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Cryptocurrency Exchanges exist to facilitate the trade, buying and selling, of digital assets for a broad audience of users. With a wide range of cryptocurrency exchanges providing a safe and secure, yet relatively comprehensive system that allows you to achieve the intended goal.
Each service provider has its distinct quirks that any new user should be aware of before using them. Something else to keep in mind is that CEX's (Centralized Exchanges) do not handle the currencies themselves, and instead will store them within their infrastructure, almost always simply acting as a wallet for you. Once your trade parameters are set, the exchange then triggers the trading process independently as each criteria is met. This makes the exchanges security a high level need and of extreme importance.
All data was collected on, April 7th 2021.
Here's 9 Cryptocurrency Exchanges To Use in 2021.
Binance is the worlds largest cryptocurrency exchange by trading volume which provides a platform for various trading methods. Binance was founded in July 2017 by Changpeng Zhao and is now a staple of the cryptocurrency space.
Notable offerings from Binance:
Exchange is worlds largest trading platform by volume.Academy is an open access learning hub.Charity is a non-profit to advance blockchain philanthropy.Labs is an infrastructure impact fund.Research is an institutional grade research, data and analysis.Binance & Smart Chain is a community driven blockchain system.Native token is BNB.
FTX is a cryptocurrency exchange who on their website states they are "Built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. We strive to develop a platform robust enough for professional trading firms and intuitive enough for first-time users."
Founded by an experienced team who come from leading Wall Street firms and silicon valley tech companies, FTX:
Offers approximately 60 "futures" contracts.Introduced options on January 13, 2020, listing puts and calls on BitcoinUsers have to pass FTX’s KYC level 1 to be eligible to trade, and they can't be residents of the U.S., the U.K., the EU, the UAE, Canada, Hong Kong, Singapore, Cambodia, Turkey and China.Native token of the FTX blockchain is FTT.July 2020, FTX announced the introduction of a DeFi driven trading platform for derivatives called Serum.Launched a U.S.-based cryptocurrency trading platform called FTX.US on May 22, 2020.
Kraken is one of the most recognizable names on this list. A US based cryptocurrency exchange and bank, founded in 2011. They provide cryptocurrency-to-fiat trading and price information to Bloomberg Terminal.
Founded by Jesse Powell in 2011 in case the notorious exchange Mt.Gox was shuttered due to it's security failures, Kraken launched in 2013 after going through development and testing.
Available to residents of 48 US states and 176 countriesIn September of 2020, Kraken was granted a special purpose depository institution (SPDI) charter in Wyoming making it the first cryptocurrency exchange to receive this in the USA.While they have been approved for the SPDI they state "we have not yet opened a bank for business and when we do it will be a separate entity."
KuCoin is another recognizable name on this list from Hong Kong. The exchange has been operating since 2017 and was created to give people all over the world access to a simple and safe platform to buy and sell a range of digital currencies with the company marketing themselves as “The People's Exchange”.
Futures and margin trading.Crypto lending which allows you to lend your assets to those looking to margin trade, and in return receive a daily interest rate.A multi-function trading bot that sees constant updates, however it is currently only available on their mobile app.Its own token, KCS, which gives users access to greater benefits, including dividends on all fees generated on the platform.
The name at the forefront of the cryptocurrency space in the US in 2021, Coinbase, has it's own exchange, Coinbase Pro. According to their website:
"Coinbase Pro is a trading platform for individual traders and crypto enthusiasts. It offers a secure and easy way to buy, sell, and trade digital assets online instantly across various trading pairs. With a Coinbase Pro account, you can track the market, view trading history, monitor open orders, manage multiple portfolios, and more."
The exchange stands out due to offering:
Prime security and regulatory compliance.Massive backing as the leading name in the exchange business stateside.Professional-level trading platform tools.Does not have a mobile app available making its overall design cleaner for professionals and active traders.
A digital currency exchange founded by Cameron and Tyler Winklevoss in 2014 that allows customers to buy, sell, and store digital assets as a custodian service. Listed as a New York trust company and regulated by the New York State Department of Financial Services, Gemini is one of the most consistently trusted exchange in the United States.
Notable Gemini developments are:
The exchange went live on October 25, 2015.On May 5, 2016 they became the first licensed Ethereum exchange in the US.In September, 2018 Gemini received regulatory approval for a new stablecoin product, the Gemini dollar, GUSD.In October, 2018 Gemini announced they had obtained insurance covering tokens and coins held on its exchange.In May 2020, a partnership was announced with Samsung. Samsung smartphone users can link their Samsung Blockchain Wallets to their Gemini accounts to view balances and transfer crypto.
Huobi Global is a leading blockchain asset financial service provider. With a mission to make investing in alternative assets more efficient and adaptable, the company is committed to providing customers with safe, professional, and honest services based on the core principle of putting the customer first.
After being founded in 2013, some notable things about them are:
Offices in Hong Kong, South Korea, Japan and the United States.In August 2018 they became a publicly listed Hong Kong company after China banned Crypto exchanges in 2017.Huobi China does still continue to operate as a blockchain consulting and research platform.Huobi is listed on the Hong Kong stock exchange after they acquired a 74% stake in electronics manufacturer Pantronics Holdings.
They state "Huobi has over 1,300 employees and established subsidiary companies and partnership companies in 12 countries, including the U.S., Japan, Thailand, Gibraltar, etc. The Huobi team is dedicated to providing safe, professional, trustworthy, and world class services to its global clients across 170+ countries."
Another of 2017's big players, OKEx states that it "is an innovative cryptocurrency exchange with advanced financial services. We rely on blockchain technology to provide everything you need for wise trading and investment."
OKEx offers 400+ trading pairs.Claims to have 20 Million+ traders.Is available in 200+ countries.
Crypto.com is a leading cryptocurrency and payment platform founded in 2016 with a primary focus to promote the widespread adoption of cryptocurrencies. As of 2021 the company has over 10 million users and is headquartered in Hong Kong.
They say on their website that cryptocurrency matters because "It's your basic human right to control your money, data and identity." As of 2021 Crypto.com is a little different to others on this list as they offer a wide array of products to solve customer problems.
The Crypto.com Visa card.Crypto.com app, defi wallet, and exchange. On these there are various tools to earn interest on your deposits.
Supported in over 90 countries.Currently 900 employees and expanding.They have large insurance funds to cover deposits.Crypto.com now has their own blockchain for development supported by the native coin, CRO, which is CRONOS.
There we have it, a list of 9 cryptocurrency exchanges and ways to trade in 2021. It's typically recommended to determine your trading plan before choosing an exchange as you should understand local regulations that may impact your choice of platform. After that, comparing the tools and services the platform offers that will best meet your needs will help you achieve your goals with less hassle.
The explosion in retail investing over the last few years has been massive, with the influx of young money, and un-researched investments creating new propositions in markets, aided by helicopter money from governments. Cryptocurrency, with its perceived promise of high returns seems on the surface to be an easy path to success. But, what if you're looking at blockchains, cryptocurrencies, and digital ledgers as disruptive technologies of the future.
1. Decentralized Finance
Many of us invest because we want to attain a certain financial goal. Achieving that goal requires a range of tools that give you access to investment strategies to help you earn. Decentralized Finance (Defi) gives users access to a variety of tools that make choosing something that fits your own strategy and risk tolerance easy.
Yield Farming, Lending, Staking and Liquidity Pools are all available to you through Defi platforms like PancakeSwap, UniSwap, Curve and 1Inch. To stay on top of the Defi space and it's constantly changing marketplace you can use a variety of tools ranging from Defi Pulse, to Poocoin and DexTools.
2. Transaction Speed
Have you ever bought something with a card, returned it, then needed to get money back and it takes 3 days? This is because normal SWIFT based transactions take days to settle between accounts. Cryptocurrencies are an almost instant settlement in most cases, typically completed within a few hours. CRC20 on CRONOS, TronChain TRC20 tokens, Binance Smart Chain BEP20 tokens, among others all offer accelerated transaction completion, making sending and receiving currencies faster, simpler and more efficient.
On top of chains designed for transactions like these, there are new developments constantly in the space, allowing for new blockchains with massive scalability, low cost, and ultra-fast transmission such as Elrond, Avalance, Solana and more. All these aim to improve the next-generation of the tech while being efficient.
It's 2021 and cryptocurrency has come a long way in terms of security, depending on knowledge and willingness to be responsible for your funds, there are various options available to users.
We've covered the function of wallets in this article, but as a quick summary, you have cold wallets (private and secure because you own the keys, it is not connected to the internet and there is typically no KYC requirement) and hot wallets (always connected to the internet, normally requiring KYC, these are what are used on exchanges and custodial crypto apps).
As an example of a hot wallet owned by a company, Crypto.com is a leader in the space. The regular Crypto.com app is a wallet connected to a marketplace where you can purchase your cryptocurrencies and hold them. The benefits to this are that you do not have to be responsible for tracking keys and coins. If you were to lose access Crypto.com can help you restore access after proving your identity. If someone was to hack your account and steal your assets, Crypto.com has insurance to restore them. There are huge benefits to bringing aspects of the traditional finance space to cryptocurrency.
A key element to cryptocurrency is the ability to make transactions privately. A common misconception is that this means "illegal transactions". Whereas the reality is, when you make a transaction online with a debit card, credit card or payment service, all your information is attached, which explains the high rates of financial fraud.
Advocates of cryptocurrencies say that the fact that financial transactions can be completed without attaching personal information reduces the risk of fraud, and other types of leaks. The cryptographic protocols involved in blockchains can also be used to protect rights such as free speech by encrypting internet activity, which can only be decrypted by those using the same tool, or selected by the user.
5. Trading Returns
The one that everybody gets excited about, with the idea that you can attain your preferred lifestyle, buy a luxurious car, a house, and other things you may feel improve your life. Trading cryptocurrencies presents a monumental opportunity to collect a portfolio of assets that have massive potential to explode over time. By using an exchange (a place to buy and sell cryptocurrencies) you can trade based on your own risk tolerance and strategy. Learning how to determine valuable projects is a necessary skill, but the simplest way to do it is by investing in the projects you personally use or like.
Understanding how to trade effectively, and make money is difficult.
Remember, making the most of the advantages of cryptocurrency requires some learning before you can maximize the opportunity. Never invest solely because of money, it is important to have a passion for the result, as a money only driven investor will be prone to emotional errors. So, make sure to get your intentions, and goals, set ahead of time, take advantage of resources and tools, then put it all together and enjoy the results.
People always want reliable ways to grow their money that can be trusted as a store of value, and act as a hedge in times of economic distress. Bitcoin seems to be part of the answer to the big question: where should you invest? The cautious among the public tend to be skeptical of this, even as the value increases to all time highs.
What Is It?
Bitcoin is a digital currency. It doesn't get carried around in a bag or put in your safe, and you can't store a pile of Bitcoins under your mattress. In the digital age most of us wouldn't dream of that anyway. Do you carry any cash?
A paycheck is electronically deposited into your account. You pay your bills online and buy groceries with your plastic card, maybe even your phone. When was the last time you had large quantities of cash to worry about?
