Cryptocurrency for Beginners

In the early days of its launch in 2009, several thousand bitcoins were used to buy a pizza. Since then, the cryptocurrency’s meteoric rise to US$65,000 in April 2021, after its heart-stopping drop in mid-2018 by about 70 percent to around US$6,000, boggles the mind of many people – cyptocurrency investors, traders or just the plain curious who missed the boat.

How it all began

Bear in mind that dissatisfaction with the current financial system gave rise to the development of the digital currency. The development of this cryptocurrency is based on blockchain technology by Satoshi Nakamoto, a pseudonym apparently used by a developer or group of developers.

Notwithstanding the many opinions predicting the death of cryptocurrency, bitcoin’s performance has inspired many other digital currencies, especially in recent years. The success with crowdfunding brought on by the blockchain fever also attracted those out to scam the unsuspecting public and this has come to the attention of regulators.

Beyond bitcoin

Bitcoin has inspired the launching of many other digital currencies, There are currently more than 1,000 versions of digital coins or tokens. Not all of them are the same and their values vary greatly, as do their liquidity.

Coins, altcoins and tokens

It would suffice at this point to say there are fine distinctions between coins, altcoins and tokens. Altcoins or alternative coins generally describes other than the pioneering bitcoin, although altcoins like ethereum, litecoin, ripple, dogecoin and dash are regarded as in the ‘main’ category of coins, meaning they are traded in more cryptocurrency exchanges.

Coins serve as a currency or store of value whereas tokens offer asset or utility uses, an example being a blockchain service for supply chain management to validate and track wine products from winery to the consumer.

A point to note is that tokens or coins with low value offer upside opportunities but do not expect similar meteoric increases like bitcoin. Put simply, the lesser known tokens may be easy to buy but may be difficult to sell.

Before getting into a cryptocurrency, start by studying the value proposition and technological considerations viz-a-viz the commercial strategies outlined in the white paper accompanying each initial coin offering or ICO.

For those familiar with stocks and shares, it is not unlike initial public offering or IPO. However, IPOs are issued by companies with tangible assets and a business track record. It is all done within a regulated environment. On the other hand, an ICO is based purely on an idea proposed in a white paper by a business – yet to be in operation and without assets – that is looking for funds to start up.

Unregulated, so buyers beware

‘One cannot regulated what is unknown’ probably sums up the situation with digital currency. Regulators and regulations are still trying to catch up with cryptocurrencies which are continuously evolving. The golden rule in the crypto space is ‘caveat emptor’, let the buyer beware.

Some countries are keeping an open mind adopting a hands-off policy for cryptocurrencies and blockchain applications, while keeping an eye on outright scams. Yet there are regulators in other countries more concerned with the cons than pros of digital money. Regulators generally realise the need to strike a balance and some are looking at existing laws on securities to try to have a handle on the many flavours of cryptocurrencies globally.

Digital wallets: The first step

A wallet is essential to get started in cryptocurrency. Think e-banking but minus the protection of the law in the case of virtual currency, so security is the first and last thought in the crypto space.

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

  • Hot wallets that are linked to the Internet which put users at risk of being hacked
  • Cold wallets that are not connected to the Internet and are deemed safer.

Apart from the two main types of wallets, it should be noted that there are wallets just for one cryptocurrency and others for multi-cryptocurrency. There is also an option to have a multi-signature wallet, somewhat similar to having joint account with a bank.

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

Wallet notes

The cryptocurrency wallet has a public and private key with personal transaction records. The public key includes reference to the cryptocurrency account or address, not unlike the name required for one to receive a cheque payment.

The public key is available for all to see but transactions are confirmed only upon verification and validation based on the consensus mechanism relevant to each cryptocurrency.

The private key can be considered to be the PIN that is commonly used in e-financial transactions. It follows that the user should never divulge the private key to anyone and make back-ups of this data which should be stored offline.

It makes sense to have minimal cryptocurrency in a hot wallet while the bigger amount should be in a cold wallet. Losing the private key is as good as losing your cryptocurrency! The usual precautions about online financial dealings apply, from having strong passwords to being alert to malware and phishing.

