The crypto market has been on fire lately. Everywhere you look it seems like people are posting 3x, 5x and even 10x gains on their investments in a short space of time. If you’re a traditional investor, or just sitting on the sidelines it can be daunting to dive in. Which crypto do you buy? Where do you buy it? What about scams? Today I’m going to give you a roadmap to follow in getting started in your crypto journey.
As with every article, this is not financial advice. I pontificate about crypto for your education and enjoyment. Please do your own research. I’m also writing this article from the perspective of a US citizen, the available options may differ where you live.
Five Questions You Need to Answer
Before you begin there are five important questions you need to answer:
- How much should I invest?
- Where should I buy crypto?
- Which crypto should I buy?
- Where should I keep the crypto I buy?
- Keep Learning
How Much to Invest In Crypto
Let’s just get it out of the way upfront. Crypto is volatile. Very volatile. Those sweet 500% gains could quickly turn into a 50% loss or worse, your whole investment could be wiped out. This is not a playground for the faint of heart who are likely to dash at the first sign of market weakness.
Don’t invest more than you can afford to lose.
Seriously. Don’t do it. If your investment keeps you up at night it’s time to reconsider how much you’re investing. It’s not worth your mental health or financial stability to reach for the moon.
Especially if you’re just getting started you would be well served by going easy at first. Give yourself time to learn, don’t just drop $10,000 on the first thing that comes your way.
Spend some time to understand your goals when investing. Maybe you already have a decent portfolio of stocks and real estate and are just looking to diversify a small allocation into crypto for a little extra yield. Or perhaps this is your first investment and you’re using this as a way to learn more about investing with some skin in the game.
Know your goals and build a plan for how you’re going to approach crypto investing. You may decide to invest a set amount every week or every month, or invest a bit, learn more and invest a bit more as you feel confident. It’s not necessarily about lambos on the moon, although that’s possible too if it’s your goal.
Where To Buy Crypto
For a newcomer this can easily be the most intimidating question. There are so many different options available, each with pros and cons that themselves require a fair amount of knowledge to decipher.
The typical onramp to crypto is through an Exchange. This is a place where you can turn your fiat (Dollars, Pounds, as so forth) into a crypto currency of your choosing. It’s also a place where you can sell your crypto to take profits or switch out into another investment.
The most important considerations when picking an exchange are:
Is It Safe?
This isn’t an easy question to answer as each exchange lives on the continuum somewhere of regulatory risk, backend custodial risk and user supported security features. That’s not even including the outright scams such as the recent multi-Billion dollar theft of crypto in South Africa.
A few questions to ask:
- Is the company public?
- Do the founders have a public presence so they could be found if something nefarious happened?
- Have they had any recent security incidents – and more importantly how did they respond?
- Do they offer features like two factor authentication, withdrawal address whitelisting?
- Are they domiciled in a trustworthy country that enforces laws?
- How long have they been in business?
How Easy Is It To Deposit Fiat?
You’d be surprised how difficult it can be to deposit your dollars into some exchanges. I suspect this is a hold over from the days when exchanges played fast and loose with KYC (Know Your Customer) laws. Personally I try to shy away from exchanges that don’t offer ACH (Automated Clearing House) fiat deposits, and those that charge fees for depositing via ACH. There are too many good free options to futz around trying to send over stablecoins (which will be a topic for another article), or trying to get your bank to send a wire each time you want to deposit. Coinbase and Voyager both have free ACH onramps.
Which Coins Do They Offer?
This is not likely to be an immediate concern. As we’ll get to in the next section, it’s best to keep your first few investments fairly simple and stick with some of the larger cap coins. As you become more comfortable investing in crypto you might decide to acquire a few alt-coins for your bag. Alt-coins can refer to anything other than Bitcoin, anything other than one of the large cap coins, or in a derogatory fashion – anything coin the author doesn’t like. Crypto can be a bit tribal too it turns out.
Each exchange offers a slightly different variation of coins to choose from. It’s one of the reason I find myself using almost a dozen different exchanges. But I digress – this shouldn’t matter for your initial foray into crypto.
