Kiana Danial is the CEO of Invest Diva as well as an internationally recognized personal investing and wealth management expert. She delivers workshops and seminars to corporations, universities, and investment groups, and has been featured in Forbes and on CNN. She was named the 2018 Personal Investment Expert of the Year by Wealth & Finance International.

Introduction 1

About This Book 2

Foolish Assumptions 2

Icons Used in This Book 3

Beyond the Book 3

Where to Go from Here 4

Part 1: Getting Started with Cryptocurrency Investing 5

Chapter 1: What Is a Cryptocurrency? 7

Beginning with the Basics of Cryptocurrencies 8

The definition of money 8

Some cryptocurrency history 9

Key crypto benefits 9

Common crypto and blockchain myths 11

Risks 12

Gearing Up to Make Transactions 12

Wallets 12

Exchanges 12

Communities 13

Making a Plan Before You Jump In 14

Select your cryptos 14

Analyze, invest, and profit 15

Chapter 2: Why Invest in Cryptocurrencies? 17

Diversifying from Traditional Investments 18

Stocks 18

Bonds 20

Forex 21

Precious metals 23

Gaining Capital Appreciation 25

Historical returns 25

Huge growth potential 27

Increasing Income Potential 28

A bit about traditional dividends 28

The basics on crypto dividends 28

Fueling Ideological Empowerment 29

The economy of the future 29

Freedom from government control of currency 30

Help for the unbanked and underbanked 31

Chapter 3: Recognizing the Risks of Cryptocurrencies 33

Reviewing Cryptocurrency Returns 34

Capital gains (or losses) 34

Income 34

Risk: Flipping the Other Side of the Coin 35

Glimpsing Cryptocurrencies’ Reward versus Risk 36

Digging into Different Kinds of Risk 37

Crypto hype risk 37

Security risk 38

Volatility risk 40

Liquidity risk 41

Vanishing risk 41

Regulation risk 42

Tax risk 43

Exploring Risk Management Methods 43

Build your emergency fund first 45

Be patient 45

Diversify outside and inside your cryptocurrency portfolio 47

Chapter 4: Looking Under the Hood: Blockchain Technology 49

Breaking Down Blockchain Technology Basics 50

What is a blockchain, and how does it work? 50

How does a blockchain secure itself? 52

Why is blockchain revolutionary? 53

Perusing Problems with Blockchain 55

Scalability problems 56

Environmental problems 57

Fraud problems 57

Political problems 58

What Can Blockchain Be Used for? 58

Payments 58

Voting 59

Supply chain monitoring 59

Identity verification 59

Legal ownership of stuff 60

Healthcare 60

Entertainment 60

Energy 61

Internet of Things (IoT) 61

Chapter 5: How Cryptocurrencies Work 63

Explaining Basic Terms in the Cryptocurrency Process 63

Cryptography 65

Nodes 66

Mining 66

Proof-of-work 67

Proof-of-stake 67

Proof-of-importance 68

Transactions: Putting it all together 68

Cruising through Other Important Crypto Concepts 69

Adaptive scaling 69

Decentralization 69

Harvesting 69

Open source 70

Public ledger 70

Smart contracts 70

Stick a Fork in It: Digging into Cryptocurrency Forks 71

What is a fork, and why do forks happen? 71

Hard forks and soft forks 72

Free money on forks 73

Part 2: The Fundamentals of Investing In Cryptos 75

Chapter 6: Cryptocurrency Exchanges and Brokers 77

Distinguishing Crypto Exchanges 78

Centralized exchanges 78

Decentralized exchanges 81

Hybrid exchanges 83

How to choose an exchange 84

Considering Brokers 87

How brokers work 88

The pros and cons of using a broker 88

How to choose a broker 90

Looking at Other Methods for Buying Cryptos 91

Funds 91

Credit card 91

PayPal 91

Cash 92

Cryptocurrency ATMs 93

Chapter 7: Using Cryptocurrency Wallets 95

Defining Cryptocurrency Wallets 95

A few important terms 96

How a wallet works 96

Looking at Different Types of Wallets 98

Online wallet 99

Mobile wallet 99

Desktop wallet 100

Hardware wallet 101

Paper wallet 101

