Cryptocurrency for beginners

In the early days of its launch in 2009, several thousand bitcoin was used to buy a pizza. Since then, the $ 65,000 meteorological rise of $ 65,000 in April 2021, after a drop of about 70 percent in mid-2018, to around $ 6,000, has astonished many people: zip-currency investors, traders, or ordinary curiosity. he lost the ship.

How it all started

Note that the discrepancy with the current financial system has led to the development of digital currency. The development of this cryptocurrency is based on the blockchain technology of Satoshi Nakamoto, a nickname used by a group of developers or developers.

Despite the many predictions of the demise of cryptocurrency, the performance of bitcoin has inspired many other digital currencies, especially in recent years. The success of crowdfunding brought about by the fever of Blockchain has also attracted the public to cheat and this has brought the attention of regulators.

Beyond Bitcoin

Bitcoin has inspired many other digital currencies to launch, with more than 1,000 versions of digital coins or tokens now available. Not all of them are the same and their values ​​vary a lot, as does their liquidity.

Coins, altcoins and tokens

At this point it would suffice to say that there are fine distinctions between coins, altcoins, and tokens. Altcoins or alternative currencies generally describe bitcoin as a non-pioneer, although altcoins such as ethereum, litecoin, ripple, dogecoin, and dash are considered the “main” category of coins, which are traded in more cryptocurrencies.

Coins serve as a currency or store of value, and tokens provide assets or utilities, for example, a blockchain service for supply chain management to validate and track wine products from the winery to the consumer.

One point to note is that low-value tokens or coins offer higher options but do not expect a similar meteoric rise like bitcoin. Unknown tokens may simply be easy to buy but difficult to sell.

Before entering a cryptocurrency, start by looking at the value proposition and technological considerations, such as the initial coin offer or the trading strategies outlined in the white paper that accompanies each ICO.

For those who know stocks and shares, it’s not like an initial public offering or IPO. However, IPOs are issued by tangible assets and companies with a business history. Everything is done in a regulated environment. On the other hand, an ICO is based on an idea proposed by a company in a white paper – which is still up and running and active – which is looking for start-up funds.

Unregulated, so beware buyers

“Unable to regulate everything unknown” probably sums up the state of digital currency. Regulators and regulations are still trying to keep up with the ever-evolving cryptocurrencies. The golden rule of crypto-space is the “caveat emptor,” beware buyers.

Some countries have an open mind while adopting a policy of taking hands on cryptocurrencies and blockchain applications in the face of fraud. However, in other countries there are regulators who are more concerned about the disadvantages of digital money. Regulators are generally aware of the need to strike a balance, and some are looking at securities laws to try to get a handle on the many flavors of cryptocurrencies around the world.

Digital wallets: the first step

The wallet is essential to get started in cryptocurrency. Think electronic banking, but in the case of virtual currency, the protection of the law has been removed, so security is the first and last thought in the cryptographic space.

Wallets are digital types. There are two types of wallets.

  • Internet hot links that put users at risk of being hacked

  • Cold wallets that are not connected to the Internet and are considered safer.

In addition to the two main types of wallets, it should be noted that there are single cryptocurrency wallets and multi-cryptocurrency wallets. There is also the option of having a multi-signature wallet, similar to having a joint account with a bank.

The choice of wallet depends on the user’s preference for pure interest in bitcoin or ethereum, as each coin has its own wallet, or you can use a third-party wallet with security features.

Wallet notes

The cryptocurrency wallet has a public and private key with personal transaction records. The public key refers to the cryptocurrency account or address, unlike the name required to receive a check payment.

The public key is visible to everyone, but is only confirmed by verifying and validating transactions based on the consent mechanism for each cryptocurrency.

The private key can be considered as the PIN commonly used in electronic financial transactions. As a result, the user should never disclose the private key to anyone and back up the data that needs to be stored offline.

It makes sense to have a minimum cryptocurrency in a hot wallet, while a larger amount should be in a cold wallet. Losing a private key is as good as losing your cryptocurrency! The usual precautions for online financial processing are applied, from having strong passwords to being alert to malware and phishing.

Portfolio formats

Different types of wallets are available to suit your personal preferences.

  • Hardware portfolios made by third parties to be purchased. These devices work like a USB device, which is considered safe and only connected to the Internet when needed.

  • For example, web-based wallets provided by cryptographic exchanges are considered a hot wallet that puts users at risk.

  • Desktops based on desktop or mobile software are mostly free and can be provided by coin issuers or third parties.

  • Paper-based wallets can print important data about cryptocurrencies with public and private keys in QR code format. These should be kept in a safe place until needed in the cryptographic transaction and copies should be made in the event of an accident, such as water damage or printed data disappearing over time.

Crypto exchanges and markets

Crypto exchanges are trading platforms for those interested in virtual currencies. Other options include websites and brokers for direct trading between buyers and sellers, where there is no “market” price but is based on compromise between the parties to the transaction.

As a result, there are many cryptographic exchanges located in different countries, but with different standards of security practices and infrastructure. These are just a few of the ways in which an email account can be used to open an account and start trading. However, there are others that require users to confirm their international identity, known as Know-Your-Customer, and anti-money laundering (AML) measures.

The choice of crypto-exchange depends on the user’s preference, but anonymous people may have restrictions on the extent of their authorized trading or may be subject to new sudden regulations of the exchange’s headquarters in the country. Minimum administrative procedures with anonymous registration allow users to start negotiating quickly The KYC and AML processes will take longer.

All cryptocurrencies must be properly processed and validated, which can take from a few minutes to a few hours, depending on the currency or tokens being traded and the volume of trading. Scalability is known to be a cryptocurrency problem, and developers are working on ways to find a solution.

Cryptocurrency exchanges fall into two categories.

  • Fiat cryptocurrency Such exchanges offer purchases by direct transfer of bank or credit and debit cards or by ATMs in some countries.

  • Cryptocurrency only. There are cryptocurrencies that only trade in cryptocurrencies, which means that customers must already own a cryptocurrency – such as bitcoin or ethereum – in order to be “exchanged” for other currencies or tokens, depending on the market rate.

Fees are charged to facilitate the purchase and sale of cryptocurrencies. Users should conduct research to comply with infrastructure and security measures, as well as determine which fees are convenient, as well as the different rates charged by various exchanges.

Don’t expect a common market price for the same cryptocurrency with different exchanges. It may be worthwhile to spend some time researching the best price for coins and tokens that are of interest to you.

Online financial transactions are risky, and users should consider two-factor authentication or 2-FA notes, stay up to date on the latest security measures, and be aware of phishing scams. One of the golden rules about phishing is not to click on the links provided, no matter what the actual message or email.