Tech Matters: Getting started with cryptocurrency
When my soon-to-be 85-year-old dad called to say he wanted to buy some cryptocurrency, I knew it was time to write a simple guide for first-time buyers. This guide is a beginner’s “how-to” and includes an explanation of terms used in this often-confusing and volatile space. Whether or not you invest in cryptocurrency, and what you buy, is entirely up to you.
For many people, the lure of cryptocurrency is its potential to increase in value more rapidly than just about any other investment, except, perhaps, buying a winning Lotto ticket. And it really should be thought of as a gamble, which means you should never invest more than you can afford to lose.
Let’s start with the basics: What is cryptocurrency? Cryptocurrency is a type of digital currency that generally only exists electronically. Despite pictures of gold coins in articles you see online, there are no physical coins or bills, and at this time, transactions do not involve banks. There are thousands of currencies already in existence with more popping up all the time.
Cryptocurrency transactions are verified through a decentralized blockchain system that moves in only one direction. Records can be added with a precise timestamp but never changed, resulting in an immutable system that virtually cannot be hacked.
I’m going to explain the process of purchasing cryptocurrency based on how I did it. There are numerous alternatives, but this one worked for me. Before you can buy cryptocurrency, you have to join a crypto exchange, which is a platform that lets you buy and sell a variety of currencies and store them in a digital wallet. Each transaction is charged a small fee. I use http://Binance.US which can be used on your computer or as an app on your phone. I use the app because it offers an at-a-glance view of my portfolio.
To join an exchange, you will have to tie it to a bank account and provide identity verification. This process usually takes a few days. You’ll start by creating an account with your email and a password. Make sure your password is one you have never used before and one that will be unique to this account. You will be prompted to secure your account by enabling SMS Authentication. This is a form of two-factor authentication and you will receive a text with a code to complete this step.
You will then move on to verifying your identity by uploading a photo of your driver’s license or other government-issued ID. Over the next few days, you should receive a notification that your documents have been reviewed and you can finish setting up your account by tying it to the bank account you will use for purchases and setting up your digital wallet.
With your wallet comes 12 random words that will be your recovery phrase. These 12 words are the only way you can access your wallet in case you lose access to your account. Write them down and store the list somewhere safe.
Decide how much you want to spend and research the various coins available to you. You can watch top gainers and losers in the app and add favorites to your homescreen. Tap to see performance over time.
When you’re ready to buy, tap the yellow button with the arrows and then tap “Buy crypto with cash.” Find your selected coin in the list, tap it and then enter the amount of your purchase. Once you’ve put in the amount, you’ll see the number of coins or, more likely, the fraction of a coin you’ll receive. If you tap the “One-time purchase” button, you’ll have the option to change that to a recurring purchase daily, weekly, every 1st and 15th of the month or monthly. Tap “USD Balance” to select your bank account for payment and then the green button “Preview Purchase,” and finally, “Confirm Purchase.” You should see back-to-back alerts that the money was put into your app account and then your purchase of the coin was successful.
And that’s it — you now own cryptocurrency. Have fun with it, and don’t be alarmed with constant fluctuations, ups and downs are the name of the game.
Leslie Meredith has been writing about and reviewing personal technology for the past nine years. She has designed and manages several international websites and now runs the marketing for a global events company. As a mom of four, value, usefulness and online safety take priority. Have a question? Email Leslie at firstname.lastname@example.org.