I am a gold bug, a silver bug, a precious metals bug. I am also interested in the development of cryptocurrencies. I have dabbled with them mostly as an exercise in curiosity. There is still a lot that I do not know about crypto. However, I have sufficient experience to share a bit of what I've learned over the years.
Over a decade ago, @DoChenRollingBearing took an interest in learning about Bitcoin when it still very new. So new that figuring out how to acquire some was not straightforward. Bitcoin had a lot of vocal detractors back then - especially from locales inhabited by goldbugs. But DCRB was persistent and he got me to download and install a windows program that created and managed Bitcoin Wallets. He sent me ~$1.50 worth of Bitcoin back then just to test the sending/receiving system.
I did not share DCRB's enthusiasm for Bitcoin and largely forgot about the experiment over the years. Around the time that the price of Bitcoin was making new all time highs around $30K/BTC, I finally decided it was time to really start paying some attention to the crypto space and learning about it. That ~$1.50 BTC that DCRB sent me grew in value to over $200 around that time - over a 13,000% increase. This was, for me, the first of many missed windows of opportunity with crypto.
So here I am years later dabbling with crypto to learn more about it. And while I'm still a n00b, I have managed to learn a few things...
Back in the day, I thought Bitcoin (and crypto) was dead when Mt. Gox - the largest crypto on/off ramp/exchange famously imploded. But the industry has proved time and time again to be very resilient in the face of scams, frauds and bankruptcies.
For a few years, my experiences with crypto was limited to buying and holding on exchanges such as Coinbase, Kraken and Voyager. Thankfully, I saw the writing on the wall (news on social media) and managed to transfer all my crypto out of Voyager literally a week before it went bankrupt. I never used FTX, but it also serves the point that maintaining crypto holdings in accounts on an exchange carries real risk. If you don't want to lose your crypto, you need to take self custody - to transfer the crypto to your own off exchange wallet(s).
My first experiments with staking taught me very little. I allowed exchanges (Coinbase and Kraken) to stake my crypto and I accrued crypto rewards. I did not really understand at the time exactly what the exchanges were doing as middlemen in the process, or just what was involved to stake crypto natively.
Coinbase was particularly opaque about the process. I didn't need to do anything other than hold some crypto in my Coinbase account. I didn't need to commit the crypto or anything. Of course, the staking reward (yield) was lower than what other exchanges were offering, so transferred some crypto to Kraken and staked some crypto with them.
Staking on Kraken required me to lock my crypto in a staking pool. Kraken allowed me to stake and unstake pretty much at will with just a day or two transition period with each transaction. Kraken paid out better returns than Coinbase was offering, offered more detail on the rewards (transaction history of the reward payments) and had a larger selection of crypto coins that could be staked.
I was earning some yield on my crypto and it was easy to set up and manage. It was a lot like owning a dividend reinvestment stock. My "stock share" just grew over time.
When the SEC started taking up the War on Crypto in earnest, they dropped the hammer on Kraken. Kraken was forced to stop offering on exchange staking services to US based customers. The SEC is working to do the same to Coinbase. The era of exchange managed staking services appears to be dying.
Thanks to the SEC's crackdowns on exchanges in the wake of FTX's implosion, I finally got motivated to take self custody of my crypto. I bought a Ledger Nano X and began my first deep dive into the real world of crypto.
There are many options for taking self custody of your crypto. There are browser extensions (MetaMask et al), dedicated wallet software and cold storage devices (Ledger, Trezor, etc.). I did not feel comfortable with using a browser extension or software application to manage my crypto holdings, so I opted for a cold storage solution. The Ledger Nano X seemed to be the solution that offered the most features and integrations with other crypto systems, so that's the one I chose. So far, I have been happy with the choice.
Ledger (the company) offers software (Ledger Live) that works with the Nano X to manage your wallets and integrates with some dApps directly (ie. you can use some dApps directly within the Ledger Live software). The Ledger Live software provides all the basic functionality that you need to buy, sell and transfer crypto around. The access to dApps was something new to me though and it is this exposure that has really expanded my understanding of the crypto industry.
dApps open new worlds of opportunity for lending (become your own crypto banker), commerce (there are online marketplaces that only accept crypto), communication (twitter and email systems built on top of crypto technology - I still do not understand them fully), gaming ("play to earn" gaming is a small, but growing industry) and more.
