Buying cryptocurrency in 2021
May 19, 2021 9:35 AM Subscribe
I am looking to invest a small amount of money (under $10,000) in Bitcoin and Ethereum, as the fun part of my portfolio. I plan to treat this like a security, rather than currency: hold for the long term, and sell the position decades down the road. What's the best way to do this today?
You can do this on Revolute at the touch of a button. There's a crypto tab and it couldn't be easier.
(If you don't know what Revolute is, it's Venmo based out of Europe instead of... wherever Venmo is based from in the US. It operates in the US as of last year.)
posted by DarlingBri at 9:54 AM on May 19, 2021 [1 favorite]
(If you don't know what Revolute is, it's Venmo based out of Europe instead of... wherever Venmo is based from in the US. It operates in the US as of last year.)
posted by DarlingBri at 9:54 AM on May 19, 2021 [1 favorite]
Since Bitcoin is currently taking a bath, it's a great time to invest! For "fun!"
posted by SPrintF at 10:07 AM on May 19, 2021 [1 favorite]
posted by SPrintF at 10:07 AM on May 19, 2021 [1 favorite]
Coinbase is a pretty easy trading tool. I think it's also the largest/most popular.
posted by bbqturtle at 10:23 AM on May 19, 2021 [1 favorite]
posted by bbqturtle at 10:23 AM on May 19, 2021 [1 favorite]
Just a word of warning: Many cryptocurrencies are simultaneously tanking at the moment, which has led exchanges to go down, including Coinbase and Binance. Something to keep in mind, perhaps, before giving these companies your cash.
posted by They sucked his brains out! at 10:51 AM on May 19, 2021
posted by They sucked his brains out! at 10:51 AM on May 19, 2021
Please do some research into the energy consumption of cryptocurrency before you decide to invest there. If you have any interest in minimizing your own personal carbon footprint, cryptocurrency is not aligned with the goal. Apologies if you knew this and had already factored it in.
posted by dorothy hawk at 11:59 AM on May 19, 2021 [19 favorites]
posted by dorothy hawk at 11:59 AM on May 19, 2021 [19 favorites]
If you want to engage in cryptocurrency speculation as a form of recreational gambling (please don't ever fool yourself that it could conceivably be anything else) and you want to be sure that the only damage you do will be to yourself and other recreational gamblers, check the consensus protocol that the currency you propose to trade in is based on, and make sure it isn't proof-of-work or any of the various proof-of-resource-consumption algorithms. All of these are stupid, obsolete, perverse, resource-sucking wastes and nobody with a conscience should be involved with them in 2021.
Bitcoin in particular currently burns energy at the scale of small to medium nations for no good reason.
Personally I restrict my own cryptocurrency speculation to Stellar Lumens, which rely on Federated Byzantine Agreement; this costs no more energy than is required to shove the bits around between the nodes.
In general, acquiring cryptocurrencies is done by setting up an account with some cryptocurrency exchange that has an interface to banks in your country of residence, then transferring fiat currency into that via your bank, then placing buy orders on the exchange. I'm in Australia and happily use Independent Reserve; lots of people in the US use Coinbase and Binance. I believe RobinHood lets you buy cryptocurrencies as well, but I also believe Robinhood's main reason for existence is to sucker the unwary into margin buying that they don't really understand that they're doing.
Once you have your cryptocurrency, the safest way to hold it for the long term is in your own cryptocurrency wallet. I use the Stellar wallet integrated into Keybase for my long-term holdings, mainly because I use Keybase every day for messaging and this protects my wallet from app rot.
Back in the very early days of Bitcoin (they were trading at around AU$0.10 at the time and mining ASICs were not yet a thing) I bought AU$600 worth on the now-defunct MtGox exchange, bought some stuff online with them, stuck a few in a very early command-line-based Bitcoin node/miner/wallet on my old laptop and forgot about it. Later on, having not kept that software up to date or even run it for years, it was no longer compatible with the Bitcoin network; I'd also forgotten where I'd written down its secret key and my tiny leftover stash (worth maybe $5000 at today's prices) was just gone.
The vast majority of my Bitcoin was held in my MtGox exchange account because I was lazy, and it all disappeared when Mark Karpeles stole all the moneys and declared MtGox bankrupt. I would easily be a millionaire today if I'd been able to sell today what I had in that account then. Don't hold your cryptocurrency in an exchange account for longer than you need to to make trades. Stellar, in particular, is very fast and very cheap to move stuff with.
