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Cryptocurrency

The Absolute Beginner’s Guide to Cryptocurrency Investment

References are made wherever possible. All statements are based on the author’s experiences. I take pride in informing the public and helping as many as I can through sharing my experiences with my readers. That said, no one except you can take responsibility for your Cryptocurrency Investing decisions, so do think it through before investing.

It would be appropriate to start this guide off with the premise that an increasing number of e-commerce stores are beginning to accept crypto currency payments. These stores range from e-commerce shops, recruitment sites, clothing stores, marketplaces and many others. This is a clear indicator that cryptocurrency is to stay and it is therefore important to start from the beginning.

When I first started taking an interest in cryptocurrency I thought I was so lost in this huge sea of unknowns. Where do I start? What are the useful keywords to look up and keep in mind? What are the available helpful resources? This cryptocurrency investing guide is written so that in just 20 minutes, you would have a sense of what to expect of your upcoming crypto journey, and how to best go about starting it. Enjoy it, it might just be the most exhilarating ride of your life.

Beginner’s Guide to Cryptocurrency Investing

Rise of the Cryptocurrencies

As the tech literacy of the population increases, acceptance of crypto as a legitimate store of value follows, and it boomed. Titles along the lines of ‘Bitcoin price hits new all-time high’ and ‘Ethereum price surges’ are starting to perforate the general public’s news feed. What we know for sure is that people who were once sceptical of Bitcoin and the technology behind it are slowly understanding and getting increasingly involved with crypto. As at the time of writing, the market cap of the entire crypto space is at 30.9 billion USD. It was 20 billion just four months ago. What would it be four months from now?

Current Makeup of the Cryptocurrency Space

You would have heard of Bitcoin and the ‘altcoins.’ How this naming convention started was because back in the days of 2011, forks of Bitcoin appeared in the markets. The forks, or clones, each aspire to serve a niche area, aiming to be ‘better’ than Bitcoin. Since then countless new crypto has emerged, eroding away Bitcoin’s crypto market cap dominance. These altcoins are gaining market share at an alarming speed. Ten times or more growth has been observed in a time span as short as six weeks (see PIVX, an altcoin).

Cryptocurrency, Stocks, and Fiat

The currencies we know are referred to as ‘fiat’ by the cryptocurrency community. Although having ‘currency’ in its name, cryptocurrencies share more similarities with stocks than currencies. When you purchase some cryptocurrency, you are in fact buying some tech stock, a part of the blockchain and a piece of the network.

Cryptocurrency Exchanges

The most common place where people buy and trade cryptocurrency is on the exchanges. Exchanges are places where you may buy and sell your crypto, using fiat. There are multiple measures to judge the reliability and quality of an exchange, such as liquidity, spread, fees, purchase and withdrawal limits, trading volume, security, insurance, user-friendliness. Out of all these, I find Coinbase as the best exchange hands down. It has a beginner-friendly user interface, and an unbeatable 100% crypto insurance.

After setting up an intermediary bank account and verifying your details with Coinbase, you are only five simple steps away from a Bitcoin purchase:

★ Access the ‘Buy/Sell Bitcoin’ tab

★ Select the payment method using the drop-down menu

★ Enter the desired amount

★ Click ‘Buy Bitcoin Instantly.’

★ View your credited Bitcoins on your dashboard

When you get acquainted with buying crypto and start to itch for some crypto trading (e.g. BTC/ETH), simply perform an instant transfer from Coinbase to GDAX free of charge and start trading. Think of Coinbase as the place to conveniently buy and store your crypto and GDAX as your margin trading platform. Transfers between the two are instant and free.

As you slowly get familiar with other currencies, you might want to have the option of investing in them. Bittrex and Polo are two exchanges that offer a wide selection range.

When signing up on these exchanges for the first time, do make it a point to verify your account with the required documents early, as you do not want to be caught in the middle of some tedious and slow admin work when the trading opportunity comes. Verification on these exchanges may take days, and purchase/withdraw limits may only increase gradually as you trade.

An additional point to note: if you are using a currency other than USD, do check out the exchange’s ease of funding and withdrawal. You do not want your exchange to come into fiat withdrawal problems like Bitfinex did recently.

Cryptocurrency Wallets

Exchanges have inbuilt online wallets to keep the cryptocurrency you purchased. However, for those who heard of the Mt. Gox hack, you might feel uneasy to put on an exchange. If you do not wish to keep your crypto holdings on the exchange, you have the option to either use a paper wallet service like myetherwallet.com or spend 99 USD on a hardware wallet like KeepKey. Both serve the purpose of removing platform risk, at the cost of taking up the responsibility of keeping your cryptocurrency safe.

