Crypto 101 Introduction
Have you ever realized that finding a good starter guide on cryptocurrency is quite difficult nowadays? Everyone is specific and assumes their readers know 100% of the terminology, which just is not the case. We have realized this and have decided to create this beginner’s crypto 101 guide for anyone new or simply interested in what Cryptocurrency is all about. Our mission is to help inform the average consumer about cryptocurrency and what to look for to understand how you should think about investing in various coins.
Most younger generations know at least about the two main Cryptocurrencies advertised today. Bitcoin and Ethereum are wonderful coins that have taken cryptocurrency to an entirely new level. However, these are not the only two contenders as there are thousands upon thousands of different coins on different blockchains all with different purposes and features. Some of these coins are joke coins or are made to pump and dump and the owners sometimes rug-pull causing you to lose your entire investment! So, we will go over a few key things that you should look for in a cryptocurrency that helps avoid those fraudulent types of coins.
If you already have experience in the crypto world, then this guide may serve as a memory refreshment or just a fun informative read. So, sit back and grab a cup of your favorite coffee or tea or…any other beverage that you may enjoy because I am just the author of this guide and shouldn’t be telling you what to drink. Let’s Get Started!
What Is Cryptocurrency?
If you understand what currency is then it will
be quite easy to understand that “cryptocurrency” is the same thing, only
digital. Digital currency can be used for various things such as goods and
services, but rather than your traditional payment methods, digital
cryptocurrency uses an online “ledger” with strong cryptography to
secure all its transactions. Cryptography is the art of writing or solving
digital codes and this is done with advanced unique algorithms that require
specific machinery to solve each type of code called “blocks.” When a
transaction is recorded on any blockchain it is put into a block puzzle to be
solved by “mining machines”. Mining machines are small computer systems geared
specifically for solving specific algorithms depending on which coin they are
trying to mine. Some cryptocurrencies do not operate this way but for the more
mainstream coins, this is how things get done.
Try to think about it on these terms, over 6% of
all US households do not currently have bank accounts. That is 14.1 million
adults just in the United States alone. Digital currency or Cryptocurrency is a
way to create transactions without using a traditional banking system. A lot of
people are against this concept; however, cryptocurrency will not ever replace
traditional banking systems that offer loans and mortgages. Those will still
exist; this is just another way to exchange goods and services for those that
choose not to use a traditional bank.
The plus side to cryptocurrency is that if you
make the right investment choice in a specific coin and the value of the
currency increases, so too does the value of the coins you have invested in.
This has made many people incredibly wealthy. If you had invested just 1
thousand dollars in July of 2011 you would have around 72 BTC which is worth
just over 4.1 million dollars today. Not every coin/token is going to bring you
that kind of a turnaround, however, and it is important to understand what to
look for when trying to make sound long-term investments.
How Do You Buy Cryptocurrency?
This is a basic question that deserves a more informative answer than most give. The key to buying crypto is just like it is with regular currency. You need to have a cryptocurrency wallet! There are hundreds if not thousands of wallets that exist today, but when cryptocurrency was brand new, there were limited options and a couple of those online options turned out to be horrible ideas as they were breached and hacked, and a lot of people lost millions of dollars worth of their investment.
Luckily, times have changed, and smart people have put their collective minds together and have created much more secure ways of storing and keeping your investment. This is the most important thing to remember when starting in your crypto journey. Whichever wallet you decide to go with, which could even be multiple wallets for storing multiple diverse types of cryptocurrencies, there is one important thing to remember. That is your wallet recovery phrase.
Whenever prompted with what your wallet recovery phrase is you need to physically write this information down and store it somewhere you will never lose or forget it. There have been multiple people that have lost fortunes because they simply forgot their recovery phrase and no longer had access to their wallets. Avoid being one of these people at all costs.
Which Wallet Types Are the Most Secure?
There are many diverse types of digital wallets available, however, only one type is considered full-proof. These are physical hardware wallets that connect via USB whenever you make transactions. We will list our top choice below along with some of their features in case you are interested in storing your hard-earned investments in the most secure manner possible. This is unlike software digital wallets or storing your coins on exchanges. This is not ideal as anything online can be hacked no matter how secure they say they are. This has happened to multiple online digital wallets in the past, but it does not happen to personal physical hardware wallets as the only one that knows anything about them…is you.
