Get Started in Crypto for $100 and in Less than an Hour for Noobs and Old Dads!
Be Prepared to Enter the Matrix. Purchasing, Securing, and Using Crypto in 2021.
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Executive Summary
Easiest way to get started in crypto is using Coinbase and buy $100 of Bitcoin or Ethereum.
Soon after purchasing your first crypto, purchase a hardware/”cold” wallet for security and peace of mind.
Lastly, create a Metamask account to purchase things online with your crypto. You’ve now entered the matrix in less than an hour for $100.
Intro - How to Think About Crypto as an Investable Asset
I’m writing this as I increasingly get more questions from friends on what crypto is and how to get involved. There are plenty of rabbit holes, risks, and pros/cons to any ‘how to get started guide’ for crypto. This is my attempt to K.I.S.S. (keep it simple stupid) for folks looking to get into crypto as an asset, much like stocks/mutual funds/ETFs/bonds.
(Note: NONE OF THIS IS INVESTMENT ADVICE. DO YOUR OWN RESEARCH AND CONSIDER THE RISKS YOU ARE WILLING TO TAKE)
I believe crypto assets should make up at least 1% of your net worth, with a maximum of 5%, as of 2021. Why do I believe this? There are few opportunities to invest in a game changing technology, and think of crypto as giving you a chance to invest in the next version of the internet and commerce. If someone were to tell you in the early 90s of this thing called ‘the internet’, and there was a way to invest in the concept of the internet, you would have been a billionaire. Unfortunately, there wasn’t a way to invest in the internet itself, but with crypto, there are actually ways for common folk to invest in the next version of the internet (commonly referred to as web3) and commerce.
When I hear older Midwestern dads, who likely still write checks for purchases at the grocery store, ask about crypto, I think of two primary problems that I believe crypto will help solve.
The first is transaction related. When you write a check or use your credit card, there are all kinds of middlemen that help (i) transfer funds and (ii) verify your identity. All of these middlemen add fees and time to transactions being reconciled. Huge businesses like credit card companies (Visa, etc.) and financial institutions have been built on the fees charged during and after transactions.
The second is contract and ownership related. When you purchase a home, there are so many people, papers, and process involved to ensure (i) you have the funds, (ii) you are who you say you are, and (iii) ensure that all records are updated to reflect you are the owner of that home. All of this adds time, money, and headaches to this asset transfer. Again, large companies and industries have been built because of the fees charged to ensure this process is kosher.
So if you picked up the theme of each of those use cases, both are essentially about eliminating middlemen and friction that currently exist in commerce, and as well as on the internet. Other crypto enthusiasts may have other takes, but I believe ‘middlemen elimination’ is the primary use case of crypto. There will be other use cases for crypto like community, art/collectibles, etc, over time, but that is for a different post :)
Last comment before we dive into how to best get started investing, using crypto. Crypto is essentially a platform, which is powered by the blockchain. Blockchain is an open history/ledger of all transactions. As Ben Thompnson of Stratechery says, platforms can be extremely powerful when taking on incumbents who have built rigid systems. Think of the success of Shopify enabling companies to build an ecommerce, direct-to-consumer business, without having to go through Amazon or Walmart. Like Shopify, crypto is aggregation theory at play, which is the disruption caused by the Internet in industry after industry, because the platform enables all of these use cases, not just a single system which Amazon/Walmart have built their businesses on, which leaves them exposed to threats. Three characteristics of platforms that enable a strong aggregation strategy are:
Demand-driven Multi-sided Networks with Decreasing Acquisition Costs
Zero Marginal Costs For Serving Users
Direct Relationship with Users
Body - Getting Started in Crypto
#1 - Easiest way to get started in crypto is using Coinbase and buy $100 of Bitcoin or Ethereum.
Before we dig into the steps, note that that is not investment advice, and crypto is historically a very volatile asset, thus is riskier than traditional stocks/bonds. Why do I recommend Bitcoin or Ethererum? Well, they are the most popular due to their traction on becoming platforms to help solve the problems/use cases mentioned above. Think of them as the current Amazon or Apple of crypto.
These steps should take less than 30 minutes.
Go to Coinbase.com or download their mobile app, use this link https://www.coinbase.com/join/kohlho_u . If you use the link and buy $100 of crypto, you’ll get $10 of Bitcoin free.
Why Coinbase? It’s the most user friendly, offers the most out of the box, and it’s the most for people just beginning in crypto. Not to mention that Coinbase is a publicly traded company.
