A Step By Step Guidebook
Table of Contents
Introduction 3
What is Cryptocurrency? 4
What is blockchain Technolology 5
What is Decentralized Finance? 6
Step by Step Guide to Purchase and Transfer Cryptocurrency 7
How to Earn Passively from Cryptocurrency 8
Cryptocurrencies and Interest Rates 11
Where to Earn Compound Interest 11
How to Secure Your Cryptocurrency 13
Verifiable Sources to Find and Reference Cryptocurrency News and Information 14
Referral Links 15
Endnote 16
Cryptocurrency Terms 17
Disclaimer 19
Introduction
From the sale of digital art to payment for services, crypto is everywhere. While there are ongoing discussions as to how much cryptocurrency can get ingrained in society and what it can and cannot replace, there is no doubt that crypto has changed the world and this is just the beginning.
In 2009, when Satoshi Nakamoto developed the very first decentralized cryptocurrency, it all looked like some joke that would fall flat on its face. Critics talked about the vulnerabilities of the infrastructure underlying them and associated it with numerous illegal activities. But today, many of them have been proven wrong.
200 cryptocurrencies later, crypto stands as a relatively-new technology-based and efficient way to go about business. Not only has it provided numerous incentives, but it has also completely revolutionized the world of e-commerce. If allowed more room to brew, it will move on to enable social and economic growth throughout the world, including in developing countries. Without mincing words, crypto is the future and I think you should tag along.
What is Cryptocurrency?
Cryptocurrency is virtual currency or a form of payment that is secured by cryptography, which can be used to pay online for goods and services. Many cryptocurrencies are decentralized networks based on blockchain technology.
Many companies have issued their own currencies, often called tokens, and these can be traded specifically for the good or service that the company provides. What stands cryptocurrency out from other legal tenders is that they are generally not issued by any central authority. This singular attribute makes them immune to all forms of manipulation or interference from any government or individual.
What is Blockchain Technology?
There is really no way you would take a swing at cryptocurrency without hitting blockchain technology also. Both are related in that blockchain technology serves as the structure that stores transactional records, also known as the block, of the public in several databases, known as the “chain,” in a network connected through peer-to-peer nodes.
Here is the thing:
If you are to transfer money to someone else from your own bank account you will use your online banking platform to send the funds to the person through their account number, right? When this transaction is completed, your bank will then update your transaction records. If it were this simple and there was no room for breaches, then there might have not been any need for blockchain technology. The problem with this conventional means stems from the fact that transactions of this type are vulnerable and can be tampered with.
With the help of blockchain technology. Every transaction is authorized by the digital signature of the owner, and that authenticates the transaction and safeguards it from tampering.
A much simpler way to put it would be to compare the digital ledger to a Google spreadsheet that can be accessed from a number of computers linked in a network. What makes blockchain technology so intriguing is the data can be viewed by the general public, but they can’t corrupt it.
What is Decentralized Finance?
Decentralized Finance, or what is popularly called “DeFi”, makes use of cryptocurrency and blockchain tech to manage financial processes, transactions and decisions. There are quite a number of DeFi networks, but the two largest are Bitcoin and Ethereum. In plain terms, DeFi is a network of computers frequently perching in cryptocurrency mining operations in peoples’ home basements. The computers run software that renders functions like everyday banking, asset trading, loans, contractual relationships and mortgages without the interference of any middleman.
Step by Step Guide to Purchase and Transfer Crypto:
If this is your first time walking the corridor of cryptocurrencies, buying cryptocurrencies alone can be a very daunting task. “Which coin do I buy?” ”Where do I buy?” These are some of the many questions that would pop up in your head and leave you confused. But not to worry, below is a comprehensive sequence on how to not just buy crypto, but also transfer them. Read away!
1. Sign-Up on your desired exchange (ex. Coinbase, Binance, or Gemini)
2. Wait for Approval
3. After approval, link your bank account or desired method you desire to use to purchase cryptocurrency
4. Purchase Cryptocurrency from your online exchange of choice. There may be a waiting period before you can remove your cryptocurrency from the exchange until your bank funds clear on the exchange.
