Hi Everyone, This is my experience of getting into the CryptoCurrency trading. But by no means, I am not even close to being an expert in giving someone advice on this topic.
I just wanted to share my experience so far, so that maybe others who are getting into the cryptocurrency trading can find some useful points. I wanted to split my experience of getting into the crypto trading into different phases.
Phase 1: Excitement and the hoping to make some quick bucks (4th July 2017)
I started like any other person in this day and age would do, Asking Google ;). I first started searching for articles related to what exactly a bitcoin is and why on earth this thing is getting its value increased by the minute. I started to come across the terms like Blockchain, Satoshi Nakamoto, bitcoin mining and altcoins. The term mining for coins did make me curious. Without thinking much about the cost and time which takes to mine a coin, I just googled on how to mine bitcoins. Which brought me to the website "https://www.nicehash.com/cpu-gpu-mining" .
I couldn't wait to start mining, So I downloaded the app and set it up for mining. And then I started staring at the command line of the mining app to see how much coins I am making, waited for 10 mins nothing much is happening other than it shows something about Hashrate and blocks . 6 hours went by and my excitement started to fade and then I started to realize how long it will take to even mine a fraction of the bitcoin.
After a few minutes of googling again, I understood the fact that it's not feasible to mine for bitcoins using my GPUs anymore. But the terms like mining pools, ASIC miners (like the Antminer s9) and mining rigs was too complicated for me to understand. Even I couldn't completely understand the concept of wallets and how they are stored on your pc. Questions about what will happen when my pc crashes, what will happen to my wallet then, How can I purchase and add coins to my wallet when my PC is offline. So I did more research and finally started to understand the beauty of a decentralized network and open ledger concept etc.
Now after feeling a little more wiser, I decided to look into buying coins rather than mining it. And I ended up with the easiest ways to buy coins, I went to www.coinbase.com . Little did I knew about Transactions fees and convenience charges when buying via credit card. I kept telling myself "don't buy too much, just buy for 50 Euros or so".After I logged into coinbase website, I saw three coin options to buy from (Bitcoin, Ethereum, and LiteCoin).
Bitcoin was on my list by default, Since I have come across the name Ethereum in the past, I decided to buy Ethereum also for another 50 euros. But at this point I haven't heard about LiteCoin, So I decided to skip it. I made the purchase and finally I own 2 Crypto coins (well a fraction of it ).I paid 50 Euros plus 2 Euro fee for each coin. Now I wanted to see how my investment is growing, So I kept checking my coinbase mobile app every 10 seconds.
Phase 2: Realizing Crypto Currency trading is not for the faint heart (10th July 2017)
Little did I knew about the concepts like a Hard Fork or Markets sudden dip and recovery of Crypto currency prices. I think it was on July 16th that Bitcoin and Ethereum had a considerable price drop. Unaware of how the market works, I noticed that around July 10th my coin prices started to drop a few euros. And I panicked, even though it was just 104 Euros worth of investment, I felt like I was losing all my money. So I made my first rookie mistake, Instead of holding on to the coins and buying more, I sold those immediately. I sold Ethereum for 35.50 Euros plus 1.99 fees on July 10th and bitcoin for 39.04 Euros plus 1.99 fees on July 11th.
After the sale, I noticed that Instead of transferring the money back to my back account, Coinbase puts the money into a Euro wallet. I thought, "ok fine, I will withdraw it from the wallet to bank". Then came the surprise, Coinbase charges 1 Euro for each withdrawal. On July 16th the price of Cryptocurrencies fell by a good margin. I was telling myself "At least I got out in time". But I still kept checking news and articles related to Crypto Currencies and blockchains. That is where I came across a tweet from Adam Ludwin (CEO of chain.com) about the cryptocurrency.