Wallet formats

Different types of wallets are available to suit individual preferences.

  • Hardware wallets made by third parties which have to be purchased. These devices work somewhat like a USB device which is deemed safe and only connected when required to the Internet.
  • Web-based wallets provided, for example, by crypto exchanges, are considered hot wallets which purt users at risk.
  • Software-based wallets for desktops or mobiles are mostly available for free and could be provided by coin issuers or third parties.
  • Paper-based wallets can be printed bearing the relevant data about the cryptocurrency owned with public and private keys in QR code format. These should kept in a safe place until required in the course of crypto transaction and copies should made in case of accidents such as water damage or printed data fading through passage of time.

Crypto exchanges and marketplaces

Crypto exchanges are trading platforms for those interested in virtual currencies. The other options include websites for direct trading between buyers and sellers as well as brokers where there is no ‘market’ price but it is based on compromise between parties to the transaction.

Hence, there are many crypto exchanges located in various countries but with differing standards of security practices and infrastructure. They range from ones allowing for anonymous registration requiring just email to open an account and start trading. Yet there are others that require users to comply with international identity confirmation, known as Know-Your-Customer, and anti-money laundering (AML) measures.

The choice of crypto exchange depends on the user’s preference but anonymous ones may have limitations on the extent of trading allowed or could be subject to sudden new regulations in the country of domicile of the exchange. Minimal administrative procedures with anonymous registration let users start trading quickly while going through KYC and AML processes will take more time.

All crypto trades have to be duly processed and validated which can take from few minutes to few hours, depending on the coins or tokens being transacted and volume of trade. Scalability is known to be an issue with cryptocurrencies and developers are working on ways to find a solution.

Cryptocurrency exchanges are in two catergories.

  • Fiat-cryptocurrency Such exchanges provide for fiat-cryptocurrency purchase via direct transfers from bank or credit and debit cards, or via ATMs in some countries.
  • Cryptocurrency only.There crypto exchanges dealing in cryptocurrency only, meaning customers must already own a cryptocurrency – such as bitcoin or ethereum, – to be ‘exchanged’ for other coins or tokens, based on market rate

Fees are charged to facilitate the purchase and sale of crypto currencies. Users should do the research to be satisfied with the infrastructure and security measures as well as to determine the fees they are comfortable as different rates charged by various exchanges.

Do not expect a common market price for the same cryptocurrency with difference exchanges It may be worthwhile to spend time doing research on the best price for coins and tokens that are of interest to you.

Financial transactions online carry risks and users should factor in the caveats such as two factor authentication or 2-FA, keeping updated on the latest security measures and being aware of phishing scams. One golden rule on phishing is not to click on links provided, no matter how authentic a message or email is.

Which cryptocurrencies are suitable for investing in?

The value of Bitcoin has risen this year, even exceeding an ounce of gold. There are also new cryptocurrencies on the market, which is even more amazing, which is worth more than a hundred billion cryptocurrencies. On the other hand, the longer-term cryptocurrency approach is somewhat blurred. Among the major developers are the conflicts of lack of progress, which does not make it more attractive as a long-term investment and as a payment system.

Bitcoin

Still the most popular, Bitcoin is the cryptocurrency that started it all. It is currently the largest market cap at around $ 41 billion and has been around for the past 8 years. Around the world, Bitcoin has been widely used and so far it is not easy to exploit the weakness in the method in which it works. Both as a payment system and as a stored value, Bitcoin allows users to easily receive and send bitcoin. The concept of blockchain is the basis on which Bitcoin is based. It is necessary to understand the concept of blockchain to know what cryptocurrencies are.

It is simply a distribution of a database that stores all transactions in a blockchain network as a piece of data called a “blockchain”. Each user has blockchain copies, so when Alice sends 1 bitcoin to Mark, every person on the network knows it.

Litecoin

An alternative to Bitcoin, Litecoin tries to solve many of the problems that hold Bitcoin. It’s not as resilient as Ethereum, especially with the value derived from taking on strong users. It should be noted that Charlie Lee, a former Google driver, drives Litecoin. He is also working on transparency with what he is doing with Litecoin and is quite active on Twitter.

