Ahhhhh cryptocurrency. Most people have heard of it, specifically Bitcoin. Half of them don’t know what it actually is. And the the ones that do know probably don’t know how to actually buy it. But what if I told you that buying cryptocurrency is as simple as buying clothes online? Well thats where I come in. I’m going to provide you with a straight-forward how-to guide on how to buy cryptocurrency. But first, lets break down exactly what it is and where it comes from.
A brief history of cryptocurrency
Back in 2009, a man, or a group of men, or a group of companies if you believe the conspiracies, known as Satoshi Nakamoto invented and released an open-source software called Bitcoin. It is essentially a peer-to-peer digital cash system. 21 million Bitcoins were created. It is impossible to create more and they are impossible to counterfeit. But they can be split into smaller amounts. So you don’t have to buy at least 1 Bitcoin. the smallest value possible is 0.00000001 Bitcoin. When it was first established, they were pretty much worthless. One of the first transactions made with it was to buy 2 pizzas for 10,000 Bitcoins. Those pizzas are now $20 million (Ouch).
Since Bitcoin has become so popular, more and more digital currencies are being created such as Litecoin and Ethereum. I’m not going to sit here and tell you digital currency is the future and will end the banking system. But it’s gotten quite popular in 2017 and next year, in my opinion, is going to be the year of crypto.
Where Did Bitcoin Come From?
Bitcoin is stored on a block chain. A block chain is computer software that can store information ie the Bitcoins. The Bitcoin is then stored on a network of personal computers which makes them decentralised, unregulated and open to anyone to mine. The government has no control of it, the banks have no control of it, businesses don’t control it. The software generates blocks every 10 minutes, which people can then mine and are rewarded with Bitcoin.
In layman’s terms, Bitcoin is a diamond, and this diamond then gets mined. The current reward is 12.5 Bitcoins. Every 4 years this reward is halved. When I mine this Bitcoin I can then sell it to an exchange (which I’ll speak more about later). Think of this exchange as a jewellers where I sell my diamond. The jeweller then sells that diamond to me. The whole process of mining crypto is very complicated, but we’re not here to tell you how to mine, we just want to buy.
The value of crypto is determined by supply and demand. The more that is bought, the more expensive it becomes. When Bitcoin first came about, it was new technology that nobody had a clue about and no one was interested in. In 2012, you could buy a Bitcoin for a 5er. As more and more people began to adopt technology, they become more interested in crypto, driving the price up. The price slowly climbed, then dropped, then climbed until February this year when it hit 1000 euro per coin. Then all hell broke lose. It continued to climb and in the passed month alone, the price of Bitcoin exploded by 10,000 euro. At the time of writing this article, 1 Bitcoin is now worth 14,600 euro. Now everyone wants a piece of crypto currency but no one can afford Bitcoin! That’s where we come in.
In the first week of December, I decided to buy some Bitcoin. After buying 250 euro worth, I realised that Bitcoin had grown to the point that 250 euro is only going to make me 2-3 euro for every few hundred euro it grows. So I had a look at other Crypto. The second most popular is Ethereum, sitting pretty at around 350-500 euro depending on when you look. This was still too expensive for me. So I had another look around and found Litecoin. When I bought my Bitcoin, Litecoin was worth about 85 euro. When I decided to bail and by Litecoin its had jumped to 120 euro. I bought 2.something Litecoins for about 140 euro as I’d lost a bit on Bitcoin and had to pay a 1% service fee to my exchange.
But it seems I wasn’t the only one who had this idea. Which brings us to crypto week. Coincidentally, I decided to look into crypto at the same time everyone else was! Last week, people began buying Litecoin as it was cheap. The more people that bought it, the more it increased in value. So I bought more, and more, and for 600 euro I’m now sitting on 4.5 Litecoin. Because people are all over Litecoin, it continued to increase in value. In the space of a week, I have now doubled my original investment and my Litecoin is now worth about 1200 euro give or take.
Now I know what you’re thinking, how the hell can I get a piece of this pie? Well its not too late!
As I mentioned earlier, miners sell their crypto to exchanges. The most popular exchange seems to be Coinbase. A very simple straightforward website that also has a very simple app to use. You simply sign up, send a form of ID such as a licence, and enter your card details. Select your crypto of choice, Coinbase offers Bitcoin, Ethereal and Litecoin, and enter how much you want to buy. And boom! You are now the proud owner or crypto currency. However, because of all the traffic the site gets, it tends to crash sometimes, especially when the price drops. So I now use gdax.com which is a sister to site to Coinbase and is a bit more stable and offers second by second price fluctuations.
You can buy BTC or Ethereum from your Litecoin, or you can sell it and keep the money in your Euro wallet in your Coinbase account…… which we do NOT recommend. If something were to happen such as a hacking or if Coinbase crashed, you could lose your crypto or money and never get it back. Which is why we recommend downloading a wallet.
Lock and Key
A wallet is like a normal wallet. Its where you keep you crypto. My wallet of choice is called Electrum, but there are plenty of options out there. But the important thing to remember is when you create your wallet account, you will be provided with a seed. Your seed is EXTREMELY important. It is a list of 10-15 random words generate so that if you lose your password or if your laptop were to be robbed with your wallet on it, you can retrieve not on another device. It also helps if you forget your login details.
Crypto is extremely secure. There is no ‘Forgot password’ option or ‘Customer care’ to contact for security purposes. Your seed is what retrieves your wallet. many people bak in the early days of Bitcoin didn’t take notice of this as they thought it was going no where. Now literally millions of of euros worth of Crypto are on hard drives and computers and USB keys and will never be accessed again beau people have forgotten their log in details and lost their seed. When you do get your seed, write it down. Write it down 5, 10, 20 times and keep those pieces of paper safe! Your seed is like your unique key to an unbreakable safe with gold in it that could be worth thousands in a few years. And if you lose your seed, you lose your crypto and there is no retrieving it. Ever.
When to Buy and Sell
Like everything, buy when its cheap. Everything has value and that value fluctuates. In crypto, there seems to be a bit of a correlation between BTC and LTC. When BTC dips, LTC seems to go up. My theory is that the lucky people who have made their mint on BTC are selling small amounts and are buying LTC. This is driving LTC up. At midnight last night, LTC was worth about 185 euro. When I woke up this morning, it was worth 220. At about 2 pm today, the price shot up to 350 euro. And what happened next? All the cowboys that sold their BTC and bought LTC, have now sold their LTC and bought more BTC, causing the price of LTC to drop to about 280. This is when you buy and the cycle seems to continue.\
If you want to sell when it hits an all time high thats up to you. When it drops, I buy more. Personally, I think Litecoin is going to explode over the next few weeks. The reason it is rising so quickly compared to BTC which lingered around this price for a couple of years is because BTC was new technology. No one knew what it was or trusted it. Now everyone knows what it is and everyone wants some. Hence to sudden increases in value.
Before you do decide to invest in crypto, remember, I am just a regular guy in a standard customer service job who has hopped on this gravy boat at the right time hoping for the best. Nothing is guaranteed. This is not a get rich quick scheme. This could all implode in the morning and my coins could be worth Jack. Or it could be worth 20,000 by the end of next year and I could be putting down a deposit on a house. There’s no way of knowing. If you do decide to buy, only buy what you can afford and enjoy the ride!
There are a couple of great subreddits on Reddit that help to understand it more and give you and idea of when to buy and sell. You can find them here and here. It’s packed with newbies and also guys that know their stuff.
At the end of the day, this is just another form of gambling. But it might be worth noting, at the time when I began this article, the value of Litecoin was worth 265 euro. It’s now worth 310.