It’s been a while since I wanted to do a sequel to my first article on BitCoin which now dates from 2013. The current excitement around cryptocurrencies may be the right time to do so.
During my first article, we were in 2013 and cryptocurrencies were starting to be talked about.
But it was a subject that at the time had just opened up to the general public. It was then difficult to know what it was going to give for the future. We are in a much different situation now.
If no one can yet predict the future of cryptocurrencies, and even less the evolution of the course (even at 24h) of each of them, it now seems certain that cryptocurrencies have made a place for themselves, that they have obtained a credibility and that we will now have to reckon with them. I therefore suggest that you go a little further than the 2013 article which gave a very brief overview of the question, and to see the main steps to follow if you want to invest in a cryptocurrency.
Getting started with cryptocurrencies
When you want to start buying a cryptocurrency, you can be quite lost and confused at first, because it is much more complicated to buy bitcoin for example than to make a purchase from an e-merchant. It is particularly difficult to tell the difference between the sites allowing the purchase, the sites acting as a portfolio, the trading sites…
Buy a cryptocurrency
For your first purchase, it is very likely that you only have fiduciary currencies (euros, dollars, etc.).
From these currencies, you will only be able to buy the most common cryptocurrencies (Bitcoin, Ethereum, Bitcoin cash, Litecoin, Ripple with some, evolving list), made available on sites allowing purchase with a fiat currency. We will see later how you can buy less common cryptocurrencies later. You can buy with euros, with a prior transfer to fund a euro account that you can use, or directly with your bank card (for a little more commission).
This is possible for example (CB and transfer) on Coinbase, one of the references ( by following this referral link or this direct link ) or on Bitit.
I was able to test the two above which pose no problem, but there are other serious ones like Kraken , Bitstamp …
Do not hesitate to compare and see the different opinions on these sites. This is changing fast and new players are appearing regularly.
Note that before you can buy a currency, you will have to show your credentials and have your identity verified.
Note also that depending on the sites and particularly at this time, this can take time, from a few minutes to several days or weeks. So do not expect to have bitcoins or other currency a few minutes after you have decided to buy them. We often hear that Bitcoin is completely anonymous. It is true that a transaction from one user to another, even if they are public, does not allow to have the identities. on the other hand, the purchase with a fiduciary currency is not anonymous.
Store your cryptocurrency
You have chosen the site with which you will buy your first cryptocurrency. Know now that it will have to be stored somewhere. There are several ways to do this, and it is very important to avoid any disappointment to understand the issues of each:
- Online storage : some sites have built-in storage (like Coinbase for example). Other sites (like BitGo for Bitcoin and MyEtherWallet for Ethereum) offer a vault to deposit your “coins”. The advantage of online storage is its convenience. On the other hand, if the site is attacked or goes out of business, you may be able to say goodbye to your assets. It happened for example in 2014 with Mt. Gox .
- Software storage : it is possible to store locally on your computer or mobile via dedicated software or applications such as Exodus or Electrum. Be careful though if you have to reformat your disk, make a backup before
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- Physical storage : it is possible to store on a physical medium such as the Ledger Nano S or the Trezor . It is without context the most secure solution.
In any case, you will get an address that corresponds to a hash of about twenty characters ( more explanations here ). It is this address that you will need to provide when you want to buy a currency and you are asked where to store it (or if someone wants to send you money). If we have to make the analogy with the bank, it is your RIB.
Transfer funds
We have just seen that it was only possible to buy certain currencies with euros.
For the others, you will have to go through trading sites (see the next paragraph). And to be able to buy altcoins, it will already be necessary to supply the trading site with bitcoins or ethers. For this, you will have to transfer funds. The principle is not complicated, but there are some points to consider. To transfer funds, you must indicate the address of the wallet (therefore a hashed address as described in the paragraph above) to which you want to transfer the funds.
You choose the amount and you can initiate the transfer. This transfer may take longer or shorter, depending on the load on the network concerned. And also according to different criteria, especially in the case of Ethereum. Before clicking on the send funds, here are the points to check:
- Transaction fees : they will be indicated. With the explosion of bitcoin, transaction fees have also exploded, and this represents significant sums. They are also going up on Ethereum, so that might be a closer look as well. So check that your transfer is worth the cost.
- Gas in the case of ether : during a transaction with ether, two important pieces of information must be specified. These are the “gas limit” and the “gas price”. The “gas limit” option gives the maximum number of calculation steps for the transaction. Increasing it will have no effect on transaction processing time. The “gas price” gives the commission you give for each unit of gas. This parameter has a real impact on the time your transaction will take to execute. I once came across a transaction that remained pending for several hours. My gas price was too low. A transaction cannot be canceled or modified, but there is still a solution to cancel it. You have to pass a transaction with the same nounce, which consists of transferring 0 ether to your account. The MyEtherWallet wallet now includes a cancellation mechanism that pre-fills the fields, the doc is here . To avoid inconvenience, there are sites that allow you to estimate the price of gas to indicate, based on the current network load, such as this one .
Buy an altcoin by trade
We saw above that it was possible to buy the main cryptocurrencies with fiat money.
On the other hand, for the vast majority of “coins”, it is only possible to buy them by trade, ie by exchanging Bitcoins or Ethereum against these currencies. In this case, you have to go through dedicated platforms. There are several. The best known is Binance ( following this referral or direct link ), but there are others ( Kucoin , Bittrex …).
You will then be able to see in real time the prices between these currencies and the reference currencies, and place your purchase or sale offers. There it becomes classic, for example you place an order at a price. When this is reached (this can be immediate if you choose the market price) your order is executed. I refer you to this tutorial to have precisely the steps to trade with Binance.
You will see that there are many currencies. Do not hesitate to look at the courses, to find out about each of them before setting your sights on it. Because when it comes to ICOs, the currency (in this case we speak of a token) is used to raise funds for a project (see this article for more details). Knowing the project, the roadmap and the teams well allows you to have an idea of the seriousness of the project. And therefore no doubt the sustainability of the attached currency.
Then all that’s left to do is take the course. It is also a little more complex for altcoins because expressing the price in euros or dollars does not make sense, since they are not directly exchangeable with these currencies. To make the conversion, it is therefore necessary to have the price with the exchange currency (bitcoin or ether) and the price of this exchange currency with the fiduciary currency.
To summarize, to buy an altcoin, you need:
- open an account on a fiat platform like Coinbase
- exchange euros for Ethers or Bitcoins
- transfer them to a trading platform like Binance or Kucoin
- exchange your bitcoins or ethers for the desired currency on this platform
If then you want to know a little more about the trade, here are some useful links:
- The vocabulary used
- Tutorials to learn more about technical price analyzes (support, resistance, candlesticks, etc.)
Update on cryptocurrencies and blockchains
Since the beginning of December and the Bitcoin boom, there has been a lot of interest around virtual currencies. Those who missed the Bitcoin train want to successfully catch the next trains. But difficult to know which are the good ones with the multiplication of cryptos available. You have to be well informed and keep in mind that this market remains risky, and that changes are very rapid and very violent.
In any case, the principle of crypto should in my opinion continue and gain further maturity. To be continued, in any case on the subject it is impossible to make affirmative statements, because it is brand new and we still lack perspective. There are also several challenges to overcome, such as network congestion, increased transaction fees, and possible legislative regulations that may arise. On the subject of network congestion, one of the leads on the table is the lighting network .
In any case, the blockchain principle should also become part of the landscape for a long time. And not just in the world of cryptocurrency. Its principle of block validation, with the fact of making the data tamper-proof, can be useful in various sectors where there is a need for trust between third parties. This can be considered in contracts or public administration, for example.