5. Purchase your desired cryptocurrencies
6. Click on Withdraw from your desired online exchange (ex. Coinbase Pro).
7. Go to your desired exchange where you wish to send your cryptocurrency to stake, lend, or earn compound interest (ex. Celsius Network, Nexo)
8. Click on the cryptocurrency you wish to receive funds at.
9. Copy the Address Code provided
10. Return to your original online exchange where you purchased your cryptocurrency.
11. Paste the code provided in the Withdrawal Address section on your desired Defi Platform
12. Select how much cryptocurrency you wish to withdraw.
13. Confirm and approve your withdrawal on the exchange where you purchased your cryptocurrency. It’s very important to READ & VERIFY THE COPIED CODE. Ensure all information matches. If you send your cryptocurrency to the wrong address, your hard-earned cash and cryptocurrency will be gone forever.
14. Some investors choose to use the QR Code method to transfer cryptocurrency because there is no hassle in copy and pasting codes. Your funds are securely transferred through QR code captured from your camera on your Cellular Device or Computer.
15. Wait patiently as your funds are transferred
How To Earn Passive Income from Cryptocurrency:
Passive income is money gotten from endeavours in which an individual is not actively involved. When it comes to crypto, this is also possible. In fact, a significant number of people in the crypto world earn solely through passive means. This is usually because they don’t have the time or skill to go full throttle. If you fall in this category, these would help:
1. Staking: Every heard of bitcoin mining? Well, this is similar but better. Some would say it’s the evolution of bitcoin mining. In mining, a mechanism called Proof of Work (PoW) is used where every computer on a particular network hustles to complete a task first. Whichever is quickest gets awarded in Crypto. When it comes to staking, instead of many computers scrambling to complete a task, the blockchain assigns the task itself. The more holdings you stake, the higher your chances. This mechanism is called Proof of Stake (PoS).
2. Lending: Crypto lending is just like conventional lending. This is a sort of decentralized finance where investors like you can lend your crypto to borrowers from all over the world. They, in turn, work with it, then pay your crypto back with an agreed interest called crypto dividends.
3. Cashback Credit Cards & Debit Cards: This mode of passive income works like the Fidelity Rewards Visa Signature Card. In this scheme, you will be offered 2% back on every purchase when you deposit your earnings into an eligible Fidelity investment account. Crypto rewards cards work similarly. When you use the card to charge any purchase you would normally make with a credit card, and earn a certain percent back.
Credit/Debit Cards That Receive Cashback in Cryptocurrency
1. Blockfi Credit Card
2. Sofi Credit Card
3. Gemini Credit Card
4. Venmo Credit Card
5. Celsius Credit Card (Coming Soon)
6. Coinbase Debit Card
4. Liquidity Pools: In this money-making scheme called liquidity mining, Liquidity providers earn fees from transactions on the DeFi platform they provide liquidity on. The more crypto assets you stake, the larger your share of the transaction fees which will be shared to all the liquidity providers in the pool.
5. NFT’s: NFTs are the rave of the moment and this is not even a shock considering the hundreds of millions creators like Beeple have made from it. The intriguing this is, it’s not complicated. Virtually anything digital can be sold as an NTF. From music to memes to original digital art to videos and audio clips, they are all welcome. Another way to monetize this is to be an NTF collector like Pablo Rodriguez-Fraile where you buy these digital products and resell them for a profit.
6. Yield Farming: Yield farming is somewhat similar to lending as described above. It is known by some as yield or liquidity harvesting, and it basically involves you lending your crypto. As a dividend, you get interest or sometimes, you get fees. To put it simply, yield farming is any endeavour to put crypto investments to work and reproduce the most returns possible. As a yield farmer, you can choose to move your assets around on a DeFi network like Compound, and constantly chase whatever pool offers you the best APY
7. Video Games: This means of earning crypto is one of the newest and it is quickly gaining ground. By playing games such as Dodge Dash, you could quit your day job and easily earn crypto doing what you love and are really good at. In under two months, Dodge Dash had over 7.5 million plays of the demo on their official website. As I said, occupational gaming is rapidly gaining ground.
