Hello and welcome,
This is the beginning of DeFi the Dive, A blog about finding acceptable risk / reward tolerance. I aim to explore the financial opportunities available to us in blockchain. I will share some of my experience feeling out where I was comfortable and what was the next step I took to learn more. Perhaps I can create a festering curiosity of what your life might be like were you to indulge in decentralized finance. So, where to start?
DeFi can feel like a big intimidating wall at first, riddled with fees to make you wonder when you will see a net return on investment. I think of fees as start up costs, or even educational costs, after all, where I'm from you have to pay for that. You will be paying around $1.50 for simple transactions up to $13 or even $24+ for complicated smart contract transactions. For now, you need a wallet that supports ERC-20 tokens. If you haven't got one, there are several options available I can recommend Metamask, as that is the one I use. It can be found here: ( https://metamask.io/ )
This is not a guide for sending and receiving transactions on the blockchain. If desired, take a minute to familiarize yourself with such activity. Once you have your wallet set up you'll want to load it with some Ethereum set aside just for transaction fees. Loading money into a wallet can be achieved through things like https://crypto.com/en/index.html or https://uphold.com/en-us/. https://www.hotbit.io/ is really cool, doesn't need any KYC (know your customer (Identification verification.)) I recommend making transactions in the thousands of dollar range as this makes fees trivial. A $7 fee on a $50 transaction is steep, however it is done on occasion and has been known to be profitable. If thats your bag, thats between you, they and them. I feel more comfortable with a $7 fee on a $1000 transaction, (perhaps this is a shortcoming of mine and I need to see what the $7 fee on a $50 transaction is all about?)
So, security. Get comfortable giving your public keys out, get comfortable authorizing smart contracts to make use of your assets for you. There is a place called Etherscan.io every transaction you do is public, your public key can be searched, the asset value of your wallet is public knowledge, there is a virtual paper trail of every transaction you've conducted. Despite all that, you're assets are supposedly safe. Write down your seed phrases, private keys and anything else your arbitrarily discovered blockchain entities recommend on cold hard paper, or etch onto steel plates in case where you're storing the documents catches fire.
Okay with all that said you should be well set up to start testing your risk / reward tolerance. One last thing on Fees, this is decentralized finance, if you're doing it right you're working with the kind of profits the central banks are making (Chase, Bank of America, whatever you folks have in Uganda, Britain, the Berlin.) Second of all this is blockchain, we have the opportunity to help each other to the top, we don't even need to claw our way up, using those in less advantageous positions as leverage to get ourselves higher up the financial ladder, don't need to, we can sleep at night. So those gas fees? They're paying for the opportunity for your return on investment, its a way of saying thank you. Ethereum is moving away from Proof of Work, so that'll put even more money in the hands of the masses, we can mine our own transactions here soon.
Okay I'm excited to get started on the actual opportunities, see you next time.