What Are The Transaction Fees?
Transaction fees vary widely, and some can be as shockingly high as 3%. Usually your high transaction fees are to pay for a slick UI, and their users don’t really consider transaction fees. For this reason I recommend staying away from Coinbase and Cash App for any purchases. They charge around 3% depending on the size of your investment. You can get a great experience on an exchange that charges far less than that.
Usually the more advanced trading platforms like Coinbase Pro, Binance and FTX will charge a lower fee, and will give further discounts if you trade large amounts of crypto. However they cater to the advanced trader and would not be where I’d recommend you start.
Some platforms like Voyager embed their fee into the spread between bid and ask, so it’s more difficult to ascertain exactly how much they’re charging. I’ve seen anywhere from 0.75% to 1% fees being charged in the spread. If you’re part of the Voyager Loyalty Program the crypto back rewards can easily make it cheaper to transact on Voyager than even Coinbase Pro.
Do They Allow You To Easily Withdraw Your Crypto?
These days this has become less of a problem, as most exchanges allow you to fairly reliably transfer coins to another exchange or a wallet. Binance and Voyager are two notable exceptions. Binance shuts down coins on a regular basis. ADA seemingly at the end of an epoch, they even shut down USDC transfers out.
While Voyager doesn’t offer transfer out on all coins they are upfront about this when you purchase, and are actively working to enable withdrawals for these coins.
How Easy Is It To Use
As mentioned above, Coinbase Pro, Binance and FTX will generally offer cheaper fees at the cost of a quite difficult to use UI for the average user. Coinbase, Voyager and Celsius all offer a very approachable experience.
If you’re looking just for Bitcoin Strike has a very easy to use UI, low fees of 0.2%, cheap transfers and free withdrawals. It is, however, only for Bitcoin.
Do They Give You Yield?
A few platforms like Celsius and Voyager also offer yield on your coins through various means such as lending them out. This usually involves a slight counterparty risk, which is mitigated in most cases by over-collateralized loans. If you’re holding stablecoins, or want to earn yield on your Bitcoin, Ethereum and others this is a great way to earn a little more.
Many platforms also offer yield on so called Proof of Stake coins such as Cardano or Polkadot. This yield happens not through lending, but as a built in part of the coins protocol, and usually offers very low or no risk. In the case of Cardano in particular the only thing at risk when staking is the staking yield. Be aware that the yields tend to differ between platforms, with some platform (ahem… Binance) keeping a large portion of the staking rewards for themselves rather than passing it on to you.
How Easy Is It To Get Support?
The bugbear of all crypto exchanges is support. Just Google your favorite exchange ‘support’ and you’ll probably find more than a few articles slamming them for their awful support. Celsius and Voyager in particular have made great strides in the recent months on improving support, with Voyager now answering some support tickets in hours – for comparison Coinbase can take weeks to *never* to get back to you, depending on the issue.
Another aspect of support is community, and by far Celsius and Voyager have the best, most active communities of any exchange. Find a Celsian or VGXHero on Twitter if you have a question and you’re likely to get an answer within minutes.
So Which Exchange Should I use?
As with every decision, there are tradeoffs and it is ultimately up to you to decide. I personally use Voyager for most of my crypto trades these days, even if I do stray to other exchanges when I’m looking for a particular coin. Voyager would be a great place to start. They also have IMO the best UI, and their Voyager Loyalty Program will reward you with a ton of crypto back on your trades.
If you’re only ever going to do Bitcoin, then Strike is a no-brainer for you. Great UI, cheap fees. Referral code NMNWBB will get you $5 in Bitcoin when you sign up.
Which Crypto Should I Buy?
Influencers have filled Youtube with videos extolling the virtues of this coin or that coin. Over time this is the area you get to explore in depth, learn how the market works and the technology behind each project and pick your own investments.
