2022 has started recently, but has already brought many reasons to think about the benefits of cryptocurrencies and decentralized systems.
Under the conditions of currency restrictions and total censorship, such concepts as financial sovereignty, the right to privacy and access to information have moved from the category of abstract freedoms into a completely practical and tangible plane. As history shows, in order to realize the real value of something, you need to have it taken away from you.
The crypto community has long known that customers’ money in a bank belongs to the bank, and central banks can legally devalue savings through additional emission.
How to be? Now is the best time to finally understand cryptocurrencies. If you’re new and don’t know where to start, this Cryplogger guide is for you.
It’s not scary anymore
Most by inertia perceive cryptocurrencies as something marginal and illegal. But facts have long shown otherwise: cryptocurrencies have already penetrated both the very foundations of the financial system and the daily lives of people in many countries. Here are some examples:
- Cryptocurrencies have been recognized as a valuable asset or means of payment in most developed countries, regulation is actively developing. All countries where cryptocurrencies are legal cannot be listed – we recommend checking a specific jurisdiction. You can gauge the scale of recognition in our 2021 Regulatory Update.
- In many countries, cryptocurrencies have more than once served as a “lifeline” for ordinary people during political and financial crises. This happened at different times, for example, in Venezuela, Turkey, Hong Kong and Argentina. Residents of Russia have been buying cryptocurrencies for a long time, and in Ukraine they have become one of the main arteries for financing humanitarian aid.
- Professional participants in the financial market invest in cryptocurrencies. This trend has reached the most conservative of them: pension funds and states, not to mention billionaires and private companies. Such investors make only long-term and low-risk investments. This means that retail investors can even more invest in cryptocurrencies.
Where to begin
First of all, we recommend that you study the Cryplogger training cards in detail. Also, beginners will be helped by the video of the Fork The System project on our website. YouTube channelwhere the basic terms are explained in simple terms.
Storage of cryptocurrencies
The storage system for cryptocurrencies is similar to a bank. The user has his own unique address, on the balance of which cryptocurrencies are stored, he can receive or send coins.
To create an address in the blockchain, a special program is used – a wallet. In fact, this is an interface for managing the address and cryptocurrencies on it, as well as for storing personal data.
Wallets are “hot” and “cold”. Cold wallets are safer, but they require special dongles to work. To get started, it will be enough to have a “hot” wallet that exists in the form of a website or mobile application.
There are a few things to consider when choosing a wallet:
1. Each wallet can work with one or more cryptocurrencies. Each application is very individual in terms of supported coins.
2. The most secure hot wallets are those that are open source. Usually these are wallets that are developed by the community of a particular crypto project, therefore, it is often possible to store only the cryptocurrency of one network in them.
The advantage of open source wallets is complete transparency and a guarantee that there are no backdoors or exploits in the code. For example, the popular open source bitcoin wallet − electrumand the wallet for ether – MyEtherWallet.
3. The code of most wallets is closed, and they are owned by private organizations. Popular crypto wallets of this type are also quite safe, but it is impossible to guarantee the absence of a threat to users due to the lack of public access to the source code.
The advantages of such applications are a large number of supported crypto assets, customer support, the presence of additional functions and a well-designed design.
Examples of popular closed-source multi-currency wallets: MetaMask, Exodus, Blockchain.com, Coinomi. Many popular crypto exchanges offer their applications for storing coins, such as Binance (Trust Wallet) or Coinbase (Coinbase Wallet).
Blockchain hygiene
When dealing with your cryptocurrencies and any crypto services, you should remember a few simple but important rules.
First, when an address is generated on multiple networks, a unique public/private key pair is generated. For example, such a system works in bitcoin. The network uses them to sign transfers. If the public key can be viewed by any user, then the private key is named so for a reason: its real identifier is hidden from outsiders and is available only to the creator of the address.
If someone knows the private key number combined with the public key, they can access the balance of the address. Therefore, the private key should be kept in a safe place and not shared with anyone. If someone asks for your private key, they are scammers.
In addition to the standard security settings (login and password, as well as two-factor authentication), most modern wallets issue a special combination of 12 random words when creating an address – the so-called seed phrase.
Like the private key, the seed phrase allows you to access the management of the address, so it should also be kept safe and not shared with anyone. The best way to store your private key and seed phrase is offline, like in a notepad.
Secondly, no matter where and how you buy cryptocurrency, we recommend that you keep the purchased coins in your own wallet. This is the only way you will have complete control over them. Such wallets are called non-custodial.
Thirdly, there is a real threat of becoming a victim of scammers. In addition to direct hacking attempts, a popular method among cybercriminals is the so-called social engineering, when the user himself unwittingly transfers access to his funds.
