This past Labor Day weekend Sept , needing a break from my startup Harvey , I had the choice of binge watching Narcos 3 on Netflix or taking a deep dive into cryptocurrencies.
I started by wanting to know, in particular, if bitcoin was going to be the punchline of jokes like beanie babies in the 90s, and featured in Economics classes as part of bubble theory.
While there will be significant volatility in the price and valuation of bitcoin over the coming years, I strongly believe it and the entire asset class of cryptocurrencies will become a core part of the financial system within 3 years or less. But anyone who claims to fully understand how blockchain works, and is not named Satoshi Nakamoto , is probably lying to you. And anyone who claims to be Nakamoto himself, is probably also lying to you.
But here are the basics… a blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. By design, blockchains are inherently resistant to modification of the data, and serve as a public ledger of transactions between two parties.
The decentralized and transparent nature is what makes blockchain highly secure and almost impossible to hack, because a hack to one ledger would cause a discrepancy in the entire network that will be ignored. For a currency like bitcoin, this would mean millions of computers. So the larger the network, the more stable the currency. Bitcoin is here to stay. It is undoubtedly the most important currency today. Bitcoin Cash is a spinoff off of the original bitcoin blockchain.
So far, Bitcoin Classic seems to be favored by the public over Bitcoin Cash, and has an 8X higher market cap. Bitcoin is more volatile than practically any other type of asset, including gold or the stock market.
Cryptocurrency is still a young technology, and faces many challenges. While I believe the overall trend for bitcoin is upwards, trading this currency comes with considerable risk. Bitcoin prices are highly impacted by public sentiment about the currency. It will continue to fluctuate as companies and financial institutions make decisions of how to incorporate or not incorporate it into their businesses and workflow. Then as I sit here and write this on September 3rd, , the Chinese government announced a few hours ago that they are banning all organizations and individuals from raising funds through Initial Coin Offering ICO.
They barred all banks and financial institutions from doing business related to ICO trading. I will explain ICOs in the last section. There is also risk inherent to the exchange itself. Just like the cash in your wallet, the safety of your bitcoins or other currencies depend on your own diligence.
While your bitcoins cannot disappear, the transactions are permanent and can only be refunded by the recipient. This means you should only do business with people and organizations you know and trust, or who have an established reputation. Remember, bitcoin transactions are stored publicly and permanently on a network, which means that anyone can see the balance and transactions of any bitcoin address.
So for the most part, the transactions are anonymous. Other trustworthy exchanges I considered before deciding on Coinbase were in no particular order: For a full list of exchanges by country, click here.
Here are some great websites to bookmark for bitcoin news and discussion boards. The combined content here could keep you busy for at least a year. I find this to be the most efficient way of consuming information quickly before making trades. Coinbase is one of the most trusted and well-known exchanges for buying and selling Bitcoin, Ethereum and Litecoin. They are essentially a digital wallet for your cryptocurrencies, and their iPhone and Android app make sending currency and tracking prices super simple.
What I like about Coinbase is they meet all the regulatory requirements in the countries they operate, and they have two distinctly separate but integrated products: From a product standpoint, you can tell they built GDAX with their own engineers, as the user experience is similar to Coinbase.
You can instantaneously transfer currencies between the two exchanges for free, which is really nice. Once you create an account on Coinbase or another exchange , you will need to verify your identity by uploading a picture of your drivers license or passport. This only takes a few minutes, then you can fund the account. The bank account has higher limits, but takes longer for the funds to settle.
If you go bank account route, you will need to verify two deposit amounts on your account. I personally did both—I funded the account with a few grand from my checking account, and thanks to my impatience I also put few grand on my credit card just so I could get started right away.
Keep in mind, Coinbase charges a 3. You can use PayPay for selling currency, buy not buying currency; for PayPal the funds are available instantly but have lower payout limits. The bank account is usually your best bet. Once your account is funded, you can go ahead and make your first purchase. Remember, you do not have to purchase coins in full units. You can buy coins in fractions as low as one hundredth of a millionth, or about less than one-tenth of a cent at current prices.
That makes bitcoin and other cryptocurrencies easy targets for speculation. Coinbase does not charge to transfer bitcoin from one user to the other, which is the point of blockchain.
But if you want to transfer money to or from an outside exchange, such as a US bank account, Coinbase charges a small conversion fee. The charge is 1. For a full breakdown of their fees, click here. Lastly, if you choose the bank account payment method, the funds take 4—5 days to settle, and you are locked into the market price of BTC at the time of purchase. In the case above, I am buying 0. I am guaranteed that price regardless how long the funds take to settle.
Coinbase essentially buys the bitcoin at that time and saves them for you in a virtual vault, and releases them in your account once they receive the funds from your bank.
It uses the same login and password as Coinbase, and you can easily transfer currency between the two platforms, which is really convenient. GDAX charges lower transaction fees than Coinbase—ranging from 0. The advantage of the Coinbase system, however, is that it is more simple, instant, and your order is guaranteed to fill, in exchange for a higher fee. If you, like me, believe that bitcoin and the entire market capitalization of cryptocurrencies will increase in value over time, then the goal is to collect as many coins as possible , getting in at the right prices, and build a strong diversified portfolio of crypto assets that you can hold.
Moving averages are plotted on stock charts to help smooth out volatility and point out the direction a stock may be trending. As short-term moving averages red line below cross over long-term moving averages black line , this sometimes is followed by accelerated movement in the price. Also pay attention to spikes in trade volume, as this may imply that strong sentiments of fear or excitement just entered the market. Within the GDAX dashboard, you will find a price chart that looks similar to the one above, accompanied by four other sections in the same viewport:.
On the upper-left below you will see a dropdown to change the currency, with nine different options. Limit orders provide investors and traders with a means of precisely entering a position without being victim of fluctuating prices. Once the limit order is set, be patient. Give the price time to fluctuate—testing highs and lows—and see if your limit order catches a buyer or seller. There is no hurry to cancel you limit orders, so resist the urge to rapidly change your limit order prices.
Many experienced investors will set multiple limit orders at consecutively lower prices to take advantage of a big selloff or take some profits when the price tests a new high. Limit orders are your best friend, use them.
But hopefully this article serves as a comprehensive guide to getting started trading cryptocurrencies on an exchange.
Now it not the time for ICOs. Sign in Get started. Bitcoin is one of the most important inventions in all of human history. For the first time ever, anyone can send or receive any amount of money with anyone else, anywhere on the planet, conveniently and without restriction.
I am not an expert in cryptocurrency day trading, nor do I pretend to be one. I am not offering financial advice.
Please understand your own risk tolerance and be responsible with your hard-earned money. The problem with this scenario was that you needed to wait to receive a return copy before you could see or make changes to the document. You are locked out of editing it until the other person is done with it. With a Google Doc, all parties have access to the same document at the same time, and the most up-to-date version of that document is always visible and editable to all parties.
This real-time shared Google Doc is just like a distributed blockchain ledger. Bitcoin Influencers on Twitter twitter. We got you covered! Entering Market, Limit and Stop Orders On the order panel, you can choose to place a market, limit, or stop order. A market order will execute immediately at… support. Never miss a story from Kyle Hill , when you sign up for Medium.
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