The Trezor Wallet:
Trezor is a secured hardware wallet that provides advanced security for handling cryptocurrencies to allow the safest method of storing your investments as nothing online is ever completely secure. This eliminates worry and allows the most secure crypto transactions available today. You are also able to connect Trezor via our exchange to purchase various coins using Ethereum right here at Coin Stomper! We HIGHLY recommend Trezor as it is our go-to wallet due to its price and security features.
Again, there are many diverse types of wallets and even more hardware wallets that exist, we just wanted to provide an overview of the most secure type for your benefit.
When it comes to storing your cryptocurrency using a digital online wallet rather than a physical wallet, we could only recommend our own Stompy Wallet. Easily create and store your cryptocurrency safely by using our own exchange. Our wallet can be used and connected anywhere online for safe trading. Be sure to keep your recovery phrase somewhere safe!
The Stompy Wallet:
Our Stompy Digital wallets are unique and secured and are continually being updated to include new features such as Multi-Signature security! Be sure to check out our exchange and create your very own free Stompy Wallet today!
I have My Wallet, Now What?
So, you now have your fancy new wallet and have written down and safely stored away, your recovery phrase in a place that you will not ever forget about, and you are ready to start making those investments in these shiny new coins! That is fantastic, let us go over a few ways of purchasing cryptocurrency.
Think of your digital cryptocurrency wallet as a mailing address. Your wallet contains one address per each available currency, when you buy cryptocurrency, you purchase with your traditional money on an exchange of some sort and afterward digitally mail that cryptocurrency you purchased over to your wallet address for safekeeping/storage.
Let us say for hypothetical sake that you saw a market trend or read about an exciting new cryptocurrency on The Daily Stomper and your investment that you had stored in your super safe wallet is now worth millions. That is right! The cryptocurrency in this hypothetical situation just turned your fake thousand-dollar investment into a smooth fake 3-million-dollar investment and you want to cash out!
To cash out you simply reverse the process of buying cryptocurrency. Now that your investment has paid off and you would like to cash out you simply must mail your cryptocurrency back to a major exchange such as Coinbase and you can exchange that currency for USD or whichever currency you would like, and you’ll be able to transfer it to your bank account. The bonus of doing it through a platform such as Coinbase is that you will also have taxes sent directly to you so make sure you save back a lot of those fake dollars because you will be taxed for them.
Now let us say this hypothetical situation has changed a bit and you invested in a different kind of coin, one that isn’t so mainstream and isn’t available to exchange for on Coinbase…now what should you do if this radical BSC coin just made you a hypothetical millionaire? Well, you will need to find out which blockchain your investment is run on and then find a compatible exchange, generally, BSC coins are on the Binance blockchain and can be exchanged for another major cryptocurrency such as Ethereum on exchanges like Binance. Simply create a Binance account, send your cryptocurrency there or exchange it on another platform like PancakeSwap or UniSwap for a more mainstream coin first and then finally send that mainstream coin with low transfer fees over to Coinbase to withdraw that hypothetical treasure of yours. We will list a few popular exchanges below to make your investments with.
Exchanges
We could not recommend any other exchange first other than our own Ethereum exchange! You can even connect your super-secure/safe Trezor or Ledger wallets right with us and make your investments! If you have Ethereum available to exchange with you will be able to exchange for hundreds of various coins on the Ethereum blockchain; some of which we have reviewed/discussed on our Daily Stomper Ethereum Edition. At coinstomper we have SSL enabled for your security, none of your data will be stored here and cannot and we don’t want it to be. Your security is our top priority.
Coinbase is our second choice as there are a variety of options to exchange with and they offer great transaction fees but lack in the customer support department. This is our go-to exchange to cash out and to buy Ethereum.
Binance is another large exchange operating on the Binance Smart Chain. We have a detailed guide about the Binance blockchain if you are interested in learning more, please check it out. Binance offers ways to trade/exchange BNB coins and BSC meme coins. These coins are growing in popularity and their usefulness is growing as there are now utility coins that exist on the BSC blockchain.
What to Look For & Watch Out For When Investing
This is another aspect where our website comes in handy. We often look for coins that have enormous potential to grow and develop and you can read up on the coins we have reviewed on our Daily Stomper section of the website. When researching for yourself you need to pay attention to a few things.
