Beginners Guide to Cryptocurrencies

crypto getting started guide
Written by Eze

Bitcoin is the future of money. You can think of it as money that’s not controlled by the government or a central bank.

You don’t need a conventional bank account to save, send or receive Bitcoin.

Several months ago, I was at Jabi Lake Mall with my friend. We ordered food, ate, and spent some time together. A moment later, I received a call from my bank. My account had been restricted because I previously used my card to buy a domain name on Namecheap.com I had to explain to them and confirm that I actually made those transactions. While this is a good idea for them to restrict my account if there is a suspicious transaction, I could have been stranded and unable to pay my bill because my account was restricted.

Maybe, I could have joined them to wash dishes in exchange for my bill, maybe for a couple of days.

With Bitcoin, I won’t need to take permission from anyone before I can receive money or pay for goods and services. No one will have to restrict my account, I will be in control of my money. All I will ever need to complete a transaction is just a wallet.

How do you own a crypto asset

Cryptocurrencies have been designed in a decentralized fashion, in that, you basically just need someone who has the crypto you want and wants to sell it or exchange it for goods and services. So, you don’t entirely depend on a centralized system in order to own or trade cryptocurrencies.

However, you can buy cryptocurrencies from Companies that are specialized in buying and selling cryptocurrencies – this type of companies are known as exchanges, some are centralized (this usually means that there is an intermediary, mostly the organization that owns and controls the exchange for example, Binance, Kucoin, FTX, Lopeer, etc) while some others are decentralized( they do not need an intermediary. For example, PancakeSwap, SpiritSwap, and UniSwap

With centralized exchanges, you’ll be able to buy cryptocurrencies with your credit/debit card; however, for decentralized exchanges, you’ll need to exchange one cryptocurrency you already have for the one you are intending to buy. For example, on PancakeSwap, if you want to get BUSD coins, you’ll need a Binance coin(BNB). You can always get one of them from centralized exchanges where they are traded. So, you’ll exchange your BNB for BUSD coins.

Some centralized exchanges also have Peer to Peer(P2P) platforms that allow users to buy and sell cryptocurrencies from each other. This is especially prevalent in countries where cryptocurrency transactions have been banned or disapproved such as Nigeria and Kenya.

How to buy cryptocurrencies from centralized exchanges (CEX)

Get registered

Firstly, you’ll need to get registered on the exchange’s website. Let’s use Binance.com as an example. When you visit the Binance website, look for a Sign up or Register button and get registered as shown below:

Follow through with the registration process and log in to get verified.

Get verified

Exchanges require you to get verified because of regulations and to help keep users in check. In most platforms, you’ll need a government issued identity to complete your verification. For example, an international passport, a driving licence or national ID and sometimes proof of residency.

Using our Binance example, your exchange will normally guide you through the registration and verification process. But in case you missed the process, you can go to the user profile section and continue the process. Click on the user profile icon as shown below:

Binance user dashboard

You’ll see where your account will be tagged “Unverified” – click on the unverified link and continue the process. The example below says “Intermediate verified”, yours should be say “Unverified” if you are not verified yet.

After verification you are set to start buying and selling cryptocurrencies. You can start buying and selling cryptocurrencies that are available on that exchange.

Buy with your credit/debit card

Like we’ve already stated, most centralized exchanges allow you to buy cryptocurrencies with your credit/debit card. Let’s continue with our Binance example to see how to get it done. When logged in on the Binance app, click on the Buy Crypto link, you’ll see all the options available to you.

 Desktop View

 You’ll see this interface once you log into the application. On a mobile device, you’ll see something different. You’ll see an interface as shown below. However, the Binance app is always evolving, you might see something different when you check but this particular feature hasn’t changed in a long time.

Once you click on the “Credit/Debit Card” button you’ll be able to enter the amount of crypto you want to buy and pay with your card. 

Assignment

  • Find an exchange that works in your country, 
  • Get registered and verified 
  • Purchase your first Cryptocurrency — preferably for now, a stable coin like USDT, DAI, BUSD, or USDC. 

If you have any challenges you can ask for help in our community telegram group. Also, if you did this successfully, I’d like to know, let me know on Telegram.

How to buy cryptocurrencies from decentralized exchanges (DEX) 

Decentralized exchanges allow you to exchange your coin for another coin. So, first things first you would have to follow the process we described above to buy a coin.

