Beginners' Guide
Bitcoin was invented in 2009, if you begin now you are still getting in early
You take the blue pill... the story ends, you wake up in your bed and believe whatever you want to believe. You take the orange pill... you stay in Bitcoin-land, and I show you how deep the rabbit hole goes. It is never too late to learn.
Bitcoin is a cryptographically secured virtual asset. It is something that the world has never seen before so there is no anology to any more familiar form of money that can adequately explain it to newcomers. It can be very dangerous to see things from somebody else’s point of view without the proper training.
Marvin says, "If you have some money saved and you are prepared to take the risk of losing some of it then go ahead and buy some Bitcoin or Ethereum today. Their prices may drop tomorrow but if viewed as long term investments both BTC and ETH will probably reward you. But before you start experimenting with more adventurous trades, please study the STRATEGY and HAZARDS pages of this web site."
Buying Guide
Alternative places to exchange fiat for crypto
Picking the best crypto exchange can be a complicated process. First and foremost, you’ll want a secure exchange. As crypto has grown more popular and desirable, it’s become an increasingly large target for hackers, and many leading exchanges, including Binance’s international operation and KuCoin, have been hacked to the tune of tens of millions. While exchanges often reimburse those whose coins are stolen through their insurance, you probably don’t want to be in that position to begin with. That’s why it’s important you only invest your money on reputable exchanges.
The most convenient “on ramp” for purchasing cryptocurrency depends upon the country and jurisdiction in which you are resident. This guide is primarily aimed at citizens of Arthur Dent's country of origin, the UK, and it recommends the SwissBorg app because their wealth app is arguably one of the best fiat on ramps in the crypto space.
Tap is a mobile application that makes buying, selling and storing your cryptocurrencies very easy.
One of the most widely known and popular exchanges in many countries is Coinbase. It is approved by the Financial Conduct Authority (FCA) in the UK. But Coinbase fees tend to be high, withdrawal times tend to be slower than with some other services and their customer support receives poor reviews so although it is one of the most reliable exchanges it doesn't come top of our list.
So that you don't feel left out by this section of the Guide if you're not in the UK we suggest you look at Relai which has recently become popular in Europe or for the rest of the world Kraken has a good reputation. You may find that Bitget can offer a wider selection of coins and tokens not available elsewhere.
The largest cryptocurrency exchange is Binance and it offers a wider range of coins than most others. A good feature in Binance is that if you have small amounts coin left over after an exchange, then you can periodically sweep up this "dust" into BNB. But when you wish to withdraw from Binance to your own wallet they will charge you a fee whereas from some other exchanges withdrawals are free. We warn you to use Binance exchange for trading only at spot market price and to not be tempted to try to beat this casino by leverage trading. Binance is currently being investigated by regulators, and most UK banks will refuse to execute GBP transfers to and from Binance.
In fact an increasing number of UK banks are now prohibiting transfers to and from any crytocurrency exchanges. Virgin money has recently been added to the list of UK banks in this category. If you discover that your bank will not allow you to transfer money to or from your chosen exchange we recommend you open an account with Monzo that remains crypto-friendly. Lloyds Bank, HSBC and Nationwide are among the high street lenders which do not allow customers to buy crypto using their credit card.
Learn to use CoinGecko
Don't be an annoying newcomer in a cryptocurrency chat room by asking dumb questions like, “Where can I buy this?” One of the first things you must learn is how to use the CoinGecko website where you can search for any coin using its name or its ticker code to take you to a page that gives you details about that coin’s status in the market, the URL of the project team’s website, and lists the online exchanges where it can be traded and what trading pairs for that coin are supported on each exchange.
Don't forget the Gas Price (Gwei)
Before moving ERC20 tokens from one wallet to another on the Ethereum network or initiating a trade on the Ethereum network using, for example, the Uniswap decentralised exchange (DEX), it is advisable to check the current Gas Price (Gwei) and make sure you will have enough ETH in your wallet to cover the transaction fee. The Gas Price of each transaction varies depending upon how congested the Ethereum network is and it can sometimes be worth waiting for a quieter time.
Know the basics of blockchain
Blockchain is a technology with the capacity to create decentralized networks that achieve consensus without central entities and that are so hard to hack that it is the best technology to store data securely whilst assuring traceability, immutability and trustless proof-of-ownership.
Be aware that there are many different blockchain networks. You can't send ETH to a Bitcoin network address. You can't send BTC to an Ethereum network address. You can't send DCR to Monero network address. You can't send XMR to a Polkadot network address. If you attempt to send cryptocurrency to an incorrect address or to a valid receive-address that is on the wrong network you will almost certainly lose it irrecoverably.
