Crypto Basics

5. BUYING YOUR FIRST CRYPTO

rob · August 16, 2021 ·

I thought I would break this into 2 sections, as there are a couple of good options for Kiwis to buy crypto locally. Then I’ll do a second post for those based outside of New Zealand.

Buying crypto in New Zealand – EASY CRYPTO

I’ve found the easiest way to buy crypto in New Zealand is through Easy Crypto. First, you’ll need to set up an account. Use this link https://easycrypto.com/?ref=145647 to head over to Easy Crypto and select “Sign Up”. Enter your email and password. You’ll then need to verify your account by entering a few details about yourself and uploading a photo of your Drivers Licence or Passport. Plus the verification process will also need you to take a selfie, so brush your hair and put on some lippy before you start!

KYC/AML

This is standard when signing up with most crypto exchanges and brokers. It’s known as KYC/AML (know your customer & anti money laundering). It’s a requirement to satisfy each country’s financial laws. There are a few places where you can buy/sell crypto without KYC, but they often have limits and you will have to KYC for larger amounts anyway. I keep a folder of photos of all my documents on my laptop as I have had to do KYC a dozen or more times with all of the exchanges and protocols I’ve had to sign up to.

Once you’ve submitted the required info, if all is in order you should receive an email in 5 – 10 minutes saying you are good to go! Head to the Buy & Sell tab and enter the coin you want and the dollar amount you wish to buy. BTC is always a good place to start as every portfolio should contain at least some Bitcoin. Easy Crypto have a minimum spend of $100 and it’s probably a good idea to start with a small amount if this is your first ever crypto purchase.

After selecting the required coin and amount you’ll be taken to the following screen:

Here you will have to enter the Bitcoin address from the wallet you want to send it to. Head over to your Exodus wallet and select BTC and you’ll end up at the following screen.

Select “Receive” and the following screen appears:

Copy the address, which should start with 1, 3 or bc1 and have 26 to 35 alphanumeric characters. Head back to Easy Crypto and paste it into the delivery address slot. Press next and you’ll be taken to the screen below. This is the reason Easy Crypto is a great place for Kiwis to buy crypto as you can pay directly from your New Zealand bank account. One note here…. The bank account you use must be in your own name. You can’t pay from a company, trust or someone else’s account. You’ll then end up at the following screen, where you’ll need to copy the order number and then arrange the bank deposit.

On weekdays your coins should show up between 30 minutes to 2 hours. If you’re doing the transaction on the weekend it won’t show up until early Monday.

Congratulations you own your 1^st crypto!

There are another couple of good options for New Zealanders:

https://dassetx.com?ref=e324e80c

https://www.bitprime.co.nz/

4. Installing a Crypto Wallet

rob · July 19, 2021 ·

Now for the fun part, setting up a wallet and buying your first crypto!

What is a Crypto Wallet?

A wallet is a bit like a bank account that only you have control of. It’s where you store your various tokens and coins. Each type of token will have it’s own public key or address, which you share with people so they know where to send crypto to. Not every wallet supports every token, so you may end up with 3 or 4 wallets to hold all your tokens. Wallets fall into 3 main categories:

Cold Wallets:

These are like a USB stick, so are often called hardware wallets. They are “cold” because they’re not online. Which makes them the safest option. You only plug them in when you want to send and receive. The most popular brands are Ledger (www.ledger.com) and Trezor (https://trezor.io), but there are many more like Coldcard (https://coldcardwallet.com). Costs vary from about $US70 to $US200, so if you only have a few hundred dollars’ worth of crypto it’s probably not worth getting one. I personally don’t have one as my crypto is spread between about 10 hot wallets, so my risk is spread. Whether or not you get one will depend on how much crypto you are storing and your risk tolerance. One word of warning…. Don’t be tempted to buy one second hand. The risks are too high. Even if the box is still film wrapped. There are numerous stories of people getting scammed and losing all of their crypto, because the wallet they bought from a 3^rd party had been loaded with malicious software enabling hackers access to their crypto once the device was plugged in.

Non-Custodial Hot Wallets:

These are apiece of software loaded on your phone or desktop where only you have the private keys. While not as secure as a cold wallet these are still reasonably secure. With most of them you can now stake your coins (earn interest) and some of them allow you to swap between various coins. I would recommend you start with Exodus Wallet and Metamask which will cover most tokens. Other popular ones are Trust Wallet, Atomic and MEW (MyEtherWallet).

Custodial Wallets:

These come in a variety of forms, but in all cases someone else has control of the Private Keys. Hence the phrase “Not your keys, not your crypto”. These are the least secure of all the storage methods. Examples of custodial wallets are exchanges, Defi protocols and crypto “banks” like Celsius and Blockfi. These are the most common venue for hacks and exploits, so it’s recommended to take care when leaving funds long term with these organisations. To mitigate these risks, you can actually insure your crypto using protocols like Nexus Mutual, Armor.fi and Coincover. A bonus to taking out insurance with these guys is they often have their own tokens that you can earn when paying for insurance.

