Apr 20, 2022 - Economy

Teach yourself crypto in 10 steps with $100

Illustration: Shoshana Gordon/Axios

You can't learn to swim from books. No one can swim without getting in a pool, and no one understands swimming if they haven't swum.

What's happening: People often ask for a primer to read to better understand crypto. There are many good ones. And they aren't what people really need. To understand this stuff, a person needs to do some crypto'ing. That's what follows.

  • 🚨 This is not financial advice. If you don't have the money to start (or don't want to spend it) — don't. Nothing here is going to make anyone rich anyway. This is about learning.
  • Be smart: Please don't do any of this if you don't have $100 in discretionary funds.

The big picture: To wrap your head around blockchain technology, you need to do some stuff — there's just no substitute. That doesn't mean you have to continue doing it, but if you want to get it, you have to try it.

  • Cryptocurrency is an asset, though, and to use it, it must be bought. But you can do a few illuminating things with roughly $100.
  • Learning crypto is in no small part un-learning. Both web2 and web3 appear on websites and look similar, but web3 works differently.

Here's a course of practice to get started. Five activities, in 10 steps, that require about $20 each (exchange fees will vary for buying and withdrawing):

  • Warning: These instructions don't deal with every little twist and turn. You're going to need to work some stuff out along the way.

1️⃣ Do your own research

The two biggest blockchains are Bitcoin and Ethereum, but the two have very different cultures. Bitcoin is more about freedom. Ethereum is more about utopia. These are wild generalizations.

2️⃣ Pick one, for now

Now, join an exchange such as Kraken, Coinbase, FTX or Binance — one that permits withdrawing crypto (for step 4).

  • You'll have to endure some invasive know-your-customer stuff, because you're about to spend $80, and the Feds need the seller to be sure it's not for terrorism.
  • Once you’re through the surveillance system, buy $80 worth of BTC or ETH (whichever you picked). There will be some kind of fee, alas.

3️⃣ HODL

Look at the amount you bought. As I write this, $80 is 0.0020 BTC. Split your number in quarters and decide now that you are going to sit on $20 worth (say, 0.0005 BTC) in this exchange account for... three years?

  • Make a note in your phone's reminder app for three year's time, include your exchange password, the amount of crypto and what it's worth today.

All of that was basic web2 stuff. Prepare for web3!

4️⃣ Withdraw

Now you need to set up a wallet. A wallet is software for holding cryptocurrency yourself. Exodus and Blockchain.com are easy ones to start with. Transfer part of your crypto to your new wallet.

  • Be smart: As you set up the wallet, it should tell you some information to keep track of. Don't neglect this step — take it seriously. This is a piece of the unlearning! There are fewer safety nets in web3, by design.
  • The wallet's makers just made the software, but they don’t have your funds. This ~$20 of crypto is now entirely your responsibility.
  • Quick take: This $20 in your wallet is much more secure than your $20 on the exchange. It’s completely in your control.

5️⃣ Explore

Now that you have $20 on a standalone wallet, find your address where you're holding the coins. Now look at that address on a block explorer: Etherscan for ETH or BlockCypher for BTC.

  • The big picture: You should see your funds at the address you just created. You've never visited this website before, right? Yet, it can see your funds. This is because blockchains are public databases.

6️⃣ Collect

Now you should buy a non-fungible token (NFT). There are cheap ones for sale on eBay, which means a credit card is all you need, plus another software wallet.

  • Search for "Polygon NFTs." Pick one you like that costs around $20. Then get a wallet that works with Polygon (it has its own blockchain).
  • Send your new NFT to your new wallet.
  • Once you have your NFT, copy your wallet address, then go search for it on OpenSea. Like the block explorers, OpenSea can see which NFTs you have. Cool, right?

7️⃣ Degen

Now, trade some of your BTC or ETH for an altcoin. Two that are widely available and well suited to our purposes are ATOM, for the Cosmos blockchain, or SOL, for Solana.

  • Swap $40 of your remaining BTC or ETH for one of those altcoins. (You're a trader now!)
  • Create yet another wallet for whichever blockchain you picked. Keplr is good for Cosmos. Phantom works for Solana.
  • Send all $40 of ATOM or SOL to the new wallet.

8️⃣ Get stablecoins

This will be the weirdest part. Try buying stablecoins on a decentralized exchange (DEX). Use Osmosis for Cosmos and Raydium for Solana.

  • On Solana you can buy USDC (use the "Swap" page). On Osmosis you can buy TerraUSD (use "Trade"). Either way, trade half your assets into a stablecoin, so you should come out with about $20 in stablecoins and $20 in your original coin (fees here should be pennies).
  • These stablecoins are designed to always be worth $1 each.
  • Now you've made a trade on a decentralized exchange and a centralized one.
  • What's the difference? The decentralized exchange was “non-custodial,” meaning that your ATOM or SOL were always in your possession until the moment you swapped them, like a baseball card, for your stablecoins.

9️⃣ HODL an alt

Now you have $20 of a coin that has much less of a track record than ETH or BTC. Sit on it, too.

  • Make a note about how to find it again with a reminder to look in three years. Resolve now not to sell these tokens till then. Forget about them, for now.

🔟 Enjoy the ride

If all went well, you should have roughly $20 in ETH or BTC on an exchange, the same in a wallet, one NFT, $20 in a stablecoin and $20 in ATOM or SOL. (Fees probably ate some of that, sorry)

  • What's next? That's it. You have begun. 🎢

If you managed all this (or even some of it), you understand web3 much better now than you were ever going to by reading.

Welcome to the blockchains.

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