Tutorial -How to Select and then Buy Cryptocurrencies

Nowadays, there are more than 800 different altcoins and 600 different tokens. All coins and tokens are regarded as cryptocurrencies.

Explaining Coins and Tokens

Alternative coins (altcoins) refer to coins alternative to Bitcoin. The great majority of these coins is based on Bitcoin’s protocol and are often called as Bitcoin forks. A fork means a change in the underlying software protocol which can lead to the split of the original block-chain. Tokens are not coins and represent a particular asset or utility. A token can represent any tradeable asset, such as services and tangible/intangible commodities. Investors can trade Coins and Tokens using the same account on a crypto exchange.

This tutorial includes:

(i) How to Choose Cryptocurrencies

(ii) How to Choose a Cryptocurrency Exchange

(iii) How to Buy Cryptocurrencies using Cash

(iv) Cryptocurrency Exchanges that Accept Cash

 

(i) How to Choose Cryptocurrencies

Choosing cryptocurrencies is the same as choosing stocks.

1. Calculate the Total Capitalization

Before you buy anything, you must first find out how much it worth. The capitalization figure derives when multiplying the current price ($) by the number of total coins/tokens (MAX SUPPLY).

□ Capitalization ($) = Max Supply X Current Price ($)

Keep that figure in mind because you will need it later.

2. Determine the Necessity of the Project

Visit the website of the cryptocurrency and try to answer the following questions:

-Why someone created this Coin/Token?

-Is it useful -Does it solve some major problems?

-Is it useful to many people or to a few?

-Is this cryptocurrency project unique, are there any other alternatives solving the same problems?

-What is the current phase of the project (road map)? (creating period, beta period, full launching)

3. Find Out who is Behind the Project

This is maybe the most important aspect of an investment, any investment, real or digital. When investing in stocks they say that the best opportunities come from companies that have a bad balance sheet and a good management. Good management will provide the best probabilities for the project’s long-term success. Any project that respects itself must present a full team on the official website. The questions emerging at this point are the following:

-Is there a team on the website will full names and detailed information?

-Where this team comes from?

-Are they experts on their job?

-Have they been involved with other projects in the past?

4. Find Out what Internet Users Say About this project

It is always useful to check what others have to say about something. Don’t focus entirely on reviews as a great number of reviews is fake in the internet. Focus on Crypto-forums where the users are validated by the community.

-Bitcointalk.org (the best for the job)

5. Use Smart Metrics to Estimate the Fair Value (Capitalization)

The best way to estimate the fair value of a project is by using empirical metrics. Why? Simply because most people don’t do it, and that means you can look ahead of the market.

Here are some smart metrics:

(a) Create a Volume/Capitalization ratio and compare different cryptocurrencies

□ Ratio = Monthly Volume ($) / Capitalization (Circulating Supply)

The greater the ratio the better. You can use this ratio to compare multiple digital currencies.

(b) Use Internet Metrics (Alexa)

Check the current Alexa ranking, and compare it with the ranking before 12 months, and then 6 months.

(c) Use the Google Keyword Planner

Check how many enquires are made for particular keywords including this project

(d) Use Social Media Metrics (Facebook, Twitter, etc.)

 

(ii) How to Choose a Cryptocurrency Exchange

There are tens of available crypto-exchanges allowing their clients to buy, hold, and sell coins and tokens. There is a great a number of factors determining the best choice. Don’t forget to make sure that your country is accepted by a Crypto-Market. After you ensure your country’s acceptance, these are some key aspects of evaluating crypto-exchanges.

1. Available Crypto-Coin Asset Index

Most crypto exchanges offer exclusively a small number of coins, this usually includes Bitcoin, Ethereum, Ripple, Litecoin, etc. Therefore, the first step is to make sure that some exchanges offer the coin/token you want to buy/sell.

The easiest way to do this is by visiting the coin/token website or by locating the coin/token on the CoinMarketap.com website and then clicking on available markets.

