Get ready with the right crypto currency

Whether you want to invest in an ICO or just buy cryptocurrency as an investment strategy, you need to start with buying the required cryptocurrency first.

As on date, you can do this only with fiat, unless you already have a traceable cryptocurrency in your kitty (wallet).

This article is for the newbies, who have never bought any cryptocurrency and are trying to find how to go about doing so.

I will list below the sequence of steps that you may want to follow (this may differ from country to country).

Step 1 - Review your countries laws and regulations on cryptocurrency first

• Review your countries cryptocurrency laws - do you have to buy from a firm registered in your country? can you send money out of your country for buying cryptocurrency and what are the remittance limits, if any. If trading in cryptocurrency is not legal, I would not suggest it. For example Kraken would register you even if you are from another country, but you need to check how you will transfer USD or Euro to Kraken to start with. I hope you get this figured first, if you are a complete newbie. You can write to me and I can guide if I have the knowledge for your country, but google is your best bet.

• Review taxation laws (when and what tax applies at each stage of your dealing with currencies). You will be moving the tokens a lot and converting from one to another. Your countries Tax laws need to help the overall tax calculation easy for you. These steps may seem daunting, but very easy on internet. Almost everything you need to know will already be published in some paper on the internet.
  Once you have done your due diligence and zeroed in on the company (let us call this a Company) you want to trade with, create an account with them. You can do these activities in parallel, but transact in money only after you completed the due diligence on your countries laws.

• One interesting point is that most countries are not yet decided on this topic, so you may have no strict laws on this topic as yet in terms of legality, but if you hold or sell cryptocurrency then surely taxation laws apply in almost all countries.

• If you are satisfied that you can buy and trade cryptocurrency in your country, then move to next steps, else abort the process right here (you may continue at your own risk).

Step 2 - Register with a Company that gives your crypto

Register with a company that buys and sells bitcoins by taking fiat (your local currency) and giving your cryptocurrency in return - coinbase, Gemini, Kraken, Coinmama, bitstamp, localbitcoins (for peer to peer transfers) and many such. You may have other websites for your country. Some double as exchanges as well as fiat to crypto gateways. If you have both in your company of choice, that is best.

Note - Exchanges like binance, kucoin etc expect you to already have cryptocurrency to trade with other cryptocurrencies. No point going there unless you already have cryptocurrency to transfer to them.

• Review these companies on internet - they should allow buying and selling and from your country. You will need to find one that accepts you local currency and gives your cryptocurrency. For example coinbase does not operate in many countries.

Step 3 - KYC. This is the norm and must nowadays

• Be prepared to go through KYC (know your customer, aka, identity verification). Be ready with documentation as per their needs and submit. There is huge load these days and most companies are taking 1 to 2 weeks to approve (you may find one that does it in a day, so good luck). I have found Kraken to be very fast in KYC verification.

• Normally the documentation needed for KYC are as follows:

  • Your full name as in official documents
  • Your country to citizenship
  • Your country of residence
  • Your date of birth.
  • Your address proof (utility bill, passport, etc. the site will tell you what they accept)
  • Your ID proof (passport, drivers license, etc, the site will tell you what they accept). The ID proof must have your country of citizenship, your full name and your date of birth.
  • Some also need 1 selfie with your ID proof and 1 selfie of you holding a note stating their name and current date.

Step 4 - Linking Bank Account and depositing fiat

• Link Bank account and transfer money to this company. Make a payment and purchase BTC or Ether or NEO or any other cryptocurrency that you need. I suggest Ether as most ICOs are only accepting Ether, though these days a lot of new ICOs on NEO as well. Don't worry too much on what you are buying (unless you want cryptocurrency just for cryptocurrency and not for investing in ICOs).

Note - Until KYC is completed, you can't deposit. Also the whole deposit process will take a while depending on the Company and local norms you are dealing with. Be patient and allow for at least 2 days. Anything more is not unheard of, but not the norm. Norm is less than 24 hours.

Step 5 - Create an account on Exchange

You have to do this only if your Company does not double as exchange or its rates are not suitable for you. But you may want to register with as many as possible different ICOs launch with different exchanges.

• You may register in parallel with a Cryptocurrency exchange (Bittrex, Coinbase, Poloniex, Binance, Kucoin, Bitfinix, Kraken etc.), while registering for a Company to buy crypto against fiat.
• Check the rates the exchange is offering, so you get onto one that has least fees. These companies too have a KYC (identity verification). If you have registered with one that offers both Fiat to Cryptocurrency and also provides a way to exchange cryptocurrency for another, then you don't have to do KYC two times (by the way KYC is a norm for all ICOs, so get used to this concept). We will call this company that you choose Exchange from here on (it could be same as Company where you buy crypto with fiat). Please note that you need to register on an exchange only if you plan to exchange your coins (BTC or Ether that you purchased with the company) to buy some other like Litecoin, Ripple, Stellar, Cardano, etc.

Step 6 - Deposit crypto to exchange to trade other cryptos

This is needed only if you plan to buy another cryptocurrency that you need. Else unnecessary to do so immediately.