Cryptocurrencies & Interest Rates (Rates are Subject to Change)
1. USDC Stablecoin – (8.88% APY)
2. Bitcoin (BTC) – (6.2% APY)
• 6.2% up to 1 Bitcoin. Interest Rate drops to 3.51% thereafter
3. Ethereum (ETH) – (5.35% APY)
• 5.35% up to 100 ETH, 5.05% thereafter
4. Litecoin (LTC) – (3.25% APY)
5. Bitcoin Cash (BCH) – (4.51% APY)
6. Cardona (ADA) – (4.06% APY)
7. Polkadot (DOT) – (8.86% APY)
8. Polygon-Matic (Matic) – (8.89% APY)
9. Chainlink (Link) – (3.00% APY)
Where to Earn Compound Interest
If you’ve decided to put your crypto to work and earn from it passively, compounding your return is the next great idea. Some platforms such as Binance have an auto-subscription feature that allows you to subscribe the interest you’ve gained so as to earn compound interest. I’ve mentioned Binance, here are some others:
1. Celsius Network
2. Nexo
3. Coinbase
4. Blockfi
5. Gemini
6. Aave
7. Compound
8. Maker
How to Secure your Cryptocurrency
Due to the lucrative nature and erratic price swings associated with cryptocurrency, it has attracted both investors and cybercriminals. Every day, there are hacks and thefts on numerous exchange platforms and wallets such that to date, crypto crimes have hit billions of dollars worldwide. Here is how you can avoid that pitfall:
1. Wallets: Of course, you can’t store your crypto with Santa. You need some sort of wallet – a place to securely keep your crypto. These wallets are of varying kinds, but hardware and hosted wallets are the most common ones.
Hardware Wallet (Most Secure): A hardware wallet is like a physical purse where you store the private keys to your concurrency, only that it isn’t a key – it’s a thumb drive. This means that these ever so important keys are protected offline and can’t be stolen even if your computer is hacked. This makes it the most secure kind of wallet but this comes at a cost – the cost. Most hardware wallets cost $100 and above. The following are popular examples:
- Ledger Nano X
- Ledger Nanao S
- Trezor T
Hosted Wallet (Least Secure): This is the most popular and is also the easiest to set up. This works just like conventional banks where a third party secures your money for you. Hosted wallets are always accessible and their major upside is that even if you forget your password, your crypto won’t be lost. Examples:
- Coinbase Wallet
- ExodusTrezor Wallet
- StakedWallet.io
- BitGo Cryptocurrency Wallet
- Trust Wallet
- CoinPayments Wallet
- MyEtherWallet
- CoinomiJaxx
Note:
1. Cryptocurrency placed on Defi and Cefi platforms don’t have the same level of security as placing your cryptocurrency in your own personal hardware wallet. The risk and reward ratio is very high. Each person should do their own research on which cryptocurrencies they would like to invest in and which platforms they are comfortable utilizing. Only invest what you are willing to lose.
2. Download 2FA Authenticator (Google) when utilizing online exchanges and apps
3. Secure all passphrases and codes and never share your information with anyone. Never screenshot or upload your information online.
4. Avoid scams. No one should ever ask for your seed phrases, passphrases, or codes via email, text, or phone call.
Verifiable Sources to find & reference Cryptocurrency News & Information
Purchasing crypto is a great step, but in and of itself, that can’t be all you do. To be an active and successful trader, you need to stay in touch with crypto news and price swings. Here are verifiable sources:
- Bitcoin Magazine
- Cointelegraph
- CoinDesk
- The Block
- Coinbase
Referral Links
Celsius Network
Join Celsius Network using my referral code 10304942d5 when signing up and earn $50 in BTC (Bitcoin) with your first transfer of $400 or more!
Step 1: Download Celsius Network App
Step 2: Click on referral link and follow Celsius Network instructions to complete identity verification
Step 3: Click Receive on Account Tab
Transfer cryptocurrency from your desired online exchange in an amount equal to or greater than $400 to your Celsius Network Account
Step 4: Leave transferred funds for 30 days and free Bitcoin rewards will be unlocked after a 30-day waiting period
Nexo
Check Email for referral link
• For every friend who tops up $100 or more, Nexo will reward both of us with $25 in free BTC (Bitcoin)
Step 1: Share Link
• Share your unique referral link with friends and have them sign up through it.
Step 2: Verify
• Once a friend registers, they should pass our Advanced Verification to confirm their identity.
Step 3: Top Up
• Remind your friends to top up $100 or more in assets and keep them for at least 30 days in their account.