I believe that a good strategy for acquiring cryptocurrency is to place a limit buy order for a relatively small parcel for a price at least 10% below whatever they seem to be trading at today, then placing further limit orders at prices 10% below the first one until you've placed enough to suit your gambling budget. Deal with an exchange that will let you place limit buys that don't expire.
Keep a few buy orders in place at what seem to be ridiculously low limit prices. The crypto markets are insanely volatile and every now and then some n00b will place a massive at-market sell order and crash the price for an hour or two; you want your buys to execute when that happens, not when people who have some idea what they're doing want to sell to you at reasonable prices. In fact this very thing just happened about six hours ago, and I was able to pick up quite useful amounts of lumens at well below their 24 hour trade weighted average price.
I am not a financial adviser. This is not financial advice, just the musings of another recreational gambler who has been burnt before and hopes not to be burnt too badly again.
posted by flabdablet at 12:47 PM on May 19, 2021 [11 favorites]
Bitcoin in particular currently burns energy at the scale of small to medium nations for no good reason.
Personally I restrict my own cryptocurrency speculation to Stellar Lumens, which rely on Federated Byzantine Agreement; this costs no more energy than is required to shove the bits around between the nodes.
In general, acquiring cryptocurrencies is done by setting up an account with some cryptocurrency exchange that has an interface to banks in your country of residence, then transferring fiat currency into that via your bank, then placing buy orders on the exchange. I'm in Australia and happily use Independent Reserve; lots of people in the US use Coinbase and Binance. I believe RobinHood lets you buy cryptocurrencies as well, but I also believe Robinhood's main reason for existence is to sucker the unwary into margin buying that they don't really understand that they're doing.
Once you have your cryptocurrency, the safest way to hold it for the long term is in your own cryptocurrency wallet. I use the Stellar wallet integrated into Keybase for my long-term holdings, mainly because I use Keybase every day for messaging and this protects my wallet from app rot.
Back in the very early days of Bitcoin (they were trading at around AU$0.10 at the time and mining ASICs were not yet a thing) I bought AU$600 worth on the now-defunct MtGox exchange, bought some stuff online with them, stuck a few in a very early command-line-based Bitcoin node/miner/wallet on my old laptop and forgot about it. Later on, having not kept that software up to date or even run it for years, it was no longer compatible with the Bitcoin network; I'd also forgotten where I'd written down its secret key and my tiny leftover stash (worth maybe $5000 at today's prices) was just gone.
The vast majority of my Bitcoin was held in my MtGox exchange account because I was lazy, and it all disappeared when Mark Karpeles stole all the moneys and declared MtGox bankrupt. I would easily be a millionaire today if I'd been able to sell today what I had in that account then. Don't hold your cryptocurrency in an exchange account for longer than you need to to make trades. Stellar, in particular, is very fast and very cheap to move stuff with.
I believe that a good strategy for acquiring cryptocurrency is to place a limit buy order for a relatively small parcel for a price at least 10% below whatever they seem to be trading at today, then placing further limit orders at prices 10% below the first one until you've placed enough to suit your gambling budget. Deal with an exchange that will let you place limit buys that don't expire.
Keep a few buy orders in place at what seem to be ridiculously low limit prices. The crypto markets are insanely volatile and every now and then some n00b will place a massive at-market sell order and crash the price for an hour or two; you want your buys to execute when that happens, not when people who have some idea what they're doing want to sell to you at reasonable prices. In fact this very thing just happened about six hours ago, and I was able to pick up quite useful amounts of lumens at well below their 24 hour trade weighted average price.
I am not a financial adviser. This is not financial advice, just the musings of another recreational gambler who has been burnt before and hopes not to be burnt too badly again.
posted by flabdablet at 12:47 PM on May 19, 2021 [11 favorites]
Adding to what dorothy hawk said about the energy footprint of cryptocurrency: Here's a list of proof-of-stake cryptocurrencies. They have a much smaller energy footprint.
posted by qxntpqbbbqxl at 1:00 PM on May 19, 2021 [1 favorite]
posted by qxntpqbbbqxl at 1:00 PM on May 19, 2021 [1 favorite]
I notice that Stellar is on that list, but Stellar isn't a proof-of-stake currency (although its energy consumption is similarly small), so take its accuracy with a grain of salt.