The difference is that since you can withdraw cash from your bank you can hold it in your hand, making it tangible, and that gives people a sense of security. You can cash in your cryptocurrencies if you want to and end up with a handful of cash, but is that worth it?
What does Bitcoin have that cash doesn’t? For one thing, Bitcoin is deflationary. There is a limit to the total number of Bitcoins available to be mined, so as more people hop on the Bitcoin wagon, the value of each one increases. That finite limit, and increasing value, creates scarcity which is a driving force in adoption.
It is straightforward to use. Once you join the cryptocurrency world, you can pay out or receive various currencies easily, simply by creating your wallet. Each cryptocurrency transaction is recorded in a way that prevents it being manipulated meaning there are no fake charges with your cryptocurrency of choice.
Bitcoin is decentralized, as such there is no institution, or individual, playing around with the velocity or direction of Bitcoin commerce. Transactions are private, peer to peer, and external forces are typically unable to swoop in and freeze your cryptocurrency wallet.
That’s the good news. Now lets flip the coin and see what drawbacks we can find.
Most would consider learning a new method of transacting with a different medium of exchange a drawback. The education around cash and common cards has been a regular part of life for decades. To use cryptocurrency you need to have a specific wallet and learn about where cryptocurrencies come from, how you can spend them, turn them in to cash, or what the blockchain does.
Another problem is that so far adoption is still limited although this is starting to change on a larger scale. The list of online stores and services that accept cryptocurrency is growing. There are various places where you can buy gift cards with cryptocurrency, then use the gift card to shop as an easier solution to this current problem.
Bitcoins can be stolen if you don't take precautions. They are digital but you need to keep them in a specific wallet to make sure they are protected from external attacks. There is always an element of society that seeks loopholes to destroy something good. If you want to give cryptocurrency a try but fear that it will suddenly become worthless then we would suggest understanding how regular fiat currencies work, and why hedges exist.
Because there is a limit to the number of Bitcoins that will ever be available, the ability to mine for the asset is slowing down. Of course, this also means that the price of Bitcoin is rising, and will likely continue to do so until its value stabilizes when every coin has been mined.
Deciding whether cryptocurrency is for you may take some research. Are you a Bitcoin only person? Alternatively, do other projects and assets provide a better opportunity for you? At some point in the very near future, blockchain based assets will be the norm and digital currencies will be the only means of transacting. Being ahead of this technological change will put you in a strong position to take advantage of these opportunities when they are presented.
This past year has seen a crypto rally once again, leading to a worldwide boom in interest and seeing all time high prices, new technologies, business ventures, and increasing mainstream institutional acceptance.
Needless to say, cryptocurrency is volatile, but it presents opportunities for anyone.
In the beginning, cryptocurrency was not a speculative volatile asset like it is now. These days the price of many crypto assets may rise or fall by large percentages within a day, and anybody can suffer sudden unexpected losses. However, traders still find ways to take advantage of the volatility and continue trading while staying in the black, maximizing every opportunity.
In this article, we will be looking at 4 useful tips for a starting crypto trader.
1. Invest Only What You Can Afford To Lose
There is no business that involves financial trading that cannot produce losses. Cryptocurrencies are a highly speculative investment and no one knows what will happen next. You could see huge gains on a single trade, but you could just as easily see the opposite. As a result of this high level of speculation, you should invest only what you can afford to lose. If there is a sudden turn that you are not prepared for as a novice investor, losing everything is likely.
Knowing this fact can create emotional issues when making decisions. If in your mind you cannot lose more than your investment, and your investment is not your whole net worth, you'll be capable of making wiser, less emotional decisions. This will also help you make the right calls, avoid panic selling when there is a dip, and instead be in a position to acquire more assets.
2. Set Trade Goals
To keep calm during periods of high volatility, traders should set take-profit prices and stop-losses before entering any position. This eliminates making trade decisions based on emotions, greed or fear, that ultimately lead to consistent losses. Setting these goals depends heavily on a few different factors including but not limited to, risk tolerance, investment value, diversified portfolio goal, and return targets. Once you have come to your conclusions and set the goals, stick to them. You can develop these goals and refine them through learning, but stick to them. Then, if your results are not satisfactory, revisit the trades and determine why they were not successful.
3. Crypto Has Cycles
All trading has cycles. Uptrends are known as bull markets, and the opposite downtrend is called a bear market. In the last few years, it has been observed that the value cryptocurrencies, while volatile in their individual natures, still follow the standard market cycles. However, while in bear markets cryptocurrencies offer excellent chances to accumulate assets. Once the bull markets arrive, the high level of activity can generate huge returns and provide for excellent exit opportunities with large profits. Predicting cycles is a difficult task and requires a solid understanding of trading fundamentals and market sentiments. These, plus charting skills can provide insights that allow for a unique understanding of future possibilities.
4. Learn To Chart
Charting is a skill that should not be overlooked, or avoided. You should be able to study the market trends to make better trading decisions. Technical analysis is of course not an easy skill to develop, but for the purpose of treating your trading as a business, and as a new trader, you need to spend the necessary time to learn how to stay constantly informed. Other benefits of charting are understanding short term movements, understanding swings, volume, and using available indicators to excel in predicting the outcome of a trade. If you're new to trading, and want to learn how to chart, consider joining our Telegram Channels that will give you insights into charting, indicators, trade setups and outcomes.
These are only four tips when there is a virtually limitless number of ways to learn. We aim to provide accessible information to beginner, intermediate, and experienced traders alike. To learn more, we offer a multitude of ways to assist in understanding various elements of what may be a new market to you. We understand that it's difficult to know where to start, and that's why we're here to help you start moving in the right direction.
Since it was introduced, Bitcoin, and crypto, adoption has continued to increase exponentially beyond what most enthusiasts predicted, or expected. As much as it is highly volatile and unpredictable, it is fast becoming a globally-adopted digital currency, and unlike normal currencies, there are no central authorities overseeing Bitcoin transactions. Once a Bitcoin transaction has been carried out, it cannot be reversed or recovered which makes the uninitiated an easy target for fraudulent activity.
Because of this, it’s important for you to be able to differentiate between a legitimate program, and a scam, to prevent you from incurring a huge loss on a valuable investment. In this article, we will be discussing three common crypto scams and ways to avoid them.
1. High-Yield Investment Programs (HYIP)
These programs are also known as Ponzi schemes where people are convinced to invest with a promise of high returns. Here, old investors are paid from the investments of new ones, and this usually goes on for a time, before new investment slows down and older investors begin to lose money. Eventually, the scheme fails and those at the bottom lose their investment.
These programs may have different appearances.
A High Yield Mining Investment
A High Yield Individual Investment
A High Yield "Pool"
A High Yield "Trader"
All of these scams have the same underlying fundamental idea, duping you into handing over your crypto. Instead, find trustworthy investment opportunities if you are looking for long term returns, or seek out education on trading if you are more inclined to manage your crypto yourself.
2. Fake Bitcoin Exchanges
These kinds of scams usually take place on social media where you may run into an ad saying you can buy Bitcoin for below market price. This is just to lure you into visiting their website, and once you do, if you are not careful, you can be scammed. These fake exchanges request your information, have you setup accounts, and then of course ask that you send your crypto to it so you can use their "exchange." Once that's done, it's all gone. They will siphon it and you will be unable to recover any funds you placed into that wallet. Always double check the source of the ad, the legitimacy of the company behind it, and never send crypto anywhere that you are not entirely confident in.
3. Crypto Award Phishing
This is a scam wherein you receive an email or message that a particular amount of Bitcoin, or other common and valuable crypto, has been awarded to you. You may actually see a specific value given, but in reality, the link in the message to claim the awarded value is only going to give the phisher the power to take control of the users wallet. As we discussed in the "5 Red Flags Of Crypto Scams", entering your information anywhere other than your wallet, or the real company app or website, is never a good idea.
Avoiding These Scams
Carry out investigations on, and research the company you intend to do business with. Simply visit blogs, read reviews, and check forums to learn more about the credibility of the company. And if in doubt, ask. Whether you are subscribed to us or not, we are always here to help you protect yourself.
Make sure any website you visit has “HTTPS” in its web link and not “HTTP.” If it doesn't, don't enter information as it isn't protected or secure.
Always trust your instincts, and if a deal sounds too good to be real, simply opt out. Don't go into a deal because of the high rate of return promised.
Make sure you verify facts listed in the advert. Take the time to learn everything that there is to know before you get involved. Dig deep, learn more, and ask questions.
Invest in publicly-audited companies since they are the only ones that give you the access to read their proof of reserve, cryptographic audit, and publicly available minutes. This will make it easier for you to verify their crypto holdings and safely engage in investment opportunities.
In November 2008 Satoshi Nakamoto published a whitepaper that began “Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments.”
The solution, as Nakamoto saw it, was an electronic cash system “based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.”
The 8-page whitepaper then went on to explain the electronic payment system that could serve this purpose. The coins would be made from digital signatures that would be “spent” on a peer-to-peer network. This is how Bitcoin, the primary cryptocurrency we know today, was created.
Who was the genius behind the concept of Bitcoin? You would think that the identity of Satoshi Nakamoto would be obvious. After all, Bitcoin has blossomed into a massive financial asset and created the market for blockchain technology and cryptocurrencies.
A definitive search for the programmer has been on since he dropped off the grid in 2011. The identity of Satoshi Nakamoto was in question from the very beginning as it's a pseudonym. No one has been able to figure out if this was one person or a group of people.
The mysterious software programmer, the founder of Bitcoin, announced in 2011 that they were moving on to another project. Speculation is that Nakamoto took one million Bitcoins with them when they disappeared. These had accumulated over the years, and now hold a value of forty-billion dollars as of January 2021.
When Nakamoto released the Bitcoin blockchain in 2009, there was no value attached to the currency. Kristoffer Koch was writing a thesis on encryption that year and as part of his research spent the grand sum of twenty-seven dollars on five thousand Bitcoins. It was not until 2010 that Bitcoin trading began and the highest price that year was thirty-nine cents for one Bitcoin.
From the beginning, the big question was, who was this Nakamoto character. When he folded up his digital world and walked away the hunt became serious. Part curiosity and part knowledge that with control of so many Bitcoins Nakamoto could substantially manipulate the cryptocurrency's value.
Craig Steven Wright, an Australian entrepreneur, came forward to say he was Satoshi Nakamoto. Wright is currently the most news centric figure known to the world dealing with constant issues stemming from his claims. There was Dorian Satoshi Nakamoto, an American, who claimed that he was not the founder of Bitcoin.
Joshua Davis wrote an article for The New Yorker in 2011 where he stated he thought that Nakamoto could be Michael Clear, a graduate student in cryptography at Dublin’s Trinity College, or possibly Vili Lehdonvirta, a Finnish economic sociologist who used to be a games developer. Adam Penenberg, an investigative journalist, speculated that Nakamoto may be the pseudonym of Neal King, Vladimir Oksman, and Charles Bry. Davis and Penenberg did analyses of the writing style and word choices to narrow down their search.
Other notable names considered through the last decade were Hal Finney, Nick Szabo, and Adam Back. None of these have ever returned any definitive proof, while the named denied any claims made.
As of 2021, the mystery of the elusive creator continues.
