Things you need to know as a Crypto Newbie

Things you need to know as a Crypto Newbie

By Dibbler | Dibblers Dabbles | 25 Apr 2021


I get asked it often in some of the chat channels I'm in and on social media. How can I get cryptocurrency X out of my wallet Y into my bank account? 

This is one of the things that anyone who has dipped into the cryptoverse has had to deal with. Unfortunately depending on how obscure the token we are talking about is it is probably going to cost you a bundle in gas fees, exchange fees, etc. Also unfortunately- most of the time these questions are asked by new users who are not sitting on a pile of eth... perhaps they only have that one altcoin in their wallet that they got mining from a free app, or their friend told them about some mooncoin so they put $50 in with their help, or their brother sent them 0.00002 BTC last year. Now they have seen the price peaking or starting to dip and want to capitalize on it before its value drops. Often these users do not fully understand how cryptocurrencies work and are surprised to find no big CASH OUT NOW button in their wallet app. Maybe they haven't even thought about crypto since they invested that $50. So they ask questions in social media, support forums, or in chat channels like telegram and discord. They are ALWAYS surprised, and often frustrated to find out there is no direct or cheap or easy way to withdraw their funds. They are surprised that they are going to need some other currency in their wallet in order to perform transactions and move their tokens around. Finally they are understandably upset that the cost of moving their tokens to an exchange or into their bank account is so expensive- especially with the current eth gas prices. Often these newer users become unwilling bagholders simply because the value of their altcoins is lower than the cost in gas to move it to an exchange that will allow them to withdraw to fiat. I see this as one of the biggest obstacles to cryptocurrency adoption for the average person and so here is my list of things I wish someone had told me before I started investing in cryptocurrencies.

 

BE PREPARED TO SPEND MONEY. Do not plan to get into crypto with $20 dollars. This is a recipe for disappointment unless the token you are buying skyrockets. Even if it does you will likely need to put more money into crypto to be able to withdraw it. If you buy $20 of an ERC20 token you are going to need more than $20 dollars to move it out of a wallet and to a platform that can convert it to cash. Then you are going to need to move it off of that platform to your bank account. This is true for some exchanges too.

 

DO YOUR RESEARCH. Figure out how the cryptocurrencies you are interested in work, which wallets and exchanges you can use to buy/sell/hold them. Plan for the eventuality of withdrawing that currency back to cash. EVEN IF FOR NOW YOU JUST WANT TO HOLD and watch it grow. Some exchanges make it as smooth and easy as possible to put fiat money onto their platform and then when you go to withdraw it you find that you cannot actually send it to your bank account because that particular exchange does not allow fiat withdrawals. Or because you have not passed the KYC requirements to withdraw that amount. Or because some portion of those funds were from a referral bonus that you cannot withdraw for a period of time. All of these things can result in missing the prime time to withdraw and losing some of your profit because of it. 

 

THE NOT YOUR KEYS NOT YOUR COINS FALLACY. Look... I get it. It IS true after all... If you want maximum security for your $20, $50, $100 dollars of altcoin or you plan to hold BTC or ETH until the sky falls then go for it. At the end of the day if you don't hold the private keys to the wallet that contains your crypto then you technically don't have full control over it... But lets be realistic here- the cryptocurrency landscape has changed a lot in the last few years. Exchanges are far more secure than they used to be and most carry hefty insurance that will cover losses to anyone holding on the exchange in the event of a hack... With gas fees the way they have been for the last years lets stop pretending that it is best for someone new to crypto to jump in and put everything on a cold storage wallet... or even a privately held hot wallet. That is just an easy way for them to get hammered by gas, scammed, or make a mistake and lose their crypto. The most realistic option for brand new crypto users is to buy and hold on an exchange. This mitigates the cost of entering into crypto, and ensures that they have an off ramp. In particular new users should make sure to choose an exchange like Coinbase- one that allows you to directly buy with your debit card and withdraw directly to your bank and eliminates all of the gas and exchange fees that you would otherwise be faced with when attempting to cash out from a wallet. I would also argue that using an exchange lessens the chances of someone falling victim to a scam involving their wallet addresses or seed phrases and on an even more basic level reduces the chance of accidentally sending a token to the wrong address etc etc. In short- if you are new to crypto and just want to test the waters don't worry about moving the coins off exchanges until you know what you are doing, have a more substantial amount invested in crypto, are prepared to pay gas fees, and plan to hold long term... otherwise its just not worth it.

 

THERE ARE NO GUARANTEES. In a minimally regulated, growing industry that is open 24 hours a day 7 days a week 365 days a year almost anything can happen. There is a lot of money at work here. A coin that looks like an amazing prospect when you buy it today could lose 90% of its value practically overnight. For this reason it is best to reserve some portion of your investment in a stable coin. If you are brand new and only putting a small amount in that you don't mind losing then its probably fine not to but be aware of the risk you are taking. Especially if you put it all into a memecoin or brand new project that hasn't had a chance to prove itself yet. There are still plenty of scams out there so be careful!

 

DONT BUY ALL THE HYPE or FUD. It's really easy to get swept up in the hype of a particular token, especially when the trend looks good. Memecoins have taken off recently precisely because with the right influencers and posts they can go viral quickly. It is totally possible to make money trading them, but often the hype is overblown and upon deeper investigation many of them don't actually have much merit. Sorry DOGE, this includes you and your infinite token supply. It's always best to dig a little before making any trade and this applies xINFINITY to meme coins that have a powerful hype machine driving them. Do your research objectively and take anything you read with a grain of salt... good or bad. There are lots of players in the crypto world and some are trying to pump a coins price so they can sell it high by hyping it up, others missed a chance to get in early and so want to drive the price down with FUD so they can buy it at a more attractive price. There is a reason people talk about FUD (Fear, uncertainty, doubt) and hype so much- both have the power to move a tokens price and for that reason it is far better to seek facts and make your own determination about any potential investment. 

 

RIDE THE ROLLERCOASTER. Don't panic at the first dip, and don't necessarily sell at the first high. It is always good to recoup your initial investment when you can- that way the rest of your ride is free. As you watch markets and different coins you can start to judge trends and make trades that will grow your investment faster than HODLING alone. If you make a couple of bad trades- well that's why we diversify right? I try to keep a stack of coins that I like held in a wallet. I try not to touch these anymore- I learned quickly that it costs more to worry about them and move them around with every dip or high than it would have to just ride it out- this is especially true if you use a DEX like Uniswap so you can make those swaps directly from your wallet. I also have an amount I keep on exchanges that I use to trade and grow my investments- sometimes successfully, other times not, but that's the name of the game.

 

 

 

 

 

 

 

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Dibbler
Dibbler

Just exploring the crypto world!


Dibblers Dabbles
Dibblers Dabbles

A newcomer to the cryptocurrency universe recording his adventures, successes, and failures from the lay-persons perspective. Armed with only the most basic understanding of the technology and a drive to learn how to be successful in this space and generate real returns.

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