In which we look at the multiple options to get an address

The hype has been real the last couple months. Cryptocurrencies are mentioned all over the place. Not only on blockchain powered platforms like this one, but they are even mentioned in The New York Times, many TV news shows and governments put out statements all the time.

If you are not yet convinced about the power of Blockchain technology I would like to link your to my previous post https://steemit.com/crypto/@demianvrij/a-beginners-introduction-to-the-cryptoverse. Questions on why it is getting so much attention, why it is a revolution and how to get a grip on the overwhelming amount of info that's available are being answered in there.

If you have seen all the news or have read my Beginners Introduction you might have catched the crypto bug and want to see for yourself how this world is like. You might have gotten interested and want to join this new phenomenon. In short: you feel ready to invest in this ecosystem!

In this post series I'm going to give you practical tips on starting your own Crypto portfolio. After reading these posts you will be all set and ready!

But first we should ask the question: why do you want to start your own portfolio?
There could be many answers to this question.
Maybe you believe in the philosophy of decentralized networks and you want to support this new alternative movement.
Maybe you want to be able to buy stuff online without external parties checking in on you.
Maybe you just want to speculate and grow rich. (I don’t judge you)

Now part of this whole new decentralized society is that you are not being belittled by governments or companies on what you can spend your hard earned cash on, or to whom. So I won’t tell you what you can and can not do.

But let me start of with the number one advice when you start your own portfolio.

NEVER invest what you cannot miss.

The technologies that you can invest in are almost without exception still in Beta versions and are highly experimental. Things can go wrong. You can lose money.

However, that’s a part of life anyhow. But now we got that disclaimer out of the way. Let’s see how you can accumulate some digital cash!

What is your first step?

So you have decided you are ready to invest? Good for you! In what?
I sometimes hear people say answer this question with:
“well. In crypto.”
Yeah. I get that. But which?
This is one of your first questions you have to answer for yourself.
And it is a question that I will not answer here. I am not an investment advisor.

Okay okay. So I know what I want. What is the first step then?

Fair enough. No more delays.

If you want to buy crypto, you will need somewhere to store it. So this will be the first thing you need. An address to send it to. Each crypto has it’s own address system. So it is impossible to send Bitcoins to Ethereum addresses and the other way around.

When you do a transaction, like buying something or sending someone some coins, their address always has to be an address of the same kind of crypto you want to send.
This might change in the future, with automatic converters etc. but for now, always check if you are sending the correct crypto. This is kind of the same with traditional money of course. If a store asks 5 euro’s and you give them Peso's. You will probably get confused store clerks.

How do you acquire your own address?

This is possible in a couple of ways.

• You can google the crypto you want and add the word client behind your search. For instance Bitcoin Client or Dash Client. This way you will download the full software, or as they say, a full node. If you download this full node, you will become a true participator in the peer-to-peer network of this particular crypto. This is the safest way to join, since your client will store the complete blockchain of your crypto and therefore can verify all transactions. The downside is that some of these blockchains are more than 100 gigabytes and growing. That’s why at the moment, this is something you only do on your computer, and not on your tablet or phone. And if you want to store or transact large amounts where security has more value then mobility. Each Crypto has it’s own blockchain and it's own Full Client. So if you want to use/buy multiple crypto’s you will need to download multiple clients if you go with this option.
• You can download a Light Client/Wallet of your choice of crypto. In this case, you will not download the full blockchain and therefore it is possible to download these wallets as apps on your computer, but more important, on your phone or tablet. You will not be a true peer in the network however. It depends which wallet and which crypto you use, but by choosing this option you might give in some of your privacy and safety to an external party that will act as your full node. Many of these light wallets are still really safe, but due to this downside, most people only keep pocket change on mobile wallets. One of the upsides of light clients is that there are some wallets that offer support for multiple crypto’s within one app. Exodus.io is a light client for desktops that offers a bunch, and Jaxx.io is often being used as a mobile wallet (they also have a desktop version but that one has some bugs).
• Another option is creating an account on an exchange that trades in crypto’s. The obvious downside here is that you will have to trust a third party with your crypto, since you store the actual coins on the exchange their website. Decentralised exchanges are coming, but so far, none has really come forward as a true alternative to the big and accessible traditional centralized exchanges. Exchanges are kind of like putting your money in a bank account. It is user friendly, but not at all what the original philosophic spirit behind cryptocurrencies entailed.
• Hardware wallets are also possible. These are physical devices you can buy on the internet with which you can store several types of crypto. All this cryptography in cryptocurrencies is amazing, but in the end we as human beings are the weakest link in our security. If a hacker places a keylogger on your computer or your phone, your passwords and or private keys could get compromised. The idea behind hardware wallets is that the component that stores your keys to your funds will never connect with the internet, and therefore you will have less risk of losing your funds to hackers. If you plan on buying a large amount of crypto I would definitely advise buying a hardware wallet for safe storage. Well known hardware wallets are Ledger https://www.ledgerwallet.com/r/9723 and Trezor. If you want to get more info on these really helpful devices, check out this link http://www.investopedia.com/articles/investing/030515/what-cold-storage-bitcoin.asp This website gives a more in-depth view that is still readable for non technical people.
• Another possible place to store your crypto is a paper wallet. This is a piece of paper with the public and private key of your coins printed on it. It means it has no connection with the internet and therefor can be a safe way to store your crypto. Some people give paper wallets to new users as a way of starting out. https://en.bitcoin.it/wiki/Paper_wallet for more information.

What to choose?

So which option is right for you? This all depends on what your preferences are. Will you buy some and just hold? Will you buy or earn large quantities? And often? Do you want to buy products in actual brick and mortar shops? Do you want to trade a lot? And how secure do you think your computer and or phone are?

Most people that get into crypto use a bit of all the options above. After all, you might want to have some pocket change on a mobile wallet to buy a coffee here and there, or show of your new cool crypto to some friends (which I would advise against but, hey that's for another post). Then again you also could get interested in that one particular crypto that according to you will get huge profits, but no one knows of it yet and there are no (mobile) wallets available. Then you will have to settle with downloading the full client or with registering at an exchange that trades in this crypto. Let’s say this crypto does grow! And it will become one of the big ones. Then it might be time to buy a hardware wallet and store it safely away from the internet.

Either way. All these options have one thing in common. You should always backup your keys/password/etc. Most wallets have a function that is called the backup phrase or the backup key. This will be handy when your computer or telephone crashes or gets stolen. These backup phrases are often a 12 or 24 word long phrase. https://medium.com/@Gulden/how-important-is-that-backup-phrase-its-crucial-4cba19f17c67 explains why this is so important for instance.

Got an address what's next?

What did it become? Went for a mobile wallet? Or did you go full blown peer-to-peer and downloaded yourself a full node? Let me know in the comment section! If you have any questions please ask :)

So what's next? How to go about actually acquiring this precious digital gold?
In my next post I will talk about the multiple options that follow getting your own wallet address. Now that you have a place to store all this crypto, you will need to choose were you will get it from.
Are you going to mine? Are you going to buy it at an exchange? Or will you go on an adventure and meet up with some local bitcoiners?

We are going to dive into all these options in Part 2 ! https://steemit.com/crypto/@demianvrij/step-by-step-tips-for-starting-your-own-crypto-portfolio-part-2