How do I get into cryptocurrency 23 Feb 2025

How do I trade cryptocurrency to make massive profits?

We know, you've been hearing about cryptocurrency for years, have been put off by the continued negative press on cryptocurrency by mainstream media, leading investors, and friends and family. You've decided to start trading cryptocurrency and become mega wealthy to escape the rat-race.

The most important thing to learn is that most getting into cryptocurrency lose changing amounts of money. In our opinion the reason for this is not understanding core features of investment and cryptocurrency.

We created Crypto Statto to provide regular insights into the market for traders.

What is cryptocurrency and how can I get it?

Before going any further, please remember that this is not financial advice, always seek the guidance of a professional, and do your own research.

Cryptocurrency is a digital record of ownership of some information. This digital record, or from this point on - asset, is owned completely by the individual, secured by their own private key. In other words, no other person or institution bears the responsibility of owning it on your behalf. Self-custody means that you are your own bank. This means you need to take good care of your keys To protect these digital assets.

Cryptocurrency can be exchanged for other assets, goods and services. This means that cryptocurrency is both your own bank account and form of money.

Cryptocurrency can also be lent out just like a bank lends you money for buying something such as a house.

Before venturing into how to trade cryptocurrency we want to talk a little bit about how you can acquire cryptocurrency and some things to watch out for.

The one truly essential feature of cryptocurrency over all other forms of money

The most important feature of cryptocurrency is that it is stored on a decentralised Ledger known as the blockchain. Thousands of computers or nodes run all over the world verifying the transactions on that blockchain. This is a key feature in that depending upon the privacy of the blockchain come out the amount in circulation is always known. It also means that in many circumstances, your record of transactions is public - a key disadvantage versus cash.

The second big innovation cryptocurrency has over at all other forms of money

One of the most important features of cryptocurrency is that many of these blockchains can be programmable. This means you could deposit cryptocurrency into a joint account and set up a schedule appointment much like a direct debit. Another example is that you could set limits as to who that money could go to. A great example could be of giving your teenager £$30 to go out for the evening, you could set that money to only be usable in the cinema and restaurant. We are not placing judgments as to whether this is a good thing or not but It is useful to know.

The one major disadvantage to cryptocurrency

If you pay somebody with cryptocurrency that is not an honest actor it is gone forever. There is no middleman like a bank, the legal system, or a government agency that can help you recover this money.

Other important features of money to understand about money and why cryptocurrency is so important

We spend our entire lives having to think about money, but few ever consider what it really is. Most know that you work to earn it. Many get access to money from the government and think that it is free. Some know that money is debt issued by government to banks and lent out. Learning about cryptocurrency teaches you what money really is.

"Opportunity of wants", barter, and the need for money

If I am a farmer that produces grain and vegetables, and you are a fisherman that gathers fish and we both want to eat a meal with vegetables and fish, we have a double coincidence of wants. The farmer and fisherman can exchange their goods through barter. Now, the fisherman and farmer could dry their fish and vegetables to have a year round supply, but there is another challenge. What happens in the wintertime when the farmer and fisherman need to keep warm? They need firewood and thus they need to find a woodcutter to supply them with wood in exchange for their dried produce. Now imagine the woodcutter isn't a fan of fish and vegetables? The fisherman and farmer may not have much use for firewood in the summer either. As the number of needs increases, more complexity arises.

The way to solve this is by means of a commonly represented transferrable exchange intermediary - money. By exchanging their goods for money, each is able to exchange their money as opposed to directly exchanging their goods. It is important that money is trusted by all parties. Money moved from being seashells, nuts, metal, to gold. Eventually, as gold and silver became the more accepted form of money, clipping occurred. Where a person would clip the coin to then melt those clippings down into more money. This practice was known as debasement. We still have debasement to this day through government issuing debt - fiat money, with that money's value being debased through inflation.

Three important properties of money

• A unit of account
• A store of value
• A medium of exchange

We would suggest that fiat money, dollars, yen, pounds are only a unit of account and a medium of exchange. Even the unit of account is a debatable one once we move beyond relatively short timeframes? A famous historical example is the Weimar Republic Hyperinflation in 1921-1923. In 1921, a loaf of bread was 4 marks but by late 1923 reached 200 billion marks.

Aside from the store of value - cryptocurrency definitely satisfies the unit of account and medium of exchange. In terms of a store of value, many would argue it is solving that too.

Obtaining cryptocurrency

There are many ways to obtain cryptocurrency, the world has moved on the from the early days. If you are a beginner, the simplest thing to do is to join a reputable cryptocurrency exchange, deposit some Fiat (cash) and buy some cryptocurrency.

Mining

Using your own computer or mobile phone, or some other device, you can run some software to mine cryptocurrency.

Centralised Exchanges

You can either buy cryptocurrency with a market order at the exchanges current market price or you can set a limit order to buy below the market price.

