Getting started: a beginner's guide to crypto
Past phases of innovation, adoption, resets, and resurgence teach us that whilst it’s hard to currently say how the future of crypto unfolds, it doesn’t seem rational to assume that nothing will come out of this moment. It isn't too late to get started in crypto. The ship hasn't sailed. Find your bearings in this beginner-friendly guide to the basics.
With the bear market in full swing, this is probably the worst time to write about crypto. Cryptos are down, the impact of LUNA is still sending shockwaves, people are worried about Celsius. No one really knows what happens next nor how the future will unfold. It’s hardly an encouraging time for newer enthusiasts to get started in crypto. But I have the same convictions today as I did before the DeFi and NFT boom. With a balanced approach and an open mind there is no bad time to get started in the crypto world. This is not financial advice.
The long and short of this is simple. As human beings we are seeing an unprecedented change to our lives. There are some key domains where innovation is happening at a rapid pace like CRISPR (Genomics and Biotechnology), Clean Energy, Artificial Intelligence, and Data. Web3 – which can be an umbrella term to describe the blockchain and crypto space – is a similar innovative domain in my opinion.
We have always had phases of innovation and adoption. For example, microchips pretty much made the personal computer and mobile phones possible. Or take the Internet which saw the rapid growth of FAANG companies. What we can say from what these cycles have shown us so far is that whilst it’s hard to currently say how the future unfolds, it doesn’t seem rational to assume that nothing will come out of all the minds, activities and ventures in crypto and Web3.
All professionals (whatever our disciplines) should keep an open mind on Web3. You can engage with this new ecosystem as a user, benefit from utilities, be an early adopter, and can also see this as an opportunity to have exposure to an extremely volatile asset class. You can have a diversified portfolio of savings that could include cash, stock markets (equity, bonds), property and safely allocate a small proportion to cryptos.
The one principle I have followed is to never have so much exposure or put in any money I cannot afford to lose. This is the reality of the crypto market. With an intentional mindset and discipline, crypto becomes a rewarding journey more about learning and exploration. Again this is not financial advice.
If with this background you’re still curious about getting started, this series of guides I am publishing with The propeller is for you. Here, let’s clarify a few key concepts to kickstart your journey.
Centralised Exchanges (CEX)
The simplest way to get started in crypto is by starting an account at a “centralised exchange''.
A centralised exchange is a private business that provides a platform for users to buy and sell cryptocurrencies. You can set up your account quite easily by registering with your email. Many CEXs require you to complete some basic KYC to use the exchange. In some ways it’s convenient! There are some reputable CEXs like Binance, Coinbase, Kucoin, Gemini, or Kraken.
Not your private key? Not your crypto!
It’s important to be aware of some key risks. Cryptos in a CEX are not insured like money in bank accounts via deposit insurance. You also have no control over your cryptos – exchanges can very well go bankrupt, get hacked, or simply not pay you. However CEXs remain popular due to the variety of services and convenience they offer their users.
A private wallet is when your funds stay in blockchain but you control your funds with your private key to buy, sell or transfer your digital assets. There are many good private wallets available. You can have them either on your desktop or on mobile. You could even go one step further and get a hardware wallet. The rationale being that whilst desktop and mobile wallets are a good place to start, both are considered slightly less safe than a hardware wallet.
Well known wallets for mobile include Trust Wallet or Pillar, and many are now integrated with companies that allow you to purchase cryptos directly from your phone using cards or bank accounts.
A word of advice to anyone who will hear it: transactions in crypto in most countries are taxable events. Do your research and prepare accordingly.
It is best to use a software that allows you to track and report gains and losses even when you are just getting started. The benefit of this is it becomes easier to manage your responsibilities if you expand your activities later.
As an example, cointracking.info is one tool to try out. It is the compliance tool I use. If you’re curious about others, look out for a more detailed guide on The Propeller soon.
So which cryptos should you buy?
From the household names and meme coins, to alt coins and L1s in the market, as a beginner it quickly gets confusing evaluating cryptos in their swathes.
Similar to mutual funds or the stock market where beginners tend to stick to reputed companies (like Microsoft, Google, Apple , etc.), bitcoin and ethereum are considered the blue chips of the crypto world. Notwithstanding that comparison, expect that both bitcoin and ethereum are still quite volatile and risky. That’s one approach beginners might take to deciding on coins. Once again, this is not financial advice. But if you’d like to learn more about my decision making, DM me in the Propel Slack.
The author holds digital assets mentioned here and from the wider ecosystem. Any information about cryptos is for informational purposes only and doesn’t constitute financial advice. These are his personal views and opinions only and do not reflect that of any employers present and past, nor of the publisher Propel. All names, products or brands mentioned in article are property of their respective owners.
About the author
Ramakrishnan Subramanian heads data & analytics for an organisation within financial services sector. He is fascinated by Data, AI and Web3 and the potential innovations from the confluence of these technologies. He has contributed to paksha and mirror.xyz and now joins The Propeller for a series supporting beginners in crypto and Web3 to find their bearings.