Before Bitcoin prices reached all time highs, many people, freelancers mostly, were already getting paid in the currency. But now that the Bitcoin price has hit forty-thousand US dollars, people are thinking of joining the ever growing number of those getting paid for their services or products, not in fiat currency, but in Bitcoin and crypto.
The big question is, is it worth it and should you consider it?
In this article, we will use Bitcoin as the crypto of choice for payment.
What's My Pay Worth?
Some may say it’s not worth it because Bitcoin is extremely volatile. One minute the price is at a certain amount and then a day later it’s down by several-hundred dollars. If you’ve put a lot of effort into your work then you might feel faint at the thought of losing your hard-earned cash in a matter of minutes. Of course, this scenario will only happen if you decide to hold on to your Bitcoin instead of exchanging it for your local currency, or stablecoin, on your favorite exchange.
Imagine this second scenario though: what if you held on to your Bitcoin and the price suddenly jumped one hundred percent? Then you’d feel like you’ve won the jackpot, right? Because you’re essentially going to get paid at twice your rate! If the Bitcoin you’ve received is equivalent to, say, for example, your salary of five thousand US dollars, and the Bitcoin price goes up twice the original amount, then you just got paid ten thousand US dollars! That’s pretty exciting, to say the least.
What To Consider
The decision to get paid in Bitcoin is, of course, yours alone. There are so many positive benefits to cryptocurrency in general that taking a look at the option before you say no to an employer, or client, who offers it may be a wise decision. Bitcoin payments are fast and cheap. You no longer have to wait days for payment to arrive at your bank and you don’t need to pay those hefty bank fees associated with payrolls, withdrawals etc... You can receive bitcoin payments any time of the day, and you’ll usually receive it within a single hour.
If you’re averse to the volatility of Bitcoin you may want to consider holding a very small part, a lower percentage of your total pay, and only be paid that in Bitcoin. It is in that vein, a similar action to putting a percentage of your pay in a retirement fund.
Who knows, you might just be able to take advantage of Bitcoin’s volatility and before you know it, your net worth might is far more than you ever expected.
Before anyone starts to invest in cryptocurrency, their foremost need is to adopt the right mindset. When it comes to trading, what does having the right mindset mean?
What Constitutes A Good Mindset?
Being open-minded, constantly learning, thinking thoroughly, and holding yourself accountable after making decisions. You are solely responsible for the choices you make when it comes to trading. Complaining because you ended up in a losing trade is wasting the valuable opportunity to learn and improve.
This market is vicious, volatile, doesn’t care about your complaints, and given the chance will take everything you put in it. Over the last couple of months, cryptocurrencies have risen again as a global phenomenon, drawing the attention of millions.
While the public lacks an understanding of cryptocurrencies and how they operate, traders, governments, and institutions are acutely aware of its importance as the cryptocurrency market is volatile, allowing the value of an asset to fluctuate rapidly, and provide massive opportunities for profitability. This market is hard to ignore when there are countless success stories floating around, but how do you prepare to take advantage of them? If you're entering the market to trade or invest, having the right mindset to begin with and being ready to accept the challenging world of cryptocurrency can set you up to succeed.
Investing in something that may seem out of reach, too complex, or technologically challenging requires upfront effort. If you're venturing into this to trade or invest without a sense of purpose and solely to make money it will be reflected by the decisions you make. A lack of fulfillment and worse still, feeling forced to do something you aren't enjoying adds its own unique challenges. Goals will be key to creating a plan that works for you.
There are two important principles to bear in mind when making your decisions and setting goals:
1. Focus On Opportunities
When you're starting out everything is an opportunity. To learn, to grow, to practice, but as you develop and begin to actively trade you may encounter difficulties. When you do, finding the opportunity in the problem will be key to developing well as a trader. Good habits are created by constant education and well-thought-out decisions. Getting stuck on problems can cause you to make emotional choices that compound the issue.
2. Take Action And Stick To It
Before every trade you should have a plan. So, when you're just starting out you should also have a plan. What are you going to learn? How are you going to practice? Where are you going to get your information? Once you have decided stick to it until you have an understanding of the content. As you grow you'll be able to determine better options available to learn from. Much the same as your trade plan stick to it, win or lose. You're able to learn from the trade results afterwards and improve but questioning yourself during leads to far more problems. Practice good habits from the beginning.
Many investors can come up with problems but only a few take advantage of a single opportunity and we know it's true that there are so many obstacles it becomes difficult to identify them.
Do not let your challenges discourage you from exploring what is a plentiful and viable market.
Sometimes, when trying to learn about new technologies, the very idea can feel daunting. This is made worse when you hear different people tell you what something means, even though they don't understand it either. Well let's cover some basic terms you'll hear in this space, and simplify them to grasp and entry level understanding. I'll use the Ethereum blockchain for any examples given as it's widely used.
What's A Blockchain?
This the foundation. It is also a ledger that records every transaction that takes place on it. Think of it as a filing system that keeps track of everything sent, and received.
Every time a transaction is completed, a block recording that transaction is added to the public chain, hence the "blockchain". Every device that is connected to that blockchain actively is constantly updating its record, as long as all devices agree that the block should be completed, it is and the record is added. This means that fraud and tampering are difficult to achieve as when one device detects an issue the block gets rejected. But, how do these transactions take place across the blockchain?
The one that everyone knows, cryptocurrency is a means of exchange, like any other currency. In the case of the Ethereum blockchain its native token, or currency, is Ether. This means that to complete a transaction across the Ethereum blockchain you must have Ether. For example, let's say I am selling something online through a company that uses the Ethereum blockchain, I must be paid for the item in Ether. Just as in the United States I am legally obliged to use and accept USD. I provide the buyer my digital wallet address (much like you would provide account and routing numbers for direct deposits) so once the Ether is received on my end, the record of the transaction is updated on the blockchain, and the Ether is now shown in my wallet. This transaction is public, recorded using Ethereum, completed and paid for using Ether.
So What's A Token?
This is an asset, think a business, that is built on the Ethereum blockchain to perform a specific action or utility. Let's use my favorite token on the Ethereum blockchain, Basic Attention Token. This is used by Brave Browser whereby advertisers pay publishers in BAT. Users can buy BAT or earn it by watching ads, and then automatically contribute some of it back to publishers. It is a great way to reward good advertising as users who see them earn something for it, and in turn reward publishers for creating content, automatically if they want. To explain how Basic Attention Token on Ethereum works, lets say I visit a website and watch an ad, I then automatically contribute to the publisher. This updates the Ethereum blockchain with a block that says I watched "x" ad on "x" website, sent "x" amount of BAT to the publisher, and it cost "x" amount of Ether to do. Tokens may be built on any of the various blockchains that allow it to best achieve its goal.
Jingle Jingle, It's Coins.
While the terms are typically used interchangeably by the public there is a distinction. A coin is typically just a cash equivalent on the blockchain without any other utility, used for exchanging or retaining value. Some of those are subject to speculation, however, stablecoins are not. There are a varying array of stablecoins, across a plethora of blockchains. While it has "coin" in the name, and let's use USDC (USD Coin) as an example, it is in fact a token, as it's utility on the Ethereum blockchain is two-fold.
1) To provide a means of exchanging value - cash equivalent.
2) To peg and be redeemable on a 1:1 basis with the United States Dollar, bringing stability to an asset held on the blockchain, which is normally susceptible to the price fluctuations of speculative assets. This makes buying, selling, or planning transactions with a blockchain easier to achieve at a given value. Just like any transaction on Ethereum, sending USDC costs Ether.
Gas Is Fuel
Gas is relatively simple since we have an understanding now of how transactions take place on the Ethereum blockchain. It is the name given to the fee charged to conduct a transaction or execute a contract on the blockchain. That little fee you paid in Ether is the gas fee. When paying the gas fee you see the word "gwei" show up. This is in reference to the fractional division of 1 Ether, much like a Satoshi is a fractional division of 1 Bitcoin. The fee is set, and accepted or rejected, by miners who validate the transactions. To improve the speed the transaction occurs in, you can pay a higher gas fee. If a gas fee is too low, it may be denied by the miners.
I've Heard About Mining.
Similar to digging up precious metals that you used to be able to buy things with, miners use their computer hardware (now rather sophisticated) to solve the cryptographic puzzles and "mine" or "create" Ether. As long as the market value of Ether exceeds the costs associated with mining it, then it is a cheaper way of acquiring it. Add on top the fact that miners earn the gas fees for validating transactions and mining may be a profitable venture if you have powerful enough hardware.
Those are just some of the many new words you might come across, but with a basic understanding of what they mean, you can start to read, listen and learn faster about the new ocean of information you're diving into. Sometimes, learning about new technologies is a little less daunting, when you've got the right help.
While cryptocurrencies – the largest and most well known being Bitcoin – are constantly gaining traction with the general population, governments around the world are becoming increasingly concerned. Typically, conventional currencies associated with individual nations, or economic zones, are regulated by the government essentially so that they can create, track, and maintain it.
In this article, we'll cover just a few reasons that concern Governments.
Basics Of Government Issued Currencies
A value is given to a specific currency and the residents of that region must adhere to all of the regulations as the government possesses the power and enforces the laws. But, what happens if organizations other than the government are issuing their own currency into society? It cannot be treated as legal tender, yet people are trading with it between themselves.
So, an unregulated, decentralized tender is being treated like a currency by citizens of a nation that has a currency of it's own to stabilize value. Unsurprisingly officials are anxious.
Loss of Control
For a government to lose even a small degree of control over something as crucial as currency, which has a direct impact on the overall success of the economy, is a direct challenge to their monopoly as issuers. As cryptocurrencies are peer-to-peer networks, it decentralizes control and places it back into the hands of the users, and therefore, challenges the control of value the government requires.
As Bitcoin has become more popular globally, governments are feeling insecure about their ability to control their economy’s currency. This has an impact on factors such as inflation, faith, and supply, which in turn can have effects felt by everyone.
Cryptocurrencies aren’t actual forms of money as they're effectively just software. However because more than two parties agree that they have value, they become a medium of exchange otherwise known as a currency. That, along with pseudonymous or anonymous blockchain technology disguising the individual's personal information, while being publicly-accessible, makes tracking transactions hard. This creates a difficulty for governments when trying to regulate, collect taxes, and dissuade criminal activity.
Most of the regulation is based on the honesty of the person self-reporting or using exchanges or wallets that require KYC (Know Your Customer) data collection, which is an AML (Anti Money Laundering) requirement for banks that deal in fiat currencies. Regulating the creation, or use, of these cryptocurrencies is almost impossible when it's created by offshore companies, or originated in a country that doesn't place any regulations on them.
This lack of regulation creates volatility and can cause harm to those who are unaware of how to take advantage of it.
The primary concern of people who have no understanding of cryptocurrencies, and a worry for governments is the risk of illegal activity involving individuals who would prefer keeping their identities hidden. These, usually vocal, fear instigators pose the examples of cryptocurrency being used to sell drugs, launder money, traffic humans, or fund terrorism, and believe that these threats demand some serious attention. Given that all these things occur with regular currencies, it may be that the fears are driven by it potentially being easier to commit these crimes with crypto.