These tend to be regulated in the sense that you need to perform Know Your Customer (KYC) checks.

Decentralised Exchanges

Decentralised exchanges tend not to be regulated and perform what is known as peer-to-peer exchange. Often come up you have access to the private keys of your wallet.

Risks and benefits of centralised and decentralised exchanges

Centralised Exchanges (CEX)

• There isn't a guarantee that the exchange holds the entire amount of cryptocurrency but you are supposed to hold
• You have to go through more cheques to simply get access to cryptocurrency
• Centralised exchanges tend to have less coins on them then decentralised exchanges - this means you may not be able to access newer coins and tokens
• They tend to have more reserves to be able to help customers
• They have to work closer with governments, this may mean that in many countries you won't have as many capabilities as you would with decentralised exchanges

Decentralised exchanges (DEX)

• They can just disappear
• Removing assets can be more costly
• Less liquidity - in simple speak, the prices can move significantly more on smaller amounts of buying and selling (volume)
• You get more access to more coins
• You can get into newer coins sooner than on centralised exchanges
• There is less oversight on Decentralised exchanges

Faucets

Some cryptocurrencies give you a small amount of their asset to get started with. This will rarely be of much value but it can help you to get into cryptocurrency.

Staking

Some assets will let you stake your asset to earn interest.

Crypto lending

Digital companies operating just like many High Street banks offer customers the opportunity to deposit their assets in exchange for interest. We tend to think of this more like a bond.

Minting

Some assets on blockchains will provide rewards allowing you to mint your own assets in exchange for some form of action performed by the asset holder.

Work

Companies are now paying stuff in cryptocurrency. Some organisations have set themselves up as Decentralised Autonomous Organisations - think of it like a cooperative.

Buying shares in companies that have a large reserve of cryptocurrency

Not advice, but if you check the share price of Coinbase versus Bitcoin you will see quite a lot of similarity in the charts. Something this is a good way to have exposure to cryptocurrency without having to worry about owning the actual asset.

Exchange Traded Funds (ETFs) that are composed of cryptocurrency assets

Fund managers keep buying amounts of cryptocurrency. They intend to use the financial trading capabilities to buy the asset at a good price and grow the fund's value.

Many more

There are other ways of obtaining cryptocurrency, so please do your own research.

How have the team obtained cryptocurrency

We have tried all ways to obtain cryptocurrency over many years. We now focus only on two main ways;

• Using cryptocurrency to obtain more cryptocurrency
• Accepting cryptocurrency in exchange for services

One final observation

There are many apps that allow you to trade cryptocurrency. This does not mean that you own the cryptocurrency. You need to decide if you are comfortable with that or not.

How do I store the cryptocurrency?

There are many ways to store cryptocurrency, too many to list, but here are some examples. The most important thing is to understand the difference between counterparty risk and self-custody risk. A counter party is somebody else. Maybe you are one of those unfortunate people that lent your flatmate $30 to go and buy a takeaway, only to find they went to the pub and didn't buy the takeaway - that is counterparty risk in a nutshell. On the other hand you may have put that $30 under your bed, and either forget that you left it there or that your flatmate stole it anyway - self-custody risk.

On-exchange (CEX)

When you leave your cryptocurrency on an exchange the risk that it could be stolen from the exchange. The most famous example was Mount-Gox. A more recent example was ByBit. Larger exchanges tend to have high levels of trust and many don't worry about the risks. It is up to you.

Cryptocurrency Custodians

Many companies offer secure storage facilities for your cryptocurrency. These can include cryptocurrency lending companies.

Custodians are becoming more popular, especially with larger holders of cryptocurrency. At the same time, many traditional cryptocurrency holders steer clear of these types of organisations because they believe self-custody to be more important.

Self-Custody

Self-custody is very important because it is you only the private keys to your assets. This means that you are responsible for your own security, but offers key advantages in that theoretically leave one country and start using your cryptocurrency in another.

Desktop Wallets

These exist on your desktop and are therefore not stored in any cloud. You are free to add more layers of security to your hardware to try and protect your wallet.

It is worth highlighting that there needs to be a lot of trust with desktop wallets, often virus checkers will so it false positives on the safety of these wallets, and in some situations some have been compromised.

Browser based wallets

You log in to the browser with your private key or password and can access the wallet. This can be more convenient for some but naturally offers less security.

It is worth highlighting that there needs to be a lot of trust with browser based wallets, often virus checkers will so it false positives on the safety of these wallets, and in some situations some have been compromised.

Mobile Wallets

A wallet on your mobile. You've attained the keys and you have easy access to your crypto assets.

It is worth highlighting that there needs to be a lot of trust with mobile based wallets, in some situations some have been compromised - famously, SIM-Card swaps. There is also a lot of mobile phone theft.