To transfer your crypto from exchanges to your hardware wallet for long term storage, simply follow these steps, using Coinbase and KeepKey as an example:

★ Plug in your KeepKey USB cable

★ Open your KeepKey Client (on Google Chrome under Apps)

★ Find your wallet address on the KeepKey Client UI

★ Access Coinbase ‘Send/Request’ tab and input your KeepKey wallet address

★ Confirm amount and click ‘Send Funds’

Take note to first send a tiny amount (e.g. 0.0001 BTC) for testing before sending the bulk, lest an error occurred and the transfer amount is lost. A small network transfer fee might be charged.

Personally, I own a hardware wallet, as I love the feeling of a having around a tangible reminder of my crypto holdings. Also, the hardware wallet’s user interface makes it easy to keep multiple coins, which is especially handy when you participate in ICOs (Initial Coin Offering) in the future.

Cryptocurrency as a Percentage of Your Portfolio

This part will be wildly subjective. Crypto has the potential to realize many ‘rags to riches’ stories, but its volatility makes it unpredictable. As a precaution, the money you put in crypto should be money that you are fine with losing. I cannot emphasize the importance of this as we often underestimate how the volatility affects our emotional capacities. The upside is huge, but it comes with lots of risks and, if I may put it, emotional torment.

A conservative portfolio I would suggest is as follows:

★ < 30 years old (max) 30% Crypto, 50% Traditional Investments

★ 30 – 40 years old (max) 20% Crypto, 60% Traditional Investments

★ > 40 years old (max) 10% Crypto, 70% Traditional Investments

This is not meant to be age discriminatory but considers the fact that one takes up more financial responsibilities (mortgage, family) as he grows older.

Within the designated crypto share of your portfolio, you may diversify your coins based on your risk appetite.

Show Me the Money!  Cryptocurrency Investing

Now, this is where it gets exciting.

How do we pick the winner? How do we avoid picking the loser?

Note that crypto is now in a huge bull market and anything could rise over time. Also, do not dismiss the possibility that we may be in a bubble like the-dot-com boom back in 2000. Still, ask yourself these questions before you decide to invest in a coin:

Are my investments safe with the dev team? The first rule of investing should always be the preservation of capital. Can you trust the dev team with your money? Are you about to leave your money with founders who have been involved in previous scams? If you see these telling signs, back off immediately. The coin’s price might grow for all you care, but it is just not worth it to put your capital at such risk.

Does my coin of interest have a long-term plan? If you cannot understand their yellow paper, at least read their white paper. What are the team trying to achieve? Do they have the means, or have they already worked towards their goals? What are the timelines and milestones?

Does my coin of interest seem like a well-marketed plan with no backup? Lots of ICOs these days just have a pretty webpage, and then they’re shipped out to sell. Watch out for these: are they able to deliver?

How long should I stay in this? Do I have an exit plan? There will be coins where you do not want to hold forever, but wish to flip for some short-term gains. In this case, be sure to set a timeframe, or an exit price, to reduce to effect of emotions on your trades. Stick to your plan and watch your emotions.

Does it have a real-world use case? Some coins seem to keep increasing in value simply due to supply-demand factors. This trend might not be sustainable. For a coin to have long term supported value, it must have a real-world use case eventually. Look out for coins that look too much like a get-rich-quick scheme.

Short Term Trading with Margin

Once you get familiarized with crypto, you may want to trade on your ‘stash’ in hopes of increasing it. For the experienced forex traders, this is nothing new. But for the new crypto investor, you may want to brief up on how to make a leveraged trade.

Short-term trading takes advantages of incoming news to make a quick buck. If you foresee good news from an upcoming release of a coin, you may want to open a long and see how it goes. Remember, buy the rumor, sell the news; act fast and be daring if you wish to make a profit with short term trading.

Mining

For those who are more comfortable with a predictable form of reward, mining is the way. Mining involves setting up of a rig, consisting of GPUs or CPUs and an investment in the electricity. Mining is only possible on cryptocurrencies that follow the Proof of Work protocol. It takes some effort to setup and gets things running, but it is attractive as a long-term passive income as long as you frontload the work.

Staking

Staking is the Proof of Stake version of ‘mining.’ Think of this as making dividends on your stock. The reward rate and staking method differ greatly among Proof of Stake coins, but in general, it takes less effort as compared to mining.

