A Beginner's Introduction to Cryptocurrency Part 2: How Do I Get It and Where Do I Keep It?

A Beginner's Introduction to Cryptocurrency Part 2: How Do I Get It and Where Do I Keep It?

By tipplenurkey | Proven Passive | 11 Feb 2021


   Now that we've covered the very basics of what cryptocurrency is, let's discuss how to get in on this action.  Before you head off to explore the torrential waters of the crypto market, there are some tools with which you'll need to familiarize yourself.  Some of this might sound complicated or seem like too much trouble at first, but rest assured, the rewards are worth the effort.  Once you start playing around with these tools, you'll see it isn't nearly so complex as some people would have you believe.  All right, then, off we go!

   The first thing you're going to need to set up is a wallet.  There's not much point in getting yourself some crypto if you've nowhere to store it.  A quick internet search will show you that there are a LOT of wallet options out there.  The wallet or wallets you want depends on what you plan to do with your digital assets, so I'll give you a basic rundown of the standard wallet types.

   Hardware or "cold" wallets are the go-to for anyone looking to hold crypto assets securely, provided you don't intend to do a lot of fast-paced trading.  These wallets are physical devices with digital storage formatted to store cryptocurrency on an isolated drive, which makes them by far the most secure option.  Unless your cold wallet is connected to an internet capable device with the requisite software to operate the wallet, your crypto is totally untouchable.  My preference for a cold wallet is one that has no wireless connectivity or internal battery and requires a PIN to unlock once it is connected to a computer, meaning no one can hack my wallet remotely.  The main drawback to cold wallets is that it takes a lot longer to get your crypto from the wallet to an exchange account in the event that you should want to sell or trade it.  It is also worth noting that you will have to pay that assets network fee each time you deposit to or withdraw from the wallet.  There is a price to be paid for security.

   Software wallets in the form of computer or mobile apps are the happy medium between security and ease of access.  I use a lot of these, depending on what I want to accomplish.  Uphold, for example, is a fantastic option for crypto enthusiasts who wish to swap instantaneously from one asset to another with no commission fees (though this does not mean it is entirely free as there are still network fees to consider) in order to hitch a ride with whatever supported asset is on its way to the moon, or to jump ship quickly when a bubble pops.  Nexo is another of my favorites.  Available online or through the mobile app, Nexo offers its customers a variety of benefits that more than make up for the reduced freedom of maneuver.  First, Nexo pays its customers interest on all of their holdings compounded daily.  Second, Nexo sets aside 30% of its monthly profit as NEXO tokens, which are then distributed to all Nexo wallet users holding NEXO tokens in their accounts according to the amount held, from 5-8% APY on crypto and 10-12% on stablecoins.  Third, Nexo accounts are insured.  Fourth, the interest paid on your holdings increases according to the percentage of those holdings made up of NEXO tokens.  Lastly, Nexo allows their customers to borrow cash or crypto against their total holdings, with interest rates that range from 5.9-11.9% based, again, on how much NEXO is held.  For versatility, there are two wallets that come to mind: Atomic and Metamask.  The former is available as a PC or mobile app and the latter as a browser extension or mobile app.  Both support ERC-20 tokens and allow users to add custom tokens in they are not already in the wallet's listings.  Metamask features the ability to buy ETH directly via debit or credit card, while Atomic has several assets available for purchase.  Atomic also features staking of select assets within the wallet, which allows you to earn additional crypto passively, and sports a limited internal exchange (though not an instantaneous one like Uphold).

   Lastly, there are the exchange wallets.  These are the wallet addresses connected to your account with an exchange service, which you will use if you wish to buy, sell or trade your crypto.  While convenient, these wallets pose the greatest security risk to your crypto.  It doesn't happen often, but exchange services can and have been hacked, resulting in the collective loss of millions of dollars in digital assets.  That said, it is almost certain that you will have to use exchange services at some point and they do offer some perks that other wallets don't.  The most obvious benefit is that you don't have to pay any network fees if your assets are already held on the exchange.  Exchanges also tend to offer a much wider variety of staking options at much higher yields than other wallets.  One of the first exchanges I ever used, Hotbit, even offers daily compounded APY on your holdings, comparable to and sometimes exceeding Nexo's rates.  It will take no small amount of research to determine which exchanges are best for you, but I would recommend not holding anything on an exchange that you cannot afford to lose.

   Now that we've covered where to put your crypto, let's go over a few ways to actually obtain it.  Obviously, the easiest and fastest way to get cryptocurrency is to buy it.  As we've discussed, this normally happens on an exchange but, to a limited extent, can also be accomplished through certain software wallets depending on your preferred level of privacy.  There are, of course, other options available if you're not yet comfortable with the idea of turning your reliable, hard-earned cash into "magical internet money," as some are wont to call it.  In this article, I'll go over just two: mining and faucets.

