Beginner guide for first-time cryptocurrency buyers (2021)

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Coinmonks

13 min readSep 23, 2021

I hope this article will bring you value and help you begin your cryptocurrency’s journey

Some coins you will meet during your journey

December 2020. My cousin starts sending me updates about the cryptocurrency markets. I watched videos about bitcoin 2 years ago. I was not really interested in it at that time. What caught my eyes during those updates in how the market fluctuated.

At that time, bitcoin just passed $25k. I didn’t understand why it keep going up and down. I needed to go deeper. I kept digging. I started watching Youtube videos about financial markets, trading basics, and blockchain/currency explanations. It was eye-opening.

From then, I started my journey with cryptocurrencies. I started with $2.

From there, my journey was a rollercoaster trip :

Tesla bought some bitcoin
Beeple sold his NFTs for 69 million of dollars
China cracks down miners in their country
Tesla stops accepting bitcoin
The market crashed in May 2021
El Salvador accepts bitcoin as a legal tender

Every single one of these events had an effect on the market.

What kind of effect?

Lemme show you.

Understand market moves

I went through all of those phases.

Prices of assets go down and up depending on the market.

A definition of a market is where people meet and exchange value.

For example :

in the stock market, people exchange shares with money.
in the bond market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market.

And now, the crypto market: you buy coins in exchange for fiat.

The number of people buying coins and the amount of people selling determines the market moves.

You can analyze the market move using two factors :
Technical analysis: look at the chart for different indicators of a pattern.

Fundamental analysis: looks at the bigger picture, regulation, market cap, other news, or issues around a specific market. This methodology looks at the BTC value for example, as a technology regardless of the current price and its outside prices in order to determine what will happen.

With the understanding of these two basics analysis of market moves, lemme explain the market conditions.

Bull market :

A bull market is a market that is on the rise and where the conditions of the economy are generally favorable.

A bull market is typified by a sustained increase in prices. In the case of equity markets, a bull market denotes a rise in the prices of companies’ shares. In such times, investors often have faith that the uptrend will continue over the long term. In this scenario, the country’s economy is typically strong and employment levels are high.

In the case of the crypto market, it means the price per coin (in $) is going up.

Bear market :

A bear market exists in an economy that is receding and where most stocks are declining in value.

A bear market is one that is in decline. A market is usually not considered a true “bear” market unless it has fallen 20% or more from recent highs. In a bear market, share prices are continuously dropping. This results in a downward trend that investors believe will continue; this belief, in turn, perpetuates the downward spiral. During a bear market, the economy slows down and unemployment rises as companies begin laying off workers.

in the case of the crypto market, the price per coin is going down.

Because the financial markets are greatly influenced by investors’ attitudes, these terms also denote how investors feel about the market and the ensuing economic trends :

You are bullish if you believe that an asset will increase in price;
You are bearish otherwise.

Now you understand the basics of market moves, let’s jump into the cryptocurrency market.

Cryptocurrency as an investment

Investing is different from trading.

Trading means you are for the short term market move. You take profit as soon as the market move the way you predict it. If you open a position saying the trend is going up (meaning you are taking a long position), once it does, you take profit. If not, you lose. If you open a position saying the trend is going down (meaning you are taking the short position), once it does, you take your profit. If not you lose

Like I said in my recent article, Bitcoin was created in the context of an economic crisis. Satoshi Nakamoto quotes :

The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.

This was the beginning of a long road.

In 2008, an anonymous person called Satoshi Nakamoto launched Bitcoin. It’s money on the Internet, without banks, without a middle man.

First, what is money?

Money is often defined in terms of the three functions or services that it provides :

Medium of exchange: Money’s most important function is as a medium of exchange to ease transactions. Without money, all transactions would have to be conducted by barter. It involves the direct exchange of one good or service for another.
Store of value: To be a medium of exchange, money must hold its value over time; that is, it must be a store of value. Otherwise, money could not be stored for some period and remain valuable in exchange.
Unit of account: Money also functions as a unit of account, providing a common measure of the value of goods and services being exchanged.

How did Satoshi manage to create “Internet money” with these functions?

He leveraged something called Blockchain.

Blockchain is a register where every transaction is recorded. Its characteristics :

Immutability: No possibility to make a change on the register once data is in the ledger.
Decentralized: No one owns the technology, it’s shared among the users.
Anonymity: You don’t need to give your credentials, a random password is given to you only.
Security: It’s almost impossible to hack because of the density of the network.

With it, Satoshi made Bitcoin. No possibility to double spend. A store of value. A medium of exchange. A unit of account. All combined using blockchain and cryptography.