For example, you may go to a website that is completely identical to the website of the exchange you are using, or receive an email purporting to be from the team of the wallet where you store your coins. And then, thinking that you are using familiar tools, tell the scammers your login details and access to your funds.
Therefore, be careful: double-check website addresses and requests for any data, use popular applications and platforms, and always set up two-factor authentication using a phone number or one-time code.
Where and how to buy cryptocurrency
We figured out the basic terms and rules, registered in the wallet, created an address in the blockchain. Now let’s move on to the procedure for buying coins. First, let’s see where exactly this can be done.
Cryptocurrency exchanges
These are centralized platforms that operate like traditional stock exchanges, but around the clock. For beginners, the spot section is suitable, where trading pairs are traded. Trading on stock exchanges takes place by matching: the system automatically “matches” user orders with each other in accordance with the price and volume indicated in them.
For the first transaction for a small amount, most likely, it will be enough just to register and replenish the account – for example, by card or bank transfer. After depositing, go to the page of the trading pair you are interested in, select an order to buy the Market type and enter the purchase amount. Your order will be executed at the best price currently available.
Today, most crypto exchanges are regulated, that is, they comply with the financial laws of the country where they are registered. This includes user verification. Therefore, in order to fully access the trading functions, you need to go through the identity verification procedure – “Know your customer” (Know-your-customer). In particular, provide a photo of a passport or other proof of identity, and in some cases proof of address (such as a bank statement).
The disadvantage of crypto exchanges is their centralization. The administration of the exchange has access to the accounts of its users and can, upon request, transfer data to government agencies, and in which case block the account at the request of law enforcement officers.
A cryptocurrency exchange can operate not in one, but in many countries at once.
There are no legal platforms for trading cryptocurrencies in Russia, but you can use foreign platforms – this is not a crime. The main requirement in most countries is to declare your crypto assets and pay taxes on income, but users themselves are responsible for this.
The most popular platform among users from the Russian Federation and Ukraine remains Binance. This is the only exchange from the global TOP-10, where there are deposits and withdrawals of rubles and hryvnia, as well as trading pairs with the ruble and hryvnia.
A useful tool when using exchanges is trading data aggregators, where you can see all the relevant market data, including quotes, volumes and reputation of different trading platforms, and much more. The main aggregators CoinMarketCap And CoinGecko. Both resources are available in Russian, and there are also settings for displaying market data in rubles and hryvnias.
P2P platforms
There are services where cryptocurrency trading takes place according to a different principle than on exchanges: users make transactions directly between themselves. This principle is called “peer-to-peer”, or P2P.
P2P platforms publish announcements for the sale or purchase of a particular crypto asset. Each ad indicates the price and restrictions on the amount of the exchange, as well as the methods of transfers. To buy cryptocurrency, you do not need to create your own ad – just agree to the conditions specified in the ad of another user.
The platform helps make the exchange safer. For example, on the well-known LocalBitcoins platform, transactions between users are carried out using escrow. One user “blocks” the bitcoins set by the transaction, the system fixes this, then the buyer transfers the fiat money to the seller. The transaction is considered completed only after both users have confirmed the fact of receiving funds, otherwise they are returned to the previous owners.
The advantage of P2P platforms compared to exchanges is more flexible conditions for exchanging cryptocurrencies for fiat and more ways to withdraw funds, for example, by transfer to a card. The disadvantage is low liquidity compared to exchanges and a small number of supported assets. In addition, many large P2P sites have introduced KYC in recent years.
Popular P2P services include: Paxful, LocalBitcoins, Binance P2P. The current number of offers on different platforms can be viewed on the aggregator Moneytory.
Online exchangers
All of the methods described above assume the use of known applications. However, there is a fairly large gray segment on the crypto market represented by online exchangers. They do not receive licenses and do not register legal entities. At least they do not indicate this information on their websites.
At the same time, this is a popular way to exchange cryptocurrency for fiat, both online through transfers to a card, and offline – in cash. However, you can use such online exchangers only at your own peril and risk. Data on quotes and available liquidity in online exchangers is published by the service bestchangethere you can also see a list of the most popular exchange sites and reviews about them.
Output
Today, cryptocurrencies can be easily and legally bought even by a non-technical user. There are many ways to do this, as is the case with secure coin storage. The crypto industry has become much more accessible to novice investors.
The main thing is to observe “blockchain hygiene”, be aware of all the risks and, if possible, minimize them. And if you are going to store digital assets, be prepared for the fact that cryptocurrencies can lose value over a short and medium period of time.
At the same time, you need to remember: the crypto market is changing rapidly, so we recommend keeping your finger on the pulse, following new trends and opportunities. To do this, visit the Cryplogger website more often and subscribe to our Telegram.