For a few days, I kept myself away from Cryptocurrencies. But around August 30th, I started noticing that Ethereum Price was skyrocketing and by September 1st, I fell for the temptation again and bought Ethereum for 200 Euros including a 3 Euro transaction fee @333.66 per Eth. Till this date, Ethereum has not reached this Price point (I am still waiting for the day when Ethereum crosses 333.66 Euros ;) ). After buying Ethereum, I noticed the price starting to drop down gradually to 250 Euros or so. But this time, I decided "no matter what I am not selling it".
And within a few days, I bought bitcoin for 700 Euros and Litecoin for 50 Euros. But I always had told to myself "Only invest what you can afford to lose". I always take calculated risks in life, So far it has done nothing but help me achieve my goals in life, So I still believe in that. Till end of september, I kept buying bitcoins in small fractions via websites like coinbase.com and blockchain.info
Phase 3: Time to move up from Rookie to Intermediate Status
After paying transaction fee after transaction fee to coinbase and blockchain.info for months, I wanted a cheaper alternative. That is when I came across Bittrex.com and Kraken.com. For a Rookie, Bittrex and kraken will feel a little confusing and even scary at times. Having to leave the comfort zone of the likes of coinbase and blockchain (which even has dedicated mobile apps where you can keep track of your precious investment any time of the day) was a little difficult. But I eventually got over it.
But first I needed to learn the basics of how to trade on bittrex.com and kraken.com. So I went through some youtube videos and finally figured out how to buy and exchange coins (I will make a detailed blog about how to use these two websites and their pros and cons later). By that time my investment was growing and I was no longer comfortable with the concept of storing my coins in a web wallet. Especially when I got a rather scary email from one of the random websites I was signing up for online trading(https://spectrocoin.com/) in cryptocurrencies before I finally narrowed down the list to bittrex and kraken.
I quickly changed my passwords of all my online accounts and set 2-factor authentications. But this was a wake-up call, Time to keep my investments with me.
Phase 4: Say hello to Paper Wallets and Software Wallets ( Exodus)
At first, when I heard about the Paper Wallet concept (That you can literally store your coins on a wallet with the address and the private key printed on a piece of paper), I couldn't accept the fact on how a completely offline piece of paper can update its ledger. But I soon realized that it is nothing different from any other wallet we are using. In case of a web wallet like Coinbase or Blockchain.info, they are also giving you a bitcoin address to store your coins (but they holds the private keys to your wallet and not you).
Since I already had a taste of what a potential hack can do to your account in the past (my amazon account was hacked because of a regional website got hacked and my password for that website was same as my amazon account. But Since I had 2-factor authentication, the hacker was not able to make any purchase). So I went to "https://www.bitaddress.org" and downloaded the paper wallet's source code from Git Hub repository to my pc. Switched off my Wifi and went into total Edward Snowden mode and generated my paper wallet offline, wrote down my private keys and kept it in a safe place, cough also kept a backup in cough gmail cough.
But there was a downside to these paper wallets, You can receive the coins. But In order to spend or transfer it, You need to sweep the wallet's private key back into an app like Coinomi or a web wallet like blockchain.info etc. But this defeats the purpose of having your private keys with you. Because once you sweep your paper wallet into a website like blockchain.info, you are practically handing over your private keys to them.
I needed a better and flexible way of storing bitcoin and I also wanted the option to store multiple coins and not just Bitcoins. At first, I was thinking about buying a hardware wallet like Trezor or Ledger Nano S. But when I saw my wife's eyebrows going up when talking about another 100 Euros worth of investment on something that looks like a USB drive, I went for a much safer option of using a software wallet ;). I decided to go with Exodus wallet (https://www.exodus.io). So again, after a few youtube videos I figured out the basics of how to use this wallet and I moved all my bitcoins to Exodus.
One thing I love about Exodus is the number of coins it supports and it lets you exchange one coin for another. It uses the shapeshift service to make the exchanges (https://shapeshift.io). Shapeshift and Changelly (https://changelly.com) are one of most used exchange services for coin to coin transfers.