Another aspect of crime, which we’ll touch on next, is the problem of tax evasion.
Governments worldwide raise capital to operate and provide social and national services through taxation. Now, as we've already mentioned, cryptocurrency isn't classed as money, so how is it taxed? It is considered an asset and is usually taxed similarly to stocks, and other assets, through capital gains. To be taxable, the asset must be sold, and the realized profit reported, which is then subject to capital gains tax based on the legal criteria. This is where the tax evasion problem lays, reporting. Since most of this requires self reporting and is based on a trust system, the government doesn't much trust that people are accurately reporting, and therefore leaving tax revenue on the table. Around the world, governments and businesses are working hard to find solutions to this problem and improve regulatory understanding around the issue.
When it comes to crypto there are two general types of wallets to keep your assets safe. These are cold wallets and hot wallets, both offering different types of security. In this article, we'll cover some basic pros and cons of each wallet type so you can decide which variant you might want.
Hot wallets are called this because they are always connected to the internet. These types of wallets generally have lower security making it easier for hackers to get into and steal your valuable coins from you. Examples of hot wallets include the free wallets on your favorite exchange and mobile app wallets.
Desktop wallets are another form of hot wallet, especially if you install it on a system that’s connected to the Internet. However, you do have control over your private keys and you can encrypt your wallet to deter hacking attempts. The only downside to desktop wallets is if your computer gets destroyed or stolen and you don't have the backup keys, you're likely to lose all your assets.
There have been many instances of theft from hot wallets. Hackers have even managed to steal millions of dollars worth of cryptocurrencies in single instances. Hot wallets are great for storing small amounts and transacting on the fly, but if you’ve got quite a sizeable number of assets, then it’s best to move these to offline storage or cold wallets.
The preferred storage method for those individuals with a significant amount of total assets. This wallet design has no physical connection to the internet, meaning the assets may be in an app, or stored on a device, but the keys are not accessible in anyway except by having the physical wallet.
Examples of cold wallets include paper wallets and hardware wallets. Paper wallets may sound strange up front because we’re talking about storing digital currencies, but that's precisely why it’s one of the best types of wallet for long-term storage. With paper wallets, there is no chance of anyone hacking anything because the keys are on paper. However, paper has a downside and that is it can be stolen or destroyed. To keep your paper wallet safe, consider storing it in a secure environment like a safety deposit box, and having a copy that is stored securely elsewhere.
The second, and more common, type of cold wallet is the hardware wallet. This is a physical offline device that comes in various shapes and sizes. They can be plugged into your computer, or scanned with your phone when you need to make a transaction, making access to the keys secure as long as you manage the wallet and associated app or software correctly. There are many brands that are very popular among crypto owners so we recommend researching them to find what best suits your needs. All the options will cost you some money but will improve your ability keep your virtual treasure chest safe.
What is Fiat currency?
Fiat currency is a type of currency that a government declares as a legal tender. This means that everyone represented by that government may accept, trade with, and acquire with the understanding that its denomination is its value, through nothing but law.
On the opposite end of the currency spectrum is a hard currency (also known as representative money), or a currency that is backed by, or tied to, something of intrinsic value, typically gold, that can be converted from the paper note to said intrinsic item at any time the holder of the note wants through a financial institution.
The difference between money and currency is in their definitions:
A Currency is a system of money with values defined by its issuer.
Money is a medium of exchange which has intrinsic value, whether commodity money or representative money, to two or more parties with agreed upon terms.
A History Of Currencies
The simile "it's as good as gold" comes from The Lost Heir written by Thomas Hood in 1845. It is commonly used in reference to currency, and this used to be the case for the United States Dollar, as before August 15, 1971, the US Dollar could be exchanged for a fixed amount of gold, $35 USD per troy ounce. However, on this date, then President Richard Nixon removed the United States from the Bretton Woods system of monetary management, and stopped its convertibility into gold. From this point on, the United States Dollar would be the world's reserve currency, allowing for currencies to be exchanged between each other at constantly floating values known as the foreign exchange market.
Every country today, except that of Mongolia, is using a fiat currency.
The first system of commodity money can be traced back around five thousand years, to Mesopotamia, where a system of commodity money was created. It was based on a coin called a shekel being equal to the already existing value of a specific weight of barley.
The Babylonians and surrounding city states then developed a system of economics including rules on debt, contracts, practices, property, and laws as we would understand them today. During that time, the increasing complexity of transactions made money a necessity to improve the capacity for trade and industry.
The first known fiat currency was developed around 1000 AD in China. Citizens of the Tang Dynasty (618 - 907) had started accepting credit notes because of a shortage of coins due to demand for metallic currency exceeding the supply of the precious metals used. Eventually with a further shortage of copper during the Song Dynasty (960 - 1276) this developed into traders issuing private notes covered by a monetary reserve, widely considered the first fiat currency. Subsequent dynasties, the Yuan Dynasty (1276 - 1367) made these notes the only form of legal tender, and the Ming Dynasty (1368 - 1644) made its Ministry Of Finance the sole issuer of credit notes.
How Does Fiat Currency Obtain Value?
Simply put, the strength of the issuing government, alongside supply and demand. Because of this, there is the chance of the phenomenon of hyperinflation making the currency worthless. Fiat currency is worth what we are willing to trade it for when it is backed by nothing but goodwill.
The reason it is accepted as common practice as it makes for a stable store of value, allowing for simplicity in planning, conducting business, trade, and exchanges of all types. While its store of value is stable, inflation - or the decline in purchasing power of the currency, resulting in a general price level rise economy wide, constantly steals said value while the currency is idle. As an example, the average savings account in the United States returns 0.05% per year while during that same period the average inflation rate target was 2%. If you had $100, you made $0.05c, but lost $1.95. After around just fifty years you would no longer have any store of value left, and that is just a very simplistic example.
To manage inflation rates a central issuing power responds to changes in demand by expanding or contracting the supply of the currency. When the supply is increased, inflation rates increase because it is devaluing the purchasing power of already existing currency, making prices rise. When the supply is decreased, inflation rates decrease, because the purchasing power of existing currency rises, lowering prices.
Hyperinflation is the result of uncontrolled and rapid inflationary occurrences, defined by an inflation rate of over 50% for more than a 30 consecutive day period.These can be directly correlated with monetary policy, or influenced by external events. Usually countered by the increased printing of currency with changing denominations, a government may suffer total collapse of the monetary system while the currency plummets to its inherent value of zero, or it might be recovered albeit with disastrous consequences and the need for a new representative money policy.
A modern example of hyperinflation is Venezuela where the average daily inflation rate hit a high of 178%. The currency lost half it's value ever day, or prices double ever 24 hours. However, in recent history, the worst recorded hyper-inflationary period was 1946 Hungary where daily inflation was 200% and prices doubled every 15 hours.
While fiat currency is a comfortable means to achieve a goal, it is not real money, and never will be. Real money is limited in availability, has scarcity and constantly retains a value. Commodity money can be clunky, while representative money is the best possible monetary policy when the intrinsically valued commodity is managed correctly as a hedge.
This is where cryptocurrencies with limited supplies and intrinsic value to all those utilizing the system come in. Bitcoin, Bitcoin Cash, ChainLink and Litecoin are all examples of cryptocurrencies, with limited supply, that some consider have the capacity to be used as a hedge in a digitized modern age against the ever decreasing purchasing power of the worlds fiat currencies. Considering that all fiat currencies throughout history have returned to their true value of zero, it might be time that we make the case for crypto.
Even though cryptocurrency is still viewed as a digital phenomenon and not as legal tender, or government currency, it’s popularity throughout the world has increased drastically over the last year, and in 2020, blockchain technology became mainstream.
While Bitcoin may be best suited as a hedge asset or long term investment, other cryptocurrencies are more suited to general use and making transactions. Merchants worldwide now accept various cryptocurrencies as payment for their products and services. This means that the choices for what you can buy with it are countless and you may actually be surprised by some of them. Generally speaking, if you have enough cryptocurrency in your wallet, there are very few things that you can't purchase.
One of the best things you can buy with cryptocurrency is real estate. There are a few places online that offer this service, two of the top ones being bitcoin-realestate.com, and bithome.ch. They offer amazing houses and apartments around the world with the transaction taking place on the blockchain, benefitting from everything that comes with that. Some of these benefits include almost immediate settlement of the transaction, transfer of asset title ownership securely, and transparency.
Another use of your assets; you can actually plan that next getaway to your dream location knowing it's paid for with your crypto of choice. Offering airfares, rentals, hotels, tours and more this convenience cannot be overlooked when you’re trying to book something that works for you. Travelbybit, Expedia, and of course Travala are all great places to book your vacation.
When most people think of cryptocurrency, they typically associate it with acquiring financial gain and independence. To combat issues across the world requires generosity and care, and to help with this you can actually make donations to charities such as binance.charity, givecrypto.org and givedirectly.org using the virtual currency of your choosing.
This one caters to everyone, as online retailer's provide all of the products we consume including things such as jewelry, clothing, electronics, and even groceries. What retailers accept cryptocurrencies of various sorts? Overstock, Microsoft, Homedepot, Starbucks, Whole Foods, Newegg and many more. We personally use this one almost daily through the CryptoCom Visa Cards.
Do you have an affinity for art? What about trading cards, sports memorabilia, rare utilities, domain names or even virtual worlds or specialties? Well you can buy all of these and more with your crypto holdings. NFT's are the word of the year and you can buy them on various NFT Marketplaces with your crypto and make life easier. There are also ways to purchase part ownership in extremely valuable investments or wealth building assets such as famous artwork.
Can You Sell With Crypto?
Bring your business into the blockchain era. Having a long-term vision by offering a cryptocurrency payment method may sound complicated, but it's very simple to implement. The method of which largely depends on whether you're an e-commerce or brick-and-mortar store but the end game is the same.
If you’re a physical store, then you’ll need to obtain the relevant software, along with a hardware terminal. As an online store you can just add the methods into your site. QR codes are the easiest way to make this happen for both instances.
Ah, Cryptocurrency. We see it everywhere nowadays, all over our social media, in the news, in our finance apps, and of course, we hear about it from strangers we don't know.
But what is a Cryptocurrency?
Read on and we'll teach you the basics of what a Cryptocurrency is, and what's it's main functions are.
Defining A Cryptocurrency
First, to determine what a Cryptocurrency is, we have to define it. According to Merriam Webster it is defined as;
"Any form of currency that only exists digitally, that usually has no central issuing or regulating authority but instead uses a decentralized system to record transactions and manage the issuance of new units, and that relies on cryptography (the computerized encoding and decoding of information) to prevent counterfeiting and fraudulent transactions."
So now we know;
It is a digital or virtual currency designed to work as a medium of exchange.It isn't created and controlled by a, bank or government.It uses a blockchain (we'll cover this in another post) to record every transaction and manage the currency.It requires computing power to work through the cryptographic encryption of information.No one can change the entries on the blockchain, unless specific criteria are met, making it resistant to fraud and counterfeiting.
Let's get a quick rundown of the history that led to Cryptocurrencies as we know them.
1983: American cryptographer David Chaum creates an anonymous cryptographic electronic money called ecash.