There isn't an easy answer to storing your cryptocurrency

This may appear to be a real challenge, it is worth highlighting that even money in a bank account can be lost. Many get debanked, and can lose money even when going through government regulators.

Should I put lots of money into cryptocurrency?

This is not one that we can advise on.

What we can do is say what we would do in a given situation.

If we were given $200k, what would we do?

We would allocate $100k to the following;

• $30k to Gold
• $10k to Silver
• $10k to Bitcoin
• $5k to another high market cap coin
• $20k on an exchange to trade
• $10k on a crypto backed asset
• $15k in a tax-beneficial trading account

We haven't thought what we would do with the rest, some thoughts include;

• Investing more in the technology of Crypto Statto
• Buying USDT/USDC and putting that in a crypto lending platform
• Using some money as collateral on a property overseas
• Holidays

That means we but only put 17.5% into cryptocurrency. This is despite all the fervour and noise around the cryptocurrency space. Remember, the money going into the crypto exchange would not immediately buy more crypto currency, but we would intelligently trade it.

This means that the team here, despite all the genuine upside in cryptocurrency and comfort with how the space has evolved so far, with strong knowledge of the crypto space, would not be throwing all their money into cryptocurrency. The one thing we hope you take away from this guide on getting into cryptocurrency, Is that you should not put too much money in.

We have many articles on this website to give you a perspective on this. We offer many tools to help "See the wood from the trees" by producing reports and analytics.

The one extra bit of information anyone getting into cryptocurrency should understand - bonus

This will be a highly controversial opinion and you should be mindful of the fact that many within the wider financial arena recommend Dollar Cost Averaging (DCA) for new investors.

Dollar cost averaging is where you set aside a certain amount of money on a regular basis to buy an asset. Is a strategy in that it stops you from putting all your money into an asset with a single purchase. The basic idea is that by buying an asset regularly you can often by it at a lower price and sometimes at a higher price but that you may get more of the assets than just buying it in one go.

The best way to explain why we don't think this is a great idea is best explained with supermarket visits

Imagine you are a big fan of a certain cultivar of olives! You visit the supermarket every week, indeed you visit two supermarkets a week. You notice that one supermarket offers these olives at discount once a month and another supermarket offers 2-4-1 a few times a year. The only thing to do would be to buy these olives when they are on sale. We're leaving price inflation out of the equation for the moment. Buying a jar of olives every week, versus buying 10 jars when they are 2-4-1, will be more expensive. This is a highly simplistic example but you can see the problem.

With cryptocurrency and stocks in general, it is far harder to work out what a discount is on the price. However, common sense tells you when the coin is nearest all time high price versus when it is much lower. Equally, if we think about the last few days of prices when looking at a chart, we can say whether the price is high or low at that point in recent time.

Another big drawback to dollar cost averaging

Recalling our hypothetical example of what we would do if given $200,000, We decided we would only allocate $35,5000 to cryptocurrency - indeed, we didn't commit $35,000 in one go.

A recent video on YouTube by a very popular cryptocurrency influencer said why not put in $500 every week for 20 weeks (Feb 2025). That's $10,000. Others recommend doing it continuously. In a year, you may have put $25,000 in. Can you afford that? Cryptocurrency has been known to drop by 85%.

Why is the team behind Crypto Statto so cautious on cryptocurrency when the team are a super keen on crypto?

We cannot say everybody, but let's just say everybody. Everyone loses money when they first get into cryptocurrency. The lucky ones get in at a time when the market is rising, they think they're doing very well, they buy more, the price goes up and they buy more, and then the price crashes.

There are telegram scams, exit scam websites, hacked exchanges, hacked wallets, lost keys, pump and dump coins to name but a few.

The speculative store of value argument for dollar cost averaging into cryptocurrency

A really powerful case for dollar cost averaging into cryptocurrency, in particular Bitcoin, is that it exceeds the rate of inflation overtime. Indeed it beats all major indexes and thus represents the only way to get ahead.

How we would get into cryptocurrency if starting anew?

As we say this is not advice, just our opinion.

We would buy a cold storage wallet, choose a coin that has low transaction fees and is relatively high in market cap for stop you can go to a website like coin gecko or coin market cap to see which coins have the higher value. We would install a mobile app, find a password manager - any keys would go in that password manager. We would want to be comfortable that hardware wallet was backed up securely.

We would put a small amount of money onto a centralised exchange say $100 and buy $10 of that coin. We would then send a dollar of that coin to a wallet, check it arrives, And then send it onto another wallet before sending the coin back to the will exchange. Having been through this process we will then boy $90.00 worth and put it in the wallet of our choice. Forget about it, and start learning about cryptocurrency. Even better would be to have a friend that does the same thing and you can exchange small amounts coins to each other to get used to the process.

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