How to start in crypto
16th November 2020 |
Welcome to the first edition of Sam Volkering’s Crypto Network.
First off I want to explain briefly again why this exists and what its purpose is.
For some time I’ve received feedback and emails about delivering more information about cryptocurrencies. As a relatively new investment asset it has captivated the minds of investors across the globe.
People want to get started with it, they want to invest in it, they want to understand it and know how to operate in the “crypto world”.
The core mission of what I plan to do with Sam Volkering’s Crypto Network is to help everyone who see this as something they want to do, get started and build up the confidence and skill set to make all the moves necessary to do it properly, with the right amount of certainty and hopefully, success.
What I won’t be doing is recommending tiny “microcap” altcoins or throwing out complex and complicated strategies and information that you may not have the skill set to undertake.
I’m starting this all with the raw assumption that you know nothing about how to get started, how to get crypto, how to transact with it, how to understand what its worth is and how to identify what is promising, what isn’t and how to manage your expectations in this space.
You should treat this service as the ultimate “Crypto for Dummies” service. I don’t mean that in a disparaging way, but the most daunting and difficult thing in crypto is to get started and then commit to understanding all about it.
I’ll be littering these updates with little “Notes” that will contain links and information that you need to know as you build your crypto knowledge.
There’s enough difficulty in the basics of crypto to still scare a lot of people off. There’s still sufficient misinformation out there that people unbelievably still think it’s some kind of scam.
Clearly it’s not. I hope to clear any mistruths or misconceptions you might have and show you that it’s the most exciting investment asset class we’ve ever seen.
The thing is “crypto” is now such a diverse and widespread industry there are so many different things happening that you can’t even just bundle it all under one “crypto” umbrella any more.
I recall back in I think it was 2014, that I was giving a presentation at a conference and I got on to the topic of fintech and cryptocurrency.
Note: As a treat for you, I’ve uploaded this particular section of my presentation under the SV’s Crypto Network tab – it’s titled “Fintech and Crypto – March 2014”.
In this presentation I made note of the fast-growing “cryptoconomy”. And that the number of cryptocurrencies had ballooned from double digits to over 180, I think it was at the time.
According to the data aggregation site, CoinGecko, as of this afternoon there are 6,003 listed crypto on its site. There are more because not all crypto are listed on CoinGecko – but that gives you some idea of the pace of things right now.
Note: CoinGecko tracks crypto “prices”. I’ll get on to what you need to be careful with when looking at prices all the time. But it’s a helpful resource nonetheless – you can find the CoinGecko site here.
There’s a good reason why things have exploded so much in the last few years. Much of that in the last three.
A big part of it all is the astronomical returns in fiat-converted money that some cryptocurrencies have been able to deliver. A lot of those mega-gains came during the most recent 2017/18 crypto bull run.
But this wasn’t the first mega-cycle in crypto, and my take is that it won’t be the last.
I remember when I first got involved in researching and dabbling in bitcoin. The kinds of gains that were happening back then were eye-watering.
I remember its run from 30 cents to $30 and then all the way back to around $2. That was wild even back then. Little did I appreciate just how significant this would come to be over the proceeding decade as bitcoin has fast become the preeminent “alternative asset” to own for savvy investors.
Then when people realised anyone could start a crypto, the first “altcoin” boom came in 2012, 2013 and 2014.
Note: “Altcoin” is merely a term for talking about any cryptocurrency that isn’t bitcoin. It’s a weird term, and one that’s not necessarily applicable any more, as there are a lot of crypto assets that have legitimate use, real-world value and aren’t “alt” at all, they’re just another crypto asset.
These early booms brought loads of attention, capital and people to the crypto space. That all helped accelerate the broader development of the “cryptoconomy”.
Yet in the very early days of my crypto journey I didn’t appreciate the importance of what was really taking place. I had a mindset of looking at the crypto space purely from one angle – price.
That was a mistake which I’ll explain in a second.
Before that, there’s something you need to do to get started… and that’s get started.
First thing to do to get started in crypto
If you’re new to crypto assets now, then you’re in the same place I was a decade ago. The good news is that your learning can and will be greatly amplified because information about it all is far easier to come by, getting involved is far easier and you have people like me who’ve been through the ups and downs to learn from.
That leads me to the very first thing I believe you need to do in starting out with crypto.
And that’s to set up multiple points of entry into crypto. That means accounts with different, but reputable exchanges to get crypto using your fiat money (GBP, USD, whatever currency you use).
The exchange I use the most, because for me it’s the easiest and fastest, is Coinbase.
Its website is www.coinbase.com.
There are others, such as CoinJar, CoinCorner, Bitpanda, Gemini, BC Bitcoin, and others. I’ve used a few, but I repeatedly come back to Coinbase. You can find a good list of exchanges here.
People will tell you that some exchanges are better than others, some are cheaper than others, some people will try to get you to use exchanges they have referral links for. I’ve seen them all.
You can use whichever one you like, and I don’t care if some people hate Coinbase. All I’m saying is that none of them have been as easy and reliable to use for me as Coinbase has been over the years.