Step 4: Earn BTC
• Both you and your friend will earn $25 in BTC (Bitcoin). Your reward is instantly available and will be unlocked in 30 days.
EndNote:
1. The Magic Is in Compound Interest
2. Wealth is built through PATIENCE, TIME, AND COMPOUND INTEREST
3. Try to keep your gas fees (purchase fees) as low as possible when purchasing and transferring cryptocurrency from Online Exchanges to Defi/Cefi platforms and your personal storage wallets.
Cryptocurrency Terms:
1. HODL: Hold on for Dear Life: “Hodl” is meant to encourage people to not impulsively sell when a cryptocurrency drops dramatically or rises to become highly profitable to sell.
2. Stablecoin: Cryptocurrencies whose value is pegged to a traditional commodity like the U.S. dollar or the price of gold.
3. Altcoin: An alternative cryptocurrency to Bitcoin, which itself was the only crypto coin at one point in time
4. Dollar Cost Average: Dollar-cost averaging (DCA) is an investment strategy in which an investor divides up the total amount to be invested across periodic purchases of a target asset in an effort to reduce the impact of volatility on the overall purchase. The purchases occur regardless of the asset’s price and at regular intervals.
5. White Paper: Whitepapers explain the purpose and technology behind a project. They usually provide statistics, diagrams, and facts to convince interested investors to purchase the cryptocurrency.
6. Cold Storage Wallet: A cryptocurrency wallet that cannot be compromised because it is not connected to the Internet. Also called a “hardware wallet” and “offline wallet,” the cold wallet stores the user’s address and private key and works in conjunction with compatible software in the computer.
7. Decentralized Finance (Defi): DeFi refers to a system by which software written on blockchains makes it possible for buyers, sellers, lenders, and borrowers to interact peer to peer or with a strictly software-based middleman rather than a company or institution facilitating a transaction.
8. Centralized Finance (Cefi): CeFi, short for centralized finance, offers some of the yield benefits of DeFi with some of the ease of use and security of traditional financial-services products. With CeFi, you can earn interest on savings, borrow money, spend with a crypto debit card, and more.
9. Passphrase: The passphrase protects your crypto assets if your 24-word recovery phrase were to be compromised. To access passphrase-protected accounts, an attacker will need your recovery phrase as well as your secret passphrase.
10. Bear Market: A bear market is defined by a prolonged drop in investment prices — generally, when prices fall by 20% or more from their most recent high
11. Bull Market: Generally, refers to periods of time when stock prices go up
12. Buy the Dip: Purchasing an asset after it has dropped in price. The belief here is that the new lower price represents a bargain as the “dip” is only a short-term blip and the asset, with time, is likely to bounce back and increase in value.
13. FOMO: An urgent need to get in on what everyone else is doing: buying a certain cryptocurrency when they think its price is about to hike.
14. Blockchain: Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain.
15. Not Your Keys Not Your Coins: The expression “not your keys, not your coins” refers to needing to own the private keys associated with your funds. The person owning private keys is the one deciding how the crypto assets associated are spent. If you don’t own this, you’re entrusting your crypto to a third party. If you do own your keys, you have complete control over how to use your funds.
16. Fiat: Fiat currencies are a medium of exchange established as money, often by government regulation. Fiat money does not have intrinsic value and does not have use value. It has value only because a government maintains its value, or because parties engaging in exchange agree on its value.
17. Private Key: A private key, also known as a secret key, is a variable in cryptography that is used with an algorithm to encrypt and decrypt data. Secret keys should only be shared with the key’s generator or parties authorized to decrypt the data. Private keys play an important role in symmetric cryptography, asymmetric cryptography, and cryptocurrencies.
18. Diamond Hands: An investor who doesn’t panic when their investment decreases or fluctuates in value—one who is resolute and patient enough to hold until they realize big gains. It can also be used negatively to refer to a stubborn investor who refuses to abandon an investment that is likely to lose value.
DISCLAIMER
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial, legal, or tax advice. The content is solely the opinion of Crypto Wealth 101 who is not a licensed financial advisor or registered investment advisor. Trading and Staking cryptocurrencies pose a considerable risk of loss. Crypto Wealth 101 does not guarantee any particular outcome.