Getting Started with Cryptocurrency
It doesn’t matter if you’ve never heard of blockchain or are already trading bitcoin futures, you will find a wealth of information here about investing in cryptocurrency.
- Best exchanges for trading cryptocurrencies based on your situation
- Safest platforms to store digital assets while maximizing interest rates
- Recommended resources to learn about decentralized finance
Note: This article was written for US taxpayers to manage digital assets more efficiently but mentions additional offerings only available to international investors.
Step 1: Setup Accounts on US-Regulated Centralized Exchanges
You need a “fiat on-ramp” to exchange US Dollars for your first cryptocurrency and this involves going through a comprehensive onboarding process called KYC/AML to verify your identity. Submitting a photo ID and selfie may seem alarming but these security measures ensure your funds stay safe.
Coinbase is the most popular platform for new US-based investors as they comply with all applicable laws and regulations.
Sign-up with this referral link and we both earn USD 10 in bitcoin when you deposit at least USD 100 into any digital assets.
https://www.coinbase.com/join/morris_l9u
Coinbase offers a great user experience but they also have high trading fees. It is still the best exchange for beginners and a reliable fiat off-ramp if you ever want to convert cryptocurrency back into US Dollars.
Unfortunately, they don’t offer the best selection of cryptocurrencies so you will also want to sign-up with other exchanges to access more products and services.
Gemini is a major US-regulated exchange with better opportunities for earning interest on your digital assets. Trading fees are high like Coinbase (both 1.49%) but it’s still worth signing-up as Gemini is a reliable fiat on-ramp/off-ramp.
Sign-up with this referral link and we both earn USD 10 in bitcoin when you trade at least USD 100 within 30 days.
https://www.gemini.com/share/qp448xue
Binance is the leading exchange globally but was forced to stop servicing US customers in 2019. They now offer a scaled down US-regulated version which I still recommend to access more sophisticated products and services
Binance.US has low trading fees and a good selection of cryptocurrencies compared to other exchange with a fiat on-ramp in US Dollars.
Sign-up with this referral link and buy some Binance Coin (BNB) for 25% off trading fees.
https://accounts.binance.us/en/register?ref=52324662
bitFlyer is a popular Tokyo-based exchange with a US-regulated version. They offer low fees but the selection of trading pairs is limited. If you just want BTC or ETH then go for it but don’t waste your money buying ETC, LTC, or BCH.
Sign-up with this referral link and we both earn USD 15 in bitcoin when you trade at least USD 100 in any digital asset.
https://bitflyer.com/invitation?id=knujn1zm&lang=en-029
Note: International investors should make Binance.com their main exchange as they offer some of the most innovative products and services. Use this referral link for a 10% rebate off trading fees and you can still get the additional 25% discount if you have any BNB.
https://www.binance.com/en/register?ref=DFS14X8J
UPDATE: Global regulators are starting to target Binance so you shouldn’t keep your digital assets on any crypto exchange unless you are an active trader.
Step 2: Earn Interest on Cryptocurrency Deposits
There are limited opportunities to earn attractive interest rates for keeping cryptocurrency on an exchange. Transferring digital assets to a crypto lending platform will allow you to generate income and/or borrow against your crypto collateral.
BlockFi is US-regulated and uses Gemini as their primary custodian, both company are regulated by the New York State Department of Financial Services.
A crypto lending platform is like a bank but you earn high-yield passive income on digital assets. Self-executing software called Smart Contracts enable peer-to-peer lending without intermediaries (bankers).
An easy way to get started is to buy USD Stablecoins like USDC, GUSD, BUSD, or PAX . These are “digital dollars” pegged 1-for-1 with the US Dollar and will offer significantly higher yields than what is available through traditional banks.
Sign-up with this referral link and we both earn USD 10 in bitcoin when you deposit at least USD 100 into any digital assets.
https://blockfi.com/?ref=dc871909
After completing the onboarding process, you can either fund your account through their fiat on-ramp or transfer crypto from a digital wallet on one of your exchanges.
Coinbase has step-by-step instructions here about transferring crypto between digital wallets.
Cryptocurrency wallet addresses are a unique string of alphanumeric characters in hexidecimal notation and can also be represented as a QR code for easy scanning.
Note: You may need to pay a small “Network Fee” to transfer digital assets between an exchange and BlockFi. For me, this was only USD 0.58 when transferring USD 100 in USDC from Coinbase but will vary depending on network traffic.
I mention this because you need to deposit at least USD 100 into BlockFi to earn their USD 10 bonus in bitcoin so the minimum amount I would initially fund Coinbase would be USD 101.
BlockFi has just released a new credit card offering 1.5% cash back paid in bitcoin. Sign-up with this referral link to join the waitlist.
https://blockfi.com/credit-card-waitlist/?r=zVvl4
Gemini was already mentioned above as they are a US-regulated exchange with a fiat on-ramp but they also offer decent interest rates through Gemini Earn.
Note: Coinbase and Gemini have high trading fees (both 1.49%) and the minimum sales commission is USD 2.99 so you should invest at least USD 200 or else you end up paying more than 1.49%. This does not apply to stablecoins so you can easily move any amount from fiat into stablecoins.
What I like about Gemini is they have a good selection of blue-chip Decentralized Finance (DeFi) and Decentralized Exchange (DEX) tokens. All of them offer interest through Gemini Earn whereas Coinbase Earn is still very limited.
After buying BTC and ETH, I recommend looking at AAVE, COMP, LINK, MATIC, MKR, SNX, SUSHI, UMA, UNI, YFI, and ZRX.