To buy on decentralized exchanges first you’ll need a wallet. A wallet that allows you to connect to decentralized applications, examples of such wallets include Metamask, coin98.com, Wallet Connect, etc.

Next, you’ll need to consider the coin you want to buy and the decentralized exchange that supports it. For example, if you want to buy any coin in the Binance chain ecosystem, you know you should use PancakeSwap, Ethereum you know to use UnisSwap, Fantom Ecosystem you know to use SpiritSwap, Solana ecosystem you know to use Radium, etc.

Assuming you want to buy BUSD and you have decided to buy from PancakeSwap remember you are going to pay gas fees with Binance Coin (BNB), make sure you have BNB in your wallet.

Then log in to Pancakeswap.finance and connect your wallet by clicking on the connect wallet button as shown below:

You’ll see different wallets to connect, however, for now, we want to use Pancakeswap for this example. So, choose PancakeSwap:

The MetaMask interface will show up for you to complete the connection.

After that, you can now click on “Trade” button as shown below and then choose the coin/token you want to swap for the other.

If you get confused at any point and need help, please, ask for help in the community channel on Telegram.

Other Decentralization exchanges includes 

Airdrops

An airdrop is a distribution of a cryptocurrency token or coin, usually for free, to numerous wallet addresses. Airdrops are primarily implemented as a way of gaining attention and new followers, resulting in a larger user-base and a wider disbursement of coins. — Wikipedia

Even though there are lots of scam airdrop programmes nowadays, the rule of thumb is to never send money to anyone in exchange for an airdrop token. Airdrop should be free. The least you could do would be to do the tasks that you are expected to do in order to qualify for the airdrop.

Peer to peer

In the words of Satoshi Nakamoto, the creator of Bitcoin, “I’ve been working on a new electronic cash system that is fully peer-to-peer, with no trusted third party.” Bitcoin was built as a peer to peer money. If someone needs to buy something and they have bitcoin, they can easily send you bitcoin (any cryptocurrency) in exchange for the item they want.

You can also sell your Bitcoin in exchange for Fiat money such as USD, Naira, Pounds to someone who wants Bitcoin.

Also, some centralized exchanges like Binance and Kucoin allow you to buy cryptocurrencies with their Peer to Peer feature.

To buy with the Binance P2P go to the Binance website and get registered and verified.

After that, go to the P2P platform as shown below:

Binance.com

Decide the currency you want to buy, choose as shown in the image below and click on the buy button. Pay with Fiat and the seller will release the funds to your Binance Wallet.

Make sure you check the seller/buyer ratings and ensure they have positive feedback in most of their trades. After the purchase, your coin will be transferred to your wallet.

Assignment: Use the Binance P2P or any other platform to buy cryptocurrency. Let me know if you have challenges with that in the comment section or in our telegram group.

How to Store Cryptocurrencies

Just the way your Fiat currency has a home in your conventional bank accounts, cryptocurrencies also have a place to call home. 

You won’t need to walk into a banking hall to create an account. You won’t also be required to enter your name, email, etc, well, except you are storing your cryptocurrency in an exchange. 

All you need is a wallet.

What is a wallet, you asked?

A cryptocurrency wallet is an app, a file, a piece of code, or directory that allows cryptocurrency owners to store and retrieve their digital assets. When a user acquires cryptocurrency, such as bitcoins, they can store it in a cryptocurrency wallet and from there use it to make transactions.

There are several cryptocurrency wallets out there. The one you’ll eventually choose depends on its support for your favourite coins, your technical skills, the fees involved and their availability on your type of device (Mobile phones, desktop, or web).

Basically, there are two types of wallets; custodia and no-custodia wallets. Custodia wallets are the wallets provisioned for you by exchanges such as Binance and Kucoin. You don’t have total control over it — your keypairs (private keys) are in their hands, both your private and public keys.

However, the non-custodial wallets are the ones that give you the ability to store your coins in your device and give you and only you your keys. Because your private key is the only proof of ownership of your coins. Anyone who has it can spend your coin. So, ensure you keep it safe.

Examples of Non-custodial wallets include; Atomic Wallet, Coin98, Metamask, Sollet, Solflare, Trust wallet and so on. Some of them are available on all devices while others are available as progressive web apps, Mobile wallets and others as Desktop only wallets. 