Arbitraging

As you get a hand in multiple exchanges, you may wish to buy from one exchange and sell on another to make ‘arbitrage’ gains when you spot an arbitraging opportunity. Take note of two things if you wish to do so: remember to factor in fees, and remember that the price could change when you are transferring your coin between exchanges, especially during volatile times. USD tends to be liquid so this happens less for it, but for other currencies such as CAD (Canadian dollar) and SGD (Singapore dollar), there may exist more arbitraging opportunities to exploit.

Helpful Resources

Check out coinmarketcap for the tabulation of various coins’ market cap and price. Check out cryptowat for the prices of popular coins across different exchanges. Check out the respective coins’ subreddits for available news and market sentiments. Lastly, check out hypecoaster for how much more crypto you need for a Lamborghini Aventador 🙂

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That’s about all I have, for now, invest smart and most importantly, don’t forget to have fun!

Cryptocurrency

Top 5 Cryptocurrency Tips for GAINS during DOWNTIME

There’s a reason why people opted for cryptocurrencies many years back. With most of them claiming that it’s profitable, secure, and free from system outages; people have jumped right into the bandwagon without doing further research.

Sure enough, users may have had a seamless user experience ever since Bitcoin was launched in 2009. But with an upswing of several downtime occasions from several exchanges or online wallets in the last recent years; this leaves one question which is probably still up in the air, at the time of writing: Are investors at risk now due to downtime inflation?

Coinbase’s downtime occurrence last December 2017 and Bitcoin’s so-called “system maintenance” last August 2018 have left a lot of investors hanging by a thread. Not that a system glitch is something out of the ordinary; but the fact that the system was disrupted for about 12 hours and 2 hours, respectively, while the value soared at noticeable prices during those times left investors asking yet another question: Were those manipulated?

The Worst Downtime in Cryptocurrency History

During a dreadful downtime and sky-high values happening in cryptocurrencies simultaneously, sometimes investors can’t help but speculate if these are indeed planned or a big coincidence. As if missing out on a good trade isn’t bad enough, put hacking into the mix and investors will find themselves really keeping both eyes on those computer screens until the page doesn’t annoy you with that all-too-familiar blue screen.

The most recounted downtime in cryptocurrency history that led to class suits should remind investors that this is somewhat the price they pay for not doing due diligence. The world’s largest cryptocurrency exchange, Bithumb, has found itself in a conundrum when its users have filed a class suit after a 90-minute server outage on November 12, 2017. Although this might not sound as bad as Kraken’s 48-hour server maintenance, investors claimed of losing millions of dollars when the outage hit the fan – a $250-million loss to be exact.

Let’s not forget about Kraken’s DDoS attacks last June 2018 which formed a bunch of Florida users to file a class suit against the said platform. They allegedly claimed of losing up to a million dollars during the frenzied trading.

How to Ensure Gains in Case a Downtime Occurs?

As crypto investors, this is an inevitable situation nowadays but since investors are nevertheless responsible for their investment decisions, here are 5 simple ways you can do to prepare yourself in case a distressing downtime happens:

1 Don’t Put All Your Eggs in One Basket

As with any other investment options, having different portfolios or platforms might save you from a great deal of money whenever your favorite exchange or online wallet’s server fails. But that’s not the only benefit you’ll get from diversifying, you also get to leverage your trading on different platforms with different prices.

2 Choose Decentralized Platforms

A distributed denial-of-service attack (DDoS) is when an influx of users simultaneously uses the system. When you’re investing in a centralized platform which is handled by a sole controller, you’re bound to see doom. The advantage of decentralized platforms is that they are managed through peer-to-peer transactions, therefore, lessening the risks of DDoS attacks.

3 Look at Long-Term Holds

While it’s almost always tempting to sell when “it’s too high”, putting your investments in long-term holds will be beneficial for you in the long run – if you’re patient. So during a downtime, when an upsurge of value takes over, don’t worry if you can’t log in. Who knows, it’ll be double or triple a week from now or even months from now! You’ll likely thank the server for failing at an opportune time.

4 Consider Stop-Loss Orders

If you really don’t want to further your loss and maximize your gains pre, during, and post downtime; don’t forget to set up stop-loss orders across all your exchange platforms. When a downtime occurs, at least you can sleep you at night knowing you won’t be losing that much.

5 Be Patient. Persist.

If you really want in on a good trading situation during a server crash, be unrelenting in clicking the “refresh” button. Patience is a virtue, they say. So hope for the best but don’t expect too much.

As the surge of cryptocurrency investors seems to fortify more people, downtime occurrences are also giving some of them a huge scare. These simple tips will maximize gains or control losses during server outages; so it’s vital to be always on the ball about your investments.

