Getting Started with Cryptocurrencies ¶
By: GreenandPleasantLand on June 21, 2021, 2:52 p.m.
It can be very overwhelming to get started with cryptocurrencies where every question you try to find the answer to leads down a rabbit hole to even more questions. This guide is designed to explain how to get started with cryptocurrencies in an easy to follow way. Most of the websites or services that I mention here I have personally used and are mentioned to try and make it easy for you to take your first steps in crypto. There are of course tons of different alternatives for you to consider and as always please double check to make sure that it is the right one for you. Nothing here is intended as financial advice.
As cryptocurrencies are a brand new area which has been drastically increasing in value, it has attracted a lot of criminals that wish to steal your hard earned crypto, not to mention user error which can lead to you losing some or even all of your funds. Unlike with a bank, there are no phone numbers to ring up if something goes wrong and once a transaction is sent, then your crypto is gone with no way of reversing the transaction. It is therefore very important that you learn about the best practices and to increase your security before you start buying cryptocurrency.
The first thing that you should do is to make sure that your computer is secure by scanning it for malware and either use a key scrambler to encrypt your keystrokes in case of a keylogger or alternatively use an on screen keyboard for typing in your passwords.
Also make sure that your internet connection is secure by checking that it is using WPA-2 encryption. Never try and access any crypto accounts or wallets using public wifi, as this can very easily be hacked.
Another thing that you should do is to secure you mobile phone. This involves also scanning it for malware and making sure that you have a strong password to access it. You should also try and keep your phone number as private as possible in order to minimise the chances of SIM theft. Consider setting up a password or passphrase with your SIM card provider so that it will be needed to get a replacement SIM card or alternatively get another SIM card which will only be used for crypto. This is important to do as you should set up two-factor authentication using apps such as Authy or Google Authenticator.
Next set up a brand new encrypted email address that will only be used for accounts used for buying, selling and storing crypto and make sure that it doesn’t contain any information such as your name, nicknames etc that you have used previously. An example of a encrypted email provider is Protonmail (https://protonmail.com).
When creating the accounts, use very long passwords with a combination of letters, numbers, capitalisation and symbols, making sure that they don’t spell any words, even with numbers in place of letters. This will make it harder for password cracking software to find your password. Don’t store passwords on your browser or on a cloud password manager. Instead, store it on paper. Consider making a backup of this paper/notepad and storing it in multiple locations in case of fire.
Whenever you are going to a cryptocurrency website, whether that is to download a wallet or to sign in to an exchange, always double check that the website address that you are using to make sure that it is correct, as well as checking that it is using https by looking in the address bar (if the https isn’t visible in the address bar, double click and it should show the full address) and that it has a padlock symbol just before the address. Once you are sure that it is correct, then bookmark the website and only access it through the bookmark to prevent the accidental use of a phishing website.
Odysee and LBRY Credits (LBC)
A great way to start earning some cryptocurrency to learn what it’s all about is to start using the video website Odysee (https://odysee.com/). In order to start earning their cryptocurrency called LBRY Credits (LBC) you will first need to verify your account using a phone number or a credit card, which according to the founder is done to prevent fraud. Once your account has been verified you will then be able to complete various tasks such as watch a certain amount of videos, follow a certain amount of channels etc, as well as getting a daily watch reward.
Once you have set up a wallet that can store LBC, you can then use the LBC that you have earned to practice transferring it to your wallet in preparation for when you buy and transfer other cryptocurrencies such as Bitcoin.
The next thing you need to do is to get a cryptocurrency wallet. A cryptocurrency wallet doesn’t store your crypto on it as these are stored on the blockchain. Instead, the digital wallet will store your public and private keys as well as giving you access to the blockchain so that you can see how much crypto you have as well as send and receive them.
Your private key is used to sign transactions and prove that you own the crypto. Your public key encrypts transactions and is used to generate your wallet address.
Creating a wallet is very important security wise as the custodial wallet (i.e. a wallet where the private keys are held by a third party) that is automatically created when you create an account on an exchange is at risk of being hacked, as it is held on a centralised server, or the exchange itself could even block access to your cryptocurrencies at the request of regulators. With a custodial wallet, you don’t own the private keys and as the saying goes, if you don’t own the private keys, then you don’t own cryptos.
There are a few different types of wallets that you could use, all with their own advantages and disadvantages, however a good type of wallet that is easy to set up is a software wallet. A software wallet is downloaded onto your computer and/or mobile phone and your private keys are stored on your hard drive alongside the software. It has very good security, however it is connected to the internet (therefore considered “hot” storage) so once you start to store a few hundred pounds or so of crypto on your software wallet you may want to consider buying and using a hardware wallet, which looks like a USB stick and isn’t connected to the internet until you use it (therefore considered “cold” storage).
Setting up a Software Wallet
As this will be your first wallet, the quickest and easiest to start with is a software wallet. Which wallet you choose to use will be dependent upon which cryptocurrencies you intend to use and the different features that the various wallets offer. As our first transaction will be to send some of your LBC to your wallet, we will need to use a wallet that is compatible with LBC, therefore we will use Coinomi (https://www.coinomi.com/en/).
Coinomi can be downloaded on desktop for Windows, macOS and Linux as well as on mobile for Android and iOS. Once you have downloaded Coinomi (only from the official website!!) make sure that the checksum of the download is the same as the checksum code found next to the download link on the website. This makes sure that the download hasn’t been tampered with. It sounds complicated however easy to follow guides are readily available on the internet on how to do this.