2. Available Deposit/Withdrawal Methods

You need to make sure that the available funding methods suit your needs. Otherwise, it will be a complete waste of time to keep reviewing and gathering information about a particular cryptocurrency market.

3. Crypto-Market’s Reliability and Safety

When you are trading online, you need always to consider the safety of your money and to avoid potential scams. These are some key aspects of ensuring safety:

(i) Where is the Market Headquartered? (Western Europe and the United States are generally more safe choices)

(ii) Is there any authority regulating that market?

(iii) When did this exchange start operation?

(iv) Are the coins kept safe offline? (where hackers can’t reach)

(v) Is there a 2FA (2-factor authentication) and an email verification security?

(vi) What other users say about this market?

3. Funding Fees and Trading Fees

The cryptocurrency exchanges make money by charging funding fees and transaction fees. Make sure you are aware what you are paying.

-Transaction Fees

Most exchanges charge 0.25% to 0.50%.

-The Spread Between Ask/Bid

The spread is a ‘hidden fee’ and may prove significantly large if you trade non-popular coins.

-Funding Fees

Usually depositing crypto is free but there may be significant fees (up to 5.0%) when you are depositing real cash. The same goes for withdrawing cash or coins.

4. Customer Support Quality

A responsive customer support means a customer-oriented internet business. Good support can save you a lot of time and provide the sense of having a good and reliable partner who is there for you when you need him.

 

 

(iii) How to Buy Cryptocurrencies using Cash

Not all cryptocurrency markets accept cash. That means that in order to buy an altcoin you have two choices:

-Find a crypto-exchange that converts cash to that particular crypto

-Buy Bitcoin, and then convert it to an altcoin in the same or another exchange

After you have found an exchange that allows you to deposit via your desired fund method you have to open an account and to verify it. This is usually an easy process.

Step-by-Step

Step-1: Open an Account with a Crypto-Exchange

(a) email verification

Step-2: Verify your Account

(b) Mobile phone verification

(c) Identity proof (ID or passport)

Step-3: Deposit Some Funds

If real cash deposits are allowed by a crypto-market, you will be able to use Bank Wire. Additionally, many exchanges allow credit/debit cards. Only a few crypto exchanges allow internet wallets (Skrill, Neteller, Paypal, etc.).

As concerns the allowed currencies, the United States Dollar (USD) is the standard flat currency to convert. Some exchanges allow also Euro and the British Pound (GBP).

Step-4: Buy some Crypto

Make sure you are aware the total cost you pay. Do the calculation yourself before clicking on execution.

Step-5: Store Your Cryptocurrencies

There are several options for storing cryptocurrencies:

a-You can keep them in the Exchange (this is the best choice if you have invested small amounts of money in several different altcoins)

b-You can store your cryptocurrencies in a Software Wallet (even transfer you wallet on several USB to avoid the hacking risks)

c-You can store your cryptocurrencies in a Hardware Wallet (like Trezor or Ledger)

The choice (a) is better for those investing small amounts in many different altcoins. The choices (b) and (c) are the best for those who have invested a lot of money, and hold one or two different altcoins.

 

(iv) Cryptocurrency Exchanges that Accept Cash

This is a list of Bitcoin exchanges that allow the conversion of cash to cryptocurrencies.

