Steemians, Minnows & Crypto Noobies,

I was just having a cup of coffee and I wanted to put some information together for you to make your considerations more informed if you decide to get into the blockchain in some form or the other. Please always do your own independent research before ever trading into any coins, and always keep in mind that there is inherent risk with money you place into a decentralized system.

Cryptocurrency Storage  

I wanted to start with how to get coins and where to store them, as storage is the single most important thing you need to be savvy of and doing something wrong can literally cost you everything.  

Wallets  

A wallet can be software or hardware based and there are many many different options available for each type of cryptocurrency. Most official websites for a type of coin, like Ethereum (ETH) or Litecoin (LTC), will provide a link to their natural wallet system. These are the most RELIABLE software wallets but may not be the easiest to use. 

Fortunately there are always alternatives.  Don’t confuse an Exchange for a Wallet, these are different and I will explain Exchanges.  In order to store or even purchase a cryptocurrency you will need a wallet address specific to that currency. For example, I used MyEtherWallet (MEW) and Exodus as my software wallets. MEW is secure and encrypted and completely safe for long-term storage and Exodus allows me to exchange coins for other coins through the Shapeshift network for very very little fees.  Most importantly, both these types of wallets allow you to control your PRIVATE KEYS.

**Important: When configuring your MEW, remember to store your JSON encryption file redundantly. This is used to access the wallet combined with your password. Only you control this encryption file, if you lose it you will never recover the wallet.  Always go through the set-up instructions for wallets and always redundantly back up all recovery files. Be organized with these files.  

Exchanges  

Exchanges are a 3rd party storage system that also allows you to convert USD deposits into cryptocurrency and cryptocurrency into USD for withdrawal to a private account which contains wallets held by the exchange. These are currently the only way to put money in initially and get money out. Caution needs to be used when using exchanges. There are many scams, they can be unreliable, some fees can be way too high and you should NEVER trust long term storage in an Exchange. You’re basically trusting your crypto to a company.  The only exchange I am currently comfortable with is Coinbase at coinbase.com.  

However, I never store anything there long term and only do short term trading there. Anything longer than a few days, I transfer out to my Exodus wallet or MEW. I’ve personally never had an issue with Coinbase, but their website does go down from time to time and this is a scary thing.  Also, remember that unlike a software or hardware wallet, you are entrusting the Exchange to keep security of your wallets in their website. If they are hacked or compromised, you cannot do anything about it and this has happened in the past.  

**Important: I would urge strong strong caution against the use of Poloniex. They have made it quite clear through recent actions that their primary concern is accumulation of fees and holding of cryptocurrency. Users are their very lowest priority and there are some very bad indications that this site is up to no good. 

ETHereum  

Ethereum or Bitcoin are most people’s entry coin. The reason for this is that these are the easiest to purchase with USD and are the easiest to exchange for other coins that you want. If you buy in to cryptocurrency through an Exchange, I suggest picking one of these two initially. Ethereum is currently the only way to participate in ICOs as well and you need an ERC20 compatible wallet (like MEW) to deposit into the ICO contract to receive Tokens. DON’T DO ICO CONTRACT SUBMISSIONS FROM AN EXCHANGE WALLET--you will lose it.  If you want to be involved in the blockchain, you will more than likely need some ETH at some point. 

Altcoins  

Altcoins are minor cryptocurrencies that may or may not stick around. Many of these are based on services or organizations. An ICO Token will become an altcoin once it becomes trade-able, and an altcoin becomes a Cryptocurrency once it can be exchanged directly for USD. There are many many altcoins and keeping track of all of them is impossible.  However, the most useful site I use to keep track of all my positions is through a Market Cap tracker that uses a live API feed of activity.  You can find this on coinmarketcap.com  This is also a great way to find out what coins are out there and what their official websites are by going through their list.  

ICOs  

Initial Coin Offerings are the fund-raising stage for upcoming companies/technologies on the blockchain. They will provide a specific start time for these events and you will be required to submit ETH from an ERC20 wallet to their contract address in order to receive their Tokens in exchange. The tokens will eventually (10 days) become part of the blockchain and become a tradeable item. The Tokens will start at the promised exchange rate during the ICO, but these could fall or rise depending on the success of the project. Always research the F out of an ICO before participating and only do so when you understand the deposit process completely.  

**Important: Lots of scams out there in ICOs and lots of ways to lose your money. Research research research. Also, I personally avoid an ICO that doesn’t place a CAP on its Token offering. These will rarely ever see any profit as the Token is basically devalued.  

Mining  

This is the meat and potatoes. This is how you pioneer and get the gold out of the ground. This will eventually be impossible (cost-wise) for the common person to participate in as things progress, but right now, it’s a Wild West scenario.   

Direct Hardware Mining  

This is the most profitable but also requires an extensive knowledge of the tech involved and how to configure your mining rig successfully. You mine using GPU, or desktop graphics cards, to provide a share of computation over the blockchain. This share is measured through Hashrates, or MH/s for example. The higher your MH/s, the more share you’re rewarded. 