While many of these don’t have real-world equivalents in the traditional financial services industry, think of it as investing in J.P. Morgan and the New York Stock Exchange back in the 19th century.
https://www.gemini.com/share/qp448xue
Celsius is headquartered in London and looking to relocate their headquarters to the US but conservative investors need to understand they will be playing outside the proverbial sandbox for now.
I’m willing to accept the additional risk because Celsius offers the widest range of available digital assets and some of the best interest rates in the market. The product isn’t perfect but I keep most of my crypto on their platform.
Since they don’t offer a fiat on-ramp, you need to first purchase cryptocurrency on an exchange and then transfer it between your digital wallets.
First get comfortable trading on US-regulated exchanges but if you are a long-term investor and want to earn high-yield passive income on your digital assets then Celsius offers the best opportunities.
Sign-up with this referral link and we both earn USD 40 in bitcoin when you deposit at least USD 400 into any digital assets.
https://celsiusnetwork.app.link/1419941113
Vauld is a Singapore-based crypto bank formerly known as Bank of Hodlers. They are growing aggressively and offer some of the highest interest rates in the market for many popular digital assets.
Long-term investors in BTC, ETH, XRP, and DeFi tokens should consider depositing a small portion of their digital assets with Vauld.
Vault also offers innovative products like “Token Basket” indexes and an Automatic Investment Program for buying the dips.
https://vauld.com/register/HB6muv93qD
Voyager is another crypto lending platform and publicly traded on the Canadian Stock Exchange (CSE: VYGR). They also have very competitive interest rates for many digital assets and offer an exchange.
Sign-up with this referral link and we both earn USD 25 in bitcoin when you trade at least USD 100 in any digital asset.
https://voyager.onelink.me/WNly/referral?af_sub5=26B1EF
Referral Code: 26B1EF
Step 3: Optimize Portfolio for Maximum Returns
- Stablecoins offer significantly higher yields than traditional banks but first understand the risks of holding digital assets.
- Both short-term traders and long-term investors should strategically select exchanges based on available trading pairs, tight bid-ask spreads, and low trading fees.
- Crypto lending platforms are aggressively increasing Assets Under Management (AUM) but yields change based on market conditions so stay updated.
USD Stablecoins are fully backed 1-for-1 with government-issued US Dollars. Converting fiat money into “digital dollars” will allow you to earn double-digit yields on crypto lending platforms instead of less than 1% APY with your checking or savings account.
- Fiat-collateralized Stablecoins are the safest as they are pegged to fiat money. BUSD, GUSD, PAX, TUSD, USDC, and USDT are the most popular USD Stablecoins. There are also stablecoins pegged to international fiat currencies like AUD, CAD, GBP, and HKD.
- Commodity-collateralized Stablecoins are similar to fiat-based stablecoins but backed by gold, silver, or other commodities (PAXG)
- Crypto-collateralized Stablecoins are not pegged 1-for-1 with fiat money and require a crypto reserve to protect against price swings (DAI)
- Non-collateralized or Seigniorage-style Stablecoins are not backed by any assets and use complex algorithms to maintain price stability (AMPL)
- Fractional Algorithmic Stablecoins or Hybrid Stablecoins are partially backed by collateral and partially stabilized algorithmically (FRAX)
To mitigate risk, deposit different fiat-based stablecoins across BlockFi, Celsius, Nexo, Vauld, and Voyager. Don’t put all your eggs in one basket!
Strategic Yield Investing will allow you to maximize total return by keeping trading fees low and earning the highest yields available in the market.
BTC and ETH will probably be part of your core cryptocurrency portfolio and long-term investors will want to keep everything safely distributed across different crypto lending platforms while earning at least 5% APY.
Don’t make large trades on Coinbase or Gemini due to their high fees (both 1.49%). The only exceptions would be for these opportunities:
- Coinbase Earn: ATOM (6.0%), XTZ (4.63%)
- Gemini Earn: AAVE (5.83%), FIL (7.4%), SUSHI (3.1%), UNI (3.59%), YFI (3.29%), ZRX (3.68%)
For everything else, use Binance.US or bitFlyer for the lowest trading fees. If you don’t need a fiat on-ramp then Kraken or KuCoin are also popular exchanges.
Be sure to check CoinGecko.com or CoinMarketCap.com for cryptocurrency market research and select an exchange based on available trading pairs (USD/BTC, USDC/BTC, and/or USDT/BTC).
These are my favorite cryptocurrencies for earning interest. Remember, decentralizing your digital assets across 2–3 crypto lending platforms is a great strategy to mitigate risk. Scroll to the right for links to CoinGecko.
SUMMARY
Step 1: Setup Accounts on US-Regulated Centralized Exchanges
- Coinbase
- Gemini
- Binance.US or Binance (international investors only)
- bitFlyer
- Kraken (no fiat on-ramp, mobile app requires API key)
- KuCoin (no fiat on-ramp)
Step 2: Earn Interest on Cryptocurrency Deposits
- BlockFi (US-regulated)
- Gemini Earn (US-regulated)
- Celsius (London-based)
- Nexo (Bulgaria-based)
- Vauld (Singapore-based)
- Voyager (Canada-based)
Step 3: Optimize Portfolio to Maximize Returns
- Earn over 12% APY with stablecoins
- Research cryptocurrencies on CoinGecko.com or CoinMarketCap.com
- Select the right exchange for low fees and available trading pairs
- Download Interest App and check regularly for the highest yields
- Educate yourself about Decentralized Finance
