The number of people I’ve heard asking about “buying a bitcoin” in the last month is just ridiculous. I say ridiculous because this is fuelled just by the train of thoughts that crashes dreams and into bubbles. It’s partly driven by the fact that their (cryptocurrencies) returns have far outsized any other asset class (and their supposed utility value to a regular consumer at this point in time). And partly by the mainstream media showing charts that are trending upwards like there is no ceiling to touch.
But then I think that this is such a new space that you cannot perform any tested fundamental analysis nor should you pretend to time the market any better than the next person. You are only bound by your own curiosity in this vast expanse of cryptocode—all promising a more decentralised, unhindered, seamless internet.
There is enough great material on the blockchain space and its techno-financial implications. Here is one summarising the best of the lot — Crypto-token roundup.
If you are from India, there are a few ways you can start off
Research About Cryptocurrencies
You’d like to potentially purchase. Good starting points — CoinMarketCap, CoinDesk, Smith+Crown. Then ideally you should be reading whitepapers, talking to the founders on Slack and Telegram channels, attending local meetups, believing in the product roadmaps, listening to developer chatter on Reddit and forums.
Buy from a site like Zebpay or Unocoin and Ethereum from EthexIndia. These are the gateway currencies. These sites accept common Indian payment methods like net banking, bank wires (RTGS / NEFT). They are just dealers with wallets (like PayTM) and not exchanges.
Transfer bitcoins to a reputed global exchange like Poloniex or GDAX. These exchanges will give you a long alphanumeric key based on the cryptocurrency (BTC/ETH in this case) you choose to deposit. Go to your wallet and send your currency to this key address. Wait for some time (~30 minutes depending on network traffic) for it to hit your exchange balance. These exchanges have most of the commonly traded currencies along with good volumes. You are ready to buy your desired altcoins and cryptocurrencies. ProTip — Do not read what is being said in the troll boxes (small chat corners).
Switch On 2nd Factor Authentication Everywhere!
Google Authenticator > SMS. Hackers are lurking everywhere. This isn’t a stock market where you have a Demat account number or an online wallet where you store cash behind a username/password. Private keys <> Public blockchains are at play here along with some cryptography magic dust.
Now Comes The Really Technical Part
If you plan on holding a substantial chunk for a long enough duration, you’ll need a place to store these. Most recommended solution for this is to get a hardware wallet like Trezor or Ledger. Transfer your ‘holdings’ offline using the guides included with them, lock it away safely and keep the recovery phrase at a separate location. Consider this analogy — you will not keep your investments in a PayTM wallet but with a more trusted 3rd party like a bank or trustee, in this case, it just happens to be you!
Repeat in reverse when you decide to exit. Try to keep up with the legalities, regulations and
Try to keep up with the legalities, regulations, and space. This is growing so fast that I hear even the ‘experts’ commonly say that they don’t have a grasp on this.
I was thinking twice about publishing this. Then this quote about the market deciding the perfect equilibrium tipped me over — “It’s immoral to let a sucker keep his money”. This was said by a poker player and I’d really suggest playing this asset class as a game of poker. The player-beware warning implies that if you don’t understand, don’t sit at the table. Choose your table wisely, set your buy-in within limits and don’t look back when you get up.
Disclaimer: This is not an investment advice. Hope it enthuses you enough to go around the world wide web digging for information yourself. Do not participate in ICOs (initial coin offerings) unless you really digest the crucial steps of understanding, buying, holding, and loving an asset class.
I wrote something previously about this, which makes a good precursor to this post. Needless to say — all thoughts are casual, personal and unedited.