How I access the world of cryptocurrency in 2021
Disclaimer: I am not a financial advisor and none of this is financial advice. This is merely a guide into how I use crypto at the moment for the purpose of sharing this information with Crypto newcomers. Always do your own research before investing your money and consult with licensed financial professionals before taking on any risk.
Also, you should only consider investing in crypto if you have no outstanding debt and an emergency fund. These are two fundamental things to take care off if you want to begin investing and any professional advisor worth 2 cents will tell you this.
Cryptocurrency is revolutionary. This much is apparent in the little time I have spent researching and playing with cryptocurrencies. The technology and it’s many use cases are bewildering as well as the amount of passion and innovation is breathtaking. It truly feels that if you aren’t somewhat involved with crypto at the moment, you are missing out on something huge, a financial revolution whose likes we may not see again in our lifetimes. Today, I’m here to show you how I take part in crypto and how it might be the right way for you to partake in it.
Remember, this is very much a new space and you should be very careful; you are using your own money so you are the one who is responsible for your wins and your losses. Always do plenty of research and if you are confused, seek the help of licensed professionals.
1) Turning FIAT into Crypto
The first step in using crypto is depositing your FIAT currency into a brokerage account. A FIAT currency is a form of currency governed by a central bank and is not backed by anything other than governmental and consumer confidence. FIAT currencies are the most commonly used forms of money in the world and examples of FIAT are the US dollar, Canadian dollar, the Euro, British pound, Japanese yen, etc. In other words, you have to put your money in.
The reason you have to use your money and not say money from a credit card is because many countries, including Canada, classify currency purchases made with a credit card as a “cash advance” meaning they will charge you at a much higher interest rate than you would normally have for any other purchase. Having to pay more for your crypto means you have to take more risks in order to recoup your costs and have your investment become profitable which is not a smart strategy. All this ultimately means is that you should be using your own money to invest in crypto, not borrowed money.
As a Canadian, I am very lucky because there are many excellent choices to use as a brokerage account. In the past I have used Coinsquare.com but currently I am using Newton.co as well as Crypto.com. I have also heard great things about Shakepay and Swissborg and will be checking them out in the future.
Coinsquare is one of the oldest Canadian crypto brokerage services and can be considered among the most trustworthy. It currently offers Canadians the ability to pay into Coinsquare as they would with their other investment platforms: direct bank transfers in the form of bill payment. This is great as it is very easy to automate a weekly or biweekly payment which helps a lot with getting a beginner into good saving habits. Coinsquare currently features 11 crypto markets and 4 FIAT currencies including the Canadian Dollar. What does suck is Coinsquare taking 1.5% of that deposit and you having to wait the 2-3 days for that bill payment to process.
Newton may have less crypto currency options than Coinsquare but it does have one great advantage over the older broker: free e-transfer payments. That’s right, instead of waiting days for your bill payment to process, you can send money over to your Newton account in generally under 20 minutes! This is great because it lets you use your money faster and helps to alleviate the potential stress from being unsure of whether you put in the right bill payment info or not. Another neat thing about Newton is that the app itself is a much cleaner and modern design which makes learning it and its features very easy. Another thing I can say about Newton is that they have great customer service. Once when I was trying to transfer one crypto from Newton to Binance and had enterred in an entirely different crypto’s address they contacted me and helped me correct the mistake! Oh and if you use this link to signup, you and I will both get $25 when you buy or trade your first $100 in crypto!
The last option I will talk about today is Crypto.com. Crypto.com is the newest platform for my use but is is nonetheless impressive! It has e-transfer capabilities, more cryptos available than any other broker I’ve mentioned so far (50+!), offers staking capabilities (earn interest on deposited crypto) and offers a Visa credit card that can give you cashback in crypto! On top of all of that, Crypto.com has it’s own crypto, $CRO, which is used for staking rewards and as collateral for your Crypto.com Visa credit card. Crypto.com can only be accessed via its app, unlike Newton or Coinsquare, and the UI is a little messy for my tests. That being said, it is becoming my #1 pick simply because I can directly buy the cryptos I want to actually buy and hold. Crypto.com has the most complicated referral program so far but if you’re hardcore enough to jump through hoops and get 1000 $CRO, you’ll get $25 USD worth of $CRO.
Whatever the option you choose, what you do next depends on how far you want to go.
Want the simplest option to start? Just buy some Bitcoin, Ethereum or other coin and et voila, you are now a proud owner of some cryptocurrency. You will notice that your $ value will immediately drop and that is normal: most brokers are “no fees” which just means that they make money off the difference in price between the BUY and SELL (otherwise known as the SPREAD). This is inescapable and necessary: brokers need to eat too.
More importantly, you want to be paying something for your use of the broker or you might be buying from an order flow broker. This is a broker who sends your order to a third party for them to process your order. Why is this bad? These third parties are more often than not large financial institutions who will use these orders to accumulate data and allow them so keep an eye on trends emerging from retail traders. Think of these brokers as the equivalent of a Facebook or Google: they are “free” to use because YOU are the product.
