CRYPTOCURRENCY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bitcoin, Ethereum, and other cryptos are revolutionizing how we invest, bank, and use money. Read this beginner’s guide to learn more.

 

CRyptocurrency

 

A brief history

At its core, cryptocurrency is typically decentralized digital money designed to be used over the internet.

 

Its founder goes my name of Satoshi Nakamoto, mysteriously disappeared after release the Bitcoin Peer2peer electronic cash whitepaper.

Bitcoin, which launched in 2008, was the first cryptocurrency, and it remains by far the biggest, most influential, and best-known.

 

In the decade since, Bitcoin and other cryptocurrencies like Ethereum have grown as digital alternatives to money issued by governments.

 

 

What is cryptocurrency?

 

  • Popular cryptocurrencies, by market capitalization, are Bitcoin, Ethereum, Bitcoin Cash and Litecoin.

  • There are cryptocurrencies similar to Bitcoin. Others are based on different technologies, or have new features that allow them to do more than transfer value.

 

  • Cryptocurrency makes it possible to transfer value online without the need for a middleman like a bank or payment processor, allowing value to transfer globally, near-instantly, 24/7, for low fees.

 

  • They’re managed by peer-to-peer networks of computers running free, open-source software. Generally, anyone who wants to participate is able to.

 

  • How is crypto secure? If a bank or government isn’t involved,  It’s secure because all transactions are vetted by a technology called a blockchain.

 

  • A cryptocurrency blockchain is similar to a bank’s balance sheet or ledger. Each currency has its own blockchain, which is an ongoing, constantly re-verified record of every single transaction ever made using that currency.

 

The most important feature, cryptocurrencies allow individuals to take complete control over their assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Why Do They Have Value?

By their nature cryptocurrencies have no underlying value. Their prices are driven by three key factors that determine value: supply, demand and utility.

 

<> Supply

  • This stands for the amount of coins that will be issued. Coins with a finite supply are scarce assets, whose amount is limited. This means their value tends to rise over time. On the contrary, cryptocurrencies with an infinite supply are meant to decrease in value with every inflow of newly issued coins.

 

<> Demand

  • Like anywhere else, demand for the product raises its value. The more people are in need and want of a certain cryptocurrency, the more they are able to pay, the more value a certain digital asset can gain.

 

<> Utility

  • To have value, cryptocurrency has to be somehow useful and usable. What real-life problems do they solve? What is their function? What creates their intrinsic value? Can coins be used for voting rights or dividend payments?

 

  • There might be successful coins (like DogeCoin or Shiba Inu), that have no utility but their value is built upon speculation. Usually, this is not sustainable in the long term.

 

TOkens vs COINS:

are they different or the same?

 

<> There are thousands of cryptocurrencies today; actually, over 5,800 according to CoinMarketCap.com and the numbers keep growing.

 

 <> Each serves different purposes and can be classified by different methods. However, on a basic level it is important to understand the difference between coins and tokens.

 

  • Coins are virtual currencies based on a native blockchain, just like Bitcoin or Ether. They run on their own infrastructure and can be used to pay for purchases, as an investment or a unit of account.

 

  • Tokens, meanwhile, are built on the existing blockchain like all the custom DeFi tokens built on the Ethereum network.

 

This is one of their key differences from coins. Beyond that, tokens can be used for more purposes than coins; they can represent a company’s share, give rights to the governance of the network or even act as a tip for a nice comment.

 

 

 

 

 

 

 

 

 

 

 

What Can You Do With Cryptocurrency?

 

<>  Make low-cost international transfers

  • Cryptocurrencies are one of the cheapest ways to send money internationally. Direct (P2P) crypto transactions eliminate third parties like banks or other transfer service providers that charge high fees. Crypto transactions are much faster without intermediaries as well.

<> Trade

  • Cryptocurrencies are volatile assets. Their prices are highly driven by market sentiments and fluctuate more compared to stocks, bonds, or commodities. This allows opportunities to generate bigger gains by trading.

 

<> Store funds free from financial censorship

  • Cryptocurrencies give freedom from financial repression, be it governmental or household. They rely on a decentralized blockchain and only the private key holder has access to their cryptocurrency wallets.

 

<> Stake for rewards

  • Besides simply holding their digital currency, crypto holders may now employ them. This method, called staking or yield farming, allows you to earn interest for locking your coins for an agreed period of time.

 

How to store cryptocurrency

 

<> Usually, cryptocurrency is stored in crypto wallets, which are physical devices or online software used to store the private keys to your cryptocurrencies securely.

<> Some exchanges provide wallet services, making it easy for you to store directly through the platform. However, not all exchanges or brokers automatically provide wallet services for you.

 

There are different wallet providers to choose from. The terms “hot wallet” and “cold wallet” are used:

 

  • Hot wallet storage: 
    • “hot wallets” refer to crypto storage that uses online software to protect the private keys to your assets.

 

  • Cold wallet storage: 
    • Unlike hot wallets, cold wallets (also known as hardware wallets) rely on offline electronic devices to securely store your private keys.
    • Trezor T model
    • Ledger Nano S
    • KeepKey

 

Is cryptocurrency safe?

Here are some facts:

 

  • Cryptocurrencies are risky investments. They are highly volatile, prices may fluctuate in double digits within a day as cryptos are still highly dependent on market sentiments and speculation.

 

  • Crypto space is still widely unregulated, although the landscape is changing. The lack of regulatory oversight means the lack of legal protection, thus the less safe market.

 

 

 

Four tips to invest in cryptocurrency safely

 

According to Consumer Reports, all investments carry risk, but some experts consider cryptocurrency to be one of the riskier investment choices out there.

 

If you are planning to invest in cryptocurrencies, these tips can help you make educated choices.

see below

 

 

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  1. Research exchanges:

Before you invest, learn about cryptocurrency exchanges. It’s estimated that there are over 500 exchanges to choose from. Do your research, read reviews, and talk with more experienced investors before moving forward.

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        2.  Know how to store your digital currency:

If you buy cryptocurrency, you have to store it. You can keep it on an exchange or in a digital wallet. While there are different kinds of wallets, each has its benefits, technical requirements, and security. As with exchanges, you should investigate your storage choices before investing.

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         3. Diversify your investments:

Diversification is key to any good investment strategy, and this holds true when you are investing in cryptocurrency. Don’t put all your money in Bitcoin, for example, just because that’s the name you know. There are thousands of options, and it’s better to spread your investment across several currencies.

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           4.  Prepare for volatility:

The cryptocurrency market is highly volatile, so be prepared for ups and downs. You will see dramatic swings in prices. If your investment portfolio or mental wellbeing can’t handle that, cryptocurrency might not be a wise choice for you.