There are a few main coins that exist, with countless others built using the technology used to build the main coins.
The main coins are Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC). You can think of these as Gold, Platinum, and Silver.
The other coins are typically referred to as Altcoins - these are usually relatively new, and worth a lot less than the main coins. There are hundreds of Altcoins, many of which will probably fizzle out, but some of which could rank among BTC, ETH, and LTC over the next few years.
Ethereum is unique in that it provides a platform on which you can build new coins. The creation of Ethereum lead to a huge rise in the creation of new Altcoins designed for really niche purposes (everything from Shopify alternatives, to gambling websites, to managing real estate transactions).
Most of the Altcoins we'll be trading are built using Ethereum.
If you're storing a coin, i.e. not actively trading it for other things, it lives in a wallet. A wallet typically has two addresses:
- Public address that you can use to send money to the wallet, and view previous transactions.
- A private key that you use to access your wallet and send money other places (to buy other coins, send to exchanges etc.). You need to store this in an extremely secure place. If someone has this they can take all of your coins and you have no way of getting them back.
When you want to buy/sell coins, you need to move them from wallets to an exchange. There are lots of different exchanges that let you trade lots of different coins, but typically the main exchange we'd use is Bittrex.com - it's one of the larger, more trustworthy exchanges.
When a new coin is created, the coin creators will have a fundraiser just like when a stock lists on the Stock exchange and holds an IPO. The initial coin offering (ICO) allows investors to get in typically at a very inexpensive price before the coin is listed on any exchanges.
ICOs are currently the best way to make money with cryptocurrency I think. ICOs are held on specific dates, and when they happen, you send one of the main coins to a provided address, and in exchange you get a predetermined quantity of the new coin.
i.e. if a new coin called DNT is listing, and we participate in the ICO by sending 1 ETH to the specified ETH wallet address, you may get say... 10 DNT in exchange. This would mean every DNT is worth 0.1 ETH. It usually takes a few weeks after an ICO for the coin to start showing up on major exchanges, and at this point prices typically will rise to reflect demand. Once it lists on an exchange people may be willing to pay 0.4 ETH for the coin, meaning that you can sell the coin for a 400% profit. Maybe they're only willing to pay 0.05 ETH though, but currently joining and ICO is a pretty good way to guarantee some growth.
Typically when an ICO finishes, the new coin will become available on some very small exchanges, usually Etherdelta. If you are in a hurry to sell, you can do this, but it is typically better to wait for the coin to list on a larger exchange.
Here's a breakdown of some of the more common exchanges:
Small: Etherdelta
Medium: Liqui Binance
Large: Bittrex Polinex Kraken
You can think of the large exchanges as something like the New York Stock Exchange. Once it lists here it's considered something that probably won't go away soon.
Obvs no guarantee about success of these, but I'm currently looking at the following upcoming ICOs:
- Modum
- HelloGold
- Monetha
- Redpulse
- Bankera
- Kyber
To learn where to invest, what people are excited about, upcoming ICOs, etc, there are lots of different communities you can get involved with.
CryptoCapital LLC Telegram group - Best advice I've seen. Has both public and private groups on Telegram
reddit.com/r/cryptocurrency - lots of noise, but can be indicative of market sentiment
There is a small group of coins that are already moving out of Altcoin territory. They are interesting ones to watch, especially in Asian markets. They are great ones to read about to learn about potential use cases and things that are pushing the boundaries of what Cryptocurrency can be used for.
- NEO
- OMG
- Monero
- IOTA
This was surprisingly the hardest part about getting into Crypto. Several exchanges provide an option to wire transfer, but I was hesitant to wire transfer to banks in random countries that I didn't know a lot about.
The best option for me ended up being Coinbase. In the US it's easy to transfer funds from a bank account, and in Canada you can hook up any major credit card. The only drag is that with a credit card there's a $250 per week deposit limit, so you'll need to build up a balance over a little while.
Once you've deposited to Coinbase, you can send your coins anywhere you want.
To withdrawal to fiat money, find an exchange that will transfer to your currency. Most will do EUR and USD, Kraken was the best one I found for CAD.
- You have a coin sitting in a wallet, and want to move it to an exchange
- Login to the exchange and create an address for the coin you're trying to deposit (this is a wallet too, but lives in the exchange)
- Login to your wallet, send the coin to the address you just created on the exchange
- When money appears on the exchange, create a new trade to buy/sell whatever coin you want
- Wait for ICO to start
- When it starts, send ETH from your wallet to the ICO address.
- When ICO finishes, the new coin should appear in your wallet.
- Wait for the coin to list on exchanges - it may list on random small exchanges first, in which case if you want to trade, you'll have to create an account on the exchange then follow steps outlined above under "Basic trading flow"