Edmond Chan

How I finally bought my first MONERO cryptocurrency (complete beginner’s guide)

chanman · Aug 24, 2017 · Leave a Comment

Argh. Today (22nd August 2017) I was looking at buying Monero again (remember it was on my watchlist of cryptocurrencies to buy) and I couldn’t believe it.

Suddenly, Monero was trading at USD 75, when it had been bouncing around USD 45 for months. (see chart below from Coindesk):

how to buy monero — ARGH! This is what FOMO feels like.

I looked up the news for Monero and apparently it jumped on rumours of being listed on a South Korean exchange:

https://www.coindesk.com/monero-price-hits-record-high-near-100-on-new-exchange-listing/

This would bring extra accessibility to buying Monero so would have spurred demand for punters wanting to get some of the price rise once it did get listed on that exchange. If it gets on that exchange, it will pop. (If it doesn’t, then it might well go down due to not being listed)

Getting a Monero Wallet to receive and store Monero

I looked at Moneroeric and this article on how to use the official GUI wallet from monero.how. I then downloaded the GUI but couldn’t get it to open on my computer.

So the alternative wallet is My Monero, which is a web-based browser wallet. This is only recommended for small amounts of Monero and not for big amounts. I wanted something quick and easy to set up NOW.

I then went onto My Monero and created an account, which was really easy.

Buying Monero

There are two main ways of buying Monero that Monero Eric recommends in his excellent article on buying Monero.

First, you could go onto an exchange like Poloniex and use either fiat currency like USD or EUR and then use these to buy Monero (XMR).

Second, you could use a cryptocurrency swapping site like Changelly or Shapeshift.

I went for the second option because I wouldn’t need to sign up for a laborious ID verification process, like I would have to do with an exchange like Poloniex or Kraken.

So I went to Changelly (not Shapeshift) and opened an account.

Why Changelly? I just got a better feel off Changelly vs Shapeshift. I liked the look of the site more and I think it gives a slightly better exchange rate than Shapeshift. I haven’t done extensive comparisons (for a later post).

I went to change a test amount of BTC to XMR and went through the steps on Changelly:

I entered my My Monero address and payment ID.

Then I went to my BTC Electrum wallet to send BTC to Changelly BUT………

I couldn’t get my wallet to send BTC. ARGH. In a similar way to my Ethereum wallet, the wallet needed to sync before it could do anything.

It wouldn’t sync. To be fair, my internet connection at home is not the strongest, so I’ll try again tomorrow.

OKAY so let’s try this again.

So following the exact same steps as above:

SUCCESS! On 24th August 2017, I finally bought some Monero.

It’s really not an easy process. Wallets in cryptocurrency world take a long time to sync with the Blockchain.

Even sending Bitcoin from my Electrum wallet took a while for the transaction to be verified by the Blockchain.

Then it finally got to Changelly…..

Then it confirmed the transaction had happened on Changelly, but now I had to wait for my Monero to appear in my My Monero wallet.

Instead of instantly appearing in the wallet, it stayed at a zero balance because it was still catching up with the Blockchain:

So here we wait.

UPDATE: This morning (25th August 2017), despite the wallet still being 46 blocks behind in syncing with the Blockchain, my Monero (XMR) has arrived in my wallet. Woohoo!

In the next posts, I’ll give my assessment of the Monero buying process and of the various elements of the trade.

Why is Bitcoin trending now?

chanman · Aug 22, 2017 · Leave a Comment

Following on from the last post, we’re looking at questions that my friends have asked? Last time we looked at ‘What is Bitcoin?’

Today, we look at ‘Why is Bitcoin trending now?’

The main reason that Bitcoin is trending now is because it’s making the news.

It’s making the news because it’s smashing through historic highs from deep lows.

Most people knew Bitcoin as a ‘digital currency’, but maybe thought it was a fad or a scam, or something to use to buy drugs on the Silk Road.

They may have known that it was pretty cheap a few years ago.

Those same people now know Bitcoin as going through USD 3,000, then USD 4,000.

Now people see that tech giants like Bill Gates and Jack Dorsey talking about how the Blockchain is here to stay and talking up Bitcoin.

This new phase of acceptance and then adoption is driving the price multiples of what it has been.

People now see Bitcoin millionaires. Those early adopters that bought in at USD 30 are now rich (on paper) and people want in on that.

If you bought £1,000 worth of Bitcoin at £30, you would have 33.3 Bitcoins, which at £3,000 per Bitcoin, would be £100,000. A huge return.

So it’s trending because of natural greed and from looking at charts like this:

Who doesn’t want to see charts like that?