1995: He implements it through Digicash, an early form of cryptographic electronic payments requiring software to withdraw and designate specific encryption before sending. This made it untraceable to the issuer, the government, or any third party.
1998: A description of "b-money" was published by Wei Dai. It was written as an anonymous, distributed electronic monetary system. Also in the same year Nick Szabo published his description of bit gold, which was required to complete proof of work functions with cryptographic solutions. Of note is the fact that all these attempts are using a "trusted third party solution."
2009: The first decentralized cryptocurrency is created, Bitcoin (you might have heard of it), by a pseudonymous (probably) developer Satoshi Nakamoto.
2011: Litecoin is created.
2015: Ethereum is created.
2017: First Cryptocurrency and mining boom.
What was once a cumbersome and difficult process is becoming easier everyday, and, in this new decade will most likely become mainstream. While Bitcoin is the most widely accepted of the cryptocurrencies, many altcoins are starting to become accepted commonly as well. There are even companies and apps out there now that allow you to sell your cryptocurrency directly into your fiat (USD, EUR, JPY, CNY) currency of choice on a debit card. We'll cover those apps in another post though, as that's a fun subject.
Trade or Invest
This is what most people think of when they hear Cryptocurrencies. However, there is a distinction to be made as these two choices are not synonymous. We will define these as:
Investing: Purchasing a certain amount of an asset at a specific, or various prices, to hold (or HODL "Hold On For Dear Life" as the community refers to it as) for either a predetermined timeframe or until it suits the investor to sell, hopefully at a profit. This is typically a passive action and requires input from the investor only when buying and selling without much work elsewhere.
Trading: Actively purchasing, selling and trading assets to target a specific return. These timeframes are based on monitored data from charts and analysis of the asset being traded, market sentiments, and potential external influences. This is considered an active action as it requires constant monitoring and input from the trader. Most utilize tools available to them to improve the odds of a trade being successful.
It is worth noting, that while both of these actions are widespread in the Cryptocurrency markets, it is a highly volatile and risky investment segment. It is true that people make money, but more lose it because they don't have any guidance on what tools, analytics or strategies to use.
Now, if you're a PC gamer, you'll be well acquainted with the mining boom, and miners in general. But, if this is your first time learning about mining and how it works, we'll try to make it easy.
Mining is considered an investment. Because a miner is contributing their computing power and related resources to solving the cryptographic puzzle to confirm a transaction on the blockchain, once it is solved they earn a reward and a miners fee. When this is done, the blockchain is updated and the public ledger now displays it for everyone.
Some Cryptocurrencies are easier to mine than others, but all of them are resource intensive and usually require some sort of industrial hardware. This is especially true for Bitcoin, Ethereum and other top cryptocurrencies. This is because as they are mined the puzzles become increasingly more difficult, and over time, the rewards get smaller. For example, when Bitcoin was created in 2009 the reward for mining was 50 BTC, in 2016 it was 12.5 BTC, and in 2020 it halved to 6.25 BTC. But, because Bitcoin only has a total of 21 Million BTC that can ever be mined, the more there are in circulation, the more valuable the unmined Bitcoins become.
Accept As Payment
If you're a business, much like us, then you'll know that finding ways to meet your customer where they want to met can sometimes be difficult. We believe cryptocurrencies make that easier in general, especially with fast settling payment remittance solutions like Ripple's XRP.
As a business you can accept cryptocurrency just like cash, gift cards, etc...
There are many services out there that allow the settling of cryptocurrency payments and simplify the process for a business looking to add to it's payment repertoire. The great thing about crypto is the common use of QR codes to make the transaction process easier, especially if someone is in the comfort of their own home and doesn't want to have to convert to their fiat currency before making a purchase.
Privacy of the customer is another valid reason to accept this method of payment. While a hot wallet with KYC (Know Your Customer - we will have a post for this soon) implemented will be traceable on the blockchain to that person if needed, a cold wallet (we will have a post on this soon as well), that is a private hardware wallet, protects your customers privacy from prying eyes, invasive third parties and anyone else looking to potential inflict financial harm on people.
What To Avoid
We are quite clearly supporters of cryptocurrencies, but as usual, there are a few things to look out for that, at first glance don't seem problematic, but can cause massive heartache if you fall victim to them.
Scams & Fakery
This is a worldwide commonality, but some are unaware as to the types of scams out there. Typically, anyone asking you to send a payment in cryptocurrency to them with the promise of a massive return on that "investment" is a scammer.
Another scam is asking you to send wallet information to the person, or letting them remote in to a device which has your wallet on it. The scammer will then send themselves your cryptocurrency and you will have no way to reverse the transaction in most cases.
The last one in the examples we will give is a fake "miner" asking you to send money to purchase a percentage of the mining pool. Now, mining pools are common and can work well, but do your own research and protect yourself. If you cannot find legitimate information or do not feel comfortable with the transaction, do not complete it. Live with the assets for another day.
Back in 2017 ICO's, or "initial coin offerings" were a huge thing. These are a way for a company to drum up investor financing by offering their token to early adopters with the promise of great returns. The first boom in crypto and mining meant that everyone was trying to get a piece of the pie. Our recommendation here is a simple one, since many ICO's are not worth what they are requesting at the time, do not invest in anything presented as an ICO or similar and wait until the product has been on the market for a time to be assessed accurately. Of course, you may know how to take advantage of scenarios like these, much like the stock market's Initial Public Offerings, or IPO's.
PROTECT these at all times. Your private key is your ONLY means of accessing your assets on hardware or cold wallets. Most wallets ask you to write them on a piece of paper and store them safely.
Whatever you do to protect them and yourself, make sure that you have a way to access them no matter what happens. Backups on backups never hurt.
Do not give these to anyone who asks for them, never type them in under cameras or prying eyes, never tell them to anyone else, and most of all never give them up to pressure if you want to protect the assets you hold.
The cold wallet makes you your very own comptroller, that requires some responsibility and action, but can also bring you freedom and independence. Respect that fact and you will be sure to enjoy all the benefits.
So there are just some basics of Cryptocurrency. We have many current articles, and lots of planned ones to help you accelerate your learning what a cryptocurrency is, does, and most importantly how to make it a part of your life and profit from their existence.
Created by Vitalik Buterin, it has scored itself the second spot in the hierarchy of cryptocurrencies.
This digital currency launched in 2015 is predicted by some to surpass Bitcoin and may be the cryptocurrency of the future. Ethereum is currently sitting second to Bitcoin in cryptocurrency market cap.
Is Ethereum similar to Bitcoin?
In the way that it is a cryptocurrency, built on a blockchain, sure.
The main difference between the two currencies is that Bitcoin blockchain focuses on tracking ownership of the digital currency while Ethereum blockchain focuses on running the programming code or network.
What Is Different About Ethereum?
Instead of having to build an entirely original blockchain for each new application, Ethereum enables the development of thousands of different applications in a single platform. To complete the transactions on the Ethereum blockchain, miners work to earn Ether. Ether is the native crypto token that helps run the network.
Another use of the Ethereum blockchain is its ability to decentralize any services that are centralized. For instance, Ethereum is capable of decentralizing services like loans provided by banks, online transactions using PayPal as well as voting systems and much more.
Ethereum can also be used to build a Decentralized Autonomous Organization (DAO). A DAO is a fully autonomous organization without a leader. DAOs are run by programming codes on a collection of smart contracts written in the Ethereum blockchain. DAO is designed to replace the structure of a traditional organization and like Bitcoin, eliminating the need for people and a centralized control.
ERC-20 is a widely accepted standard and allows developers to build token applications that are interoperable with other products and services. The ERC-20 introduces a standard for Fungible Tokens, in other words, they have a property that makes each Token be exactly the same (in type and value) of another Token. For example, an ERC-20 Token acts just like the ETH, meaning that 1 Token is and will always be equal to all the other Tokens.
What Are The Most Obvious Benefits Of Ethereum?
Ethereum is a vastly greater project in scale than Bitcoin, exponentially increasing the capability of the underlying technology. With the ability to create DApps, using it's own monetary system, independent coding language and browser.
A third party cannot make any changes to the data. The system is also tamper and corruption proof. This is because Ethereum is built based on a network formed around a consensus, and as a result it makes censorship impossible.
Just like Bitcoin, Ethereum is backed up by secure cryptography meaning the applications are well protected against any form of hacking.
Drawbacks to Ethereum
Just like any other coded property, human error may leave vulnerabilities. Ethereum is no stranger to issues in its past due to exploits of these coding mistakes. If this occurs, the only potential fix goes counter to the whole foundation of the blockchain by requiring a rewrite of the underlying consensus.
Another issue with Ethereum is scalability on demand and the cost of transactions rocketing when the blockchain becomes choked by demand. ETH 2.0 is coming in 2021 and should help alleviate these issues, but that itself may bring it's own growing pains. Ethereum's future as the big boy in altcoins largely depends on it's ability to resolve it's scaling issues and reducing transaction costs to improve adoption rates.
Blockchain is the technology that makes Bitcoin, cryptocurrencies, smart contracts, and other programs built on it secure. It’s an open-source and distributed database that is stored in nodes, or devices, within the network. When new transactions or blocks are added to the blockchain, it will automatically update itself.
Here are 5 interesting facts about this modern digital technology.
1. It’s Tamper-Proof
Once an entry has been added onto the blockchain it will be nearly impossible to remove or alter. If you wanted to alter an entry you would have to attempt to alter all the transactions that came after it , doing this is mathematically impossible. Even genius fraudsters would have to look elsewhere to steal blockchain based assets without extensive efforts. Being tamper-proof is also the reason cryptocurrency payments are final and irreversible.
2. It’s 100% Transparent
Anyone with access to the blockchain can see all the transactions that have ever occurred in the past. You can even look up the first ever block (block 0) that was mined by Bitcoin founder, Satoshi Nakamoto, in 2009. This genesis block contained the message “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” This type of transparency has excellent use cases in the public sphere, as well as anywhere corruption is prevalent.
3. Criminals Can’t Hide Behind The Blockchain
If criminals think they can hide behind the relative anonymity that cryptocurrencies provide, they’re sorely mistaken. Many have tried to evade the long arm of the law by converting their stolen loot into cryptocurrency and then transferring them to different wallets, but with the transparent nature of the blockchain, computer experts can spot and trace all the bitcoin transactions these criminals have ever completed.
4. Blockchain Technology Is Not Limited
Hundreds of startups have been created to solve problems by implementing blockchain technology in various industries. One such example is Polkadot which "enables cross-blockchain transfers of any type of data or asset, not just tokens."
"Connecting to Polkadot gives you the ability to interoperate with a wide variety of blockchains in the Polkadot network." Since the blockchain is decentralized, two parties can make transactions between themselves without needing the services of a middleman. This not only saves money, but it also saves time and potential pain points.
5. The Omni-Chain Future
While this technology has definitely improved the lives of many people, it can still be improved. For one, as time passes, the blockchain will grow to be larger than several hundred gigabytes of data. This will cause a lot of bandwidth and storage problems on personal computers requiring ever larger storage or purpose built solutions.