Since then, Bitcoin has exploded. After 13 years, a unit of bitcoin is now worth between $30k and $65k depending on the demand.

In 2015, a group of 8 persons figured out they can do more things with the blockchain: they can build some kind of contract on top of it.

Given the fact that the blockchain is a register, what you put on it depends on the writer of the code. If they can figure out a way to codify functions and put it on the blockchain, they will have another use case.

And they made it. Ethereum was born.

You can create your coin(or token) like Bitcoin, determine the max supply, and release it in under 5 min, using something called “Smart contract”: lines of codes you write and deploy on the blockchain.

In January 2021, I programmed the first token I called “Wetchit” which means “spare change”. I couldn’t believe it. It took me less than 5 min :

I went on Youtube
Research “How to create a coin with Ethereum”
I watched the tutorial
Click on the Github link
Copy the code
Paste it on Remix
I change the name of the token
Define the max supply, the abbreviation of the token name, the divisibility, and leave the rest unchanged.

Done. I compile it. No error.

Now, I connect my Metamask and it was ready to deploy.

Unfortunately, I didn’t have enough Ethereum to pay gas fees.

But I had the option to test the coin on Kovan Test Network. I was working well. I sent some tokens to different wallets.

I was like “WOW, this is the next thing”.

Do you see how easy it was to create a token in under 5 min, with an open-source program?

That’s why you need to know some statistics.

Macro view of the cryptocurrency market

Here are the statistics in 09/21/2021, based on Coinmarketcap:

12,037 cryptocurrencies
$1,828,977,121,702 market cap
$139,985,252,175 24h volume

12,037 coins !!!!!!! That’s 66.8722222222 times the number of fiat currencies.

Knowing cryptocurrency market follows the same market rules, how do you choose the best ones to invest in?

First, every coin has a cycle, like thefigure from Binance above. We can group them into two categories :

Bitcoin season
Altcoin (all coins different from BTC) season

With the data record, scientists develop a model for the evolution of bitcoin, called the Stock-To-Flow model.

It represents the evolution of BTC since the beginning of its creation.

On the X-axis, you have Years, Y-axis you have the price per BTC.

Bitcoin has a 21 million coins supply. No more will be created.

If 75% of the Top 50 coins performed better than Bitcoin over the last 30 days it is Altcoin Month. Otherwise, it’s Bitcoin month.

If 75% of the Top 50 coins performed better than Bitcoin over the last season (90 days) it is Altcoin Season. Otherwise, it’s Bitcoin season.

If 75% of the Top 50 coins performed better than Bitcoin over the last year it is Altcoin Year. Otherwise, it’s Bitcoin year.

Here is an index to find out which season we are: Blockchain Center index

The macro view allows you to have a global view of the market.

Here is how to approach bitcoin and altcoin season from a macro perspective.

Altcoin dominates Bitcoin in terms of percentage gain

A great opportunity to invest in Bitcoin.

Counterintuitive right?

Lemme explain.

When you know everyone is buying a house from a specific location, what happen? Prices go up. You have then two choices :

FOMO (Fear Of Missing Out): do whatever possible to have a slot for you (at a higher price with maybe a smaller slot because of the high demand)
Research an alternative to the location, not far and with a lower price.

That’s the same strategy here.

If it’s altcoin season, it means bitcoin is undervalued in some way. It’s ‘cheap’.

When you buy an asset when it’s cheap, it gives you leverage to take profit sooner, when you needed.

Bitcoin dominates altcoins in terms of percentage gain

Same concept here. You want to invest in cheap options. In this case, it’s altcoins.

Now, how do you choose which altcoin to invest in?

Here is my methodology I called: themetapick

How to invest in altcoins using themetapick strategy

12,036 altcoins. That’s a lot.

How to wrap your head around those?

1-Understand blockchain

2-Understand cryptocurrency market (I gave you an overview, but you need to go deeper)

Begin here: 100 Tools and References to Begin with Blockchain and Cryptoassets (2021)

Do you homework for at least 50 hours.

After that you should be able to answer these questions :

What is a blockchain?
What is a market cycle?
What is the difference between bitcoin and Ethereum?
What is a support? What is a resistance?
What is a wallet? How to secure a wallet?
How to buy a coin? Where to buy a coin?
How to transfer a coin?
What is the difference between a cold wallet and a hot wallet?
What is a seed phrase? What is the difference between a seed phrase and a password?
What is the difference between Bitcoin and Dogecoin?
What is the difference between Dogecoin and Shiba INU ?
What is the difference between Ethreum and the coin built on top of Ethreum?
What is a gas fee? What is a gas price? What is a gas?
What is the definition of circulating supply? What is the difference between circulating supply and max supply?
Why not buy a hardware wallet on Amazon or another third-party company? Why do you have to buy from the company making them?
What is the best way to protect your coins?
What is the best way to lose your coins?
Why can’t you invest more than you can afford to lose?