This may sound straighforward but it can be confusing because, for example, the BNB token is available both on the Ethereum network and on the Binance Smart Chain network, but you can't send BNB directly from an Ethereum network address to a Binance Smart Chain network address. So be careful! For a credit to be moved from one ledger to another it has to pass through a combination of smart-contracts on both blockchains via a special application that is called a bridge.
Know about an inherent security risk in using a bridge
If using a bridge be aware that these bridges secure the funds moved onto the other blockchain forever.
It's not that once moved your funds are safe in the new chain. Their value depends on the original collateral coin/token locked on the origin chain.
Keep this in mind when you think about cross chain operations.
Be aware of the Dunning-Kruger Effect
The more you get to know, the more you become aware of how much you don't know.
Marvin says, "Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so."
Get a wallet
Storing and exchanging cryptocurrencies
There are many different wallets to choose from but possibly the easiest way to get started is to download and install the Exodus wallet that is good for beginners because Exodus is available on a choice of operating system platforms including Windows (Microsoft), Android (Google) and IOS (Apple) and it is simple and easy to use. Exodus can hold many of the most popular coins and tokens in a single wallet, including BTC, ETH, XMR, DASH, ATOM, EGLD, DCR, DOT, XTZ, SNX, LTC, LINK, ENJ, ZIL, etc, etc. Exodus integrates with the Trezor hardware wallet for the added security of keeping your private keys offline. If you choose to try Exodus be very careful that you download Exodus from the genuine Exodus web site because there have been several reported incidents of fake applications masquerading as Exodus becoming available on Google Play or App Store. These fake apps will steal your funds.
If you buy a Trezor hardware wallet you may use Trezor Suite as your user interface to your wallet. You may choose to use both the Exodus and Trezor Suite user interfaces because Exodus recognises a number of coins that Trezor Suite does not while Trezor Suite recognises all ERC20 tokens, some of which Exodus does not recognise.
For storage of the latest ERC20 compatible tokens Marvin recommends you install the MetaMask extension to your web browser. An advantage of installing MetaMask is that it will enable you to use of the Uniswap decentralised exchange and the OpenSea marketplace for NFTs.
If you're interested in tokens on the Solana blockchain then Phantom is a user friendly wallet.
Before saving a significant amount of cryptocurrency get yourself a wallet
Before you accumulate a lot of cryptocurrency you should get a wallet in which you can safely store what you've bought because it isn't wise to leave more than you can afford to lose on an exchange.
Protect your private key
Keep your recovery phrase safe
Understand what the wallet does
Understand what the wallet does
When you first install and activate your wallet you will be invited to write down a list of keywords that can be used to re-generate your wallet in the event of failure or loss of your device. Never store this list of keywords electronically on your device as access to this information by a hacker would give the hacker the ability to control your wallet. This list of 12 or 24 keywords is sometimes called your private key mnemonic or may be called your recovery phrase or your list of seed words.
Understand what the wallet does
Understand what the wallet does
Understand what the wallet does
It is important you understand that your wallet never actually contains cryptocurrency. It holds the private cryptographic key that permits its owner to move crytocurrency from one address to another on the blockchain, and it provides you with a user interface to facilitate such moves. Your cryptocurrency is a record in a decentralized ledger maintained by the blockchain.
Authority to amend a ledger record
Authority to amend a ledger record
Authority to amend a ledger record
So if somebody else obtains your recovery phrase they can re-generate your credentials using either the same or different wallet software on another device and steal your cryptocurrency by signing a transaction to send it to a different address in the ledger. This is because the same BIP39 mnemonic words standard is employed by most wallet applications.
For your own safety please obey Zaphod's Ten Commandments.
Ensure you really own your coins
Authority to amend a ledger record
Authority to amend a ledger record
If you chose to use an online cryptocurrency exchange to buy a coin that was not obtainable via your chosen fiat “on ramp” or through the DEX facility built in to your wallet then never leave any significant value in the exchange's wallet. Exchanges can be and have been hacked. After you have finished trading always withdraw most of your coins to an appropriate wallet on your own device for which you have control of the private key. An often heard phrase is, “Not your keys, not your crypto.” Trusting your coins to the custodianship of a centralised exchange or financial institution will defeat one of the main objectives of the bitcoin vision.
Glossary
We recommend you visit this A - Z cryptocurrency glossary
When learning about cryptocurrency and you encounter some, jargon, terminology or acronym that you don't understand then click the button below to visit a helpful A - Z glossary of cryptocurrency terminology.