A development that will become much more common place is that of omni-chains. Polkadot, used in our example above, is actually an omni-chain. This is a type of chain design that connects multiple blockchains together. Omni-chains allow for better scalability, network volume, connectivity and interoperability. Given these developments and the consistent increase in demand, it is currently looking like omni-chains will be the future of blockchain technology.
While many businesses have already joined the crypto revolution by accepting Bitcoin payments, many are still hesitant to make the jump. They are afraid that with the volatility they may end up essentially giving their products or services away for free. Most of the businesses we speak to think they are going to get shortchanged if the price in the accepted cryptocurrency drops and would, therefore, cost them profits. This is absolutely not the case.
In this article, we'll show you three reasons why you shouldn’t miss out on accepting cryptocurrency payments.
1. Instant Conversion To Your Local Currency
Bitcoin’s volatility is a business owner’s biggest concern. With payment gateways like BitPay, Coinbase, Paypal, Crypto.com, Coingate, and more, you can easily bypass assuming the risk of the volatility, especially with the speed of settlement that cryptocurrency has, typically well within an hour. These services will instantly convert your crypto payments into your local currency which you’ll receive in your bank account the following business day. This means that if your customer paid you $100 worth of cryptocurrency, you're able to determine the best way to maximize the value of that money, whether to convert it immediately and receive the pay out, or hold it in the cryptocurrency itself as the asset appreciates.
2. No Chargebacks. Ever.
One of the most common things business owners hate with credit card payments is the very real threat of receiving a chargeback. Some customers are just fickle-minded and dishonest. They would file chargebacks for various reasons such as they’re not happy with the color they got, or they regretted the purchase, or sometimes more scam related reasons. But with cryptocurrency payments, you don’t need to worry about chargebacks because all the transactions, once verified by the main network, are final and irreversible. This means those currencies you’ve received are yours (unless of course, you chose to have them instantly converted to dollars). You can still offer refunds or other consumer oriented protections, but you alleviate the headaches and now control the necessary operations around these financial actions.
3. No Costly Processing Fees
Credit cards are widely accepted worldwide, and merchants like receiving payments from anyone with a valid card. While credit cards are convenient, there are fees that merchants need to pay. Credit card fees can range depending on merchant services, credit card issuer, and per transaction plus another few cents for each transaction made. If you receive card payments from 99% of your customers you’re paying away profit to provide convenience. With cryptocurrency payments, the transaction fees you have to pay are a fraction of what you pay the credit card companies, and in some cases are almost zero.
With multiple blockchains, various ways to process transactions, low costs associated with these payments and the speed of settlement, there are obvious benefits to accepting cryptocurrency as a method of payment for your business. We accept seven different ones as of right now and are constantly adding to this list to provide and improve our convenience to customers. Would your customers also benefit from you accepting cryptocurrencies?
There are many different kinds of cryptocurrency scams that are victimizing people who are new to the crypto world. Con-artists prey on those who don’t know the difference between a legitimate crypto platform and a fake one, who don’t know a Ponzi scheme from a legitimate affiliate program. These scammers fool people into thinking that their well-designed websites give them a semblance of legitimacy, but on closer inspection, these scams can easily be detected. Here are five red flags you should be aware of.
1. The Website Has No SSL Certificate
It’s very important for any website, but more so one that deals with cryptocurrencies to have an SSL (Secure Sockets Layer) certificate installed. Websites with no SSL only display HTTP before their domain names and websites with SSL show HTTPS. This means that data entered on the website is encrypted and private, to protect you. Many scam websites are here today, gone tomorrow types of sites, which means once they’ve scammed a certain number of people, they’ll shut down that site and move on to a fresh domain. An SSL certificate is not necessary for them as they do not intend on legally, or securely accepting consumer information. It’s quite easy to transfer website files from one domain to another; this is why these scammers can set up shop very quickly. Watch out for this as you browse crypto websites.
2. The Offer Is Too Good To Be True
If you’re trying to get the best exchange rates for your dollars or crypto, it’s only natural that you’d want the best possible deal and be curious about those that promise this. Since cryptocurrencies are decentralized, most crypto exchanges have, and set, their own exchange rates. However, these rates don’t vary by much when compared. If you see a website offering rates that are significantly lower, or promising higher returns, than other established exchanges, then it should be considered a very wavy, very visible, red flag. It is always better to do business with a trusted and reliable exchange with higher fees, than to try to get the best deal out of an unknown platform that could possibly cost you your entire fortune. Fees are cheap compared to a total loss.
3. Beware Of Ponzi Scams
The classic Ponzi scheme is everywhere. Some Ponzi scams are not obvious either, especially if they’ve been around for a while, have what appears to be a following, and possibly promotion. This is because their first members would already have received their profits (derived from payments by new recruits) and would be posting glowing reviews about the product wherever they can. At first glance, you might be fooled into thinking it’s a legitimate crypto operation especially if you personally know someone who’s made money from the scheme. But, sometimes the people promoting it, using it, and benefitting from it are unaware that they are involved in the scamming of others. Some do though, so check out those positive reviews, and you’ll see they’re basically saying the same thing. We’d even like to bet they would have their affiliate or referral links somewhere in it. Taking your money in more ways than one, unethically, just isn't anything most people can condone. Do your best to protect yourself, and avoid these scams.
4. Email Phishing Scams
If you have crypto, and you enter your email anywhere online, then you may suffer from a phishing attack at some point. These are when an email replicates a legitimate business by using logos, wording and structure from typically received real emails in an attempt to get you to send payment, or enter your private information to steal. The easiest way to check for a phishing scam is to look at the email address it is delivered from. If it does not appear to be an email address that the actual company would use, it's a phishing scam. Another way to determine a phishing scam is if it links you to an external unusual site, or expresses a time constraint in making sure something is accomplished. Finally, in this scam someone may ask for your account logins or private keys to help you. Customer service departments will never ask you for this information and one thing to always know with your crypto is NEVER enter your private keys anywhere except your actual wallet. Keep it safe, don't just readily give out information and learn the steps to protect your information online.
5. Private sales of Dollars to Cryptos.
If someone offers you a lot of Dollars for your crypto versus what you can make from an exchange, in the form of debit cards or cash amounts, you will want to be sure you either know the person, or know a way to protect yourself. These scams are usually stolen funds, fake debit or credit cards, and in many cases you would never receive anything anyway as you have no way to recover your cryptocurrency once sent. Just please, don't exchange cryptos for your local currency with anyone unless it's a reputable exchange, app, or person that you know. Also, don't give anyone your wallet or phone to "enter their wallet" … ever. They'll just steal your keys. Do it yourself, do it the right way and be safe.
We work hard to bring information to beginner, intermediate, and experienced crypto users alike. In a space that evolves quickly, presents challenges daily, and can be overwhelming to so many, we are extending a helping hand to make crypto accessible to all. Learn, stay safe, and enjoy all the benefits this technology can bring you.
Going into an unpredictable space, much like that of cryptocurrency can be daunting. Because there is no centralized authority and, as we all know well, rumors get spread quickly online about about anything, especially cryptocurrencies, it’s a volatile market to get into. However, if you are willing to accept the risk, create a strategy, have some patience and consistently learn, then there is money to be made. Below we discuss five important tips that you must know if you are considering investing in cryptocurrencies.
1. Due Diligence And Homework
As far as trading is concerned, some people have experienced a certain level of success while others have suffered loss, just like any other market. If you are entering into this space, it is important that you know just what you are getting into and invest only the amount that you can afford to lose. Being a crypto investor is quite exciting as well as confusing, so you should not enter based on only what you have heard. Do your own homework and stay on top of the ever-changing market. This means finding people, and sources, that provide reliable information that you may make a decision based on. Before putting money into any crypto make sure you understand what it is, it's use case, why it may have value to a user, and if it has any legal issues. If you are not confident, do not risk your money.
Alongside Bitcoin, there are hundreds of other cryptocurrencies that provide the opportunity to maximize returns and improve your financial situation. Try to diversify into alternative cryptocurrencies, also known as altcoins, because as Bitcoin drops, these other cryptocurrencies tend to perform better. This is known by those in the space as "altcoin season." When you are waiting for Bitcoin to increase in value, you can continue to trade the altcoins, or exit into stablecoins and wait for the next opportunity. Diversification also allows you to find projects that you believe in and support them by staking on their blockchain while earning a return from the staked value.
3. Don't Keep Crypto On Exchanges
Hackers and scammers these days have devised means to get into the crypto space, rip people off, steal their crypto and sell their information. You can save yourself from the heartache and avoid the menace by using exchanges strictly for your trading activity. Once you have bought a currency you intend to hold for a the set time, move it into a wallet that only you can control. It is even better that is a hardware wallet, or cold wallet. You'll pay a fee for this transaction, but the security is worth the cost as a total loss may be possible if a hacker is able to access your exchange's wallet. There are some exchanges that offer security and insurance on crypto holdings, but these also have other limitations based on their need to pass regulatory scrutiny, and follow local laws. For this reason, many people choose to trade on decentralized exchanges (DEXs) which leave them at risk of attack if they are unsure of how best to protect their assets.
4. Be Prepared For Volatility
Crypto investing isn’t a get rich quick scheme. It’s something you should plan on participating in over a longer term. You may have to steel your nerves sometimes because of its volatility, but it can be worth it. It is going to take effort, patience, and a lot of frustration. Effective diversification can help, but that too requires a bit of effort and work. The most well-known and effective strategy thus far for standard investors is to “HODL” which means to hold on to your investment no matter how volatile the market gets. This can backfire though if you buy the top of a market cycle. Getting into the crypto space is quite tricky which is why you must be able to understand how the market works in order to tilt it in your favor and ultimately end up in profit. You can do this by having a plan.
5. Have A Trading Plan
Why do you need a plan? Because guessing leaves you open to emotionally charged decisions, which are ultimately weak in basis. Knowing what your goal is before you invest in a cryptocurrency will give you a way to determine how all the information from step one will help. It will allow you fit the choice into step two. Give you the chance to organize for step three. And of course, allow you to sit tight through step four. You can have any type of plan, a short-term, mid-term, or long-term strategy alongside a target for return. Given the nature of crypto and the way it may suddenly boom, knowing these targets allows you to exit confidently without questioning the possibility of further gains, which may become extensive losses. When it comes to losing, a plan around your point of exit, or stop loss, such as a reduction of 20% in total value may stop you from losing all of the investment.
With these five tips, you can start to piece together how you want to enter the market, determine the assets you want to trade, what your goal is and how you will manage and store your crypto as needed. All these parts will eventually fit together into your own personal fundamental strategy which, if you are surrounded by successful traders and investors, should also be a successful venture.
Candlestick trading is an essential component to learning technical analysis. It is a technique that many highly successful traders use, even when implementing automated trading systems. One of the most important things you can learn is how to properly understand candlesticks on your charts and recognize the potential changes in trend occurring, this is a valuable skill when mitigating risk.
Technical analysis doesn't always have to cost hundreds of dollars for you to gain access to this information. Candlestick trading is a great place to build up your investment skills and learn how to trade the right way.
History Of Candlesticks
Candlestick charting originated in Japan during the 17th century. Before candlestick charts were used to depict current market trading information, samurai warriors used them to describe past battles. Battles could be portrayed using various candlestick formations and then interpreted using relevant Japanese texts.