• Now on the exchange click deposit, chose the coin to be deposited (must be same as what you purchased on the company website / app - like Ether or BTC) and exchange will show you an address (a very long alphanumeric key). Do a computer copy of this address (don't write it as you can make mistakes).

• Assuming you are doing all this at same time and have your company app open, click on send (chose coin if it offers multiple ones) and they will ask for an address where to send - here paste the address you copied from exchange.
  You will also be asked how much you wish to send. IMPORTANT NOTE - Since you are trying out first time, do not send anything more than $5 equivalent. I would suggest try with $1 if its possible. send lowest possible value. Even if you lose you can sleep ok.

NOTE 1 - Last few steps may vary a lot depending on the company and exchange you have chosen. Read well. Be slow, methodical and review 10 times before completing task. Unlike credit cards, banks etc, here there are no undo buttons. Once cryptocurrency is sent to an address that is not yours, you have no way to recover it again.
NOTE 2 - Until now all your money is with company or exchange. You do not have anything with you. So if either company or exchange defaults, gets shutdown in their country of operation or are hacked, you pretty much lost everything. Therefore next step.

Step 6 - Create your own hardware or software wallet

You must do this. If you are serious about cryptocurrency and / or ICOs, then you must be serious about having your own hardware or software wallet. For almost all ICOs this is a must.

• Wallets are where you store your cryptocurrency. Wallets have a private key and public key. Private key, only you should know and public key is what you give others, so they can transfer cryptocurrency into your wallet. Never share the private key. Sharing Private key is like giving the keys to your bank locker, or credit card along with PIN to someone. What happens next depends on who you shared and their intentions. Once again - NEVER SHARE YOUR PRIVATE KEYS.

• Anyways how do you get wallets in the first place to even have a private key and public key. There are a few choices, and I note then strictly in order of preference.

  • Choice 1 - buy hardware wallet. Make sure the recent Ether standards are supported by your hardware wallet (All ICOs are expecting this - ERC-20 compatible). Make sure your hardware wallet is supporting the cryptocurrency you are buying. Start with bitcoin or ether to keep things simple.

  • Choice 2 - Register with a software wallet for your cryptocurrency.

    • MYETHERWALLET for ether and any ERC-20 compatible coin/token. There are many phishing websites, so please do your research and get to the right website, else you lose it all).
    • NEON wallet - For Neo
    • Stargazer - for Stellar Lumens
    • Daedalus - For Cardano (ADA).
    • There are more for other cryptocurrencies and also multiple choices for above as well, like meta mask for ether and any ERC-20, Centaraus (mobile wallet) for Stellar Lumens etc.

  • Choice 3 - what you are doing until now, keep the money on company and exchanges. When you buy cryptocurrency on Company and / or move it to exchanges to trade with other cryptocurrencies, the Company or exchange is creating a wallet for you and storing your cryptocurrency there. The Company or exchange has your Private key. In case the Company or exchange is hacked, goes out of business or is shut down, you have no way to recover your cryptocurrency. So please transfer to your own wallet (Choice #1 or #2) as soon as possible, unless you plan to day trade.

• When you create wallets (Choice #1 and #2), you will be asked for a passphrase or password, they may give out pass phrases to recover wallet in case of issues later. They will also share your Private Key and public key / address. #1 Write down these on paper and electronic document. #2 Save paper in locker and electronic in a hardware storage device and again put this in locker. Download keys only after encrypting them with passphrase (most wallets provide this option and please use it). #3 delete all unencrypted key and passphrase documentation from your computer systems. #4 Never share your passphrase or private key. #5 share your address with those who need to know only, like exchanges and company and any ICOs you may participate in.

Step 7 - Now you are ready for ICOs

Now you may look into ICOs, if such investments interest you. Each ICO will tell you what Cryptocurrency they accept (as on date maximum are asking for ether, and very few NEO). One important aspect to note is that almost all ICOs expect you to transfer your cryptocurrency from your own wallet (Choice #1 or #2 above). The reason is that they will transfer their coins / tokens back to same wallet. If you transfer from a Company or Exchange wallet, then your tokens are lost and your investment goes for a toss, with no recovery. This is very important. Never ever transfer cryptocurrency from Company or Exchange to ICO contract address. This is sure shot way to loose your cryptocurrency with no redressal to your issue.

Some of the steps above can be done in parallel like creating an account for fiat to crypto and creating an account with exchange for trading crypto and also creating a wallet.

• This is #1 of my series on ICO investment. Please don't get discouraged if this is was too newbie. Everyday 100s or people are wanting to join the cryptocurrency space and have no clue where to start. This #1 is for them. I will be writing more in this series and I sincerely hope that there may be something for the experienced ones as well in my future posts.

• This is my first article on steemit. I would have surely made many mistakes. I apologise for the same. Hopefully I will get some good comments to improve, rather than downvotes. Kindly up vote if possible. In the end readers are best judges on the value of content they just read. So I respect whatever you choose.

Disclaimer - I am only sharing my limited knowledge and for the sake of knowledge alone. This is in no way an investment advice or legal or taxation counsel. I am not qualified to provide any of these. This is also not a recommendation or encouragement to invest in cryptocurrencies.