Found a mistake in the text? Select it and press CTRL+ENTER
2022 has started recently, but has already brought many reasons to think about the benefits of cryptocurrencies and decentralized systems.
Under the conditions of currency restrictions and total censorship, such concepts as financial sovereignty, the right to privacy and access to information have moved from the category of abstract freedoms into a completely practical and tangible plane. As history shows, in order to realize the real value of something, you need to have it taken away from you.
The crypto community has long known that customers’ money in a bank belongs to the bank, and central banks can legally devalue savings through additional emission.
How to be? Now is the best time to finally understand cryptocurrencies. If you’re new and don’t know where to start, this Cryplogger guide is for you.
It’s not scary anymore
Most by inertia perceive cryptocurrencies as something marginal and illegal. But facts have long shown otherwise: cryptocurrencies have already penetrated both the very foundations of the financial system and the daily lives of people in many countries. Here are some examples:
- Cryptocurrencies have been recognized as a valuable asset or means of payment in most developed countries, regulation is actively developing. All countries where cryptocurrencies are legal cannot be listed – we recommend checking a specific jurisdiction. You can gauge the scale of recognition in our 2021 Regulatory Update.
- In many countries, cryptocurrencies have more than once served as a “lifeline” for ordinary people during political and financial crises. This happened at different times, for example, in Venezuela, Turkey, Hong Kong and Argentina. Residents of Russia have been buying cryptocurrencies for a long time, and in Ukraine they have become one of the main arteries for financing humanitarian aid.
- Professional participants in the financial market invest in cryptocurrencies. This trend has reached the most conservative of them: pension funds and states, not to mention billionaires and private companies. Such investors make only long-term and low-risk investments. This means that retail investors can even more invest in cryptocurrencies.
Where to begin
First of all, we recommend that you study the Cryplogger training cards in detail. Also, beginners will be helped by the video of the Fork The System project on our website. YouTube channelwhere the basic terms are explained in simple terms.
Storage of cryptocurrencies
The storage system for cryptocurrencies is similar to a bank. The user has his own unique address, on the balance of which cryptocurrencies are stored, he can receive or send coins.
To create an address in the blockchain, a special program is used – a wallet. In fact, this is an interface for managing the address and cryptocurrencies on it, as well as for storing personal data.
Wallets are “hot” and “cold”. Cold wallets are safer, but they require special dongles to work. To get started, it will be enough to have a “hot” wallet that exists in the form of a website or mobile application.
There are a few things to consider when choosing a wallet:
1. Each wallet can work with one or more cryptocurrencies. Each application is very individual in terms of supported coins.
2. The most secure hot wallets are those that are open source. Usually these are wallets that are developed by the community of a particular crypto project, therefore, it is often possible to store only the cryptocurrency of one network in them.
The advantage of open source wallets is complete transparency and a guarantee that there are no backdoors or exploits in the code. For example, the popular open source bitcoin wallet − electrumand the wallet for ether – MyEtherWallet.
3. The code of most wallets is closed, and they are owned by private organizations. Popular crypto wallets of this type are also quite safe, but it is impossible to guarantee the absence of a threat to users due to the lack of public access to the source code.
The advantages of such applications are a large number of supported crypto assets, customer support, the presence of additional functions and a well-designed design.
Examples of popular closed-source multi-currency wallets: MetaMask, Exodus, Blockchain.com, Coinomi. Many popular crypto exchanges offer their applications for storing coins, such as Binance (Trust Wallet) or Coinbase (Coinbase Wallet).
Blockchain hygiene
When dealing with your cryptocurrencies and any crypto services, you should remember a few simple but important rules.
First, when an address is generated on multiple networks, a unique public/private key pair is generated. For example, such a system works in bitcoin. The network uses them to sign transfers. If the public key can be viewed by any user, then the private key is named so for a reason: its real identifier is hidden from outsiders and is available only to the creator of the address.
If someone knows the private key number combined with the public key, they can access the balance of the address. Therefore, the private key should be kept in a safe place and not shared with anyone. If someone asks for your private key, they are scammers.
In addition to the standard security settings (login and password, as well as two-factor authentication), most modern wallets issue a special combination of 12 random words when creating an address – the so-called seed phrase.
Like the private key, the seed phrase allows you to access the management of the address, so it should also be kept safe and not shared with anyone. The best way to store your private key and seed phrase is offline, like in a notepad.
Secondly, no matter where and how you buy cryptocurrency, we recommend that you keep the purchased coins in your own wallet. This is the only way you will have complete control over them. Such wallets are called non-custodial.
Thirdly, there is a real threat of becoming a victim of scammers. In addition to direct hacking attempts, a popular method among cybercriminals is the so-called social engineering, when the user himself unwittingly transfers access to his funds.