The Japanese had contained the use of candlesticks from the western world until the 1980’s when the growth of international banking and cross-sharing financial institutions around the world brought new knowledge. This is when the institutions and traders began to get a glimpse of the candlestick charts. Computers becoming commonplace would then quickly make charting easier and a programmable norm.
Michael Feeny, who was the head of Sumitomo London in the United Kingdom began using candlesticks and introduced the idea to other traders. In December 1989, technical analyst at Merrill Lynch in New York, Steve Nison, penned a paper that showed a series of candlestick reversal patterns and explained their predictive powers, then followed it up by writing a book. Since then candlesticks have become the standard template that most analysts apply to charting, adopted by modern day traders because they use simple shapes to show price action.
Importance To Analysis
As a visual representation of human sentiment in the market they can be used alone or in combination with technical analysis tools such as the moving averages, momentum oscillators, support and resistance, and trend lines. These tools can be combined with more advanced theories such as Dow Theory or the Elliott Wave Theory.
When it comes to money, human behavior is emotional and irrational. Hope, greed, fear and doubt all contribute to trading decisions. Candlestick analysis will help you understand these behaviors by displaying how buyers and sellers interact with each other. Because they provide these valuable trading signals, using candlestick patterns will help you understand what the markets are doing, showing you entries, exits, and historic responses to external factors.
Candlesticks are a very old way of visualizing the price movement in a chart. Candlesticks analyze market sentiment by revealing the open, high, low, and close of the period. A candlestick contains a body that represents the range of prices between the open and close, and various lines extending outward from the body. Candlestick analysis is best used in conjunction with the opening, high, low, and closing price (OHLC) for each period. This is how you can fully analyze the candlestick patterns and movements.
When the candle closes above where it opened the candlestick is bullish, meaning that the market is gaining during this period. Bullish candlesticks will be displayed as green throughout this book, while bearish candlesticks will be displayed as red. These colors may be displayed differently by other systems as they are not fixed.
The anatomy of a candlestick is fairly basic, composed of very few elements. The filled area is the candle body, displaying the difference between open and close, while the wicks show the difference in total price action.
Candlesticks may also be shown in different shapes. Long and short body candlesticks show different trading actions, and you can determine the total ranges based on the length of the wicks compared to the bodies.
For many years, the financial industry has always been controlled by centralized organizations like banks and other related financial institutions. When one carries out a transaction using a credit card or through the bank, a fee is charged for this transaction. These fees are even higher when you make an international transaction because of the many middlemen involved.
Sometime in 2008, the concept of decentralized finance (DeFi) was introduced to the world through the blockchain – the technology that runs most of the cryptocurrencies, including Bitcoin. But what is DeFi, and why should you care about it? These two questions are what I will be answering in this article. Let’s dive in.
What is DeFi?
Defi is the acronym for decentralized finance and encompasses all financial services not controlled by any central authority. With Defi, it is possible to offer almost every financial service currently offered by centralized institutions such as banks, but in a decentralized manner and without any controlling authorities.
Some of the services currently offered on Defi platforms include; stock trading, services like borrowing, stock trading, assurance, asset management, making financial payments among others. The entire infrastructure of these services is built on a blockchain and distributed on thousands of computers owned by individuals all over the world.
Benefits Of DeFi
The fact that DeFi systems are decentralized makes them better than centralized systems in many ways, and these include;
Fewer transaction fees: Since DeFi platforms are not centrally managed, they don't involve a lot of operation costs, which in the end leads to lower charges when one is making a transaction. Another reason for lower fees is the fact that all transactions are peer to peer, so no middlemen are involved along the way.
More privacy: Unlike in centralized financial systems, there is no requirement for one to share their user information to use the respective services on most of the DeFi platforms. Accordingly, while using a DeFi platform, one is guaranteed that no one is collecting their data and analyzing their financial behavior.
Easy accessibility: Unlike the legacy financial institutions that require a lot of documentation to get started, one only needs to have a smartphone/computer and an internet connection to access a DeFi platform. In essence, DeFi platforms don’t require a lot of documentation. This ease of access makes it an advantage to people living in areas that have underdeveloped financial systems.
Safer and more secure: The immutability of the blockchain is one of the reasons why DeFi platforms are way safer than centralized ones. Accordingly, once a transaction is recorded in the blockchain system, it can neither be deleted or edited, thus making it a secure system to store sensitive data.
More transparency: Every transaction carried out on DeFi platforms is publicly visible on the blockchain, and this kind of transparency is what users need to be certain that the money they use to do any sort of financial business is safe and won't be tampered with.
Innovation: Most of the DeFi platforms are open source, which enables anyone willing to improve and enhance the platform. The fact that various minds across the globe come together to build something enables DeFi platforms to bring on board more features that improve user experience.
Cryptocurrency is fast becoming integrated into the everyday lives of people in developing, or suffering, nations. With unstable and hyper-inflated national currencies, cryptocurrencies are proving to be a much more viable solution to solving the financial woes of their citizens.
Here are 5 reasons why cryptocurrency has massive appeal for the masses in developing economies, and the unbanked, worldwide.
1. You Don’t Need Banks
In developed countries it’s relatively easy to sign up for bank accounts and credit cards, but in the developing world it’s a vastly different story. It’s much harder to get credit and setting up a bank account is no walk in the park. Cryptocurrency, and decentralized finance as a whole, changes all that. With cryptocurrency, you can manage your financial assets yourself, transact with others, improve understanding of monetary systems and drive household growth. All you need is a secure wallet to keep your digital money safe, and with ever cheaper access to mobile phones, this is a relatively easy task to complete.
According to the World Bank about 1.7 Billion adults worldwide still do not have a formal bank account, and women are 9% less likely to be able to obtain an account than their male counterparts. Crypto and Defi alleviate this concern.
2. Fast, Cheap, and Borderless Payments
When you are unbanked, primary concerns are cost and efficiency. Typically, financial services are expensive and difficult to obtain due to the very central problem of not having formal financial institution access. With cryptocurrency and the many solutions being created, you can send any amount of value to anyone else in the world in a matter of minutes. When you send that money through banks you not only pay those costly bank fees you also need to wait for restrictive timeframes and "banking" days to allow for transaction completion. Another cost associated with being unbanked is the cost of exchange rates. But with cryptocurrency, as we’ve mentioned previously, you don’t need banks to convert the currency, or to finalize and remit payments to other people. All you need is their currency address of choice and voila! Your payment should arrive within an hour, anywhere in the world.
3. Bitcoin Can’t Be Manipulated By Anyone
Governments and banks can dictate the production and movement of their national currencies which ultimately leads to inflation. Unlike fiat currency, however, cryptocurrencies are decentralized in nature. This means there is no controlling entity that tells their respective networks what to do. Everything has been hard-coded into the network and the underlying technology behind cryptocurrencies, the blockchain, is tamper-proof and fraud resistant. Because it can’t be manipulated by anyone, not even its developer, it provides certain levels of security to those who prefer to manage their own financial assets.
4. Crypto Will Help Authorities Limit Criminal Activity
Contrary to popular belief, many cryptocurrencies are not fully anonymous. Rather, they are a pseudonymous currency because while your alphanumeric public keys provide a certain level of anonymity, computer experts can trace who owns which wallets and the amount of currency each one contains. The masses who make legal and honest transactions don’t have anything to worry about. Criminals who move large amounts of currency that catch authorities’ attention, and become who they focus their research on are targets,. Understanding that the risk of the unbanked being targeted is so low, and that criminal activity can be discovered relatively quickly, provides those in unbanked situations confidence that they are not under scrutiny, or going to suffer undue consequences of actions taken by illicit activists.
5. Change In Economic Fortune
With simpler access to monetary management, quick and cheap payment methods, safety in secure wallets, and knowledge that criminal activity is traceable and differentiated, those who were previously unbanked can now rapidly use this new found monetary access to develop their local economies. Economies that were previously significantly below the global poverty line and had no real infrastructure, can use these new financial strengths to build out things we take for granted in other parts of the world. Once this occurs, external investment can begin to find it's way in as infrastructure development insinuates improved stability. With so many people still unbanked in poorer regions these opportunities would drive worldwide economic growth due to increased demand for products, labor, and property from the new markets.
Cryptocurrency, fintech, and decentralized finance are just many developments that provide people access to basic means that most of us have, and will drive the next generation of global growth, create new economies, and provide the world with all new developments that we may have missed out on otherwise.
Decentralized finance platforms can be used by anyone willing to embrace the idea of not having to use services of financial systems controlled by a central authority. Some of the popular use cases of Defi include;
Crypto Borrowing And Lending
Currently, there are a good number of Ethereum-based crypto lending platforms that connect lenders and borrowers. Anyone can join these platforms to either borrow or lend out their crypto. Those who lend out their crypto earn interest after a certain number of days. The interest rate varies based on the platform and the coin one is dealing with. Some of the popular lending/borrowing Ethereum-based platforms
A Defi Derivative refers to a financial contract between two or more parties whose value is based upon an agreed underlying asset such as bonds, commodities, currencies among others. Defi derivative platforms make it easy for individuals across the world to make financial contracts without having to meet physically.
Asset Management Platforms
Asset management is usually referred to as Defi wallets, and their main role is to safeguard the financial assets of their users. As a result, with a Defi wallet, one can store their assets like cryptocurrencies and also convert them into fiat currencies anytime they wish to do so. Some of the popular Defi wallets include Metamask, Trust Wallet, Dex Wallet, Atomic Wallet, and Magic Wallet.
Defi insurance platforms allow users to get insurance policies on smart contracts, funds, or any other form of digital asset. Just like the centralized insurance platform, these also guarantee compensation for specified loss, damage, illness, or death in return for a payment of a premium. Some of the most popular Defi insurance platforms include; Cover protocol, Nexus Mutual, and Opium Insurance.
Decentralized financial systems are gradually changing the way we do financial transactions, thanks to the many benefits they have over centralized institutions. Yes, Defi platforms have a couple of drawbacks, but the positives they bring to the table significantly out way the negatives.
The ease of access, privacy, the immutability of data, and significantly low transaction fees are some of the benefits Defi platforms have over the legacy financial institutions. Most of the Defi platforms have been built in the last decade. However, the impact they have created can be felt in almost every industry. This trend clearly shows where the future of finance is heading.
Very few things divide opinion across the globe as cryptocurrency does. A small percentage of the population truly understands what it is, a large portion view it as something that can only be utilized by the tech-savvy, and the others believe it's used for illicit purposes alone. In actual fact, cryptocurrencies are digital or virtual representations of an exchange of value, like the US Dollar, that can be both identifiable or anonymous and present opportunities to resolve some of our modern day inefficiencies.
Creating Financial Independence
Cryptocurrencies remove the need to use financial institutions to store, lend, manage, or control money and simultaneously provide access to the benefits of anonymous transactions. Due in part to the anonymity factor, cryptocurrencies remove some of the risks of becoming a victim of fraudulent activity, such as identity theft. People, institutions, and governments worldwide are beginning to realize the advantages of cryptocurrency as a whole, and the increased popularity and perceived strength is correlated with the soaring prices across the digital exchanges.
