There are a few main coins that exist, with countless others built using the technology used to build the main coins.
The main coins are Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC). You can think of these as Gold, Platinum, and Silver.
The other coins are typically referred to as Altcoins - these are usually relatively new, and worth a lot less than the main coins. There are hundreds of Altcoins, many of which will probably fizzle out, but some of which could rank among BTC, ETH, and LTC over the next few years.
Ethereum is unique in that it provides a platform on which you can build new coins. The creation of Ethereum lead to a huge rise in the creation of new Altcoins designed for really niche purposes (everything from Shopify alternatives, to gambling websites, to managing real estate transactions).
Most of the Altcoins we'll be trading are built using Ethereum.
It is quite difficult to transfer traditional currency (fiat) into digital markets. There are however, numerous options available:
Some options for funding with fiat money are:
- coinbase.com
- gemini.com
- quadrigacx.com
- cex.io
The simplest, and fastest option is Coinbase since you can hook up any major credit card and start purchasing coins in a matter of minutes. The benifit wass that verification was quick and easy, but the drawback is that there's an initial limit of $250/week (can be increased to $1,000 per week). The other options require a longer process of verification, but allow you to fund higher amounts at a time.
Other options listed above require more thorough verification.
Once you've deposited funds and exchanged them to one of the main coins, you can send them to wallets.
To withdrawal to fiat money, find an exchange that will transfer to your currency. Most will do EUR and USD, Kraken was the best one I found for CAD.
If you're storing a coin, i.e. not actively trading it for other things, it lives in a wallet. A wallet typically has two addresses:
- Public address that you can use to send money to the wallet, and view previous transactions.
- A private key that you use to access your wallet and send money other places (to buy other coins, send to exchanges etc.). You need to store this in an extremely secure place. If someone has this they can take all of your coins and you have no way of getting them back. Options for storage include printing a physical copy of private keys, storing keys in a password management tool like 1password, or purchasing a "cold storage" wallet (typically a USB key).
When you want to buy/sell coins, you need to move them from wallets to an exchange. There are lots of different exchanges that let you trade lots of different coins, but typically the main exchange we'd use is Bittrex.com - it's one of the larger, more trustworthy exchanges.
When a new coin is created, the coin creators will have a fundraiser just like when a stock lists on the Stock exchange and holds an IPO. The initial coin offering (ICO) allows investors to get in typically at a very inexpensive price before the coin is listed on any exchanges.
ICOs are currently the best way to make money with cryptocurrency I think. ICOs are held on specific dates, and when they happen, you send one of the main coins to a provided address, and in exchange you get a predetermined quantity of the new coin.
i.e. if a new coin called DNT is listing, and we participate in the ICO by sending 1 ETH to the specified ETH wallet address, you may get say... 10 DNT in exchange. This would mean every DNT is worth 0.1 ETH. It usually takes a few weeks after an ICO for the coin to start showing up on major exchanges, and at this point prices typically will rise to reflect demand. Once it lists on an exchange people may be willing to pay 0.4 ETH for the coin, meaning that you can sell the coin for a 400% profit. Maybe they're only willing to pay 0.05 ETH though, but currently joining and ICO is a pretty good way to guarantee some growth.
ICOs are increasingly moving to a) hard caps on amount of money to raise; and b) thorough verification processes for all investors - this typcially invovled uploading passport photos and other documents via a processed called KYC (Know your Customer). All of this is to improve the long-term viability of new coin listings, and to accelerate the process of getting listed on exchanges.
Typically when an ICO finishes, the new coin will become available on some very small exchanges, usually Etherdelta. If you are in a hurry to sell, you can do this, but it is typically better to wait for the coin to list on a larger exchange.
Here's a breakdown of some of the more common exchanges:
Small: Etherdelta
Medium: Liqui Binance Cryptopia
Large: Bittrex Polinex Kraken
You can think of the large exchanges as something like the New York Stock Exchange. Once it lists here it's considered something that probably won't go away soon.
We are currently looking at the following upcoming ICOs:
- Wabi
- SimpleToken
- Oracles
- ICON
There is a small group of coins that are already moving out of Altcoin territory. They are interesting ones to watch, especially in Asian markets. They are great ones to read about to learn about potential use cases and things that are pushing the boundaries of what Cryptocurrency can be used for.
- NEO
- ICON
- IOTA
- Cindicator
- Request Network
Some coins provide alternate forms of value creation, similar to dividend payouts, for holding coins, or running processes called Masternodes - these are similar to mining, but require significantly less power. Instead of power, they require you to hold a set number of coins for the given currency.
Current interesting "dividend" type coins:
- AION (token buyback and distribution model)
- WTC (requires 5,000 tokens for a masternode)
It is quite difficult to transfer traditional currency (fiat) into digital markets. There are however, numerous options available:
Some options for funding with fiat money are:
- coinbase.com
- gemini.com
- quadrigacx.com
- cex.io
The best option for me ended up being Coinbase since I could hook up any major credit card and start purchasing coins in a matter of minutes. The benifit wass that verification was quick and easy, but the drawback is that there's a $250/week deposit limit. The other options require a longer process of verification, but allow you to fund higher amounts at a time.
Thankfully, Coinbase can increase your limit to $1,000 per week via credit card, which is more sufficient.
Once you've deposited funds and exchanged them to one of the main coins, you can send them anywhere you want.
To withdrawal to fiat money, find an exchange that will transfer to your currency. Most will do EUR and USD, Kraken was the best one I found for CAD.
- You have a coin sitting in a wallet, and want to move it to an exchange
- Login to the exchange and create an address for the coin you're trying to deposit (this is a wallet too, but lives in the exchange)
- Login to your wallet, send the coin to the address you just created on the exchange
- When money appears on the exchange, create a new trade to buy/sell whatever coin you want
- Wait for ICO to start
- When it starts, send ETH from your wallet to the ICO address.
- When ICO finishes, the new coin should appear in your wallet.
- Wait for the coin to list on exchanges - it may list on random small exchanges first, in which case if you want to trade, you'll have to create an account on the exchange then follow steps outlined above under "Basic trading flow"