And when people hear that some are predicting that Bitcoin could go to USD 500,000 per Bitcoin, understandably, people don’t want to miss out. Greed and FOMO are driving interest and that drives the price up and that then drives more greed and more FOMO.

People are now thinking that maybe Bitcoin has a future. That it could be the dominant cryptocurrency and that it could one day be as accepted as the mighty dollar.

So in a nutshell, it’s trending because it’s new and exciting, it’s been rocketing up in price, it’s being talked up by big, well-respected figures and it’s potentially being viewed as a truly viable currency (crypto or not).

Any questions, let me know in the comments below!

What is Bitcoin? (the beginners’ guide)

chanman · Aug 21, 2017 · Leave a Comment

Since starting this blog and dabbling in Bitcoin and Ethereum, friends of mine have asked me to hold off with the dollar cost averaging stuff, and go back to the very beginning.

Questions they’ve asked:

What is Bitcoin?
Why is it trending now?
Why should I buy one now?
How do I get one?
How should it be viewed in your portfolio i.e. is it an asset?
How is it different from normal currency?

In this post, I’m going to answer the first question:

What is Bitcoin?

Bitcoin was created by a Satoshi Nakamoto. Nobody knows who he or she is.

The idea was to create a new currency, one that was fully online and digital and that was fully decentralised.

Problems with normal currency

The problems with normal currencies stem from their dependence on third parties.

Normal currencies are controlled by that country’s government and central bank.

So Pound Sterling is controlled by the UK Government and The Bank of England.

Third parties can devalue a currency

The UK Government can print money. Since 2008, they’ve pumped shitloads of new money into the system. This over supply devalues the currency. It buys less now than it did then.

Third parties charge you unnecessary fees

You have to pay fees to move money into other currencies and to move money across borders. Why should you pay £25 to move money to The Philippines in addition to the money you lose on exchanging one currency for another?

Bitcoin aims to solve all these problems. How does it do this?

Well Bitcoins run on something called a Blockchain.

Blockchain is a system or network of ledgers. A ledger is like a register.

The network has the effect of decentralising how the currency operates.

These ledgers record every single valid transaction in Bitcoin that is made. So if I send you a Bitcoin, this transaction is first verified by other ledgers in the system, then the ledgers get synced with the verified transaction. This is truly peer to peer.

We don’t need a bank or institution to tell us that the transaction was made. Other users verify that the transaction happened and then this transaction is recorded on all the ledgers in the blockchain.

There is no need for a bank to verify a transaction. There is no need to use a bank to send or receive money.

I can send money to you in The Philippines peer to peer. I send you a Bitcoin and you receive it. All in minutes or even less. For me to send you money that you could use, you would have to open up a Western Union account, send GBP to be converted to Pesos, then you would have to open up a Western Union account too to receive it. Not so with Bitcoin.

Essential further reading and viewing for ‘What is Bitcoin?’

https://bitcoin.org The official Bitcoin website

https://www.weusecoins.com

https://99bitcoins.com

https://www.investinblockchain.com/what-is-bitcoin

How and why to dollar cost average building your Bitcoin position

chanman · Aug 15, 2017 · 2 Comments

So you want to start building your Bitcoin position?

How should you go about it? Should you just whack your full investment stake in one go?

In this post, I’m going argue that you shouldn’t just whack it all in, and instead I’m going to argue that you should dollar cost average your Bitcoin investment.

What is dollar cost averaging?

This is a way of building a position and making sure that your overall price that you entered a position isn’t too high. (assuming that you want to go long) or too low (assuming that you want to go short).

Example: buying Rolls Royce stock.

If you have £1,000 that you want to invest (i.e. buy/go long), then you could invest that whole £1,000 into Rolls Royce now. Looking at the price in the chart below, the current price as at 14th August 2017 is 904.50p or GBP 9.045.

Now you could put the whole £1,000 into RR at this price.

But what happens if the price starts to fall in the next month, say it drops to 800p? That’s a drop of 11%?

Well, this sort of thing does happen. 11% lower than you got in for? You’re not going to be happy. You’re going to wish that you got in at a lower price. However, you couldn’t have predicted that the price was going to go down anymore than you could have predicted that the price was going to rise following your purchase. But there is a way that you could have lessened the blow of the price drop:

You could have dollar cost averaged your entry into this position.

The easiest way to see this is to imagine that you split your total investable stake (£1,000) into equal chunks say (four lots of £250) and invest at pre-defined intervals (say £250 every week). In our decline case for RR above, this might look like:

Week one: invest £250 at 904p

Week two: invest £250 at 860p

Week three: invest £250 at 835p

Week four: invest £250 at 801p

First step is to calculate how many shares each weekly investment would buy you, then you add up all the shares you bought to arrive at the total RR shares bought.