There are also dApps that let you design "smart contracts" that can execute trading strategies for yield farming or seeking arbitrage opportunities in the crypto space, but I have not dipped my toes in these waters yet. This is where things start to get very technical and make my head start spinning when I read too much about it.
Learning how to stake various crypto coins/tokens was an adventure. As each crypto coin has it's own system design, they all work slightly differently from each other. Consequently, the staking process works slightly differently with each of them. Importantly for my self custody situation with the Ledger Nano X, very few crypto platforms have a native staking system with a direct integration with the Ledger Live software. That means, for most crypto, if I want to stake it, I needed to learn how to use that crypto's native staking system (outside of Ledger Live). I have written a good bit about my experiences with staking various crypto already, so I won't repeat it here, but I will summarize my experiences:
* Polkadot rewards are tied to epochs that end daily at 10:30am CST, but the timing of the rewards distribution seems to vary with the validator that was active during the epoch. I've seen rewards credited almost instantly at 10:30am and sometimes as late as 5pm.
Manually claimed rewards require you to spend some crypto in gas fees to claim your reward whether you claim the reward to your wallet or add it to your staked balance. In my experience, the gas fees typically run around 7-10 cents per claim. You can wait to claim rewards until you have a sufficient reward balance to make it worthwhile. Automatic rewards get added to your staked balance without any gas fees or manual action required.
I could probably have added another column to the table above listing the unstaking period for the various crypto, but I haven't actually gone through that process with each crypto, so I don't have any notes to draw upon. I mention it here though because some crypto does lock your coins for a period of time (days to weeks generally) when you initiate the unstaking process. Staking generally involves a bit of commitment.
Sidelines of Regret
Over a decade ago, @DoChenRollingBearing took an interest in learning about Bitcoin when it still very new. So new that figuring out how to acquire some was not straightforward. Bitcoin had a lot of vocal detractors back then - especially from locales inhabited by goldbugs. But DCRB was persistent and he got me to download and install a windows program that created and managed Bitcoin Wallets. He sent me ~$1.50 worth of Bitcoin back then just to test the sending/receiving system.
I did not share DCRB's enthusiasm for Bitcoin and largely forgot about the experiment over the years. Around the time that the price of Bitcoin was making new all time highs around $30K/BTC, I finally decided it was time to really start paying some attention to the crypto space and learning about it. That ~$1.50 BTC that DCRB sent me grew in value to over $200 around that time - over a 13,000% increase. This was, for me, the first of many missed windows of opportunity with crypto.
So here I am years later dabbling with crypto to learn more about it. And while I'm still a n00b, I have managed to learn a few things...
Risk is Real
Back in the day, I thought Bitcoin (and crypto) was dead when Mt. Gox - the largest crypto on/off ramp/exchange famously imploded. But the industry has proved time and time again to be very resilient in the face of scams, frauds and bankruptcies.
For a few years, my experiences with crypto was limited to buying and holding on exchanges such as Coinbase, Kraken and Voyager. Thankfully, I saw the writing on the wall (news on social media) and managed to transfer all my crypto out of Voyager literally a week before it went bankrupt. I never used FTX, but it also serves the point that maintaining crypto holdings in accounts on an exchange carries real risk. If you don't want to lose your crypto, you need to take self custody - to transfer the crypto to your own off exchange wallet(s).
Baby Steps With Crypto Staking
My first experiments with staking taught me very little. I allowed exchanges (Coinbase and Kraken) to stake my crypto and I accrued crypto rewards. I did not really understand at the time exactly what the exchanges were doing as middlemen in the process, or just what was involved to stake crypto natively.
Coinbase was particularly opaque about the process. I didn't need to do anything other than hold some crypto in my Coinbase account. I didn't need to commit the crypto or anything. Of course, the staking reward (yield) was lower than what other exchanges were offering, so transferred some crypto to Kraken and staked some crypto with them.
Staking on Kraken required me to lock my crypto in a staking pool. Kraken allowed me to stake and unstake pretty much at will with just a day or two transition period with each transaction. Kraken paid out better returns than Coinbase was offering, offered more detail on the rewards (transaction history of the reward payments) and had a larger selection of crypto coins that could be staked.
