3LAU’s Crypto Beginner Guide

I’ve decided to outline how most people first get involved with Cryptocurrencies, walk
through the discovery process, and highlight where people are making mistakes. It’s
important to me that you all don’t get ripped off in this crazy new race to buy crypto, and
a lot of basic questions aren’t really answered with a simple google search. The truth is,
by the time you’ve converted your familiar currency into your first partial Bitcoin (BTC),
Litecoin (LTC) or Ether (ETH), you’ve probably fallen victim to 5 misconceptions that
really hurt most new crypto users. Don’t panic, none of these mistakes are irreversible,
but we should all spread the word so that less people are taken advantage of.

IMPORTANT: The following paragraphs are my personal views and should not be
interpreted as investment advice of any kind. This is just cautionary advice to
newcomers in crypto. Some of this is very simple stuff if you’re already involved, but you
never know what you might learn! I learn something new in the crypto space every day.
 MISCONCEPTION #1
“BITCOIN IS TOO EXPENSIVE SO I’LL BUY SOMETHING ELSE”

SO all your friends are talking about Bitcoin (BTC). You hear it’s this digital gold that’s a
great investment, so you download this app called Coinbase where you can acquire
BTC quickly. But then, you see some other coins called Litecoin (LTC) & Ether (ETH).
Those coins look less expensive, so maybe you want to buy those instead?

The mistake here is in the logic, not in the act of buying other cryptos (that’s fine). A lot
of people wonder why the price of 1 Bitcoin (BTC) is so high (which it is, now), but what
they don’t know is that they can own partial coins to multiple decimal places. This feels
weird at first right? owning .0245083 Bitcoin is not something we’re used to, but in
crypto world that’s pretty normal. In fact, MOST other cryptocurrencies trade in relation
to the value of Bitcoin, NOT the US dollar, which is noted as USD. (side note, USDT is
NOT USD, if you’ve seen USDT just know this).

Point being, don’t let buying a partial coin INFLUENCE what crypto you buy. Litecoin
(LTC), Bitcoin (BTC) and Ether (ETH) are NOT the same, so when you purchase one,
you do not own the other. It’s apples to oranges. I heard this the other day: “I have
Litecoin so doesn’t that mean I have one cent of bitcoin?” If this is obvious to you, dope,
but I just want to demystify that before we move forward. PS totally cool if you thought
that, this shit is confusing!
 MISCONCEPTION #2
“COINBASE SEEMS LEGIT AND EASY. TIME TO DOWNLOAD THE APP!”

If you want to “get in quick” I can’t blame you, but you shouldn’t really go crypto for that
reason. But, if that IS what you want, Coinbase is for you. Otherwise, Coinbase is the
crypto equivalent of Starbucks if the barista took a week to make your drink. Why? High
fees, overpriced currencies, and unacceptable delay times.

credit cards: If you exchange for crypto using your credit card you pay a 4% fee (sorry
3.99%). That might not seem like a lot, but the second you exchange dollars for your
first currency you just lost 4% of that currency’s value in dollars. That’s a hefty $450 for
1 BTC right now. On the bright side, you get your crypto right away.

bank accounts: If you exchange by connecting your bank account, there’s 1.5% fee,
that’s 6 times the normal fee for a purchase in other exchanges (normally .25%). What’s
worse, you won’t get your coins for 5 DAYS, if not a full week. Oh, and Coinbase debits
your account immediately, not at the point you receive the coins in your digital wallet.

wire: The fastest way to get your USD into Coinbase. You won’t have deposit delay
times, but it still costs higher fees to purchase crypto once USD is in your wallet.

delays: Whether you’re buying coins or withdrawing back to your bank, Coinbase takes
DAYS when other reputable exchanges offer instant purchases and same day
withdrawals. When you buy on Coinbase, you’re really exchanging USD for crypto using
its underlying Exchange called GDAX (I might lose you here for a sec). I’ve personally
traded using the GDAX platform and I’ve experienced terrible delay times in withdrawing
money in USD. Even my crypto itself has gotten locked up for over 24 hours (normally
you can transfer it between wallets & exchanges instantly), this is why Coinbase is shit.