Choosing a Crypto Wallet 102

Based on security 102

Based on your crypto ownership 103

Based on transaction fees 104

Based on anonymity 104

Keeping Your Wallet Secure 105

Back up your wallet 105

Have multiple wallets 105

Add more security levels 106

Update your software 106

Remember where you hide it! 107

Chapter 8: Different Types of Cryptocurrencies 109

Celebrating Celebrity Cryptocurrencies by Market Cap 109

Bitcoin 110

Ethereum 112

Ripple 113

Litecoin 116

Other top ten major cryptos 117

Top 100 major cryptos 118

Cryptocurrencies by Category 119

Payment cryptos 120

Privacy cryptos 121

Platform cryptos 121

Exchange-specific cryptos 122

Finance/fintech cryptos 123

Legal and property cryptos 123

Chapter 9: Identifying Top Performing Cryptocurrencies 125

Introducing the Invest Diva Diamond Analysis 126

Using Fundamental Analysis to Pick Cryptocurrencies 127

Go with what you know 127

Choose the right categories 128

Check out cryptos’ websites 129

Choosing Cryptos with Sentimental Analysis 131

Key sentimental elements 131

Stuff to check in the news 134

Trying Technical Analysis to Select Cryptos 136

Chapter 10: Diversification in Cryptocurrencies 137

Breaking Down Some Basics on Diversification 137

What is traditional diversification? 138

How does diversification reduce risk? 138

Using Cryptocurrencies in Long-Term Diversification 140

Diversifying with non-cryptocurrencies 141

Diversifying among cryptocurrencies 143

Tackling Diversification in Short-Term Trades 147

Part 3: Alternatives to Cryptos 149

Chapter 11: Getting Ahead of the Crowd: Investing in ICOs 151

Understanding the Basics of Initial Coin Offerings 151

How an ICO works and how to start one 152

ICOs versus IPOs 153

Investing in an ICO 155

Finding ICO listings 155

Analyzing an ICO listing 156

Outlining the ICO investment process 158

Holding your tokens after your purchase 159

So You Want to Start an ICO: Launching an ICO Yourself 159

Understanding the challenges 160

Taking a few steps before the launch 160

Chapter 12: Cryptocurrency Mining 163

Understanding How Mining Works in a Nutshell 163

Discovering What You Need to Mine 165

Before you begin: The mining profitability of different cryptos 166

Mining hardware 167

Mining software 167

Mining pools 168

A mining setup example 169

Diving in and making sure mining is worth your time 170

Chapter 13: Stocks and Exchange Traded Funds with Cryptocurrency Exposure 173

Looking for Stocks with Exposure to Cryptos 174

Fundamentals 174

Market sentiment factors 177

Other considerations 178

Considering Cryptocurrency and Blockchain ETFs 179

Getting an overview of blockchain ETFs 179

Keeping an eye on other indexes 181

Chapter 14: Cryptocurrency Futures and Options 183

Focusing on the Fundamentals of Futures 184

Futures’ features 184

Financial futures 185

Introducing the Basics of Options 186

Futures versus options 186

Puts and calls 187

Risks 187

Understanding Cryptocurrency Derivatives Trading 188

The advantages of crypto derivatives trading 188

The advantages of crypto derivatives for the industry 188

Trading resources 189

Chapter 15: Dealing with the Dollar and Other Fiat Currencies 191

Considering the World’s Reserve Currency: The U.S Dollar 192

Focusing on factors that affect the U.S dollar 193

Looking at Bitcoin versus the U.S dollar 194

Examining the Euro and Other Major Currencies 196

The euro and the British pound 196

Safe havens: The Swiss franc and the Japanese yen 198

The Aussie, Kiwi, and Canadian dollars 198

Comparing the Forex Market and the Crypto Market 199

The similarities 199

The differences 200

Resources for forex trading 200

Part 4: Essential Crypto Strategies and Tactics 203

Chapter 16: Using Technical Analysis 205

Beginning with the Basics of Technical Analysis 206

