Thread by @manansmehta5

Let's introduce you to the crypto world. And where to get started. I'm going to use stock analogies here.

I've spent over 100 hours dissecting the basics.

Here's a Crypto investing 101. A thread 🧵

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1/ Indian exchanges:

Think of crypto exchanges like WazirX, Zebpay and CoinDCX as a broker-cum-exchange. I like to say this is Zerodha + NSE.

They allow you to purchase cryptocurrency on the exchange as well as act as a store of your cryptocurrencies.

All your crypto currencies are stored on a Wallet with these exchanges. There are considered centralized exchanges.

These exchanges allow you to invest in all your major cryptocurrencies - Bitcoin, Ether, Dogecoin, ADA, Matic, etc

Most transactions are denominated in INR

2/ Foreign Exchanges

Very similar to Indian exchanges discussed above. Only difference is that these are based outside India.

2 big examples are Binance and Coinbase

(Binance is an investor in WazirX, Coinbase in an investor in CoinSwitch Kuber)

These are usually lot more advanced and allow multiple things that Indian exchanges don’t allow such as yield farming, staking, etc.

(These are complex topics – beyond the scope of this beginner’s thread).

Trades are done majorly in USDT (which is theoretically supposed to be equal to 1 US dollar).

There are also centralized exchanges.

3/ Decentralized Exchanges

While these save the same purpose as the exchanges above, there are 2 major points of difference:

a. These exchanges are decentralized – Binance, WazirX, Coinbase, etc are controlled by one company. Decentralized exchange are not controlled by one...

corporation or one person. Every person holding a particular crypto token are owners of this exchange.

Decisions are taken on a proof-of-work or proof-of-stake basis.

b. They usually do not offer a wallet service. You need to use some other wallet. (more on wallets below)

Examples of Decentralized Exchanges (DEX) are PancakeSwap and Uniswap

4/ Wallets

While centralized exchanges offer their own wallets, decentralized exchanges don’t.

You can always transfer crypto currency to your own wallet from the exchange’s wallet anyway.

Think of this as having an account with CDSL/ NSDL.

There are online wallets – Metamask, TrustWallet are the most popular and offline cold wallets (where you can save crypto on a hard drive)

At each point of remittance from one wallet to another, a remittance fee (commonly called gas fee) is charged.

Here's a great article on what Web3.0 wallets are and why you need them:

learncrypto.com/blog/keep-lear…

5/ Common money flow

A typical crypto trader would probably transact money in the following way:

You could also transfer money straight from the Indian exchange to Metamask or Trust wallet.

At each point of remittance from one wallet to another, a remittance fee (commonly called gas fee) is charged.

6/ What are crypto swaps?

Unlike shares, crypto currencies can be traded for each other. Think of this as trading Asian Paints shares (Bitcoin) for Reliance shares (Etherium).

For shares, you would have to sell Asian paints, receive money in INR and then purchase Reliance. However, you can directly switch Bitcoin for Etherium. This is known as a crypto swap pair.

99% of cryptocurrencies can be swapped for another cryptocurrency. This probably means that there are millions of crypto swaps available on Decentralized exchanges.

Note that centralized exchanges usually offer only some crypto swaps – Binance offers the most, WazirX offers a few, Zebpay offers the least.

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