.

So now, here is that guide!

Getting Started With Bitcoin

Jump in the water’s warm!

This is just a hobby for me, I think it’s cool and since it makes money that’s double cool! I wouldn’t put in big stacks right away – just toss a couple hundred in to get started and play around, you’ll quickly get a feel for the market.

Bitcoin is the main currency to use for trading. So first you gotta get some Bitcoin, then you can use it to trade for other coins – there are currently about 1400 coins listed on Coin Market Cap.

How to Get In

It’s not too late, and if you’re here because you’ve been hearing the booming news about bitcoin, today is the best option you have to get started.

Step 1 – Buy $100 in Bitcoin from a reputable source

Crypto Currency isn’t regulated by banks, like traditional money, so you want to use a trusted entity.

Coinbase is the most popular.

– Founded in 2012 in San Francisco, CA
– $217M raised from investors
– 10M users

You get $10 free in Bitcoin if you sign up using my referral link:

www.coinbase.com/join/59084c7001bc8b0df50a02b8

… and I also get $10 in free Bitcoin. Thanks! I’ll buy you a beer next time I see you 😀

Take a quick look at my chart above and check what your $10 would have yielded if you traded in January for Verge (or another alt coin)- that ten bucks would now be worth $62,073 jeeeeez. Who knows what will happen a year from now, could go either way but I’m betting on more UP.

I like math if you couldn’t tell.

Here’s how to get into Coinbase:

It’s easy just head over to Coinbase and sign up for a new account, enter your info, add a credit card, and click Buy/Sell.

You can buy Bitcoin, Ethereum, Bitcoin Cash, or Litecoin with a credit card.

Toss in a $100 into Bitcoin for now so you can use it to trade for other alt coins.

Once you’ve established your account, deposits instantly show up and can be used for trading.

*I’ve been hearing they’re crazy busy with the influx of people jumping in Bitcoin, so there might be a few days wait for your first deposit to be available for trading.

Step 2 – Spread Da Coinz Arooooooound

Stack mad chips spread love with my peeps

Coinbase is your start point, but it’s not a full exchange marketplace. To trade in alt coins, you need to transfer your Bitcoin to a currency exchange, like Bittrex.

Bitcoin is flying sky high right now. Who knows it could crash, or it could continue, but either way there are hundreds of other cool coins, many backing interesting projects.

Side note, you can find coins on coinmarketcap.com, then just google a coin and you’ll see the purpose of their coin. Bitcoin is just a currency, but many of these coins are part of an ecosystem, like Steem for example.

My personal favs are Ethereum, NEO, Ripple, Steem, and now Verge (haha admittedly I don’t know too much about Verge, but since it has exploded in value I’m paying more attention).

Lots of coins to choose from.

Trading on Crypto Currency Exchanges

Everyone’s got their favorites, here are the 3 I’ve used personally:

• Bittrex (my go-to)
• Poloniex
• Kraken is cool you can deposit Euros here and trade (it’s more steps than Coinbase but a good option)

They’re all pretty similar, but not every coin can be purchased on every market, so sometimes if you want a specific coin you have to trade on a different market.

Here’s step by step guide how to transfer Bitcoin from Coinbase to Bittrex:

1. Sign Up with Bittrex then log in and click on Wallets

2. Type “bitcoin” in the search box, then click the + sign next to it.

3. This gives you your wallet address to send funds into your account

4. Head back to Coinbase  and click Buy/Sell to “sell” your Bitcoins to your Bittrex account

5. Paste your address from your Bittrex wallet, the amount of bitcoin you want to send, then click Continue

If you look at the fees, you’ll notice they’re super high right now! Earlier this year, you could send bitcoin for like 10 cents, as of now it’s like $30 whaaaaat. One of the best things about crypto currency is the ability for low transfer fees, because you aren’t paying into fat banks… this is one of the problems with Bitcoin right now, but luckily there are a bunch of other alt coins that don’t have this problem. Bitcoin is just the first mover and most popular, not the best solution.

What you lose in fees you make up as the market rises, so I just see it as a small annoyance at this point.

6. Grab a beer and wait for your transfer to complete

*Update: Because Bitcoin is raging in popularity, the network is congested so probably going to take a little longer, maybe 30 minutes to a couple hours, so grab a couple cold ones!

When the transfer completes, you’ll have the Bitcoin available in your Bittrex account, and now you can buy other coins.

7. Trading for alt coins

I like buying some well known coins, but I also like to gamble on coins that are worth 1 cent or less, because you can buy a bunch and if that coin does any decent kind of run you’re sitting on high quantity and stackin up.