As you’re getting started the easiest place to start is to buy some Bitcoin. Strike makes it easy to buy even very small amounts. The benefit of buying even a small amount is that it will trigger a shift in your brain to want to learn more about crypto. You’ll start to notice things in the crypto market, perhaps read up more on the coins or monitor the price. A little bit of skin in the game, even if it’s $10 or $100 is all you need.
Bitcoin is also one of the least volatile crypto currencies, and one of the few that show up on the balance sheet of businesses like Tesla and Micro Strategies. It has also been adopted as legal tender by countries like El Salvador, and is one of the few that has the all-clear from the ever-secretive SEC.
Where Should I Keep My Crypto
This can get complicated quickly. Hardware wallets, seed phrases, multi-sig. Don’t worry about any of that for now. You may hear the phrase ‘not your keys not your coins’, sometimes uttered as a put down for folks who don’t store their crypto on a hardware wallet. In reality it is used by people who don’t understand the nuances of the different threat models of storing your crypto with a custodian (such as an exchange) as compared with self-custody on a hardware wallet.
I personally keep much of my crypto investments on Celsius and Voyager for a few important reasons:
- Focused on security. Celsius slightly more than Voyager IMO. Celsius has a whitelist of addresses you can withdraw to, built in time delays for adding to the whitelist as well as a unique ‘HODL mode’ that requires an extra code before you can withdraw your crypto. Both of them support two factor authentication. Always always use two factor authentication, ideally using an authenticator like Google Authenticator (or a yubikey) and not your phone number which can be hacked. That’s a topic for another article.
- Offer yield. I enjoy earning additional yield on my crypto. And I especially enjoy earning yield on my USDC I keep around to buy the dips. You can earn up to 10.5% on Voyager at the highest rewards tier.
- Easy to use UI and decent support. Both are very accessible to use and have decent support. So if you need some help they’re there for you.
- Celsius offers crypto back loans. This is a great tax efficient way to get fiat from your crypto when you need it.
- Diversify. I don’t keep all my crypto in one place, I spread it out between custodians, hardware wallets and so forth. As the size of your investment grows you’ll need to look into ways to mitigate a security incident in any one place.
If you move your coins over to another exchange or custodian, be aware that in most cases you will pay a withdrawal fee. This cost be minimal – Cardano withdrawals are usually around 50c, or a LOT – Ethereum and Ethereum tokens can cost $20, $30 or even more to withdraw. It’s cheaper to keep your crypto where you buy it. Another reason why I love Voyager.
If you’ve decided to make your first crypto investment – congratulations! You’re in for a fun and rewarding ride. This is only the start though, the crypto market is ever changing and there is a tremendous amount of opportunity beyond Bitcoin.
I highly recommend watching this 101 guide from the Coin Bureau. It’s the best way to quickly get an overview of the types of coins, and will help you better evaluate any future investments.
I also recommend subscribing to the Coin Bureau, Digital Asset News and Invest Answers. If you’d like to learn more about the tech behind the coins then Crypto Over Coffee is where you’ll want to go. Please also sign up to receive a weekly email update from me – Just to the right you’ll see a signup form. I don’t spam, and you can unsubscribe at any time.
Be aware that there are many folks on Youtube shilling their favorite coin, pump and dump schemes and other nefarious activity. Keep your wits about you, always think through an investment and do your own research.
Also be careful of common crypto scams that follow the Nigerian Prince format. The scammer will impersonate a crypto influencer, tell you that if you send them some money they’ll send you back double. Since transactions on the blockchain for all the top coins is irreversible as soon as you send them anything it’s gone. No legitimate person in the crypto space will ever ask you to send them crypto with the promise of giving you back more.
Just Tell Me What To Do!
That was a lot to digest, I know. Take some time to work through it, perhaps explore some of the exchanges mentioned above, do more of your own research, even re-read this article. It is your money and in crypto you’re the only one who is really looking out for you. Actually this is not unique to crypto, and applies to any aspect of financial investments.
If I were just starting out, I would open an account on Voyager and buy a little Bitcoin to get my feet wet.
What will you do?
If you have any questions, please comment down below. You can link your Twitter account to the comments on the site so you don’t need to create yet another login.