You can check this article to learn more about wallets => Best Crypto Wallets

How to Send and Receive Crypto

Eventually, the main reason to have a wallet is to be able to receive and to spend cryptocurrencies. But how do you do that? The process might be a little different depending on the wallet you are using but it’s fundamentally the same.

To show how to send crypto from your non-custodial wallet we need to use an example.

We’ll use Coin98 wallet for this case study:

Download Coin98 from the official website 

Setup the wallet, keep your private key and keyphrase in a safe place.

To receive funds click on the receive button as shown below:

Then, choose the coin/token you want to receive

You’ll be taking to a page with your address as shown below:

That’s your Luna coin address, give it to the person that wants to send you Luna. Only Luna coins should be sent to that address. If you want to receive Bitcoin, select the Bitcoin wallet  you see there and get the address. That’s all.

To Send click on the Send button as shown below:

Enter the address you want to send to and swip the send button right.

And that’s it. You’ve received and sent your first cryptocurrency. Do this exercise. If you need help send a message in the comment or in the Telegram group.

How to spot cryptocurrencies with profitability potentials

The first thing I tell newcomers to the crypto space is if you ever get confused on the coin to buy, buy Bitcoin. It has been battle tested and you know that you have a rock solid investment until you figure out other coins that you might want to invest in.

In the crypto ecosystem there is a concept of shitcoins and meme coins. Bitcoin Maxims refer to other coins other than Bitcoin as shit coins, but are they shit coins?

In the crypto space there are a lots of slangs we’ve covered a ton of them in this article, check it out – Cryptocurrency Terms You Should Know

Well, it depends on how you look at it. Personally, I do thorough research before buying into any crypto project. If after my research I figure out the project has solid fundamentals and a great team, I wouldn’t mind throwing in some cash in it.

To figure out coins or tokens that wouldn’t get rugged —  get you scammed, make sure there is a solid project behind the coin. Examples of such coins include Ethereum, Solana, FTM, Algorand, Avalanche, Cardano, etc. 

We’ve also published a content discussing some of the top blockchains and their tokens — Top decentralized Blockchains

You’ve probably also heard of meme coins. Meme coins are those cryptocurrencies that are inspired by popular social media jokes, sarcasm or puns. However, some of them such as DogeCoin and Shiba Coin have risen to fame and have been listed in major exchanges.

This might be a little tricky to research but the basic thing to do is to look for their community group on Telegram, Discord, and Reddit follow the trend for a while and try to understand what is going on. Check the current market capitalization of the token as of the time you saw it (it should be low), check the tokenomics. How is their marketing strategy, are they doing well at it? 

Check the total supply of the coin to make sure the market cap and the total supply are not too big and it has room to grow.

Listen to news and follow crypto people on Twitter. Once you stick around long enough you’ll be more confident and things will become much easier for you.

What is staking

Staking is a way new coins are minted into circulation in proof of stake consensus blockchains. It is another way to earn more money holding cryptocurrencies. If you know how bank fixed deposit interest schemes work you’ll have a fair understanding of how crypo staking works on the economic side, of course, not on the technical side. We’ll focus on the basics for now.

How and where to stake your crypto

Depending on the token and the blockchain you have chosen to invest in there are several platforms that allow you to stake your coins. 

You could stake with exchanges like Binance, Kucoin, etc and you could also stake with independent validators using a wallet that supports staking of that coin.

For example, you could stake your FTM with the FTM PWA wallet, sake ADA with the Yoroi walle, etc. How do you calculate the ROI for your staked tokens?

Just like your bank interest rates, it’s calculated based on Annual Percentage Yield (APY).

Assuming you are staking 1000 FTM for 12 months at a 9.6% APY you’ll get this:

You can use https://www.stakingrewards.com/earn/fantom/ to get an idea of what I am taking about.

The value of that token will be determined by the price of FTM at that time. The formula to calculate APY is as shown below:

APY= (1 + r/n )n – 1

Where:

  • r = period rate 
  • n = number of compounding periods

To learn more about APY check this article on Investopedia

If you got to this point, you are a legend. You can’t possibly learn everything in one goal but gradually things will begin to make sense. Just stick around. Bookmark this guide, share it also for others to learn. Keep learning.

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