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5 Easy Steps to Get Started with Cryptocurrency

In this article we explain how to buy, where to keep, how to earn and how to withdraw cryptocurrency.

Read time: 11 min
Cryptoassetsrank.com Published on Jul 04, 2018
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In this article we explain how to buy, where to keep, how to earn and how to withdraw cryptocurrency.

What to know before entering the cryptocurrency market?

The cryptocurrency market is unstable. The price of coins changes constantly because of the demand, laws, news, competition and lack of real cost. If a project promises to provide a stable growth, do not invest in it.

A lot of scammers. They offer "the safest bitcoin wallets", cloud mining, investments with a profit of hundreds of percent. When the conditions are too favourable, it is often a scam.

No experts. Do not believe the crypto analysts who predict the change of prices or success of projects because there are no experts in this field and they can make mistakes. Conduct your own research.

Risks. The price of any currency can drop and you will lose your money, that is why invest only that amount of money that you are ready to lose.

1. Study the types of cryptocurrencies

According to CoinMarketCap - Forbes, around 1,500 types of cryptocurrencies were registered as of the beginning of 2018. It takes a lot of time to examine them all and is a useless process because they have just a few differences. There are three major coins:

Bitcoin. It is a cryptocurrency and a payment system that is famous for its quick, cheap transactions and decentralized nature. However, due to high popularity of the cryptocurrency, the transaction process has slowed down to several hours. It is too complex and not profitable for the amateurs to mine bitcoin; a less expensive alternative is to exchange it for another currency.

Ethereum. It is a currency for smart contracts. The developers have added to the basic features of cryptocurrencies a possibility to write programs that automate processes and expand the functionality. For example, they allow users to make wallets with several owners, self-fulfilling bets, lotteries, casinos, voting, automatic transactions, etc. Unlike Bitcoin, the number of Ethereum coins is not limited.

Ripple. It was created in order to increase the speed of banking transactions and to make them cheaper. It cannot be mined because all the coins have already been released and belong to Ripple Lab.

Find a cryptocurrency that is profitable for you and before investing in it check its reliability, practical use and technological need for the market.

2. Select a wallet

A crypto wallet is a program or an equipment for storing cryptocurrencies and keys.

A private key is a password consisting of random numbers and letters. It is impossible to make a transaction to another user without it.

There are several types of wallets:

Hardware wallet. It is a removable media device. It is suitable only for a long-term storage of currency because it is not convenient to use it for trading; on the other hand, it does not overload the computer.

Examples of devices:

  • KeepKay. It supports Bitcoin, Ethereum, Bitcoin Cash, Ripple;
  • Ledger USB Bitcoin Wallet. It is the most protected device but it supports Bitcoin only;
  • Trezor. It supports 12 cryptocurrencies and can confirm the transactions.

Desktop wallet. It is a program that helps to get data about the account and keeps the keys on HDD.

It is one of the most reliable types of wallets but it requires constant updates that take up more than 100 GB. That is why the desktop wallets are divided into:

  • "thick" wallets that independently download and update the chains of blocks; and
  • "thin" wallets that do not download all of blockchain but get synchronized with it when connected to the Internet, transferring the money or performing other operations.

Examples of wallets:

  • Exodus. It is a thin wallet that allows its users to exchange 29 cryptocurrencies. It is compatible only with Mac, Linux and 64-bit Windows operating systems;

Exodus interface

Exodus interface

  • Bitcoin Core. It is a thick wallet that works on all operating systems. It is notable for high reliability but a very long synchronization period.

Bitcoin Core interface

Mobile wallets. Programs for smartphones. They are suitable for those who use cryptocurrency as a payment method. It is a transitory variant for storing cryptocurrency because smartphones do not support constant blockchain updates.

Examples of wallets:

  • Coinomi. It supports 86 cryptocurrencies. Its advantage is a high level of safety: to enter the wallet you need to type a phrase that is shown once during the registration. It helps to recover data if the password is lost;

Coinomi interface

  • Xapo. The wallet supports only Bitcoin but it has a lot of advantages: there are no commissions for transactions, the money in the wallet is insured, you can order a debit card.

Xapo interface

Xapo interface

Online wallet. It is a third-party service, the keys of which are located on remote servers. With them it is possible to create several wallets for different cryptocurrencies, to trade at cryptocurrency exchanges, to exchange currency, to calculate fees using built-in calculators.

Advantages:

  • anonymity;
  • work with several cryptocurrencies;
  • quick transactions.

Disadvantages:

  • risks: some wallets are made by the scammers and there is a possibility of being hacked;
  • the service's fees for actions with cryptocurrencies.