Phase 5: Dear bitcoin, I wish I knew you 4 years ago. you are too expensive now, I need to find someone else
Now that I have found a base to store all my coins, I was also constantly thinking about the fact that, Why on earth I didn't took bitcoin seriously 4 years ago. Now that bitcoin price has gone little above my risk threshold, I needed to move my investments elsewhere. So I turned into ICOs. Funny thing is, I didn't know what an ICO is until China put a ban on new ICO's and bitcoin price took a slight hit due to that news. Now, I have invested in a few ICO's here and there like UTRUST, ATLANT, Medibond etc. But during my research about ICO's, I came across a youtube video which in my opinion was the most sensible advice I have got in terms of Crypto coins.
Long story short, If you have a limited budget and not enough to buy a whole bitcoin. Then don't put your entire investment in one coin. Spread it across multiple coins. But keep at least 30 to 40% of your investment in bitcoin, 20 percent in Ethereum and then use the remaining to invest in some medium priced coins like STEEM (obviously) , NEO, TenXPay etc and the remaining in a few coins which cost in pennies/cents.
But before you buy these coins which are priced at cents right now, Do a proper research on what is the use case of that coin. For me, I bought coins like FunFair, Golem,OmiseGo etc. Take FunFair (https://funfair.io/) for example, Its based on Ethereum smart contracts technology and they already had a prototype even before the ICO and their roadmap seems to be on track.
If one of these alt coin's price goes up in future which you bought in a large quantity at a very low price, then you are making enough profit by either selling or exchange them for bitcoins and thereby increasing your bitcoins considerably. This could be the safest and cheapest way to increase your bitcoin holdings. Because you are not directly buying bitcoin for its whole price, but rather buying an altcoin for the fraction of its price.
So in my case if the price of Funfair coins goes up to .50 cents by end of 2018 or 2019, I am holding 20000 coins now (Which I bought for roughly 200 euros) will increase its value to 10000 Euros. Which I can then put back to bitcoins. I am not saying that it will go up for sure, but 200 Euros is something that I can afford to lose rather than putting all my budget in Bitcoins now to get a whole coin.
Summarizing my coin collection so far (Approximate amount)
Bitcoin: 0.46786 (I have split my bitcoins between Exodus wallet, Kraken and Bittrex - I Always keeps bitcoin in Kraken for selling off during some all-time highs and buying back during dips or exchanging with other coins). Ethereum: 2.94 Litecoin: 2 Golem: 1021 SALT: 56 OmiseGo: 27.48 FunFair: 20,000 Civic: 157 Ripple: 500 (in Bittrex, because Exodus doesn't support it yet) Lsk: 100 (in Bittrex) STEEM : 100 (in Bittrex) TenXPay : 100 (in Bittrex) UBIQ: 100 (in Bittrex)
Coins I have in mind to purchase in near future
i. NEO ii. DASH (Not sure why I haven't bought this one yet) iii. BitcoinCash (Made a small profit in the recent Bitcoin Segwit2x fiasco by selling all of it,needs to buy it back in future) iv. Storj v. IOTA vi. GAS
If you guys have any suggestions on which coins should I look out for, please let me know.
A few things I have learned
i. Never fall for FOMO (Fear of Missing Out), If you see a sudden price hike in a coin, Don't jump to buy it. Mostly it will come down once the hype runs out. ii. Don't sell a particular coin if it suddenly drops the price. Instead try to buy it if you had got a feeling during your research that this coin has potential, Usually, it will recover after a few weeks. iii.Think about long-term investments and drop the concept of getting rich within months. v. Don't keep checking the price of your coins every 2 minutes unless you are into day trading. iv. Most of all, Don't invest your backup money which you have kept for emergencies. Only invest the amount which you are ready to lose. For me, I used to buy PS4 games or some useless electronics on Amazon every month, which now I have stopped and rerouted to Crypto Coins. So for me, that's kind of a saving.
This is the current status of my 4 months journey into Cryptocurrency trading. Will update my blogs in a few months and hopefully, I will still be in profit :).
