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Tuesday, August 16, 2022


BDC’s Crypto Corner


BDC’s Crypto Corner

By Biodieselchris

Hello fellow PSW-ers. I've been interested in cryptocurrencies (informally, "cryptos" or "coins") since 2011 when I first heard about Bitcoin, Since that time I've become somewhat of a subject matter expert and personal investor in Bitcoin and other alternative cryptocurrencies ("altcoins").

I've been posting comments about cryptos in Phil's daily post from time to time. Recently, Phil and I got on a call and he asked if I would like to run a blog on his site specifically about cryptos, which I thought was a great idea. My goal would be to educate members on what I know about how coins work, how I research coins (what I find interesting), how exactly one can invest (buy, hold, and sell) coins and a basic, easy-to-follow general how-to on all things crypto. In addition, other members have expressed an interest in learning more directly in the comments as well.

A cryptocurrency is a unique digital asset that has characteristics of both a currency (exchangeability) and an asset (store of value). There are lots and lots of great articles around the web which I will link to in future posts. However, today I want to post specifically about trading. Before discussing trading, I need to post a big giant disclaimer:

Investing in cryptocurrencies is extremely risky. You should assume 100% loss of capital is not only possible, but likely. I basically treat cryptocurrencies like options or futures: THEY ARE NOT FOR THE CONSERVATIVE PORTFOLIO. I will relate information that I know about trading cryptos, including the coins themselves and the mechanisms used to buy them (exchanges). I am not making any specific recommendations on the third parties I use for these activites. I mention them simply because I know about them. The crypto space is continually evolving and there is no way I can guarantee I have the latest or best information on any particular coin, third party service, or other information. I may hold coins I am recommending though I won't be selling any at the time I'm recommending a buy!

I'm here to hekp and get anyone on interested in crypto on there way. With that, we can move on to how you go about risking losing 100% of your capital cool

Buying coins is generally a two-step process:

The first step is to buy Bitcoin using USD (for US residents). I use coinbase.com. This is basically like having a bank account and requires the same documentation as opening a bank account. Once your account is open and approved, you can easily buy Bitcoins by linking a checking account (and possibly using credit cards, though I use the bank option). I will not provide a tutorial because they have a great one and it is very straight forward. Coinbase also trades Ethereum directly. Ethereum is a popular altcoin that has the second highest valuation after bitcoin. As an aside, here is a great site that lists all known coins by market capitalization. I use this site practically as my coin "homepage," so bookmark it! In Coinbase, from account setup to first Bitcoin purchase being in your account may take 7-10+ days, so expect this timing. If you only want to own Bitcoin or Ethereum you are done, there is nothing more to do.

The second step is if you want to buy altcoins, or, everything else that currently exists that is not Bitcoin or Ethereum. One popular altcoin exchange is bittrex.com and another more esoteric one is coinexchange.io which I'll detail because the account sign up is as easy as providing an email/password. I recommend always using the 2-factor authentication method these sites offer (either a code that is texted to you, or google authenticator, depensing on the site) because it makes your account much more secure. Altcoin trading is normally done using Bitcoin, meaning the trading pairs, whatever coin you want to buy or sell, is priced in Bitcoin. So the next step is to deposit Bitcoin that you bought through Coinbase. Here are the steps:

  • Login to coinexchange.io (I assume you've already set up your account)
  • In the upper right go to My Account -> Balances
  • Find Bitcoin in the table (usually at the top if your balances are empty; the symbol for Bitcoin is BTC)
  • In the Bitcoin line go over to the right where it says Actions and select "Deposit BTC"
  • You will see a deposit address. This is a unique bitcoin address that is associated with your account. (to learn what a "bitcoin address" is, click here, but this knowledge is not necessary for this tutorial). Select and copy this entire address.
  • In you Coinbase account, go to Send/Request
  • Paste the address you copied from coinexchange.io into the Recipient field at Coinbase
  • Select the amount you want to send in Bitcoin on USD (note, if you select USD, it simply sends the USD equivalent in Bitcoin, given the current market rate).
  • You can watch your transaction in real time with a block explorer like blockchain.info. Paste your address that you copied before into the search box and you can watch your transaction update in real time.
  • Transactions require confirmation time that can be up to an hour or more so be patient and don't worry if you cannot trade right away, as this is normal.

Hurray! you can now buy any Altcoin in the 1000+ altcoin universe (that's why the altcoin sites look so "busy," they often list many coins). To trade, follow these steps:

  • Still using coinexchange.io, go to the Markets menu option. You can select a coin from the list or search. Picking a coin at random, say "HappyCoin" start typing the name and click on the HPC/BTC pairing.
  • Scroll down to the green boxed "buy" area. Here's where you enter your bid. Before you do, look in the Bid/Ask columns to get an idea of a price. Don't be scared by all of the decimals: altcoins trade for a fraction of a Bitcoin so it is not uncommon to see a bid/ask of 0.00005458 and 0.00006578. Bitcoin is divisible to 8 decimal places. The smallest amount of bitcoin, 0.00000001 is known as a "Satoshi." People often talk about coin trading in Satoshis, for example at "50 satoshi," but they usually get entered in the trading site as BitCoin, (0.00000050), so the ugly decimals are just part and parcel to this business.
  • Enter some amount of coins to buy and the buy price in bitcoin. For HappyCoin, the market as of this writing is showing a bid/ask of 3715 / 6300 satoshi. So you could enter a limit order for 100 coins with a price of 5000 satoshi (entering 0.0005 bitcoin as your bid price). The site calculates your total bitcoin outlay (0.05 bitcoin) and adjusts for their fee amount.
  • Submit you order and wait for a seller, you're done!

Once you know how to do these steps you can essentially trade any coin in the entire universe. So congratulate yourself, you're probably more knowledgeable at this point than 99.8% of the general public. It might look hard and like a lot steps, but it's atually pretty straight forward once you get the hang if things, so don't get discouraged.


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