Click on Markets with the Bitcoin currency icon, then search the coin you want to buy, then click on the result.

8. This brings you to the trading block

Here is where you make your trades. If you haven’t traded on the stock market, this is probably foreign to you (it was to me).

There are some high level strategies you could use, but for simplicity you can click on a bid in the order book to match that bid, and it will auto fill in your bid box.

You obviously want to bid low to get better value, but if you bid too low nobody will buy your trade and it just sits there. If you’re after a coin, just bid a common value from the order book to get it faster.

Select how many units you want at that bid, then click the + Buy button, then Confirm. Double check your numbers though before purchasing, if you entered a bid manually and accidentally added an extra 0 for the bid, you just put in a bid to buy that asset at 10x more than you intended.

Once your bid is confirmed, your transaction will happen as soon as someone buys at your bid price. This is why getting started you can just select a bid from the order book, so the trade happens faster.

If you get into trading strategy, you can start playing with bid amounts but for now just get in with some coins.

NOW YOU OWN SOME ALT COINS, NICE!

Step 3 – Tracking your holdings

Download the Blockfolio app for your phone. This app is where my portfolio screenshots are coming from.

You input your holdings and the app tracks them in real time. You will check this every day 🙂

Step 4 – Storage

You can keep your coins in Coinbase (if Bitcoin, Ethereum, Litecoin, Bitcoin Cash), you can also keep them in Bittrex or whatever exchange you’re using, or you can keep them in your own wallet.

I keep my currencies spread out in my trading accounts, but will move long term holdings into an offline wallet when they reach significant level.

For offline wallets, Trezor is really popular and recommended everywhere.

For online wallets, you can put on phone, computer, web. I have a Copay wallet, but here are some other recommended options to choose from: bitcoin.org/en/wallets/web. You can worry about a wallet later though, once you have the assets you want to pull off the market and hold long term.

Step 5 – Research and join discussion groups

Some coins are scams, some are legit. Stay with the legit ones if you’re thinking long term.

A scam coin example is someone does an ICO makes a big buzz, get’s people to buy in to drive up the value, then they dump their holdings for a profit. Also called a pump and dump.

Join facebook groups to get the newest information and trends, and get in some convos. This is where I learned about NEO when it was around $6, now worth $60+

You can also check Meetup.com for bitcoin/crypto meetups in your area. These are pretty fun because you can talk about coins, strategies, biz ideas or just shoot the breeze.

Don’t go crazy dumping all your money in

It’s cool to play around with a couple hundred bucks, but before investing anything significant, do some research, and also know that this is still the wild west. It’s fun to throw some cash in but be careful don’t invest more than you would want to gamble with. Until things stabilize it’s a roller coaster ride… except it’s a roller coaster ride that pays you money haha.

Well, pays you money if you take it out. If you want to be conservative, you can withdraw your initial investment once you start making some gains. I still have all my chips in the pot, maybe I’ll take some out when it gets over 10 I don’t know.

The Roller Coaster

This is kinda funny…. in the 3 days I took from idea to publish this article together, my holdings were up and down thousands, check it out:

Swings like that are why I’m hesitant to invest big until I have the time to analyze on a deeper level. For now it’s been fun watching that small early investment almost 10x.

Additional Resources

Mining – how coins are created:

Coin Stats

• CoinMarketCap
• CoinGecko is like CoinMarketCap, but it also adds more info, like public interest and community activity to rank coins based on more than just market cap.

News

• coinzy.com sends a daily curated newsletter on the top crypto news.
• coinspectator.com – timeline style news and links.
• There’s a lot of activity on Reddit, like /r/Bitcoin, /r/CryptoCurrency, /r/ethereum
• Facebook groups are great too, search “crypto currency groups” and join some – look for active groups with lots of members.

Wallets

• Here is a comprehensive list of wallet options.

Techincal Details

• What is Blockchain Technology
• Bitcoin White Paper

Ideas

• Earning crypto for riding bikes – could be a cool way to help build cycling infrastructure in cities.
• Create a platform for freelancers and businesses to transfer money. Low fees, smart contracts (kind of like escrowing), no international restrictions (like Google Wallet and PayPal), and quick payments are all bonuses that could make this easier and low cost.

It’s Still a Gamble

But a fun gamble. And a gamble on a world changing technology that could become a part of our ever day lives.

Enjoy the ride! If you have any questions comment below and I’ll expand this.