Litecoin was Bitcoin’s second fiddle for a long time, but things started to change in early 2017. First, Litecoin was taken over by Coinbas along with Ethereum and Bitcoin. Then Litecoin solved the Bitcoin problem by taking Segregated Witness technology. This gave him the ability to lower transaction fees and do more. Decisively, however, Charlie Lee decided to put his only attention on Litecoin and even left it at Coinbase, where the Director of Engineering was, only for Litecoin. Therefore, the price of Litecoin has risen in recent months, with its strongest factor being that it could be a real alternative to Bitcoin.

Ethereum

Vitalik Buterin, the superstar programmer, thought of Ethereum, which could do everything Bitcoin can do. However, its goal is primarily to be a platform for building decentralized applications. Blockchains are the differences between the two. Basically, the Bitcoin block registers a type of contract that indicates whether the funds have been moved from one digital address to another. However, there is a large expansion with Ethereum because it has a more advanced language script and a more complex and extensive application framework.

Projects began to emerge on Ethereum when developers began to notice their better features. Through crowd sales of tokens, some have even raised millions of dollars and this is still a constant trend today. It’s almost like the internet itself that you can build wonderful things on the Ethereum platform. This caused the price to rise, so buying Ethereum for a hundred dollars this year would not be worth nearly $ 3,000.

Currency

Monero aims to solve the problem of anonymous transactions. Although he perceives that this currency was a method of money laundering, Monero aims to change that. Basically, the difference between Monero and Bitcoin is that Bitcoin has a transparent blockchain that is public and registered in all transactions. With Bitcoin, anyone can see how and where the money moved. However, there is imperfect anonymity in Bitcoin. In contrast, Monero has an opaque rather than transparent transaction method. No one is completely sold with this method, but since some people love privacy for any purpose, Monero is here.

Zcash

Unlike Monero, Zcash also aims to solve the problems that Bitcoin has. The difference is that instead of being completely transparent, Monero is partially public in its blockchain style. Zcash also aims to solve the problem of anonymous transactions. After all, not everyone likes to show how much money they spent on Star Wars memorabilia. The conclusion, then, is that this type of cryptocurrency actually has an audience and demand, although it is difficult to indicate which cryptocurrency will focus on which cryptocurrency will eventually come out on top of the stack.

Bancor

Also known as a “smart token,” Bancor is a new-generation cryptocurrency standard that can hold more than one token in reserves. Basically, Bancor tries to facilitate the creation, management and creation of tokens by increasing the level of liquidity and allowing the market price to be automated. At the moment, Bancor has a product on its front end, including the creation of a wallet and a smart token. There are also characteristics in the community, such as statistics, profiles, and discussions. In short, Bancor’s protocol allows for the finding of an internal price and a liquidity mechanism for smart contract tokens through an innovative reservation. With a smart contract, you can immediately settle or purchase one of Banco’s reserve tokens. With Bancor, you can easily create new cryptocurrencies. Now who wouldn’t want that?

EOS

Another competitor to Ethereum, EOS promises to solve the Ethereum scaling problem through a set of more robust tools for running and creating applications on the platform.

Tezos

An alternative to Ethereum, Tezos can be renewed by consensus without too much effort. This new blockchain is decentralized in the sense that it is self-governing through the implementation of a true digital commonwealth. It facilitates a mathematical technique called formal verification and has the features to increase the security of the most conscious and financially intelligent contract. It will certainly be a big investment in the coming months.

Judgment

It’s incredibly difficult to predict which Bitcoin will become the next superstar on the list. However, user adoption has always been a key success factor when it comes to cryptocurrencies. Both Ethereum and Bitcoin have this and while there is a lot of support from the beginning users of all the cryptocurrencies on the list, some have yet to prove their enduring potential. However, these are the ones that need to be invested and cared for in the coming months.

Nola irabazten du kriptomonetak balioa?

Kriptomonetak mundu digitaleko azken “gauza handia” dira eta gaur egun diru-sistemaren parte direla aitortu dute. Izan ere, zaleek «diruaren iraultza» gisa etiketatu dute.

