Today, I am learning to trade Cryptocurrency for one major reason:
- The Pandemic has fueled my interest in a different structure than the current favored fiscal system. I’m investing in a decentralized monetary system as the standard.
With that said, I am a complete n00b and starting from Nothing. I will document my journey as I learn the ropes. Maybe it will help others out there who don’t know what the hell fiat currency is or the difference between an exchange and a wallet.
My experience with crypto starts back in 2018 when I bought tickets for Jordan Peterson’s book tour and my friend paid me back in Bitcoin. The value of the ticket was $60 and for that I got some one thousandth percent of 1 Bitcoin. I downloaded the wallet app, BRD, and forgot about it for the next two years.
For that matter, a wallet is a secure location where you can keep your funds, like you would a traditional leather wallet. There are two types of wallets. One is software, e.g. the BRD app, and the other is hardware, e.g. Ledger. The latter is actually the most secure and comes as a USB thumb drive for you to stash somewhere.
When you create a wallet via an app, you are given a randomized, super secret, 12-word passcode that you DO NOT lose as there is no way to retrieve it. There is no ‘Forgot your password?’ option.
I wrote mine down in the back of my planner as my friend watched with unease at my cavalier attitude for the security of this all important passcode. So perhaps you may want to find a better place to keep yours than hastily jotted in a defunct planner.
An exchange is the platform where one buys, sells, or trades currencies. For example, once you’ve sold some Bitcoin (Ticker: BTC or XBT, most exchanges use BTC but some use XBT) on the exchange, you may want to transfer the subsequent funds into a secure wallet for safekeeping.
Fiat currency is the “standard” moneys like the U.S. Dollar or the British Pound or the Euro. A more technical term that I enjoy is provided by Kraken (the crypto exchange I am learning on): Fiat currency has “no intrinsic value and is established as legal tender by a government” (Kraken).
The reason I like the definition is where it states “NO INTRINSIC VALUE”. The value is rendered insofar as we all agree there is value. A social agreement. We can all agree on a new system if we desire. The way things are does not equal the way things must be.
When learning anything, the first thing I know to do is familiarize myself with the lingo as this tends to be the learning curve. By knowing a few key terms you go from n00b-status to more knowledgeable than the majority of laymen.
One of the first things I noticed on the available crypto services was something that looked like “XBT/USD” or “XMR/XBT”.
This is what is called a currency pair. “In order to trade one currency for another, there must be a market linking both currencies”, basically so that we know x amount of Bitcoin equals x amount of US dollars (Kraken).
The first currency listed in a pair is known as the base currency and the second currency listed after the backslash is known as the quote currency. So if XBT/USD is a currency pair, then XBT is the base currency and USD is the quote currency.
The next terminology I learned is a limit order type. This is where I set the price at which I want to sell at. If this is not met, then it doesn’t sell and I can cancel if I wish. If it is met, then the sale will be made automatically. (Another order type that uses automation is iceberg orders.)
For example, right now Bitcoin is trading at 10,204.20 USD. If I set the limit to 10,205.00, then when BTC reaches that value, it will make the sale for me.
When I do this, the order is a maker in the market. When I sell BTC at market rate, e.g. $10,204.20, the order is a taker. Makers add liquidity to the market and Takers remove liquidity from the market.
I am still wrapping my mind around what liquidity means and what I do know is that liquidity is good. It means there is high trading volume, which means there are plenty of buyers, so sellers can sell quickly at their asking price.
An illiquid market means there are not enough buyers buying at the market price, so the seller may be forced to sell at a lower price than market. When this occurs, this decreases the market price, creating a fluctuation in the market.
Here is a simple and clear 2.5 minute YouTube video about what liquid means in cryptocurrency.
There are a few key people who have brought me to this point.
- Jim has been trading crypto since 2016 and encouraging me to do the same. Although I’ve been keen to do so, there was something daunting about learning a whole new world that kept my interest at bay. He set me up with a few hundred dollars worth of BTC on a Kraken account and here I am.
- The Dollar Vigilante aka Jeff Berwick. Since March 2020, I’ve been watching his YouTube videos where he walks in various locations throughout Mexico talking to his phone on a rotating selfie stick about his thoughts on COVID-19 and the global response to the pandemic. He worked in finance at some point, made a lot of money, and now shares his anti-authority, anarcho-capitalist, collapse-of-the-Dollar-$$$, crypto-centric viewpoint, makes a lot of money doing so, and shares how you can too. He may not be for everybody and sometimes I get the feeling he is gleeful about what he sees as the impending dollar collapse, but what I do value is learning a perspective from somebody who navigates the system in a way that works for him.
I am just learning how to work Kraken exchange and for that, I simply hopped on the Goog’s and searched for “Kraken tutorial” and found this 17 minute YouTube video.
The video is very basic and helped me grasp a general understanding of the exchange, so I didn’t feel as overwhelmed and baffled as I did when I first logged on. The channel has loads more beginner crypto videos that I haven’t watched and therefore cannot recommend.
Next up is to research some cryptos that have come up in conversation like Quantstamp and Monero, as well as familiarize myself with the various tools for crypto trading.
Although I have the BRD wallet app, I’ve also downloaded the Exodus app at Jim’s recommendation. It is a wallet as well, so why the redundancy? Well, it’s a wallet that has additional trading capabilities so I can quickly buy or sell crypto from my phone.
I’ll continue to share what I’m learning so stay tuned!
- Kraken. Trading Glossary. 2020, https://support.kraken.com/hc/en-us/articles/115000364388-Trading-glossary
- “Kraken Exchange Tutorial 2020: Beginners Guide.” YouTube, uploaded by Every Bit Helps, 4 June 2020, https://youtu.be/rqCE8jXdTdI
- “What Does Liquidity Mean When Trading?” YouTube, uploaded by Binance Academy, 28 October, 2018, https://youtu.be/oyBIh1zDKho