Instead, I would start with Gemini. First off, the exchange was started by my friends,
Cameron & Tyler Winklevoss, who informed me about the crypto space in the first place
4 years ago. They are true pioneers in the space, and designed a platform that’s easy to
learn on. Second, it’s regulated as a trust company by the New York State Department
of Financial Services (NYSDFS), your funds are inevitably safer in a regulated
exchange. Finally, there are no fees for deposits or withdrawals, and all transfers
process on the same business day. While it looks complicated at first, if you’re even
thinking about putting money in crypto, you should understand how exchanges work. I
cannot stress enough, it’s very important to understand what you invest in. If you
choose Gemini, you have to submit personal information to get verified, which could
take up to a week, but if you’re serious it’s a great starting point. I do not recommend
using any other exchanges until you have experience. Every exchange has lots of
different rules, fee structures, withdrawal limits, and verification processes. It’s very easy
for your money to get stuck somewhere, and we all don’t want that to happen. Bittrex &
Binance, for instance, are my preferred exchanges to trade altcoins, BUT I wouldn’t
even think about trading alts until you have a very solid understanding of the basics!
 MISCONCEPTION #3
“I HAVE MY COINS, NOW I’LL WATCH THEM GO UP IN VALUE”

So you’ve bought your first .01 Bitcoin and it’s showing up in your Coinbase wallet.
You’re stoked to show your friends on the app that you “got in” early. What you don’t
know is that your crypto isn’t 100% safe in the app. I’m not going to go into heavy detail
here, but in the event the exchange goes offline, or is hacked, or is overcrowded with
volume, you will not have access to your crypto.

So how do you keep your crypto safe? There are a few solutions: Paper Wallets & USB
Wallets. First, you can generate a “paper wallet” (again, no need to explain detail), but if
you google search paper wallet + the name of the crypto you #HODL you can learn
more about wallets, as well as how they work with public & private keys. For instance, I
use blockchain.info for BTC paper wallets & myetherwallet.com for ETH addresses /
wallets of my own. Personally, I have multiple wallets / addresses that hold different
values of crypto for extra security. An interesting thing about these wallets is that they
aren’t associated with your identity (unless you go public with your address), while your
accounts with exchanges ARE associated with your identity. If you’ve made it this far,
you should also probably have a basic understanding of what blockchain means and
how it works. Here’s a startup guide that will demystify how crypto networks function,
and it isn’t too dense of a read: http://bit.ly/2wR4Sx4

Also, when you save your private keys, keep them in places that NO ONE ELSE can
access (i.e. not your dropbox). AND do not, under any circumstance, paste them
anywhere on the internet (with the exception of the website you created your wallet with,
for now). If you see something called an “airdrop” where you get “free coins,” 90% of the
time it’s a phishing scheme used to steal your coins. You cannot get them back. There
are real airdrops for ETH based tokens, but those are usually heavily publicized. You
can use reddit as a resource for identifying when there’s a real airdrop (but this is way
more complicated, and you don’t really need to know this stuff to start). I just wanted to
note this to prevent anyone from making this mistake.

Another way to secure your crypto: USB Wallets. If you want to get really fancy, and of
course, safe, you can search Amazon for USB crypto wallets. These are the most
secure way to store your crypto offline. I personally have a ledger nano s. These USB
wallets sometimes cannot store alt coins though, but I imagine they will continue to be
upgraded over time.

Finally, you need to have your crypto OFF exchanges to take advantage of future
FORKS. Understanding forks is a little more complicated, and there are lots of places to
learn online, but for the purposes of this beginner’s guide, just know that you cannot
take advantage of forks when you leave your crypto in exchanges, unless those
exchanges support the new currency derived from the fork.
 MISCONCEPTION #4
“I’M IN EARLY, SO NOW I CAN TRADE MY CRYPTO TO MAKE MORE MONEY”

So now you have your crypto in more secure places, and you want to trade it. The price
of your crypto goes up, you sell some of it, but then it falls a little so you wanna go in
more! Sell High / Buy Low strategies DO work, but if you don’t have experience running
them, you’ll actually lose more in the long run than if you just #HODL your crypto.