I was earning some yield on my crypto and it was easy to set up and manage. It was a lot like owning a dividend reinvestment stock. My "stock share" just grew over time.
When the SEC started taking up the War on Crypto in earnest, they dropped the hammer on Kraken. Kraken was forced to stop offering on exchange staking services to US based customers. The SEC is working to do the same to Coinbase. The era of exchange managed staking services appears to be dying.
The Pandora's Box of Self Custody
Thanks to the SEC's crackdowns on exchanges in the wake of FTX's implosion, I finally got motivated to take self custody of my crypto. I bought a Ledger Nano X and began my first deep dive into the real world of crypto.
There are many options for taking self custody of your crypto. There are browser extensions (MetaMask et al), dedicated wallet software and cold storage devices (Ledger, Trezor, etc.). I did not feel comfortable with using a browser extension or software application to manage my crypto holdings, so I opted for a cold storage solution. The Ledger Nano X seemed to be the solution that offered the most features and integrations with other crypto systems, so that's the one I chose. So far, I have been happy with the choice.
Ledger (the company) offers software (Ledger Live) that works with the Nano X to manage your wallets and integrates with some dApps directly (ie. you can use some dApps directly within the Ledger Live software). The Ledger Live software provides all the basic functionality that you need to buy, sell and transfer crypto around. The access to dApps was something new to me though and it is this exposure that has really expanded my understanding of the crypto industry.
There's an dApp for that?
dApps open new worlds of opportunity for lending (become your own crypto banker), commerce (there are online marketplaces that only accept crypto), communication (twitter and email systems built on top of crypto technology - I still do not understand them fully), gaming ("play to earn" gaming is a small, but growing industry) and more.
There are also dApps that let you design "smart contracts" that can execute trading strategies for yield farming or seeking arbitrage opportunities in the crypto space, but I have not dipped my toes in these waters yet. This is where things start to get very technical and make my head start spinning when I read too much about it.
Self Custody Staking
Learning how to stake various crypto coins/tokens was an adventure. As each crypto coin has it's own system design, they all work slightly differently from each other. Consequently, the staking process works slightly differently with each of them. Importantly for my self custody situation with the Ledger Nano X, very few crypto platforms have a native staking system with a direct integration with the Ledger Live software. That means, for most crypto, if I want to stake it, I needed to learn how to use that crypto's native staking system (outside of Ledger Live). I have written a good bit about my experiences with staking various crypto already, so I won't repeat it here, but I will summarize my experiences:
| Crypto | Where | Claiming | Reward Period | Est APR | Difficulty |
|---|---|---|---|---|---|
| Solana (SOL) | Ledger Live | Automatic | ~3 days | 4-5% | Easy |
| Cosmos (ATOM) | Ledger Live | Manual | ~15 minutes | 7-8% | Easy |
| Avalanche (AVAX) | AVAX browser extension | Automatic | Min 2 weeks - user choice | 7-8% | Hard |
| Polkadot (DOT) | DOT Staking Dashboard | Manual | 1 day* | ~12% | Medium |
| Cardano (ADA) | Typhon Wallet | Automatic | 5 days | 3-4% | Medium |
| Polygon (MATIC) | Stader dApp in Ledger Live | Automatic | 1 day? | ??? | Easy |
| Ethereum (ETH) | LIDO dApp in Ledger Live | Automatic | 1 day | 4-8% | Easy |
* Polkadot rewards are tied to epochs that end daily at 10:30am CST, but the timing of the rewards distribution seems to vary with the validator that was active during the epoch. I've seen rewards credited almost instantly at 10:30am and sometimes as late as 5pm.
Manually claimed rewards require you to spend some crypto in gas fees to claim your reward whether you claim the reward to your wallet or add it to your staked balance. In my experience, the gas fees typically run around 7-10 cents per claim. You can wait to claim rewards until you have a sufficient reward balance to make it worthwhile. Automatic rewards get added to your staked balance without any gas fees or manual action required.
I could probably have added another column to the table above listing the unstaking period for the various crypto, but I haven't actually gone through that process with each crypto, so I don't have any notes to draw upon. I mention it here though because some crypto does lock your coins for a period of time (days to weeks generally) when you initiate the unstaking process. Staking generally involves a bit of commitment.