Now that you have purchased some cryptocurrency, you might want to park your crypto into a wallet like Metamask (a universal crypto wallet that defaults to using the Ethereum network), Zilpay (a wallet made for use with the Ziliqa network) or Trust Wallet (a wallet designed to use many different cryptos and their networks). Be sure to research what wallet is compatible with your crypto and be sure to safely store your seed key (a 12+ combination of words unique to your wallet and used as a user ID of sorts).
In the world of crypto, a wallet is simply a sort of crypto chequing account that can take the form of browser extension, smartphone app or hardware wallet and is accessible to anyone and everyone. Browser extensions like Metamask and Zilpay are secure and free just like smartphone apps like Trust Wallet while Hardware wallets like the Ledger Nano are even more secure but cost money, money which most beginners should use for buying crypto because there’s little reason to spend $120 US to protect your $40 CAD crypto investment.
Why use a wallet? Well, as the popular saying in crypto goes, “Not your keys, not your money.” Cryptocurrencies are owned by whoever owns the wallet that holds said currency, and the person who ultimately owns the wallet is the person who owns the password and seed phrase to the wallet, sometimes called keys. When you keep buy crypto with Wealthsimple or buy and hold crypto with Newton, Coinsquare or even Binance, you aren’t the one who really “owns” the crypto. They do. You simply own a contract with them saying you have x amount in holding with them which isn’t exactly the same thing.
If you do go and store your crypto into a secured wallet that you own, and that no one else knows your seed key and password, your crypto is technically invulnerable, meaning no one can ever take it from you. You can still have your crypto stolen from you if you get your seed key stolen by a phishing scam or if you click on sketchy links, download viruses or sketchy apps, etc. There are a lot of scammers out there these days so you have to be careful and responsible for your self and your money.
Want to go a little bit further, a little bit deeper into the cryptoverse? Then you might want to buy a stablecoin (stablecoins are cryptocurrencies whose value is tied to existing money like the US dollar) like USDT or USDC or a low-cost transfer crypto like Litecoin, Doge, XRP, XRM as you will want to move your crypto from your broker account into your Trading Platform account.
2) Higher Risks and Rewards
Now that you have crypto, you might be wondering: “what do I do now?” Well you have a few options now. Firstly, you can just go ahead and do nothing. By doing nothing and holding, you are partaking in a strategy jokingly called HODLing. This has been a particularly effective long-term strategy with Bitcoin historically and will most likely be effective for a few more cryptos going forward. The only downside to long-term HODLing is the opportunity cost of not partaking in higher risk activities like earning liquidity pool yields, active trading, earning interest on crypto platforms like binance, crypto.com and bitforex. Then again, certain cryptos like Algorand ALGO can be staked while HODL’ed in certain wallets like the Trust Wallet app for your phone which means you can earn passively for your HODLing.
Secondly, maybe you’re feeling eager to make more crypto now and if you are aware of the risks you may or may not be taking, you can decide to sign-up to Crypto.com or perhaps the most popular and highest volume trading crypto exchange in the world, Binance.
Binance has one of the biggest listings of crypto trade pairs available to the market, meaning that you can trade almost every crypto they list in at least Bitcoin (BTC) and US Dollar Tether (USDT) pairings and many others have more crypto pairs like Binance Coin (BNB), US Dollar Coin (USDC), Ethereum (ETH), and Binance US Dollar (BUSD). Binance is more than just a trading platform. It also offers many ways of earning interest on your crypto coins via options like Flexible & Locked Savings, earning up & coming cryptos by staking your BNB & BUSD in Binance’s Launchpad. Once your crypto bags are plump enough, maybe you can start thinking about staking some of your crypto with Binance and earning an Annual Percentage Yield of anywhere between 3% to 27%! Honestly, Binance is so great to use that I could and probably will talk about it more in the future. If you want to know more about Binance right now, I suggest watching CoinBureau’s recent video on the platform. His content is good and he has positioned himself as a reputable name in crypto information.
And if you want to sign-up to Binance.com, consider using my referral link as it will give you a reduced fee for trading crypto coins which is really nice if you want to one day start actively trading your coins as a day trader or just to help you get the most amount of crypto when trading your hard-earned coin.
Now look at you! You’ve joined the world of crypto and are ready to start really delving deep into the space: staking, NFTs, liquidity swaps, mining pools… There’s a whole new financial world being built onto blockchains as we speak and you are now equipped to investigate and partake in this crazy revolution. Just remember, always do your research, always ask licensed professionals for help, and never believe any offer too good to be true!
Lastly, another great video I recommend you watch before you start throwing money around by Coin Bureau: 10 Worst Crypto Mistakes: Are you Making These??