My own experience and research.

Should those I care about be bold enough to join me on the crypto high seas.

Disclaimer:

Decentralised Finance (DeFi) is not for the litigious or adult babies.

Why crypto?

We all play the finance game to survive.

You have the time for and access to medium articles, so you’re probably 👌

Please still try to understand options and consequences.

Try out a few options before forming opinions.

I’m Australian. I heard of “snow” and had ideas about what it might be like.

I only started to understand while jogging through the German winter.

Standard finance (central assets)

The standard financial model puts information and decisions at the centre.

No conspiracies just policy.

Central decisions aim to stabilise and chase the status quo.

Ray Dalio knows things

Quantitative Easing is printing money to buy assets.

Charts move up and to the right without external change.

Old management saying “what you measure improves.”

Chinese ghost cities.

What could possibly go wrong?

Some central assets:

Cash (central banks supply, states tax)

Bank accounts (delegated ownership and access)

Equity (corporations supply, states regulate)

Real estate (states tax and regulate)

This is usually convenient.

Central entities are economic deities (ostensibly) on your team.

they freeze and reverse bad transactions

they fix inconvenient market trends

they offer money for nothing

they absorb chaos and foreign happenings

they research and think

They are entities and deities because they are concepts not people.

There are trade-offs.

your assets and transactions can be frozen

your property folio is the next generation’s affordability crisis

your assets are invested in things you hate

your assets are trapped in a single region

your independent thought and learning is irrelevant

Decentralised Finance (DeFi/edge assets)

DeFi uses every trick in the book to push responsibility to individuals.

There are rules but permission is never required.

Anyone can generate new keys at any time to join the network.

Nobody can stop you if you hold the keys.

Nobody can help you if you lose the keys.

This flips the traditional model.

Every problem and opportunity is global and uniquely yours.

It’s not an answer to anything on its own, just a tool.

Old engineering saying “When all you have is a hammer, everything is a nail.”

DeFi tools are helping us explore new solutions to old problems.

Aren’t you scared?!

I’d be stupid not to be.

DeFi is terrifying and inconvenient.

I’ve survived with central assets for decades and find it easy to do so.

I could keep bumbling along as I am then retire to a beach soon.

Markets and mistakes can wipe me out any moment in DeFi.

Fear is no reason to do or not do anything.

DeFi exists as long as we show up.

That’s why I’m here.

Please don’t remortgage the house!

What does it cost?

A few hundred dollars upfront for hardware.

A few hundred dollars annually for physical security.

Use a custodial service?

Custodial services like Coinbase let you buy and sell crypto without keys.

It’s the crypto equivalent of a bank without insurance.

When the media says “Bitcoin hacked” they mean a custodian was hacked.

Bizarre exit scams and worse are normal.

Old crypto saying “Not your keys, not your coins.”

You can’t avoid custodians entirely, just get in and out fast.

How to handle keys?

Hardware wallets

Ledger Nano X

Buy a hardware wallet from a reputable manufacturer.

Yup, a wallet for keys; software developers love mixing metaphors.

Buy direct from the manufacturer and follow instructions.

Everything else is insecure as it relies on you never making mistakes.

The options are Ledger and Trezor.

Hardware wallets are secure because keys don’t leave the device.

This means you can’t fuck it up.

If anyone or anything ever provides keys or asks for keys it is a scam.

Hardware wallets have an 8 digit pin and wipe after a few failed unlocks.

You can safely travel with one. It will wipe itself if someone tries to use it.

I don’t think it needs to be declared at customs (I’m no lawyer… grey area?).

The electronics are tough and survive impacts, X-rays in airports, etc.

Buy a few with the same or different keys for extra convenience and security.

Backups

Backup and restore is the only time keys ever leave or enter a hardware wallet.

The backup of your keys takes the form of 24 “seed words.”

Anyone with the seed words can spend (steal) the money on your keys.

A piece of paper is not appropriate for serious funds.

Fire or flood can easily become a double disaster.

Billfodl

Buy a billfodl or cryptosteel.

Cover all nearby cameras.

Don’t read seed words aloud.

Never type or photograph your seed words for any reason.

Hackers love key loggers, screenshots and hijacking audio and visual devices.

Storage

real vault

Don’t leave seed word backups lying around your home.

Rent a safety deposit box from a private vault company.

Do not use banks as they are more likely to drill under pressure.

Banks may tie your access to a bank account that can be frozen.

Read the terms and conditions!

The smallest boxes are fine for key storage and relatively affordable.

What to get?

Start with ETH.

It is decentralised (this is the point of DeFi but can’t be assumed)

It handles the most daily transactions (not theoretical or fake volume)

It is over four years old (an important metric)

Other tokens are built on the ETH network

It has an awesome web service that works with hardware wallets

There is active R&D pushing the network forward in critical areas

It typically processes transactions in under a minute

It’s “good enough” in every way for beginners

Yes, Bitcoin is “hard money” as in gold, but also as in “difficult to use”.

Walk before you run!

How to get some?

The best option

Find someone who has some and offer them goods and/or services.

Buy some from a friend.

Getting it direct from a person you trust is always the best option.

I work for and prioritise clients who pay ETH.

It’s fantastic for international business.

The second-best option

Buy on the open market operated by an exchange.

Most exchanges are scams and/or incompetent.

Avoid Bitfinex and Tether.

BTC Markets works for Aussies.

Some exchanges handle state money and some are crypto only.

There is a huge difference.

Good international exchanges that handle state money (USD & EUR):

You’ll need to do KYC to use a state money exchange.

This means scanning your passport and sending it to strangers on the internet.

Somehow these laws are supposed to reduce crime.

Trade other tokens?

Once you’re in the ecosystem you can move between tokens very easily.

You have access to pure crypto and decentralised exchanges (DEX).

It’s possible to trade without further KYC or an account.

It’s possible to trade purely algorithmically without order books.

It’s possible to trade against “stable” central banking simulations.

Lots of other crazy fun stuff out there and in the works.

The first thing to try is trading ETH against DAI.

DAI is a decentralised token that roughly tracks $USD so is relatively safe.

Send and receive?

Use My Ether Wallet (MEW) with your hardware wallet.

Follow the instructions!

Try out new services/addresses with small test transactions.

If you want to get fancy with websites that support ETH get MetaMask.

Use your hardware wallet with MetaMask too!

Tracking transactions?

Use Etherscan — a website that scans and visualises the ETH blockchain.

Every address, transaction and token appears here in almost real time.

It is a courtesy to send an Etherscan link when sending ETH.

Dealing with volatility?

Mathematically

To decrease volatility make many transactions over a long time.

This cancels out large price dips and spikes.

Regardless of the charts your personal volatility is set by your own behaviour.

Large infrequent purchases mean high personal volatility.

The long term average of crypto has been very good to be exposed to so far.

Old saying “don’t stress the small stuff, everything is the small stuff.”



Old trader saying “Time in the market not timing the market.”

Conveniently

Use DAI instead of ETH; 1 DAI is always roughly $USD 1.

It’s not exact due to the decentralised algorithm but it’s pretty darn close.

Avoid centralised stable coins (everything other than DAI).

Scams and regulatory issues are incoming — get the popcorn ready.

Buy an ICO/IEO/I*O?

If you are asking the answer is no.

Please don’t ask again. The answer is no.

Short/leverage trades on margin?

God no. Do you even know what that means?

Send ETH to someone on chat/social media?

Stop!