If you cannot answer one of these questions after 50 hours, DM me on Twitter or Instagram, I will be happy to help.

Now that you can answer all these questions. We can move forward.

When It comes to investing, you have to consider 4 cases :

Low risk/low reward potential: If you are a real risk-averse person, I suggest you look into the top 5 coins. You can find them on Coinmarketcap or coingecko.

Low Risk/High Potential reward: These are scams. When you don’t have something to lose, you are not investing. you are gambling.

High Risk/Low Potential reward: Think of it like digging a well, you go deeper and deeper, with all the risk, you finally find out there is a little quantity of groundwater. Worth the risk? Don’t know, maybe now you learned how to dig a well. In the case of cryptocurrencies, I may be a way to experiment.

High risk/high potential reward: Those are the ones you need to investigate and it will take time.

if you are a high-risk/high reward-looking person, the rest is for you.

Level 1: All new beginner

1-Unique value proposition
Is it clear? Compelling? Credible?

2-Unfair advantage
Is it feasible and leverageable?

3-Team :
Strong domain expertise, evidence of execution capability, can they attract a world-class team? Development activity: get into GitHub repose

4-Technology

White paper: protocol consensus method, technology stack, interoperability of protocol, scalability of the network, uses cases, project roadmap
Easy or hard to replicate, good product-market fit, does it scale?

5-Traction
Customers, revenues, other signals, key challenges to adoption

6-Community
Is their discord active? What about their Twitter account?

7-Finance and economics
How much capital is required to reach an inflection point, can it make a 10–20X investment?

Level 2: For much more resourceful persons

1-Visit their website:

Real-world use case, solving a real problem
Easy to understand
Functioning product

2-Check on Youtube :

What others are saying ( I recommend Coin bureau, Benjamin Cowen, Bob Loukas, Digital asset news, Finematics, Heresy financial, Thinking crypto, Andreas Antonopoulos, The Defiant, JRNY crypto, Pompliano, Altcoin Daily, Sheldon Evans, 99bitcoins)
What the founders are saying, watch the most recent interview
Check their Youtube channel for the latest news

3-Go to Messari.io

It’s a research tool that will allow you to data-drive your market analysis. You will find investments made by the best venture capital specialized in blockchain and cryptocurrencies development :

Grayscale portfolio
Pantera capital
Coinbase Ventures
Polychain Capital

The question to ask is: did one of them at least invest in the project?

4-Check again Messari.io or Binance research

White paper: Look into the token docs, tokenomics, consensus mechanism, staking reward, mining requirement

5- Note your impression :

1: Not clear
2: Doubting
3: Bullish

If your note is 1 :

Look at their Twitter, and see if there are any updates.
If you haven't found any, go to Messari.io, then search the coin, click on it, search for the GitHub link, and click on it. See if there are no recent updates! Ruuuuuuuuuun!

If your note is 2 :

Go to #6

If your note is 3 :

Still, go to #6

6-Icodrops.com

Look at the token allocation: see if more than 50% is allocated to the public in the long term
Look for the team: Do they have experience in the field?

7-Coinmarketcap.com/coingecko.com

Look at the actual market cap, circulating supply, and the chart
Volume, compare the 24h volume to the market cap and see if it is in the range of 10–50% compared to the market cap
Exchange listing
On-chain metrics: Active addresses/addresses with a balance, the time between transactions

8-Cryptopanic.com

Look for the latest news

9-Check their community :

Twitter
Discord
Telegram

10- Note your impression :

1-Not clear

2-Doubting

3-Bullish

If you note is :

1: Don’t invest in the coin

2: You have time to follow them on Twitter

3: It could be an investment opportunity, the coin is yours.

Where to buy your first coins?

Binance(or Binance.us if you live in the US)
Coinbase
Kraken
FTX

I suggest these two videos from Coinbureau for the step to step process :

To summarize :

1-Study and understand the bitcoin market cycle

2-Exit the market at the top of the cycle

3-Buy back in near the bottom of the cycles diversifying between BTC and altcoins

4-Rinse and repeat

Here you have it. Hope that this guide was useful.

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