Setting up your first wallet

You don’t need any crypto to open a wallet, so it’s a good place to start. I would start with Exodus, which supports 103 of the most popular crypto currencies and is easy to use. I would recommend Metamask as your 2^nd wallet. Metamask allows you to store all the Ethereum based tokens known as ERC-20 tokens (there are thousands!). It also allows you to store all of the Binance Smart Chain (BSC) tokens plus a host of tokens from other chains.

Exodus Wallet

Exodus

This is available in both mobile phone and desktop versions. Start by going to https://www.exodus.com/download/ which will give you the option to download either the desktop or Mobile versions. I’d start with the desktop option, so select Download Exodus and select whether you are using Microsoft or Apple Mac. Once the .exe file has downloaded, double click on it and the software will start installing.

Once installed, select settings in the top right and go to Backup. Here you will create a password and then the system will give you a 12-word seed phrase. It is super important that you carefully write this down on a piece of paper in the correct order and store it in a safe place. I can’t stress how important this seed phrase is. If something happens to your wallet and you need to re-install the software you will need this seed phrase to gain access to your crypto, otherwise it is lost forever! I have a small notebook where I keep all my seed phrases and passwords, which I then store in a secret, secure place. Don’t be tempted to type it in a word file. If someone hacks your computer and gains access to that word file, your crypto will be history!

If you get stuck the Exodus.com website is very helpful plus there are lots of helpful links on You Tube. Have a look around your new wallet and in the next post I’ll show you how to buy crypto and send it to your wallet.

Metamask

You can download the Metamask desktop version at https://metamask.io/download or I would recommend you install it as a Google Chrome extension at https://chrome.google.com/webstore/detail/metamask/nkbihfbeogaeaoehlefnkodbefgpgknn?hl=en. If installed as a Chrome extension it will make it easier to use it with other programs like Uniswap and a range of Defi protocols. I also believe it can now also be installed as a browser extension on Firefox, Brave and Edge. Once downloaded you will have to create a password and then it will give you your 12-word seed phrase. Once again write this down and store it in a safe place. I was talking to someone the other day who records their seed phrase on two pieces of paper. First 6 words and second 6 words and then stores them in separate places. This will add an extra layer of security, as without both pieces of paper no one can gain access to their wallet.

Once installed you can go to settings (click the red/blue circle in top right) and change what currency you want your balances denominated in. Being from New Zealand I originally had mine set to NZD, but I’m changing all my wallets to USD as that is what I’m trading against most of the time.

As mentioned previously Metamask stores all the Ethereum based ERC-20 tokens, but for them to show in your wallet you need to scroll down to “Add Token” and select those you want to add. Have a play now and try adding a couple.

You now have 2 wallets installed ready to receive some tokens. Next post I will cover how to buy and transfer some crypto into your wallets.

3. SO WHAT’S A BLOCKCHAIN?

rob · July 11, 2021 ·

While it’s not totally necessary to know all about blockchain technology to invest in crypto. It’s quite helpful to have a basic knowledge as it’s the cornerstone of all crypto currencies.

A blockchain is a type of database which stores a list of transactions or other data in blocks, which are “chained” together in chronological order.

Each block has a finite size and when the newest block is full it is “chained” to the previous one.

Each block is given a timestamp when added to the blockchain and once added it cannot be changed.

Cryptographic Hash

This “chain” that links the blocks together consists of a cryptographic hash, which is a long alpha numeric code. It can be thought of as the blocks fingerprint, which is unique to each block. Each block contains its own hash and the hash of the previous block, hence creating a chain. These cryptographic hashes are why most block chains are referred to as cryptos or crypto currencies.

These hashes are created based on the information within the block. If someone tampers with a n older block and changes the information within, the hash will change. Therefore, the next block will become invalid as it no longer stores the correct hash of the previous block, so the chain will be broken.

Decentralised Ledger

To keep blockchains secure they are used as a decentralised ledger. This is where there is a network of hundreds or thousands of people with a complete copy of the blockchain (called nodes). When a new block is created it is sent to all nodes, who check it is valid and then add it to the end of the blockchain. This is known as consensus. If a block is found to be invalid it will be rejected.

This makes blockchains very secure as there are thousands of identical copies spread far and wide. To tamper/change a block you would have to change it on 51% of all nodes. The computing power required to do this makes it virtually impossible.

Proof-of-Work

This creates trust in the data. Before a block can be added to the chain a few things must happen:

First a cryptographic puzzle must be solved thus creating the block.
The computer that solves the puzzle first shares the solution to all the other computers on the network. This is called proof-of-work.
The network will then verify this proof-of-work and if correct, the block will be added to the chain.

Here’s a great clip to explain blockchains visually: Youtube.com/watch?v=3xGLc-zz9cA

Smart Contracts

Another feature of blockchains are smart contracts. These contracts are simple programs stored on the blockchain. They automatically perform an action when certain conditions are met. E.g. IF x DO y, ELSE DO z. These are very powerful and can operate without human intervention. I might expand on smart contracts in a future post.