Bitcoin, the most well known example, is an entirely decentralized medium of exchange, meaning it’s only maintained through a peer-to-peer network. The users are the ones who mine, create, and exchange the value across the Bitcoin blockchain. That value is exchanged for any reason two or more parties might agree on. Moreover, as Bitcoin is just a set of numbers and letters which are stored on the blockchain itself, and it isn't represented in the way a conventional currency is, millions of people worldwide may conduct transactions with each other no matter their location, independent of middlemen financial institutions.
If we use a common product example, it’s similar to PayPal enabling you to send and receive money, and then allowing a withdrawal of your balance into your local currency. However, since Bitcoin is peer to peer and a decentralized network, there's no official method to determine what value the bitcoin currency possesses. Welcome, supply and demand.
The Supply Creates The Demand
As you may have discovered, cryptocurrency tends to prove that it's value is influenced by the number of people who want it and the amount that is available — otherwise known as supply and demand. Interesting to note about limited supply cryptocurrencies is that as the supply decreases, and demand increases the price rise over time will eventually lead to an equilibrium. This won't make those strongest crypto's great currencies for an everyday exchange of value, instead it will cause them to become quality stores of value, or hedges.
On the opposite end of that spectrum lay the uncapped currencies, like Ethereum which only has the rule that eighteen million Ether can be mined in any year. This uncapped total leads to the ability of the currency to be used a consistent medium of exchange, due in part to the knowledge that it's inflation rate is going to be limited by it's creation rate. This means that planning your regular financial activities becomes much easier as it is much less volatile, and almost consistent in nature, but scales total volume as the society that uses it increases it's economic output.
Cryptocurrencies, in their current state, are a line of code that has been recorded in the blockchain ledger, and a set of digital keys stored in an offline (cold) or online (hot) wallet. So, as they're advantageous due to the benefits we covered, how do we improve them and overcome current limitations?
What's In Store
While the technology is becoming more commonplace, it is still in its infancy. This leads to significant challenges around adoption and quickly outdated platforms. Think of how fast computers and cellphones developed into what they are now. What was once state of the art 5 years ago is effectively obsolete as a general purpose product. These limitations are in part due to blockchain itself being developed rapidly, and the lack of major adoption of cryptocurrency by financial centers and governments creating volatility as users attempt to find the true value of any and all currencies.
Governments and financial centers are looking into developing their own digital currencies based on platforms that solve their needs, but they must also consider building one that maintains the sovereignty of the nation and it's economic independence, alongside it's utilitarian features. Some of these use-cases are for financial transactions, to speed them up and maintain a completely transparent ledger meaning that while the government can see what transaction you are involved in, you can also see what they do with the currency.
Other use cases are to replace paper based registration and transfer system, transparent owner-ship system, access to shared services and simplified social data security between agencies. Developments like these, especially transparency, are at the core of a future many of us are looking to achieve. They will however require new creations, such as omni-chains, to provide solutions at the scale, pace, and volume demanded.
We'll cover some of these topics in-depth in other articles. We attempt to bring you information that can help you develop an understanding of the direction technology, and society, may be heading to give you the head start you need to provide family and friends with a little help. Who knows, maybe you or one of them will develop the next great technology that powers us all forward and brings us the value of the future.
Defi (Decentralized finance) has been one of the most common buzzwords in Fintech and the mainstream tech industry. If you have closely been following news related to cryptocurrencies in recent years, this term should already be familiar to your eyes. What does Defi mean, and how does it work? These are some of the questions that this article intends to address.
Here is a brief of what we shall discuss in this article;
What is Defi?
How does Defi work?
What are some of the common use cases of Defi?
Pros and cons of Defi
Let’s dive in!
What Is Defi?
Defi is the term used to cover all financial services that are carried out on the blockchain. So, with Defi, we don't have any central authorities responsible for managing the financial activities going on a particular platform like it is in the centralized financial systems. One of the most common use cases of Defi are cryptocurrency transactions.
Many of you reading this article should have already heard about cryptocurrencies like Bitcoin and Ethereum. Transactions made using these digital currencies all fall under decentralized finance. However, Defi is way broader than trading crypto; it covers all most every financial service that we see in the centralized financial system, but this time in a decentralized way. So, how does this happen?
How Does Defi Work?
Like we have seen above, decentralized finance involves doing financial transactions on a decentralized system like the blockchain. For those who may not know, a blockchain is simply an immutable decentralized public ledger. Most of the Defi platforms run on the Ethereum blockchain because it was built with more capabilities to run these apps than other blockchains.
With Defi, all the data regarding a certain financial service is not stored on central servers like it is in the centralized financial system. For instance, a company like VISA processes all its transactions and stores its data on central servers. On the other hand, cryptocurrency transaction data is stored and processed on a decentralized network of computers owned by individuals.
Smart Contracts And Defi
Other financial services like insurance and lending are possible thanks to the invention of smart contracts. So, what is a smart contract? It is a computer program or transaction protocol that automatically executes, controls, or documents an action based on the agreed terms and conditions in the contract. Just like you would sign an agreement while borrowing money from the bank to agree to their borrowing terms and conditions, smart contracts are used to replace these agreements in the Defi world.
Before getting any financial service like insurance or borrowing money on a Defi platform, a smart contract must be created to govern how this transaction is executed from start to end. The fact that smart contacts run on the blockchain means they are also immutable, meaning no one can tamper or change the information in the smart contract.
The immutability of these smart contracts protects all the parties involved in a financial transaction on any Defi platform. All parties will have access to the smart contract, but they can not tamper with it after it has been added to the blockchain. Immutability is one of the significant strengths of Defi platforms and the blockchain in general.
Common Use Cases Of Defi?
- Decentralized exchanges: (DEXs) Decentralized exchanges refer to platforms that facilitate peer-to-peer buying and selling of cryptocurrencies without any central authority in between. With DEXs, the financial assets (cryptocurrencies) are not held in a central wallet like it is in the centralized platform. One of the most popular DEX platforms is SushiSwap, which has a volume of over $4.3 Billion in 24 hours.
- Lending platforms: One of the most innovative use cases of Defi is the peer-to-peer lending and borrowing of money without any central authority's involvement. Defi lending platforms use smart contracts that trigger an action when specific terms and conditions are fulfilled. To be given money, the borrowers use a digital asset as their collateral security and agree to lose ownership once they default. All the borrowing terms and conditions are added to the smart contracts. One of the most popular Defi lending platforms that you can check out is Aave.
- Prediction markets: A prediction market allows anyone on the platform to predict the outcome of any future event and earn a reward. They work just like the traditional prediction market, but this time running on a blockchain, eliminating any central authorities. Participants on prediction markets can literally predict anything like the outcomes of an electoral process, football matches, and many more.
Pros And Cons
Pros of Defi
Decentralization eliminates regulatory authorities, which in the end reduces bureaucracy in getting financial services on Defi platforms.Consumer privacy. Users on these platforms are sure that no single platform or person has their information like centralized financial systems.
Lower transaction fees: Due to the elimination of brokers and central authorities from the equation, the transaction fees on the Defi platform are very low compared to the mainstream centralized financial services.More transparency: Transactions happening on Defi platforms are available to all stakeholders since they are stored on the blockchain (public ledger).
Cons of Defi
Slow transaction speeds. One of the blockchain's significant drawbacks is the transaction speeds compared to mainstream payment platforms like VISA.Uncertainty since most of the assets transacted on Defi platforms are highly volatile.
Decentralized financial services have already started disrupting the way people get financial services like lending and insurance. Because one doesn't have to go through the bureaucracy in the mainstream financial players, many people are picking interest in Defi services. Removing centralized authorities from the equation may have its risks, but the benefits one gets while using Defi services are worth the risk.
PancakeSwap is a decentralized exchange for swapping BEP-20 tokens on the Binance Smart Chain (BSC) and is an automated market maker (AMM). While you can trade assets, an AMM isn't like a centralized exchange as there isn’t an order book where you’re matched with open orders, instead, you trade against a liquidity pool.
In this article, we will use Trust Wallet as the wallet of choice, and show you how to connect, execute the swap, then safely disconnect to complete a decentralized transaction on PancakeSwap.
To be able to complete your transaction you need to have a token that is transactable on the BSC. So for our example you will need to purchase some Binance Coin (BNB) on your exchange of choice, and transfer it to your wallet. A note here for new users who may not have any crypto already is that you can buy BNB with Fiat on Trust Wallet through third party providers like MoonPay or Simplex, but you will then lose the relative anonymity.
After this you'll need to convert it to be BSC compatible (BEP-20) to use it on PancakeSwap. You can do that within Trust Wallet by going to your BNB then tapping “Swap" or "More" followed by "Swap to Smart Chain."
Connecting To PancakeSwap
There two separate ways of connecting to PancakeSwap depending on if you're using Android or iOS. We'll cover both methods, but once connected the execution is the same.
The dApp browser was removed from Trust Wallet on iOS starting with version 6.0 and requires a few more steps.
To connect to the dApp go to this verified link in your browser, click "connect wallet", then select "Wallet Connect".
(Follow instructions below based on what device you opened PancakeSwap on)
- PancakeSwap on desktop
When you click Wallet Connect a QR code will pop up.
Open the Trust Wallet app on your iPhone and go to "Settings", then find "Wallet Connect."
Now scan the QR code on your desktop with your phone.
Approve the connection, that's it.
- PancakeSwap in Safari on iPhone
When you tap on Wallet Connect a menu will open. On the WalletConnect menu, tap on Trust Wallet.
Launch Trust Wallet by tapping on Open.
Trust Wallet will automatically launch and ask you to approve the connection.
Android users will have a significantly easier time thanks to the integration of the Web3 dApp browser.
If you don't see the 4 square dApp browser icon, go to settings, preferences and enable the dApp browser.
Press the dApp icon at the bottom of the app.
Search or find Pancakeswap.
Press "connect" then "Trust Wallet", approve the connection and that's it.
Swapping Your Assets
Now that you have successfully connected you Trust Wallet to Pancakeswap you'll be presented with the trading interface.
Since we own BNB our top field should show a BNB balance.
On the bottom field, press the arrow and search for the asset you want to get.
If you are unable to find the token you want to receive, open CoinMarketCap, find it there, then copy the BSC token address and paste it into the PancakeSwap search field.
Double check the information then click Confirm Swap and approve any pop-ups to execute the smart contract and complete the transaction.
Disconnecting your Trust Wallet from an active PancakeSwap, or any dApp session, is a recommended practice.
To do so is very easy, and could potentially save you some massive pain caused by permanent losses should your session be compromised.
In the top right corner of your PancakeSwap page there is an icon of a wallet.
Press that icon and a menu will pop up.
At the bottom of that menu is a disconnect button, press it.
Congratulations you've safely completed your transaction and disconnected your current session.
You might not be an expert just yet, but practicing and learning good habits from the start will work wonders in protecting you from mistakes in DeFi.
You can use this method to exchange hundreds of various tokens across the PancakeSwap AMM. Be aware of things like slippage, fees and potential scam tokens because once a transaction is started there is no way to cancel it.
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