   Mining can be a bit difficult to grasp for individuals who are new to the crypto market, but since I already covered the gist of it in the first article, I'll be digging a bit deeper here.  There are, for all intents and purposes, just two ways to mine cryptocurrency: hardware or "cloud."  Hardware mining is not a little complicated, not to mention prohibitively expensive to the average joe, so let's skip that for now.  "Cloud" mining is much simpler, but does come with some associated risks of its own.  Boiled down, cloud mining is a misleading name for renting mining power from a "farm" run by someone else.  These farms are made up of one or more warehouses stacked floor to ceiling, front to back with mining rigs.  A mining rig is a CPU designed to do nothing but achieve confirmations on the crypto network for which it is formatted.  The ones worth using consume tremendous amounts of electricity and generate a lot of heat, so operating enough of them to actually mine a block before anyone else does is quite costly.  In order to offset this cost, miners sometimes rent out rigs, requiring the customer to pay the lion's share of that unit's electricity cost in exchange for a portion of whatever it mines.  Most of the time, this means you'll still be eating a net loss, but you don't have to maintain the rig or deal with the heat it produces (they are also usually very loud).

   There are other cloud mining sites, however, that actually offer very profitable options and these are the ones with which you must exercise the greatest caution.  The old adage, with limited exception, applies here: if it seems to good to be true, it is.  That said, I have managed to wade through the swamp of cloud mining scams to find a couple that have yet to let me down.  The first is HashShiny, which is available online or as a mobile app and offers new users free hashrate to get started.  It isn't a lot, to be fair, but one cannot argue with free.  Since HashShiny allows users to automatically reinvest their mining profits for more hashrate, you can pay nothing and slowly build up a reasonable passive crypto income without a second thought.  I was not patient enough to do this, but perhaps you are.  The other mining site I want to mention here is Dualmine.  I was extremely skeptical of this site at first because of the kind of ROI they offer on their contracts, but I've been a satisfied customer for about a year now and my monthly mining profit ranges from $850-1200 per month depending on the price of ETH and Dualmine's own native token CRT.  It should be noted that, while mining contracts can be purchased for BTC, ETH, DOGE, LTC, BCH, DASH, ZCASH, XMR, ETC, BTG and CRT, withdrawals can only be requested in CRT.  Users can convert mining profits instantly between these assets and CRT can be traded on two exchanges so far, with more being negotiated at this time.  The reason I have invested close to $3000 in Dualmine contracts is, as I said, the ROI.  Though it varies between assets, most offer something in the neighborhood of 300-400% returns yearly, with each contract lasting two years.  They also feature a "special offers" page that boasts even higher numbers than those, provided you have the $249-999 to drop on a single contract all at once.  Dualmine also allows users to reinvest mined profits like HashShiny, though not automatically.  The site has been operating for almost three years and, as far as I can tell, shows no signs of slowing down.  Dualmine may display some of the red flags typically associated with HYIPs, but they have not once failed to pay me on time and I have not encountered anyone who has ever had any problems from them.

   Okay, that last paragraph sounded more like a sales pitch than I intended, but I stand by it.  Moving on, we come to faucets.  Let me start by saying I have never heard of anyone striking it rich this way.  These faucets do not flow.  They drip.  A faucet is an app or website that offers users small amounts of crypto for free.  Some can be claimed hourly, others daily and sometimes even every five minutes.  They generally involve solving captchas, viewing PTC ads, watching short videos or other similar tasks.  The most notable advantage of faucets is that there is no risk of loss.  The payouts, though small, are free and allow newcomers to crypto a chance to test the waters before diving headlong into decentralized finance.  If you want to gather up a little crypto and see how it performs without having to invest, then faucets are just the thing for you.  I could list a few of them here, but they are not difficult to find and are far too numerous to bother singling any out.  My advice to you would be to find faucets for multiple cryptocurrencies so you can get some experience with different networks, their fees and how they work.

   So, now you know a few ways to get some crypto and some options on where you might hold it.  I advise you to keep in mind that I am not a financial advisor and, full disclosure, all of the links in this article are my personal referral links, so I do stand to benefit if you use those.  I do run a website that lists some alternatives I didn't cover here, so please visit https://www.provenpassive.com if you want to discover other ways to earn.  I'm not sure yet if there will be a third part to this, so if you'd like me to do one, leave a comment below.

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tipplenurkey
tipplenurkey

Disabled veteran, father of 7 and crypto investor with a natural talent for research and a God-given gift with numbers.


Proven Passive
Proven Passive

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