The chart art 206

The time factor 209

The psychology factor: Trends 210

Spotting the Key Levels 210

Support levels 210

Resistance levels 211

Trends and channels 212

When the trend is no longer your friend 213

Picking Out Patterns on a Chart 213

Bullish reversal patterns 214

Bearish reversal patterns 214

Smoothing Charts Out with Moving Averages 215

Basic moving averages 216

Sophisticated moving averages 216

Chapter 17: Short-Term Trading Strategies 217

Distinguishing Three Short-Term Time Frames 217

Profiting within hours 218

Profiting within days 221

Profiting within weeks 222

Trying Short-Term Analysis Methods 223

Deciphering chart patterns 223

Using indicators 227

Avoiding illegal pump-and-dump stuff 228

Managing Short-Term Trading Risk 228

Chapter 18: Long-Term Investing Strategies 231

Time Is on Your Side: Getting Started with Long-Term Investing 231

Your personal goals and current situation 232

Your portfolio’s objectives 233

Creating Long-Term Strategies 234

Observing psychological levels 234

Selling when you reach your goal 235

Keeping tax consequences in mind 236

Considering Limit and Stop-Loss Orders 236

Limit orders 236

Stop-loss orders 237

Chapter 19: Minimizing Losses and Maximizing Gains 239

Keeping the Losses Down 240

Measuring returns 240

Monitoring exchange fees 241

Understanding the art of getting out 242

Letting the Profits Rise 244

Buying at the bottom 244

Knowing that patience is a profitable virtue 245

Identifying the peaks 245

Finding peaks and bottoms with a few trading tools 247

Chapter 20: Using Ichimoku and Fibonacci Techniques 249

Getting a Handle on Ichimoku Kinko Hyo 249

The components of Ichimoku Kinko Hyo 250

Ichimoku interpretations 251

Introducing Fibonacci Retracement Levels 252

Some background on Fibonacci 253

How to insert Fibonacci retracement levels into your chart 253

Combining Ichimoku and Fibonacci Techniques 254

Chapter 21: Taxes and Cryptocurrencies 257

Distinguishing Three Types of Crypto Taxes 257

Income taxes 258

Long-term capital gain taxes 259

Short-term capital gain taxes 260

Minimizing Your Crypto Taxes 260

Lowering your mining income tax 260

Reducing your trading tax 261

Bringing down your capital gain taxes 261

Checking the rate of your state 262

Evaluating Taxable Income from Crypto Transactions 263

Tracking your crypto activity 263

Handling crypto forks 263

Reporting international crypto investments 264

Part 5: The Part of Tens 265

Chapter 22: Ten Considerations Before Getting Started with Cryptocurrencies 267

Don’t Get Too Excited 267

Measure Your Risk Tolerance 268

Protect Your Crypto Wallet 268

Find the Best Crypto Exchange/Broker for You 268

Determine Whether You Should Invest Short Term or Long Term 269

Start Small 269

Follow the Cause 270

Mull Over Mining 270

Look into Investing in Other Assets First 270

Get a Support Group 271

Chapter 23: Ten Possible Moves When Your Crypto Portfolio Is Down 273

Do Nothing 273

Reevaluate Your Risk Tolerance 274

Look at the Big Picture 274

Research the Fundamental Reasons the Crypto Is Down 275

Consider Hedging 275

Diversify within Crypto Assets 276

Diversify across Other Financial Assets 276

Exchange with a Better Crypto 276

Think about Adding to Your Current Position 277

Contemplate Cutting Losses 277

Chapter 24: Ten Challenges and Opportunities for Crypto Investors 279

New Cryptos on the Block 279

Finding Economic Data 280

Regulations 281

Hackers 281

Bubbles 281

A Down Market 282

New Currencies and Projects 282

Diversification 283

Falling in Love with a Crypto 283

Using Invest Diva Diamond Analysis 284

Part 6: Appendixes 285

Appendix A: Resources for Cryptocurrency Investors 287

Appendix B: Resources for Personal Portfolio Management 303

Index 309

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