Termino argian, kriptografia-monetak erabiltzaileen artean truka daitezkeen aktibo digital deszentralizatuak dira, agintaritza zentral baten beharrik gabe, gehienak “meatzaritza” deritzon konputazio-teknika berezien bidez sortuak.

Monetak, AEBetako dolarra, Libra Britainia Handia eta Euroa bezalako monetak legezko balio gisa onartzea banku zentralak jaulki dituelako da; moneta digitalak, ordea, kriptografia-monetak adibidez, ez dira publikoak jaulkitzailearengan duen konfiantzan eta konfiantzan. Horrenbestez, hainbat faktorek bere balioa zehazten dute.

Kriptomoneten balioa zehazten duten faktoreak

Merkatu askeko ekonomiaren printzipioak (eskaintza eta eskaintza nagusiki)

Eskaintza eta eskaria balio duen edozerren balioaren determinatzaile nagusia da, kriptografia-monetak barne. Hau da, jende gehiago kripto-moneta bat erosteko prest badago eta beste batzuk saltzeko prest badaude, kriptografia-moneta jakin horren prezioa igo egingo da, eta alderantziz.

Adopzio Masiboa

Edozein kriptografia-moneta masiboki hartzeak bere prezioa ilargira jaurti dezake. Hau da, kriptografia-moneta askok hornidura muga jakin batean mugatuta dutelako eta, printzipio ekonomikoen arabera, eskariaren igoerak hornikuntza dagokion igoerarik gabe salgai jakin horren prezioa igotzea ekarriko du.

Kriptografia-moneta anitzek baliabide gehiago inbertitu dituzte haien adopzio masiboa ziurtatzeko, batzuek beren kripto-moneta bizitza pertsonaleko arazo larrietarako aplikagarritasunean zentratuz, baita eguneroko kasu erabakigarrietan ere, eguneroko bizitzan ezinbestekoak bihurtzeko asmoz.

Fiat Inflazioa

Fiat moneta bat, USD edo GBP bezalakoak, puztu egiten bada, bere prezioa igotzen da eta erosteko ahalmena jaitsi egiten da. Honek, orduan, kriptografia-monetak (erabil dezagun Bitcoin adibide gisa) fiat horri dagokionez handitzea eragingo du. Ondorioz, bitcoin bakoitzarekin fiat horren gehiago eskuratu ahal izango duzu. Izan ere, egoera hau izan da Bitcoin-en prezioaren igoeraren arrazoi nagusietako bat.

Iruzurrak eta Zibererasoen Historia

Iruzurrak eta hack-ak ere kriptografia-moneten balioa eragiten duten faktore nagusiak dira, balorazioetan aldaketa basatiak eragiten dituztelako. Zenbait kasutan, kriptografia-moneta babesten duen taldea iruzurgileak izan daitezke; kriptografia-monetaren prezioa ponpatuko dute ustekabeko pertsonak erakartzeko eta gogor irabazitako dirua inbertitzen denean, prezioa laburtu egiten dute iruzurgileak, eta gero arrastorik gabe desagertzen dira.

Beraz, ezinbestekoa da dirua inbertitu aurretik kriptomoneta iruzurrekin kontuz ibiltzea.

Kontuan hartu beharreko beste faktore batzuk, kriptomoneten balioan eragina dutenak, honako hauek dira:

  • Kriptografia-moneta gordetzeko modua, baita bere erabilgarritasuna, segurtasuna, eskuratzeko erraztasuna eta mugaz gaindiko onargarritasuna ere

  • Kriptomoneta babesten duen komunitatearen indarra (finantzaketa, berrikuntza eta kideen leialtasuna barne hartzen ditu)

  • Inbertitzaileek eta erabiltzaileek hautematen duten kriptografia-monetaren arrisku txikiak

  • Albisteen sentimendua

  • Merkatuaren likidezia eta kriptomoneta hegazkortasuna

  • Herrialdeen araudia (honek Txinan kriptografia-moneta eta ICOak debekatzea eta Japonian legezko diru-sarrera gisa onartzea barne hartzen ditu)