posted by flabdablet at 1:06 PM on May 19, 2021
posted by flabdablet at 1:06 PM on May 19, 2021
If you don't want to worry about securing the crypto on your own, there are services that handle "custody" for you. It's trusting someone else with your crypto, which historically hasn't been a great idea, but the major players in this space are much more regulated and serious about everything involved than mtgox ever could have hoped to be. Gemini is a great US based exchange and do custody with a lot of layers of security and insurance built in. I haven't used it for custody, but the exchange is among the most trusted in the US.
posted by msbrauer at 4:33 PM on May 19, 2021
posted by msbrauer at 4:33 PM on May 19, 2021
I had that plan, in the end I've pulled out of crypocurrencies after only 3 years because I no longer see them as a long-term investment. I think the environmental impact (and the contribution to the fact you can't get a new graphics card for love nor money at the moment) is going to be their downfall. Its already started with Elon Musk pulling out. The value of bitcoins is down 30% in the last couple of weeks. With climate change becoming an increasingly important issue, I think long term, crypocurrencies are going to continue to tank.
Maybe I'm wrong and this is a great time to invest. If you think $10k is a small amount of money, maybe you can afford to take the risk! I found CoinBase very easy to use.
posted by missmagenta at 12:24 AM on May 20, 2021 [1 favorite]
Maybe I'm wrong and this is a great time to invest. If you think $10k is a small amount of money, maybe you can afford to take the risk! I found CoinBase very easy to use.
posted by missmagenta at 12:24 AM on May 20, 2021 [1 favorite]
I think the environmental impact (and the contribution to the fact you can't get a new graphics card for love nor money at the moment) is going to be their downfall.
Chia creating a worldwide shortage of hard disk drives likewise.
The collapse of all of the dopey proof-of-consumption blockchains cannot come soon enough for me. But gamblers gonna gamble, and I think there's every chance that those of us who have got in reasonably early on their efficient modern replacements could do quite well out of them as coal-fired crypto sputters and dies.
At present there is nowhere near enough public awareness that resource-efficient public blockchains are even a thing; the widespread perception in ecologically aware circles is that all cryptocurrency is just fintech bros rolling coal. But that simply isn't the case, and the fact that I know that and so many other people don't know it yet is an information asymmetry that I think could make me some money.
But of course as a holder of Stellar I could only be expected to spruik it at every opportunity, so do not trust a thing that I tell you. Do your own research and by that I do not mean spend hours watching dodgy YouTube videos. Read the whitepapers. Understand how the protocols work. Exercise your own informed judgement about their proposed use cases. Remain extremely skeptical about fully buzzword compliant hype.
And keep half an eye on Elon. That guy is a total loose cannon with control over far too much capital.
posted by flabdablet at 1:01 AM on May 20, 2021 [1 favorite]
Chia creating a worldwide shortage of hard disk drives likewise.
The collapse of all of the dopey proof-of-consumption blockchains cannot come soon enough for me. But gamblers gonna gamble, and I think there's every chance that those of us who have got in reasonably early on their efficient modern replacements could do quite well out of them as coal-fired crypto sputters and dies.
At present there is nowhere near enough public awareness that resource-efficient public blockchains are even a thing; the widespread perception in ecologically aware circles is that all cryptocurrency is just fintech bros rolling coal. But that simply isn't the case, and the fact that I know that and so many other people don't know it yet is an information asymmetry that I think could make me some money.
But of course as a holder of Stellar I could only be expected to spruik it at every opportunity, so do not trust a thing that I tell you. Do your own research and by that I do not mean spend hours watching dodgy YouTube videos. Read the whitepapers. Understand how the protocols work. Exercise your own informed judgement about their proposed use cases. Remain extremely skeptical about fully buzzword compliant hype.
And keep half an eye on Elon. That guy is a total loose cannon with control over far too much capital.
posted by flabdablet at 1:01 AM on May 20, 2021 [1 favorite]
This thread is closed to new comments.
These will be significantly more user friendly than the coins themselves, in the same way that a gold ETF or REIT is easier to own than gold bars and commercial real estate.
It's not 100% certain that these ETFs will be approved, so you might be waiting a while. But my view is that, if the SEC won't approve crypto ETFs because of concerns about market manipulation and fraud, then that's a pretty good sign that I (an amateur) have no business investing directly in the cryptocurrencies.
posted by caek at 9:44 AM on May 19, 2021 [13 favorites]