For example, you may go to a website that is completely identical to the website of the exchange you are using, or receive an email purporting to be from the team of the wallet where you store your coins. And then, thinking that you are using familiar tools, tell the scammers your login details and access to your funds.
Therefore, be careful: double-check website addresses and requests for any data, use popular applications and platforms, and always set up two-factor authentication using a phone number or one-time code.
Where and how to buy cryptocurrency
We figured out the basic terms and rules, registered in the wallet, created an address in the blockchain. Now let’s move on to the procedure for buying coins. First, let’s see where exactly this can be done.
Cryptocurrency exchanges
These are centralized platforms that operate like traditional stock exchanges, but around the clock. For beginners, the spot section is suitable, where trading pairs are traded. Trading on stock exchanges takes place by matching: the system automatically “matches” user orders with each other in accordance with the price and volume indicated in them.
For the first transaction for a small amount, most likely, it will be enough just to register and replenish the account – for example, by card or bank transfer. After depositing, go to the page of the trading pair you are interested in, select an order to buy the Market type and enter the purchase amount. Your order will be executed at the best price currently available.
Today, most crypto exchanges are regulated, that is, they comply with the financial laws of the country where they are registered. This includes user verification. Therefore, in order to fully access the trading functions, you need to go through the identity verification procedure – “Know your customer” (Know-your-customer). In particular, provide a photo of a passport or other proof of identity, and in some cases proof of address (such as a bank statement).
The disadvantage of crypto exchanges is their centralization. The administration of the exchange has access to the accounts of its users and can, upon request, transfer data to government agencies, and in which case block the account at the request of law enforcement officers.
A cryptocurrency exchange can operate not in one, but in many countries at once.
There are no legal platforms for trading cryptocurrencies in Russia, but you can use foreign platforms – this is not a crime. The main requirement in most countries is to declare your crypto assets and pay taxes on income, but users themselves are responsible for this.
The most popular platform among users from the Russian Federation and Ukraine remains Binance. This is the only exchange from the global TOP-10, where there are deposits and withdrawals of rubles and hryvnia, as well as trading pairs with the ruble and hryvnia.
A useful tool when using exchanges is trading data aggregators, where you can see all the relevant market data, including quotes, volumes and reputation of different trading platforms, and much more. The main aggregators CoinMarketCap And CoinGecko. Both resources are available in Russian, and there are also settings for displaying market data in rubles and hryvnias.
P2P platforms
There are services where cryptocurrency trading takes place according to a different principle than on exchanges: users make transactions directly between themselves. This principle is called “peer-to-peer”, or P2P.
P2P platforms publish announcements for the sale or purchase of a particular crypto asset. Each ad indicates the price and restrictions on the amount of the exchange, as well as the methods of transfers. To buy cryptocurrency, you do not need to create your own ad – just agree to the conditions specified in the ad of another user.
The platform helps make the exchange safer. For example, on the well-known LocalBitcoins platform, transactions between users are carried out using escrow. One user “blocks” the bitcoins set by the transaction, the system fixes this, then the buyer transfers the fiat money to the seller. The transaction is considered completed only after both users have confirmed the fact of receiving funds, otherwise they are returned to the previous owners.
The advantage of P2P platforms compared to exchanges is more flexible conditions for exchanging cryptocurrencies for fiat and more ways to withdraw funds, for example, by transfer to a card. The disadvantage is low liquidity compared to exchanges and a small number of supported assets. In addition, many large P2P sites have introduced KYC in recent years.
Popular P2P services include: Paxful, LocalBitcoins, Binance P2P. The current number of offers on different platforms can be viewed on the aggregator Moneytory.
Online exchangers
All of the methods described above assume the use of known applications. However, there is a fairly large gray segment on the crypto market represented by online exchangers. They do not receive licenses and do not register legal entities. At least they do not indicate this information on their websites.
At the same time, this is a popular way to exchange cryptocurrency for fiat, both online through transfers to a card, and offline – in cash. However, you can use such online exchangers only at your own peril and risk. Data on quotes and available liquidity in online exchangers is published by the service bestchangethere you can also see a list of the most popular exchange sites and reviews about them.
Output
Today, cryptocurrencies can be easily and legally bought even by a non-technical user. There are many ways to do this, as is the case with secure coin storage. The crypto industry has become much more accessible to novice investors.
The main thing is to observe “blockchain hygiene”, be aware of all the risks and, if possible, minimize them. And if you are going to store digital assets, be prepared for the fact that cryptocurrencies can lose value over a short and medium period of time.
At the same time, you need to remember: the crypto market is changing rapidly, so we recommend keeping your finger on the pulse, following new trends and opportunities. To do this, visit the Cryplogger website more often and subscribe to our Telegram.
Found a mistake in the text? Select it and press CTRL+ENTER
