Understand the Basics of Crypto and Diversify your Investments
Read until the end for a tutorial on how to invest in the magical world of digital money!
Hey everyone,
My name is Victor and I am excited to be the newest writer for the ScaleUp newsletter! I was featured in some publications ago and a highlight was given to me being an economics student at Concordia. I, like everyone else at ScaleUp, am all about financial literacy and want to make the knowledge I’m acquiring at university accessible, easy to understand, and actionable for everyone!
I am also very interested in the future of finance and the innovations happening in that field. I have been investing and operating the crypto markets for close to five years now and I want to, again, make these seemingly complex subjects digestible for the working man or woman!
Let’s start from the beginning, what is it and why is it important?
I feel like if you’re already here, you know why financial literacy is important, but here’s a recap:
It gives you a sense of control, stability, and liberty! It helps you understand money and how it can be used to better your life. I may talk more about this in the next publications but for now, I’d like to focus on crypto and the blockchain, as I feel a lot of interest will pour into this scene in the coming months.
Let’s talk about the underlying technology first. The blockchain was created to be a decentralized digital ledger that records transactions across many computers. It is best known for its use as infrastructure for cryptocurrencies to exist.
Its function can vary depending on how it was coded – as it can be coded to fit a specific cryptocurrency’s purpose. For example, Bitcoin and Ethereum utilize blockchain as their underlying technology but their use-cases and capabilities differ. Despite small differences here and there, blockchains and cryptocurrency systems generally focus on being decentralized and ensuring secure, transparent, permission-less, and tamper-proof transactions.
A decentralized network means that no single computer holds all the power, if you want to harm the network and make fraudulent transactions, you would have to have control over 51% of the computers that uphold the blockchain — which makes the system more resilient. With no single point of failure that a hacker could exploit and with billions of machines scattered geographically, that exploit becomes very unrealistic.
You also might’ve heard about crypto mining. It simply means these computers and their operators are monetarily incentivized to stand up against these fraudulent actions. So the price of these crypto tokens that are talked about on the news is a reflection of the network’s resiliency, applications, and utility.
The last thing I want to touch upon blockchains is their permission-less nature. Many people around the world are unbanked or underbanked — which means that they don’t have access to basic banking services. It is very hard to make a bank transaction to the other side of the world without a bank account. But with Bitcoin, for example, my parents can send me money from another hemisphere to help pay my tuition without the need to go through a bank (with minimal fees and delays). Or an expatriate can send money back home to their parents in a country suffering from an economic embargo. This is what people mean when they say crypto is for everyone.
I feel this simplified version is enough for a basic introduction to crypto. I’ll touch on more aspects of it in the coming publications. But now that we’re done with the “what” and “why”, let's move on to the actionable steps!
DISCLAIMER: All investment and financial opinions expressed in this newsletter are based on personal research and experience. The information presented should be used as educational material and not financial advice. Use this as a starting point for your research and make your own decisions.
The Tutorial
If you want to diversify your investments and put some money in crypto, here’s one of the easiest ways I found for Canadians to do it!
Step 0: Have a plan. Have a target set for yourself like “If Bitcoin hits this price, I’ll sell half of it” — any kind of measurement will work. People often lose money in crypto because they get too greedy and never sell. Be sure to take profits on the way up!
Step 1: Create an account with the Kraken Exchange (“kraken.com”);
Step 2: Validate your account and put in the information required (don’t forget to set up 2-step authentication for increased security);
Step 3: Create your investor profile (it is important to understand that crypto is very volatile and you should only invest money you are willing to lose);
Step 4: Upload a document to validate your information (this is required due to Know Your Customer and Anti-Money Laundering Policies);
Refer to their Support Page if you run into any problems.
Step 5: After validation it’s time to fund your account! On the top right corner of the home page you should see a “Deposit” button like this:
Click it, then search and select the Canadian Dollar option.
Select a deposit method:
Consider a Wire transfer if the total you’re depositing surpasses 600 dollars, as the 0.5% fee will be greater than the 3 dollar fee at that point.
Step 6: Buy your first coin! Once the money has been deposited, go to the “Trade” tab on the top left of your screen and click it.
Right underneath that tab, you will find an oval text box, click it and your screen should look like the following:
Write BTC/CAD on the search bar (indicating that you would like to BUY Bitcoin by SELLING Canadian Dollars).
For beginners, I’d say to stay with the safe “big coins” of the market, as they are less volatile than “smaller coins” such as Bitcoin, Ethereum, and Solana. You could research coins in sites like CoinMarketCap.
To the right of the “Buy” and “Sell” buttons, you’ll find a dropdown. Select “Market” for an easier beginner friendly trading experience. Input the amount of Bitcoin you’d like to buy, click the “Buy BTC/CAD” button, and done! You’ve dipped your toes into the crypto trading pond!
Next newsletter we’ll go more in-depth on things you can do with your crypto and how to protect your money in this crazy world of finance! See you!