Did The Coin Have An Audit?
Audit Certifications are the very first aspect we search for when researching various coins. An auditing company can reveal major flaws and errors within the coin’s structure and even in the code itself. Certik is a great company that audits quite a few coins. If a coin fails an audit, you can see exactly why it failed and see if it may be a reason, you should not be investing in the coin.
A lot of coins that have been rug pulled never had an audit performed so that is a key in finding a secure stable coin in our humble opinion. A rug pull is a common term you will hear about on your crypto journey, and it simply is when a token’s creator has left the coin for dead either by selling all their shares that were not locked or just plain giving up all effort of development.
This brings us to our next point; it is incredibly important that you research into the coin that’s got you so hyped up about. Some of the coins that were rug pulled had never had an audit performed and could have been avoided with just a little bit of research. In this game, knowledge is absolute power. Take meme coins for example; Meme Coins are often boosted in value by media influencers such as Elon Musk. We know that if Elon Musk tweets about Dogecoin, it is a wonderful time to invest right that second because Dogecoin is about to experience a rise in value due to its meme value. The same can be done with mainstream coins such as Bitcoin.
Look For Recent News Articles
Bitcoin recently took a dip, and we knew that it was going to experience one as China has been cracking down on bitcoin mining as we have seen in news reports. Market trends that affect future prices are all over the place, you just must know where to find them. Therefore, we try and post about our favorite coins in one principal place here on Coin Stomper. So that our readers like you do not have to search the entire world wide web to find them.
Another splendid feature to search for when researching new or exciting hype coins is to see if they have locked their liquidity. Meaning most of the tokens are in an account that is not active or a “Burn” wallet. If a coin features locked liquidity, it ensures that there will be no rug-pulling involved making it more of a stable option for an investment opportunity.
Basic Tips & The No-No Of Crypto
This is the most important tip we can provide you. While you are holding your investments, and one day you see that your coin has dropped 40% in value, do NOT sell it in a panic thinking that you will lose your entire investment. Because you will not, you will just lose 40% because you panicked. Cryptocurrency is very volatile in nature and constantly dips and rises, you can follow market trends all day long, but no one can predict the future. When coins make massive leaps, it does not follow any trend, Shiba Inu has risen millions in percentage since its’ beginning just over a year ago. There are times in between when Shiba Inu has fallen, sometimes 10% and sometimes 40% but you always want to try and wait until you at least break even before changing your mind about an investment.
"A Watched Pot Doesn't Boil"
This one coincides with our first tip; you will panic a lot less if you start paying less attention to that nifty crypto chart and alert app on your phone. Do you know what that is doing? Unless you set it to only alert you if your investment coin goes up a certain percentage like 1000% or more, then you are just hurting your long-term investment goals. Let us say you have 100.00 in ADA that just went up to 560.00 and you got an alert on your phone saying your 100.00 investment is now an amazing 560.00! That is fantastic but now all you can think about is cashing out of your investment. This is not recommended as the kind of spikes you are looking for happen when big events such as the bitcoin blockchain are halved every 4 years. These are the spikes you are waiting for, so don’t lose hope and stop looking at your phone so much!
Hold On For Dear Life (HODL)
HODL is a common crypto term meaning hold on for dear life. This is because of how volatile cryptocurrency can be, one day your one-hundred-dollar investment could potentially earn you millions, the key is to HOLD your investment in your wallet or your staking pool until it does just that.
Overall, we understand there is a lot to take in when it comes to cryptocurrency. With new blockchain forks arising consistently and thousands of coins out there in the crypto-verse, it can be a trick to pull the trigger on any specific coin/token. We cannot stress enough how important it is to do your research before making any investment because there are always tell-tale signs if there is potential for real growth.
A great way of staying up-to-date and in the know is by checking our website Daily Stomper blog and news RSS feeds. We continuously post about trending and strong coins to invest in and give overviews and our personal opinions on various tokens/coins.
We want to stress that we are not giving you financial advice and we always recommend doing your own research before making investments. Cryptocurrency is a great technology that is set to expand and boom into something bigger than we can imagine in the future. We hope this guide has helped you understand a little about the crypto world and we wish you the best of luck in all your endeavors.