There are different computation algorithms that you can mine and these will produce different coins (i.e. SHA-256 for Bitcoin, Dagger for ETH, Scrypt for Litecoin, etc. etc. )  It is becoming more and more difficult to be profitable in this configuration if you are directly mining an algorithm on only a couple GPUs or a single one. You need large arrays of GPUs to make the cost of electricity consumption worth it, and beginners often don’t realize this and they lose money.  

Fortunately, there are some options that still make it possible to mine on a few GPUs or even your single gaming GPU. Auto-converting software miners will calculate your GPUs effectiveness against all algorithms, mine the most cost-effective algorithm, and then CONVERT the mined altcoin to Bitcoin automatically. This allows you to be profitable, instead of attempting to mine Bitcoin directly which won’t be successful.  The one I use is Nicehash Miner, this is user-friendly and the website provides step by step instructions on how to set it up. This can be found at NiceHash.com here.  

Without extensive technical knowledge on how to configure your rig specifically on a per-algorithm basis, an auto-scripted miner software is going to be required for you to mine easily on a limited amount GPU power. You can definitely still make money this way if you use a strong enough GPU. Remember that you need a minimum of 20 MH/s to really stay profitable these days through this limited configuration. If a GPU has less than this, it isn’t worth it. 

Contract Mining

The most popular and easiest way for the casual miner to start accumulating crypto. 3rd party contract mining is where you fund a contract for a specific type of crypto for a determined length of time at a specific Hashrate. These contracts will then provide the mining activity on the 3rd party hardware and payout the shares to your wallet. No hardware to buy, no hardware to maintain, well, no hardware.  

However, these are less profitable over time. For example, if you purchased 20 MH/s of mining for Ethereum for 2 Years, your output would decrease continuously as the blockchain increases in difficulty. Without upgrading the contract hashrate, it would eventually run out of steam and probably wouldn’t last two years. That doesn’t mean you wouldn’t earn crypto, you would, but there is a possibility that it wouldn’t be worth your initial cost of the contract. 

**Important: Lots of scams with these sites. Becareful, do research.  The two I have experience with are Genesis Mining and NiceHash.  Genesis Mining is reliable and I always receive the payouts on time. They have been around for a long time and they provide proof of their facilities in Iceland through live streaming. It’s expensive though, and I suggest only purchasing their OPEN-ENDED contracts unless you have a lot of money to spend. 

Nicehash is a more complicated option for contract mining, but if you’re willing to sit down and learn how to tailor the contract, you have the full ability to customize the contract to target a specific output for a specific amount and a specific time-frame. This is accomplished through depositing Bitcoin and spending this bitcoin to create miners. You can also monitor the live API productivity of your miners through their site which is a powerful way to keep the contract profitable during its entire course.  

They provide step-by-step guides on how to set this up, but there are also a lot of YouTube walk-throughs out there as well. I like NiceHash but it can be very time consuming to manage these contracts.  Think of Genesis Mining as the passive option, and NiceHash as the active option.  

GPUs  

This is where the money comes into play with hardware mining. Do your research first before buying any GPUs as some are better than others and price isn’t always the determining factor. There are comparison data charts available online, and you should use these to target the GPUs you want at the price you can afford. Once you know the hashrate, or MH/s, and Power Consumption (i.e. 180W) of the GPU you intend to mine on, you can input this data into a profitability calculator in order to see what your expected profit would be and how long it would take the receive ROI.  

One of the common ones I use is through CryptoCompare. An average hashrate of a single GPU is 21 MH/s, but there are better and worse out there.  

**IMPORTANT: Hardware mining is loud. Really loud, especially if using more than one GPU. The cards run in a full state and their combined noise and heat can catch people unaware. If you run more than one card you will need an open-air configuration rather than a normal tower case. Keep this in mind and also don’t ever store a mining rig outdoors.              

Diversification  

Remember that crypto-markets are decentralized and volatile. You will see extreme dips and extreme highs in the prices. Some altcoin will profit and some will fail. If you store cryptocurrency long term, spread it out in projects and coins you really believe in. Here are a list of coins in my portfolio if you want to look at some of these:

Ethereum (ETH)  

Golem (GNT)  

Decred (DCR)  

Dash (DASH)  

Litecoin (LTC)  

Ripple (XRP)    

Hopefully this will provide you with enough information to start your consideration on whether or not this community is something you’re interested in. Use the linked resources I provided to take a look around. Also very one important fact I want you to take to heart—Don’t put any money into blockchain that you couldn’t afford to lose as this fear will absolutely remove the enjoyment out of it.  

Anyway, feel free to pass this on to  whomever else you wish. Follow me on Steemit.

@rabbt  

Ciao.   

  This is just my personal opinion, always do your own research before making any financial decisions.