Once Coinomi is installed on your device you are now ready to set up you wallet. Launch the app and click “Create a New Wallet”. A page will appear with 24 words that are derived from your private key; this is called your seed phrase and is used to restore your wallet should the worse case scenario happen. Make sure that you write it down exactly as you see it; the order of the words matter. Once you have done this the next page will get you to click the words in the same order to make sure that you have written them down correctly.
The final page after this is to create a strong password which will be required for when you are completing transactions within the app (note: you will not need your password to “log in” to your wallet as you don’t actually have an account). As previously stated, use a random combination of letters, upper case and lower case, numbers and symbols to make it very hard for it to be cracked.
Once you have done this your first wallet has now been set up. All that is left is to add any coins and tokens from the list onto your wallet. These can be added and removed at any time but for now add LBRY Credits and any others that you may be interested in.
Now that you have set up your wallet, your next step is to transfer some crypto into it. If you have earned some LBC by creating a verified account and watching videos on Odysee and have set up a Coinomi wallet, then we are going to transfer some of that LBC into your new wallet.
Before we transfer any crypto over to your wallet, it is important that you know about transaction fees. As part of the cryptocurrency ecosystem, one of the most important functions of miners is to validate transactions. As an incentive to fulfil this vital function, miners get to charge a transaction fee.
Unlike with cash transactions that you are used to, the fee isn’t fixed. Instead it depends upon how busy the network is. On some wallets they have a dynamic fee where a transaction fee is automatically set based on the network traffic and the transaction size. On other wallets you can set your own fee. The higher the fee you set, the more likely it will be that a miner will choose to validate your transaction first and therefore the faster it will go through; set it too low and there will be little incentive for a miner to choose to validate it and it might take weeks to go through, if at all.
In order to send some of your LBC to your Coinomi wallet, go to either Odysee or the LBRY app, log in and click on your LBC balance at the top right corner. Then click on the “Send” button which will bring up a box where you can enter in an amount of LBC that you would like to send and a box where you will paste the wallet address that you want to send it to.
Now open up your Coinomi wallet and either click on the LBRY Credits row on the overview or click on the wallet tab and then click on LBRY Credits. Both ways get you to the same page. Now click on the “Receive” button which will bring up a pop up with a QR code and a wallet address underneath that you can copy by clicking on the first icon opposite. There will be three tabs at the top of that box, Default, Compatibility and Legacy, each one with a different QR code and wallet address. Click on the Legacy tab and then copy and paste the address into the wallet address box on Odysee/LBRY app.
Once you have pasted the wallet address into the box on Odysee/LBRY app, it is always best practice to double check at least the first four and the last four figures of the address to make sure that it has been copied correctly. If it hasn’t and you went ahead with the transaction, then it would either not go though or worse case scenario your crypto would be lost on the blockchain.
Now set the amount of LBC that you want to transfer to your wallet. As this is your first transaction, it is best to do a small amount, say 5 LBC to make sure that everything is working correctly. Once you have entered the amount click send and then confirm it on the next page. There should be a pop up on the bottom right hand corner on Odysee/LBRY app that confirms your transaction. The Odysee/LBRY wallet has dynamic fees so as mentioned earlier it will set the transaction fee automatically.
Now go back to Coinomi and check your balance and transaction history for LBRY Credits. There will now be a “Received” transaction and your balance will go up by the amount that you have transferred. Congratulations, you have now completed your first cryptocurrency transaction!
If you want to send your LBC back to your Odysee/LBRY account, then all you have to do is reverse the process. Click on the “Receive” button in Odysee/LBRY app and copy the wallet address. Now click on the “Send” button in Coinomi and paste your Odysee/LBRY wallet address into the box, again checking at least the first and last four figures to make sure that it is correct. Enter in the amount you wish to send and then confirm the transaction. It will automatically calculate the fee, which will be taken out of the transaction. Accept that and type in your Coinomi wallet password and click unlock. The crypto will then be sent back into your Odysee/LBRY wallet and will appear in the list of transactions (you might have to click refresh for it to appear).
How to Get More Cryptocurrency
Now that you have got to grips with moving crypto to and from your wallet, you now might be wondering how to get more crypto. There are three main ways that you can get more crypto and these are as follows:
1) Buy some using fiat currency – This is the most common way of getting more crypto. This typically involves setting up an account on a centralised exchange such as Coinbase, Binance, Gemini etc, where you will need to prove your identity before using your bank account to purchase cryptocurrencies. Another alternative is to use a Peer-to-Peer exchange to do the same thing, however these can be a bit more complicated to use but with the advantage of more anonymity.
2) Start cryptocurrency mining – Setting up a computer as a mining rig means that you will earn cryptocurrency as a reward for supporting the network. It is important to consider the electricity and hardware costs versus the crypto rewards before you decide to dive in to make sure that it is profitable to do so.
3) Sell products or services for crypto – If you already have a business or have a hobby that you can turn into a side business, then consider accepting crypto as payment instead of or as well as fiat currency. Also if you offer a service such as a podcast or video channel where you provide free content, then allowing people who want to donate to support you the ability to donate in crypto is another way of getting more.
Now that you have taken your first steps with crypto perhaps you would like to learn a bit more about them without getting overwhelmed with technical jargon. If so, then this is the article for you: Cryptocurrency Overview