Layman’s Guide to Crypto Currency

This article is intended to help those considering a step into the crypto currency market. The writer has no specialist knowledge on the subject and has become involved in a couple of schemes over the past years which entailed doing some research and stumbling through the maze to successful completion of the transactions.

The information here is offered in good faith and without responsibility in the hope that some of the mysteries can be overcome allowing you to concentrate on the end game.

WARNING

Speculation in crypo currencies is just that – SPECULATION – and the cardinal rule of gambling applies here equally strongly.

DO NOT USE MONEY THAT YOU CANNOT AFFORD TO LOSE

High profits have been seen in this sector but there have been some equally significant losing streaks and with no basic regulation of the industry the risks are considerable.

WHERE DO I START?

If you have cash most people use a bank to keep it safe and make payments. But crypto, like shares, does not have banks that can be used for this purpose (indeed a major factor behind the creation of these currencies is the secrecy that backs their operation allowing holders to be largely anonymous).

So if you wish to purchase a crypto currency you will need to do this using a broker who will undertake the transaction and send the currency wherever you wish.

Should you be purchasing a currency purely to hold as an investment it is recommended that you do not leave this with a broker but set up your own digital wallet which is akin to a vault and only you have access. This article offers advice on selecting a Bitcoin Wallet as they are known.

Recently there has been some concern expressed in the UK regarding safety of assets with brokers and some banks are now refusing to authorise transactions to some brokers. I personally use Coinbase which is fully authorised by the US Regulatory authority and while there is some criticism about the level of charges and the fact that it co-operates with legal authority throughout the world I have found them to be relatively easy to use. 

Alternatively there are good reports of an Irish based broker called Coinmama which offers similar facilities to Coinbase.

Whichever broker you use you will need to provide the usual Know Your Customer evidence to allow use of the account so check you have a current photo ID and some form of bill showing your current address available.

The following is an example of how to use Coinbase for a purchase.

BUYING A CRYTOCURRENCY

Log in to your broker account and you will see something like this

There will be a summary of your holdings. Click on the GBP wallet (or the currency of your country) and there will be an option to add cash to your account.

A window should open allowing you to choose your deposit method – I recommend using the Faster Payments system which is both quick and free. You will need to set up a payment on your personal bank app or on line as per the details advised

Make a payment to your broker for the amount you are investing – I suggest you add 5% to the amount to allow for price fluctuations and charges. If not all needed the surplus can then be transferred back to your account.

The broker will confirm the payment has been received and available for use – if using the Faster Payment System this is usually within 4 hours.

Now instruct the broker to buy the crypto currency you require – select the currency from your portfolio screen or watchlist if you do not already hold any of the coin required: In this example I am buying Bitcoin

Enter the amount required in the £ box below ensuring that the coin shown at 1 is the one you wish to buy and 2 shows from where you wish to pay for the purchase – in this case the GBP I have transferred via faster payment.

Click on Buy Bitcoin and the transaction will be completed and show you the amount of Bitcoin received – this will now be held in you Bitcoin wallet at the broker and can be sent to whichever service you are subscribing to. (Make sure you have purchased enough coin to cover the cost of sending on to the third party)

SENDING CRYPTO CURRENCY FROM YOUR BROKER

The third party who to who you are sending the cypto will have advised you of a unique address for this purpose.

IT is essential that you use this address only and that it is advised correctly to your broker – misdirected funds will be lost irretrievably and unlike the banks there is no over seeing body to help you.

Go to the asset section of your account which has the currency balance available. In this case I am going to send Bitcoin to a third party using the address they have provided.  Start by clicking on the “Send” button.

Clicking on the “BTC” logo will switch the send amount to Bitcoin and you should then see the amount you have purchased displayed. Click “Send All” – number 1 below and then enter the Bitcoin address that you have been advised  by the third party – 2 below. Ensure this is right before clicking “Continue”

You should then receive a warning such as this

Assuming you have made no errors in the set up of the payment you can then click on “Send Now”

Once the payment has been send you will normally receive an email confirmation.

RECEIVING CRYPTO CURRENCY

In essence the process is the reverse of the above and it will be initiated by the third party.

However they will need to know your Bitcoin wallet address and for the reasons previously outlined you need to ensure you give then 100% accurate details.

Go to your Broker assets page (or secure wallet if using) and click on the currency you are going to receive – then select the “Send/Receive” option

You will then be presented with the detailed instructions box and should now select the “Send”  option

Check that the currency to be received is the correct one (see under the QR Code above) and then the next section shows the specific address for sending that currency to you.

Copy this information to this area carefully and send to the third party – and await your payment.

Most brokers will email/message you when you have received a payment.

REMINDER

The crypto currency market is highly volatile and accordingly the risks in investing in the market is very high. Only use money that you can afford to lose.

My Own Investments

At the time of writing I have 2 ventures into cryptocurrency – the following links will give more information on these

Yield Nodes

Hyperfund (to come late November 2021)

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