For example, HolyTransaction. It supports Top 10 cryptocurrencies; it has a simple interface; the fees are average.

HolyTransaction interface

  • Coinbase. It is a wallet with high fees (4%), it supports Bitcoin, Bitcoin Cash and Litecoin;

Coinbase interface

Browser extension. The programs in the form of extensions for Chrome and Firefox browsers. For example, Jaxx supports 14 currencies and has a desktop version for Windows and Linux.

Jaxx interface

3. Select a purchase method

You can buy cryptocurrency using the following methods:

Wallet. If the wallet is multi-currency, it has an option allowing to exchange one cryptocurrency for other cryptocurrencies or fiat money.

Advantages:

  • purchasing within several seconds;
  • paying via a terminal, a bank card or an electronic account;
  • safe transactions.

Disadvantages:

  • unfavourable exchange rate;
  • exchange fee.

Cryptocurrency exchange. It is a website where you can exchange cryptocurrency for another cryptocurrency or fiat money at a favourable rate.

This is how it works: you get registered at the website, make a deposit to your account, look for a favourable offer, submit an exchange request and wait for a confirmation of the deal. After your request is confirmed, you will get coins to your account.

Cryptocurrency exchange platforms are not suitable for storing cryptocurrencies because very often there are technical glitches or failures and you might not be able to withdraw your money. That is why as soon as you have made the deal, it is better to transfer the coins to your wallet.

Advantages:

  • it is possible to find the most favourable exchange rate;
  • to earn using the exchange rate changes;
  • a vast choice of cryptocurrencies;
  • integration with popular payment systems.

Disadvantages:

  • it takes a long time to get a confirmation of the deal;
  • high fees at the cryptocurrency exchange platforms.


Before selecting a cryptocurrency exchange, pay attention to: the daily trade volume, the methods of depositing and withdrawing the money, the number of cryptocurrency pairs and the exchange rate monitoring. The more there are, the better.

Popular cryptocurrency exchanges: Poloniex, EXMO, Bittrex.

Poloniex interface

Cryptocurrency exchange service.  An Internet service for converting fiat money to cryptocurrencies.

This is how it works: you select a currency that you would like to exchange for a cryptocurrency, for example, dollars for bitcoins, and the desired amount. The system makes a calculation and gives you the exchange price. If you accept the indicated amount, you write off the required sum from your account and wait for the cryptocurrency to be transferred to your account.

Advantages:

  • there is a large amount of cryptocurrency exchange sites, you can find a service with the most favourable exchange rate;
  • quick exchange;
  • high security of transactions.

Disadvantages:

  • the exchange rate is less favourable than that at the cryptocurrency exchange platforms;
  • high fees.

Interface of the West Change exchange site

4. Select a method to make money using cryptocurrency

Mining. Production of cryptocurrency based on mathematical calculations. To do that, you need to set a mining farm - a computer network with a dozen of powerful video cards.

Advantages:

  • no fraud.

Disadvantages:

  • expensive equipment;
  • electricity costs;
  • constant investments into the farm upgrades.

Trading. Trading at cryptocurrency exchanges with different exchange rates.

Advantages:

  • high income.

Disadvantages:

  • you need to have at least 1 BTC;
  • you might go into the red if you buy currency at the maximum rate and while transferring it from one exchange to another, the exchange rate drops;
  • you will have to spend most of the day at the computer monitoring cryptocurrency exchanges.

Investment. You buy cryptocurrency and wait till its price grows up to the required level determined beforehand.

Advantages:

  • low entry price.

Disadvantages:

  • your wallet can be hacked;
  • high volatility of the exchange rate;
  • the cryptocurrency price can drop.

5. Convert cryptocurrency to fiat money

You can cash out the cryptocurrency you have via:

Cryptocurrency exchange. Like traditional stock exchanges, cryptocurrency exchanges allow users to withdraw money. Convert currency to fiat money and withdraw it from your account.

Disadvantages:

  • double fees: for conversion of cryptocurrency into fiat money and for withdrawal of money;
  • the transfer can take a lot of time if nobody is willing to buy.

Cryptocurrency exchange service. There are a lot of them and they vary by the exchange rate, speed of operation, fees, interaction with payment systems. Not to waste time on examining each of the exchanges, use exchangersmonitor.com; it will show you the most favourable services.

Disadvantages:

  • Sometimes there is no reserve of cryptocurrency at the exchanges. It means that you will not be able to receive dollars or euros because the owners do not have them;
  • high risk of fraud.

Webmoney. The service has acknowledged bitcoins and now the users can transfer them to an electronic wallet.

Disadvantages:

  • the transfer lasts 24 hours;
  • there is a possibility of an "express transfer" but the fees grow up to 1%.
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