There are plenty of other platforms like Binance, etc, but to keep it simple stupid, Coinbase is my recommnedation for beginners.
Enter in your personal information
This information is similar to setting up a traditional investment account. Coinbase and others need to do initial identity verification. For the life your account, the major concern any financial institution has is their customers aren’t performing illegal activities. Thus, what Coinbase retrieves from you is similar to traditional investment accounts.
Securely store any passwords or passphrases for Coinbase, ideally not online. Or in a document called “Passwords” :)
Enter in your payment details (bank account or credit card)
Note that credit cards can limit the amount you can invest in crypto.
I’d recommend linking your bank account, but do as you wish.
Now, you’re ready to purchase crypto!
You can make a one time purchase or setup recurring investments, much like you do with your investment accounts like a 401k.
Coinbase will charge a small fee to complete the transaction.
Now, I know what you’re thinking “I thought crypto was supposed to get rid of middlemen fees like this.” And you’re right. Fees to transact namely when converting fiat currency like US Dollars to crypto can be expected. Once you start transacting in crypto, expect fees to continue to lower and virtually get to zero, like $0.000001 per transaction. Or at least that’s the vision, per some of the creators of these platforms/cryptocurrencies.
@nic__carter @CoinDesk > Vitalik Buterin once stated “the internet of money should not cost 5 cents a transaction.” It’s safe to say his attitude to fees, and that of Ethereans more broadly, has moderated with time Wait what? Why do you think half the ecosystem is working nonstop on rollups and eth2?
And you’re all done! You now own a part of a potentially game changing technology that will have increasing impact on our world by the end of this decade.
#2 - Soon after purchasing your first crypto, purchase a hardware or “cold” wallet for security and peace of mind.
What is a cold wallet? Think of a cold wallet just as you think of your physical wallet where you keep your credit cards and cash today. When you buy crypto like Bitcoin, that is associated with an address that can be transacted with at any time. This is convenient! But like your credit cards and cash, you wouldn’t leave your wallet sitting open on the bar all of the time and trust that no one will dip into your funds.
So having your funds available at all times online is a security threat, much like anything on the internet. So if you want to have more control over when your funds are available to be transacted with, instead of always being available online all of the time, buy a cold wallet.
I recommend the Trezor Wallet, which can be bought on Amazon here: https://www.amazon.com/Trezor-One-Cryptocurrency-Protection-including/dp/B00R6MKDDE/ref=asc_df_B00R6MKDDE/
Once you receive your cold wallet from Amazon, setup should take less than 30 minutes. Trezor has an easy to setup wizard, but takes security very seriously. So be prepared to store lots of passwords!
Now to transfer funds to your cold wallet! Note this process can be the trickiest and biggest issue with crypto, as sending crypto to the wrong address or wallet and cause you to lose the funds forever. With this warning in mind, a few best practices for sending your crypto to a cold wallet or to any account for that matter.
Start with a very small amount of funds to test that you are sending to the correct address
Give it a few minutes to transfer and don’t panic. Transactions can be instantaneous, but don’t fret if you need to wait a couple of minutes. If you don’t see the funds in more than 5-10 minutes, you likely did something wrong.
Because all transactions on the blockchain and cryptos are logged, you can search for the address you sent to by either going here for Bitcoin or here for Ethereum.
Once you’ve successfully transferred funds to your cold wallet, let’s move onto our next step and how you can then interact/transact on the web with your funds in your cold wallet.
How To Send Bitcoin From Coinbase To Trezor Wallet | Coinbase Transfer Tutorial
#3 - Create a Metamask account to purchase things online with your crypto. You’ve now entered the matrix in less than an hour for $100.
Metamask is a browser based wallet that allows you to connect all of your wallets to one central place while browsing the internet. Think of it as the wallet of wallets!
Using Chrome, Firefox, or Brave, download Metamask, you can start here.
Once installed, you can start adding “accounts” (wallets) to connect to MetaMask by adding the addresses to your accounts.
Once you’ve added your accounts, you will now be able to go to sites like Opeansa.io to purchase art/NFTs with your crypto, and more!
Wrap Up
You are all set and have successfully invested in and become a participant of a transformational technology that could change many industries in the next decade. It’s never too late to get started and learn!
If you found this helpful, share with a friend! I’ll likely be doing more in-depth guides like this as time goes on. There are a whole host of other applications and tools that I use to expand my use of crypto and my overall crypto footprint.
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