As much as I want to jump right into Bitcoin trading, I know that I must do my due diligence so that I don’t get scammed as a newbie.
Since there is so much news about crytocurrency scams these days, I wanted to know what to look out for, and after a little digging I came across some very good tips.
I won a new crypto wallet last year at a conference and I already knew that the issuing company was reputable but I found out later on that you really do have to do your research to make sure your dealing with good companies right from the start. Check out reviews and talk to others that have dealt with that company directly. As far as exchanges, make sure that you are checking prices and also make sure the site starts with HTTPS which is a sign that the traffic is encrypted. If it sounds too good to be true (and promises the world) – it probably is.
Of course we all know about fake websites that bait and switch visitors but what I didn’t know was that this tactic is being used in the crypto space via social media (See video below). ICO’s – Don’t deposit your coins ANYWHERE until you fully vet the ICO that your thinking of investing with. READ the white paper carefully.
It’s interesting that I was looking into mining just a few weeks ago. Turns out this is also an area where you really have do your homework and be realistic about returns on investment since they will probably go down a little over time and you have to be wary of sites that promise you otherwise.
I’ve ultimately decided that I’m going to read a few crypto articles everyday along with my favorite blogs so that I can start to spot things that would stand out as a red flag right away. I also read Investopedia for all things financial. They have some great articles on crypto as well.
Remember – Knowledge is power!
While it is easy to think that you can instantly get rich mining Bitcoin, the reality is much more complex.
Once you factor in the cost of the equipment, maintenance costs and the electricity, you are definitely eating up a large chunk of your profits.
That brought me to my next thought..how do miners make money? I know that they do get Bitcoins and fees as payment but does that still make it worth it in the long run? Upon further research I found out that there is something called “Cloud Mining”.
Cloud Mining takes the approach where a group of individual miners contribute to the generation of a block and then split the reward. The method of this seems easy enough, but again, it’s not without risks. It’s not certain how much money you will ACTUALLY make. It depends on a lot of factors happening at different times. You would definitely have to do your research to make sure that mining is worth your time and energy. Bitcoin.com has a lot of information on mining and offers a cloud mining service if your interested. If you have some time and want to make some money, mining just might be for you.
I have to admit it…I’m not a gamer.
I cant imagine sitting down for hours on end playing a game either by myself or with other people. However, I do love animals and the thought of creating and breeding kitties did intrigue me.
But of course the logical side of my brain also wanted to know how buying and breeding kitties would help me learn about cryptocurrency. I decided to visit the site out of sheer curiosity and was surprised that I learned a few things.
First of all, you have to buy the kitties with Ethereum. inside the marketplace on the site. There is a breeding fee that is about 0.008 Ether (approx. $4.69). Ok, that’s not too bad, but you can only play the game on a PC/MAC desktop. You also have to use a Metamask digital wallet. I guess if you are a gamer with a desktop set-up this scenario would be normal for you. I have read reviews that suggest that people are having a great time collecting kitties and “growing their crypto family”. It seems that you can also make a good deal of money by breeding, mating and selling your kitties. The overall goal is to get a kitty that everyone wants.
If your into gaming, Cryptokitties just might be your entry into the crypto world. I found a site that talks about the possible future of crypto gaming. Maybe I will stick my toe in the water one day just to make myself a virtual kitty.
I was at a crypto conference a few months ago and I won a crypto wallet of my very own. Wow! I thought, this will be a great way to get my feet wet and make my first trade. I quickly realized that I had NO idea what to do with this thing.
Ok, before I went any further I had to go backwards…again. I did some research on the wallet and realized that it’s a cold-storage wallet. What is that you might ask? Well it means that I can store my bitcoin or altcoins offline to keep them safe from the internet. The wallet stores the private keys of the bitcoin owner which they need if they are going to make any transactions. I have read that you should never keep large amounts of coins on your account in any any exchange in case the site gets hacked. Cold storage resolves this issue by signing the transaction with the private key in an offline environment. Because the private key does not come into contact with a server during the transaction signing process and is done offline, the risk of hacking goes down substantially.
I also read that there are some risks with cold storage wallets as well, but it does seem to be the best option for the person looking to hold on to their coins for a while and feel a sense of protection while through the learning process. My wallet says that it’s fire and flood resistance so that makes me feel better as well. I think i’m now ready to take the plunge to make my first trade.
Before I start investing, I wanted to make sure that I understand the difference between Tokens and Altcoins.
Altcoins are basically an alternative coin from Bitcoin. They are a fork of Bitcoin, which is an open source original protocol for generating Bitcoin. With Altcoins, there are changes in the underlying code that can take advantage of a different set of features. Some altcoins are not open-sourced like Bitcoin. They have their own Blockchain and protocol that supports their own currency. Ex: Ethereum. The main thing to remember is that each each altcoin possess its own independent Blockchain where each transaction uses its own coins.
Tokens operate on top of the Blockchain and represent a particular asset or utility. They can represent any asset that is worth value. Tokens are usually made using smart contracts. As an investor you receive tokens when you invest money into a company offering an ICO (Initial Coin Offering). Its pretty similar to a stock with some important differences.
You can read more here. This article also includes useful guides on various exchanges and wallets.
I also learned a great analogy today: Ethereum represents an app store in your smartphone. More on that here.
I also came across a crypto podcast that you can listen to on iTunes: Crypto101. I’ll give my thoughts on the podcast in another post.
Although I wanted to jump right into investing and watching my money just roll in, the logical part of my brain knew that I needed to understand fully what Blockchain was and how it played into the big picture. I started watching a video and I fould a site that explains what Blockchain is in plain english.
What It Is
Blockchain is a public record of transactions. It’s also distributed, so instead of one person controlling everything, there are thousands of computers around the world connected to a network, and these thousands of computers together come to an agreement on which transactions are valid.
Whenever someone makes a transaction, it is broadcasted to the network, and the computers run complex algorithms to determine if the transaction is valid. If it is, they add it to the record of transactions, linking it to the previous transaction. This chain of linked transactions is known as the blockchain. Since the transactions all reference the one before them, you can figure out which ones came first, thus ordering them. Full article here.
Ok, since I have some IT experience and uderstand networks, this made sense to me. I guess the next question was…How is the Blockchain secured?
I will cover this in my next post on mining and tokens.
Hello and Welcome!
I started this blog because I have found a new interest in Cryptocurrency and Blockchain. I found out about this new technology a few years ago and I can honestly say that I thought it was bogus or ponzi scheme. I didn’t really take the time to try to understand what was really going on so I pretty much lost interest quickly. Fast forward to summer 2018 and I notice that there is alot of buzz around Bitcoin and cryptocurrency in general. This time I decide that I’m going to take the time and really learn about all this from the very beginning.
So I’ve decided that I’m going to document my journey from the very beginning starting with the right vocabulary (this will be in the glossary) so that I can refer back to it on a regular basis. I’m also going to include any quotes, videos and blog post that I feel can get me thinking and engaged.
Please take the journey with me as I think it will be fun and informative at the same time.
P.S. I thought this video was the perfect way to begin. It shows just how hard it is to explain to someone just what Blockchain is.
Thanks for joining me!
I want to get a few disclaimers out of the way. First off, I am NOT telling anyone how to invest in Bitcoin or any other cypto currency. I am going to try to start investing small amounts in a few exchanges just get my feet wet and get over any anxiety that I have. I will never suggest any places for you to invest your money and I strongly urge you not to invest any more than you are willing to lose.
Good company in a journey makes the way seem shorter. — Izaak Walton