 

EXCHANGE	FEATURES	ACCOUNTS	WEBSITE
SKRILL COUNTRY BASE: UNITED KINGDOM (UK) FOUNDATION: 2001   COUNTRIES: All Countries (EXCEPT US)	TRADE COST: □  1,5% commission for EUR and USD accounts □ 3.0% for the rest account currencies ■ SPREAD: about 0.40%   AVAILABLE ORDERS: □ Market Orders □ Pending/Limit Orders   AVAILABLE CRYPTOCURRENCIES: □ BITCOIN (BTC), BITCOIN CASH (BCH) □ ETHEREUM (ETH), ETHEREUM CLASSIC □ RIPPLE (XPR), EOS (EOS), OX (ZRX)	DEPOSITING FEES: □ Very low fees □ Credit/Debit cards □ Deposit Bitcoin -$0 minimum deposit	Support: Phone | eMail | Forum   Skrill (MoneyBookers):   ► SKRILL REVIEW
CEXIO COUNTRY BASE: UK FOUNDATION: 2013 -MSB status in FinCEN (USA) -Registered with the ICO (UK) COUNTRIES: Almost all Countries except	TRADE COST: □ 0.25% commission   AVAILABLE ORDERS: □ Fill-or-Kill orders (FOK)   LEVERAGE: 3/1   AVAILABLE CRYPTOCURRENCIES: □ Bitcoin, Bitcoin Cash, Bitcoin Gold □ Ethereum, Ripple, Zcash, and Dash	DEPOSITING FEES: □ Bank Wire (0%) □ Credit Cards (2.9% + $5.00 commission) □ SEPA transfers □ CryptoCapital.co EXCHANGES: USD, EUR, GBP, RUBLE   MINIMUM: $100	Support: LiveChat 24/7   Cexio:   ► FULL CEX.IO REVIEW
LIVECOIN COUNTRY BASE: UK FOUNDATION: 2013   COUNTRIES: All Countries	TRADE COST: □  0.18% commission for up to 100,000 USD □ Lower cost for larger transactions   REBATES: 0.01%-0.10% on trades   AVAILABLE CRYPTOCURRENCIES: □ 125 digital currencies	$10 minimum deposit DEPOSITING FEES: □ Payeer (5%) □ PerfectMoney (8%) □ Capitalist (2%) □ Wire Transfer (50 USD or 10 EUR) EXCHANGES: USD, EUR, RUBLE DEPOSITING COINS: → Depositing Coins Free → Withdrawing  $10-$20	Support: LiveChat and eMail   LiveCoin:   ► LIVECOIN REVIEW
EXMO COUNTRY BASE: UK FOUNDATION: 2013   COUNTRIES: 100+ different countries	TRADE COST: □ 0.20% commission   AVAILABLE CRYPTOCURRENCIES: □ 44 digital currencies	DEPOSITING FEES: □ Bank Wire (0.5% + 20 USD) □ Cards (6%) □ Neteller (4.5%) □ Payza (2.9%) □ OKpay (0.0%) □ PerfectMoney (5%) DEPOSITING COINS: → Depositing Free → Withdrawing  $10-$20	Support: eMail   EXMO:   ► FULL EXMO REVIEW
PAXFUL   COUNTRY BASE: USA FOUNDATION: 2015   COUNTRIES: All Countries	PEER-TO-PEER TRADING TRADE COST: □ 1% commission seller (0% buyer)   AVAILABLE CRYPTOCURRENCIES: □ Only Bitcoin (BTC)	DEPOSITING: □ Credit Cards □ Bank Wire □ Skrill □ Payoneer □ Paypal □ Neteller and many more	Support: eMail   PAXFUL:   ► FULL PAXFUL REVIEW
LOCAL BITCOINS   COUNTRY BASE: Finland FOUNDATION: 2012   COUNTRIES: All countries	PEER-TO-PEER TRADING   TRADING FEES: □ 1.0% commission (seller)   -Free for inside-the-market transactions -Fees for external transactions   Available Cryptocurrencies: □ Only Bitcoin (BTC)	DEPOSITING: □ Credit Cards □ Bank Wire □ Skrill □ WebMoney □ Paypal   DEPOSITING COINS: → Depositing Free → Withdrawing  $10-$20	Support: eMail   LOCALBITCOINS:   ► LOCALBITCOINS REVIEW

 

 

►Compare Crypto Exchanges

 

□ Tutorial -How to Select and then Buy Cryptocurrencies

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