Getting into crypto for the first time since 2017?
Welcome (or welcome back) to our pseudo anonymous world! A lot has changed since you last cared about us; the good news is teams didn’t stop coding when you were gone and development continued over the “crypto winter”.
Now let me catch you up on what you missed!
Bitcoin is still King
Somethings never change. The original blockchain is still the most valuable cryptocurrency by a long shot. Currently worth 65.9% of the entire blockchain space. While you were gone a number of clones claimed to be the “next bitcoin” or the “real bitcoin”. They all failed.
Bitcoin is scarce, digital gold and has won its niche. In my opinion the first you thing you should do to get into the space is buy BTC, put it away and don’t touch it for 5 years (the cool lingo for this is HODL). Come back and you’ll be happy to see a much much bigger number than what you started with.
For note, anyone who has owned bitcoin for 5 years is up. Literally it is impossible to be down on a Bitcoin purchase over a 5 year period. Seriously go buy it.
Coins, Platforms & Tokens — What’s the difference?
Technically speaking a coin has its own blockchain and token exists on someone else’s blockchain. But for simplicity I like to divide into three categories:
Coins — Bitcoin, Litecoin, Bitcoin Cash
Coins are trying to be digital money. The best example of this Bitcoin and its army of clones. This is the easiest group to understand in my opinion cause Bitcoin wins it. It is the ultimate digital reserve asset, and a savings account for anyone in the world.
Platforms — Ethereum, Polkadot, BNB, Tezos
So platforms ARE technically coins, as they have their own blockchain. BUT there purpose is a little different. They exists for tokens and cool projects to be built on top of and exist on their blockchain. Ethereum is far and away the most popular smart contract platform (more on this later).
Tokens — DAI, LINK, WBTC, AAVE
Tokens exists on a specific blockchain, they can take many different structures. Such as representing an asset in that specific blockchains universe — WBTC is “Wrapped Bitcoin” and is just Bitcoin that exists and can used on Ethereum. Or it can represent ownership and governance rights in Dapp (decentralized apps) — AAVE is the token that controls their lending protocol on Ethereum.
Ethereum is the leader of smart contract platforms but has not won yet
Ethereum is the oldest and most established smart contract platform. When you were gone it actually got real adoption and users — you are now able to trade derivatives, lend unproductive assets for a yield, invest in an on chain hedge fund, bet on sports, and predict election outcomes all anonymously, peer-to-peer and from the safety of your own Ethereum wallet!
This adoption led to serious scaling issues on Ethereum and made it very costly for users to interact with. Since then a new a wave of well funded and more scalable smart contract platforms have emerged, but to date they have not been able to attract many developers, teams or users to shift away from Ethereum.
Without getting into too much detail, the arms race is on to scale Ethereum (many ways to do this layer2s, roll-ups, ETH 2.0) before competitors attract teams and users to build on their smart contract platform. It will take years for any team to catch up to the amount of adoption and applications that been built on Ethereum. But the main competitors who may have a chance are Polkadot, Binance Coin and Tezos.
Crypto prices are volatile
The crypto industry has matured a lot, always remember this is the Wild West but with computers. Use complex passwords, write them down, use 2FA to secure accounts, and scale your investment into crypto. Prices can and will move 10%+ a day in either direction, so be prepared.
Try things before investing large sums
If you are looking to get into crypto beyond a 70% Bitcoin and 30% ETH investment — which I think is a fantastic investment — I highly recommend trying things out. The greatest investment research is to test and see. For example I believe you can learn a lot about Ethereum and its network by just doing the following:
- Get a MetaMask wallet and send it $100 of ETH
- Go to uniswap and buy $50 of DAI (a crypto worth $1.00 USD) — yup you just made a trade
- Go to AAVE and deposit $10 of DAI to earn a 6% yield a year — a literal high interest savings account for your metamask
- Go make a $10 bet on SportX on your favourite football team — yeah you just made a bet from your own wallet
Thanks for reading, in those four steps without evening knowing it you completed a token transfer, made a trade on a decentralized exchange, earned a yield through lending, and used an Ethereum layer 2 scaling solution.
Crypto really isn’t that scary when you try it. This time around try it, use it, and you will become as hooked as all of us.