While most of us know Satoshi Nakamoto was the person/group that created bitcoin. We often overlook the fact that while creating bitcoin he/they also created the first successful implementations of blockchains, decentralised ledgers and proof of work. While others came up with the concepts it was Satoshi that successfully put them to use.

This post may have been heavy going for some, but i thought it was important to cover some of the concepts behind crypto. Now we can get on with the fun part. Setting up your own wallet and buying some crypto! Stay tuned.

2. What are Crypto Currencies?

rob · June 27, 2021 ·

An expert in crypto will read this and think “well that’s not quite right”. But I wanted to make this easy for a complete noob to get their head around.

In basic terms crypto is digital money that can be transferred using the internet.

They are border less and not controlled by any government. One of the great things with a lot of crypto’s is they are controlled by no one, but are created and managed by groups of developers/computer programmers. Decisions are made by consensus and often anyone owning the token/coin can vote.

They are usually built using blockchains in the form of a decentralised ledger, but more on these topics in my next post.

Most crypto aren’t actually currencies, but instead have some type of utility within a crypto ecosystem. You may need to own them to vote (governance), to pay transaction fees, to stake to earn a share in the fees to name a few.

When I first started, I found the easiest way to get my head around it was to think that you were essentially buying shares in a protocol. And I thought of protocols as a website or piece of software.

Most crypto’s fall into half a dozen catergories:

Currencies

Bitcoin Litecoin

Bitcoin Cash Dash

Terra/Luna

Privacy Coins

Monero

Zcash

Verge

Platforms:

I think of these as operating systems like Microsoft Windows or Mac OS that other software runs on using smart contracts.

Ethereum Polkadot

Cardano Cosmos

Solana Kusama

Zilliqa Tezos

Tron Eos

Exchange Tokens

Binance Coin Uniswap

Sushi Pancake

Crypto.com Huobi Token

FTX Token Kucoin Token

Stablecoins

Tether (USDT) USDC

Dai BUSD

DEFI (Decentralised Finance)

Aave Synthetix

Maker Dao Compound

Yearn Finance Ren

Utilities

Theta – Video streaming

Bit Torrent – Video streaming

Vechain – Supply chain solutions

Filecoin – Decentralised storage

Ravencoin – Asset transfer

Layer 2 Solutions

Polygon/Matic

OMG Network

Skale

This isn’t an extensive list by any means, but just some of the better known coins.

You could spend hours researching every different crypto. At last count there were around 10,000! If you are a short term trader you don’t really need an in-depth knowledge of the coins/tokens you are buying/selling, but if you are more of a long term investor and Hodler, you may want to do a bit of research into the coins you are interested. This can be fascinating as there are a bunch of amazing projects out there, all looking to change the world as we know it.

The website www.coingecko.com is a great place to start researching coins. It has all of the critical info including where you can buy and trade them (the Markets tab). This will be helpful as not all exchanges support all coins. Another piece of helpful info is the Market Cap, which is the total number of coins in circulation multiplied by it’s current market price. This will help you see which are the more established coins and which are new or obscure.

Hopefully this has been helpful and in future posts I will expand on most of the topics covered.

Next post: So what’s a blockchain?

1. CRYPTO – Where to start?

rob · June 26, 2021 ·

Welcome to my Blog – Corkys Crypto Matters

Over the past 12 months I have spent hundreds, if not thousands of hours learning and reasearching about crypto and cryptocurrencies. I have become the “goto” guy for any crypto related questions from family and friends.

A close family member who works in crypto suggested I start a blog. The more I thought about it the more I liked the idea. So here we are! My first ever post.

My initial goal is to make this a helpful resource for those brand new to crypto. I’ve created an extensive list of helpful links and a crypto glossary to explain most of the crypto terms and acronyms. Please use my links as often as possible as:

For many exchanges and wallets you and I will receive a small cash bonus or a discount on fees.
You will avoid falling victim to scam sites. Many people get caught out accidently downloading from scam sites. These sites have very similar names with just 1 or 2 different characters. They are made to look identical to the real sites in an effort to trick you into entering passwords or depositing crypto. Once you’ve registered with a site add it to your bookmarks to be safe and ensure you get the legit one each time.

In the crypto Facebook groups I belong to, I often see noobies really struggling with the basics. Some of these groups are quite helpful, while others are brutal, where noobies are crucified (often by people who don’t really know what they’re talking about). I want to make this blog somewhere a complete crypto rookie can come without fear of being judged.

I’m based in New Zealand, so this blog will hopefully be especially helpful for my fellow kiwis. Having said that crypto is borderless, so 99% of the advice will be relevant wherever you’re based.

I don’t pretend to be an expert, but I believe I have a solid and broad knowledge of all things crypto. I will try to start slowly with my initial posts, assuming you have little to no previous crypto knowledge. Overtime I will start to cover more intermediate-advanced topics.

Topics I’ll cover in the next few posts are:

What are cryptocurrencies?
What is a blockchain?
How to buy my first crypto, using exchanges.
Where to store my crypto, using wallets.

If you have questions or suggestions for topics you’d like me to cover. Please reach out to me. I’ll try to respond to all emails.