 

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Author Bio:  Lily Brooks, a frequent traveler and numismatist, loves to write about little-known facts and fun stuff about coins, travel, health and food. She is currently working for First Fidelity Reserve, which specializes in rare United States coins and precious metals, including gold, silver, and platinum bullion and provides superlative service, insightful analysis and comprehensive consultation for rare coin investors and collectors.

 

 

General

MtGox Finally Makes a Public Statement About Its Shutdown

bitcoins

MtGox, the bitcoin exchange site that handled most of the bitcoin transactions online, and whose website went down on Tuesday after a ‘Huge Theft’ has just released a new statement clarifying the current situation. Here is the short statement in full:

Dear MtGox Customers,

In the event of recent news reports and the potential repercussions on MtGox’s operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.

Best regards,
MtGox Team

While it’s difficult to measure actual effects of the aforementioned text on the future of global bitcoin market, MtGox exchange has apparently decided to take its website down without ever taking responsibility for what may affect the outcome. From now on, and until a new notice is made, the Bitcoin-related payment processing company will suspend any further activities concerning the trade in the bitcoin.

Update1: According to a somewhat “authentic” yet unofficial slide that is floating around the internet and is called “Crisis Strategy Draft,” Mt.Gox has lost roughly 744,408 bitcoins due to theft, worth around $350 million. In addition, it says that the digital currency exchange has a future plan to rebrand itself as Gox.

Update2: The guys over at  Fox Business have just confirmed with Mt. Gox CEO, Mark Karpelesthe, the authenticity of the slide (PDF) that recently leaked.

Update3: Mt.Gox has officially filed for bankruptcy protection ater losing 750,000 of its customers’ bitcoin savings plus 100,000 bitcoins of its own, worth together more than $450 million. In a press conference held after the bankruptcy filing, Mt. Gox CEO Mark Karpeles said that regretfully, all the bitcoins are GONE “due to weaknesses in the system.”

Update4: Mt. Gox source code just leaked  by a Russian hacker with the nickname of nanashi_. It. The code, which has approximately 1700 lines, includes the Bitcoin class for Mt. Gox exchange and the  transaction processing system that used to drive the online activity. The hackers also  say that they have managed to obtain a 20GB treasure trove of customers’ personal data information, including passport scans and contact information (some belongs to the company’s employees).

Update5: Mt. Gox has filed for Chapter 15 bankruptcy proceedings in the United State.

Check out the video for this action:

[youtube id=”NeuCuM9CkBc”]

[Image credit: Antana]

Applications, Phones, Video

Video: iPhone Firmare Version 2.0 In Action

As already mentioned, Dev Team has managed to put their hands on iPhone’s next firmware update and jailbreak it before release date in June. Here’s your chance to take a quick look and get a first impression of it in action. The clip introduces some of the new features, including AppStore, advanced calculator, Exchange Mail, Parental Controls, SDK support, Cisco VPN support and more. Don’t try looking for this update, it’s still out of bound.

[kml_flashembed movie="http://www.youtube.com/v/pbIfDJh_eb0" width="425" height="350" wmode="transparent" /]

[via slashgear]

Applications, Events, News, Phones

Apple iPhone SDK Event: Keynote Summary

3 Comments

iphone-sdk
Apple’s iPhone roadmap SDK event at “Town Hall” in Cupertino has answered our expectations with 7 major announcements from El Stivo. The keynote has introduced us as follows:

  • Apple announces iPhone SDK package.
  • iPhone gets multi-touch games.
  • iPhone receives AIM services.
  • Apple enables VOIP over WiFi.
  • iPhone gets native Exchange support, including push E-mail, calendars, and ActiveSync.
  • iPhone SDK available for free from today, requires $99 developers membership.
  • iPhone firmware update version 2.0 hits in June.

It’s not that we were strangers to most of today’s new announcements, on the contrary, we’ve been craving for them since the day the iPhone was launched, and finally they are here. Lets view some of them in a nutshell:

Apple’s iPhone SDK

For months we’ve been hearing tons of speculations about it, but today, we finally get a chance to look at Apple’s long-awaited iPhone SDK pack and stand on this exciting developer kit essence. Based on OS X Xcode source code, Cupertino will provide iPhone developers the same API and developing tools, used by Apple, including Cocoa Touch app framework, 3-axis accelerometer, access to an interface builder – providing drag n’ drop structuring of the GUI and automated power management, location enabled app, 3D graphics accelerators, full access to media capabilities and to the iPhone simulator, in order to experiment and run the developing application on OS X.

Continue reading Apple iPhone SDK Event: Keynote Summary →