Then you divide the total investment made (£1,000), by the total number of RR shares (118).

You get an average price of £8.47 or 847p.

Here’s the steps in spreadsheet form:

So thanks for the maths lesson Chan, why does this matter?

Well, if the price is now at 800p (£8.00), then your loss from your average price at £8.47 is less than it would have been had you gone all in at 904p (£9.04).

Fair enough however, the price might have only gone up from 904p (£9.04), and then you’d be sore that you dollar cost averaged with a rising price, therefore reducing off your gains.

This matters even more with Bitcoin and cryptocurrencies

Smoothing out your entry is even more important when trading in volatile things. In our context, volatility refers to the price movements of Bitcoin and other cryptocurrencies.

Look at the price movement from Bitcoin 2017 to date:

dollar cost average bitcoin — 2017 YTD Bitcoin price from coinmarketcap.com

The green line above is the price of Bitcoin in USD. Look at the volatility!

From mid-July 2017 to 15 Aug 2017, Bitcoin has risen from USD 2,000 to past USD 4,000. That’s 100% in a month!

You don’t see moves like that in normal stocks like Rolls Royce above.

This extreme of move plus the speed of the move is why dollar cost averaging is so important when building your Bitcoin position.

So if you have £10,000 to invest in Bitcoin (going long), don’t just pump it all in at today’s price. Split it into four £2,500 chunks and invest these in weekly intervals over four weeks and see what your average price for your Bitcoin will be.

Let me know how it goes in the comments below!

Two unplanned new trades (BTC and ETH)….and I need a new Ethereum Wallet

chanman · Aug 13, 2017 · Leave a Comment

In my previous post, I ended saying I was going to buy some Monero (XMR).

This it turns out isn’t as easy as I thought it might be.

I couldn’t find one exchange that traded a fiat currency (normal currency), in this case Sterling (GBP) for XMR.

The closest fiat currency I could trade for XMR was USD to XMR on Kraken, which I didn’t fancy because I don’t have a USD account (I live in the UK). Even though Kraken looks to have a very good reputation (more on that in a future post).

A Google search for ‘Buy Monero’ gave me this result https://www.monero.how/how-to-buy-monero

Reading the above page on https://www.monero.how/how-to-buy-monero and the recommended MoneroEric’s guide (which is SUPERB by the way), told me that I needed to buy Monero with Bitcoin and then either swap the Bitcoin for Monero (like Shapeshift) or buy Monero with Bitcoin using an exchange (like Poloniex or Kraken).

So before deciding which method to go with, I needed to buy some more Bitcoin.

Check out my previous post on buying Bitcoin which is pretty painless. The only thing I would look at again in the future is whether the price of Bitcoin (and other available coins) on Bittylicious is more than the price for the respective coins on other exchanges. But for now, the ease and the confidence I have with Bittylicious outweighs the price considerations. Like I constantly say on this blog, this is like the Wild, Wild West and sites that you have confidence in are worth a lot in navigating this new terrain.

I bought some Bitcoin, but not much, as the price is as high as I’ve seen it. It was GBP 2,999 per Bitcoin (BTC). I won’t tell you how much I bought but it wasn’t much. I realise now that I have to build my BTC position and my Ethereum (ETH) position for two reasons:

Firstly, they are the most dominant cryptocurrencies in the world at the moment and
Secondly, they are useful to be able to buy other cryptocurrencies with, whether using exchanges or swapping sites.

So after I bought some Bitcoin, I decided to buy some Ethereum, also using Bittylicious. I bought 0.5 ETH and went through the trade process on Bittylicious but this time I had a problem.

Whilst my bought Bitcoin hit my Bitcoin wallet, my bought Electrum did not. Or at least I couldn’t see that by bought Ethereum reached my wallet.

Remember from my previous post on buying Ethereum, that I chose to use the official wallet on the Ethereum project site. This is a node of the full blockchain. In a nutshell, this wallet has to sync with the entire blockchain in order for your transactions to be visible within your wallet.

My wallet hadn’t been synced in a while and I had 190,000 blocks to sync with until my wallet was fully synced. 190,000!!! At a rate of 2 or 3 a second, this was going to take hours at a normal broadband rate. Not good at all.

A lot of people it seems have this problem with the official Ethereum wallet. I chose it because it was on the official Ethereum site, and safety is important in this space. But it’s not user friendly at all.

Check out these dissatisfied comments on the wallet: https://github.com/ethereum/mist/issues/1795

So I’m in the

Next steps:

Build my Bitcoin position – using dollar cost averaging to get the best blended price I can get – more in a future post
Build my Ethereum position
Get a new Ethereum wallet and send my Ether (ETH) there once my ETH shows up in my current wallet
Buy some Monero using one of the methods above