Now, there’s a buzzword you’ll hear often in crypto world that’s commonly used,
volatility. Volatility just means the rapid fluctuation in price of a security (in this case,
cryptocurrencies) within a short period of time. If something is highly volatile, the price
point moves around extremely quickly. If something is less volatile (like Walmart stock),
the price is relatively stable.

High volatility environments enable very smart traders to make a lot of money, quickly,
when they have something called Technical Analysis on their side. Technical Analysis is
the process of charting trades that have happened in the past to anticipate future
movement in price and volume. If I’ve lost you already, you probably shouldn’t waste
time trading crypto, you should just hold it. BUT if you want to learn, I would spend time
googling technical analysis trends. A popular introductory trend that happens frequently
in crypto is called Head & Shoulders. If you find it fascinating, trading might be for you.
Just learn as much as you can before you start.

Ultimately, you should be prepared to lose everything that you put into crypto. I’m not
saying that to discourage you, I’m just saying that the current trajectory of crypto is out
of control at this point, and as much as people think they know about the future, they
really don’t. We are all just making educated guesses. Sometimes great guesses, but
guesses nonetheless.
 MISCONCEPTION #5
“MY FRIEND SAYS _____ IS THE HOT COIN, SO I SHOULD GET IN NOW”

So now you discover there are hundreds of coins you can buy, known as Altcoins. You
download Blockfolio to keep track of your coins and you see all these others that have
HUGE % gains in the past 24 hours. There’s Vertcoin (VTC), Ripple (XRP), IOTA, this
thing called Tether that mimics (tethered to) the US Dollar (USDT), and it’s a whole
universe that feels really difficult to understand. That’s because it is, and if you don’t
understand something, don’t buy it. There are some amazing alt coins out there with
incredible technology, but it’s very time consuming to truly understand the differences
between cryptocurrencies and how they work. Now you have some friends telling you to
buy into this coin called EDM (for example purposes) and it’s gonna get big, fast.

Unless your friend is a blockchain / tangle expert and knows for certain that the
technology underlying EDM is revolutionary, your friend could be right in the short term,
but very wrong in the long term. These conversations create a phenomena in trading
that parallels our emotions in real life, called FOMO or fear of missing out.

FOMO is very dangerous in trading cause it can be mathematically represented by

MARKET CAP - This represents the total value of coins that exist for a particular
cryptocurrency. If the value is lower than 100 million for beginners, stay away.

VOLUME - The total number of coins that are traded in a particular currency during a
specific period of time. It can be represented by the actual value of all coins traded in a
specified period of time. When 24 hour volume is low in relation to market cap, it will be
more difficult to sell your investment in the future, should you want to.

It’s also currently difficult for anyone to tell if they made the correct decision investing in
a specific coin because the entire crypto market is Bullish (i.e. everyone thinks prices
will continue to rise). When the entire market is bullish, everyone who has a long
position (or is in an investment position that benefits them when prices rise) it can be
hard to tell if you are just a part of the trend, or if you actually made decisions that
enabled you to perform better than the trend.

Ultimately, Crypto is exciting, and I fully support everyone learning about it! Just know
that crypto isn’t a game, and it shouldn’t feel like gambling if you’re making wise
decisions. It’s fun & exciting, but can also cost you BIG time if you make the wrong
moves. I hope this guide was helpful, it’s very basic, but I wanted to touch on the simple
& semi0complex facets of crypto trading without going to deep! Good luck to you all.
 BONUS
UNDERSTANDING CURRENCY PAIRS

A currency pair is the value of one currency in relation to another currency. Crypto has
exchange rates the same way Fiat does.

You may hear the word Fiat a lot in crypto - it’s an accurate definition, but just a short
way of classifying all tangible currencies such as the dollar, yen, euro etc.

So. ETH / USD = the price of 1 Ether in US dollars. Right at this moment that’s around
$470. 1 month ago that was $288.

Similarly ETH / BTC = the price of 1 Ether in terms of Bitcoin. This is where people get
confused because there are lots of decimal places & many digits. Right now that’s
around .0422

Since 1 BTC is worth $11,114 in terms of dollars. When you multiply $11,1114 x .0422
it’s about $469, brining you back to Ether in terms of Dollars. Why is that slightly
different than the calculation we did above? Well, that’s for next time.