However, the likelihood is that you’ll end up using multiple exchanges to get your initial crypto with. You need to be comfortable setting up these accounts. That’s your first job today, just go and set up an account.
The next thing to do is get some actual crypto.
It doesn’t even need to be a lot. Just some. A little bit. Maybe £50 worth. That might sound silly, but that’s going to be very important because if you somehow stuff it up (which is actually pretty hard to do) then it’s only £50 you’ve lost.
That’s how I started. That’s how I test every new exchange I set up an account with to test. Just a tiny amount until you’re familiar with the experience.
Now of course you’re probably wondering what crypto you should start with…
“Crypto to Know”
Well as promised, in Sam Volkering’s Crypto Network I’ll be building a watchlist of crypto that investors should be considering. These crypto are not recommendations per se, they are a watchlist of cryptocurrencies that if you’re going to buy some, you should be considering.
It’s fair to say that the first one, that has always been a great way to learn about crypto, is bitcoin. Now you might look at bitcoin and see that its trading price (at the time of writing) is £12,395.
To most people buying one bitcoin is too expensive. I understand that.
That’s why you ned to be familiar with the term “satoshi”. The “satoshi” or “sat” (as it’s also referred to as) is the smallest denomination of a bitcoin.
One bitcoin actually reads like this: 1.00000000 BTC
One Satoshi is 0.00000001 BTC
Hopefully that makes sense. That means one bitcoin is actually 100 million satoshi.
If you decide to buy bitcoin, you should think of it in fractions rather than whole bitcoin. And the term “stacking sats” means to accumulate bitcoin, by chipping away at buying sats.
£100 of bitcoin at a price of £12,395 per whole bitcoin works out as 0.00806777 BTC – or 806,777 satoshi.
Chip away long enough and maybe you’ll end up with one whole bitcoin one day. The point is that it’s one of the crypto that should be on your watchlist, and that if you decide to buy you should think about it in satoshi rather than whole bitcoin.
This all comes back to the one core lesson from today that I want you to walk away with.
And that’s price.
It’s hard to not think of something like bitcoin or other crypto in terms of price. One bitcoin is £12,395. £100 of bitcoin is 806,777 satoshi.
We’re so comfortable and familiar with the fiat money system (pounds, dollars, yen, etc) that we always think about assets in terms of fiat money – pounds in your bank account.
That’s the mistake I made early on. I held off buying significantly more bitcoin in the early days because the wild fiat money price volatility scared me so much. I ran some numbers recently, and that mistake cost me around 1,500 bitcoin.
30 cents to $30 to $2. It’s enough to scare any financially educated person away. By the way, that was in the space of weeks – wild volatility.
But I got interested in the first place because of the alternative nature to it. I was interested because it had value, but was not created or controlled by any government or central bank. It was a “currency of the internet” and that’s what fascinated me.
Even with that core understand and learning, the price scared me away to start with. I wasn’t appreciating my risk tolerances and capital risk.
So I stopped thinking about it in terms of price. I started to think about it in terms of crypto. One bitcoin is one bitcoin. One bitcoin is 35.9 ETH. My goal was to accumulate and build my portfolio based on goals I had for the number of certain crypto I wanted to hold and its value relative to other crypto.
The view and vision was that long term these positions would increase in purchasing power. Also, the crypto ecosystem would develop so that I could use my crypto – not my fiat money – to make purchases or to build my crypto wealth.
If you solely focus in and become obsessed with price in fiat-converted money, it will force you to make moves that ultimately cost you. That’s the lesson I’ve learnt in my time, that you need to turn away from “price”.
It’s hard to ignore, you will no doubt look at your crypto holdings in their GBP value to assess if you’re making headway. But I believe your core view should be to focus on your crypto wealth and somewhat ignore the price in fiat money.
Recap
To recap, today there’s a couple things you should do:
- Check out some of the video content I’ve made available to you. This includes an excerpt of a presentation I did in 2014. It also includes some TV interviews and another interview I did about bitcoin and crypto also going back as far as 2014.
- Set up a crypto exchange account so you can start buying crypto. I use Coinbase, but you can use anyone you like. Just get used to setting up these accounts. You’ll need to do more of it in the near future – which I’ll get to in future updates.
- Add bitcoin to your watchlist. It’s our first “Crypto to Know” that I’ll be adding to in the coming weeks and month.
Finally, before I finish your first fortnightly update, two more things to do…
Go and read the bitcoin whitepaper from the creator, Satoshi Nakamoto. If you’ve not read it, it gives you the core basis of bitcoin’s existence. It might get a little complicated in parts, but it’s necessary reading – read it a couple of times. You can find it here.
Finally – this is a word of warning. Do all of this yourself. Do not use shady crypto trading systems, do not fall to scams. I’ve written about scams before you can read more about what they look like here and here.
Even just this morning I saw another customer email that looks like they’re being scammed. If you’re ever unsure, write in to ask me – I’ve seen it all before and can smell a scam a mile off.
Again, welcome to Sam Volkering’s Crypto Network, I hope you’ll enjoy what’s coming your way and hope you’re excited about a fun, exciting and thrilling crypto journey as you head on your way.
Regards,
Sam Volkering
Editor, Sam Volkering’s Crypto Network
