Cryptocurrency for beginners

In the early days of 2009, several thousand bitcoins were used to buy pizza. Since then, the meteoric rise of the cryptocurrency reached $ 65,000 in April 2021, after its heart rate of about 70% in mid-2018 was about $ 6,000, shocking many people – cryptocurrency investors, traders or just curious idea: missed the ship.

How it all started

Remember that dissatisfaction with the current financial system has led to the development of digital currency. The development of this cryptocurrency is based on Satoshi Nakamoto’s blockchain technology, a pseudonym that is apparently used by a developer or group of developers.

Despite the many predictions that the cryptocurrency will die, the performance of bitcoin has inspired many other digital currencies, especially in recent years. The success of the blockchain-induced crowdfunding campaign has caught the attention of those who undoubtedly deceived the public, and it has come to the attention of regulators.

Beyond Bitcoin

Bitcoin has inspired the launch of many other digital currencies. There are currently over 1000 versions of digital coins or symbols. Not all of them are the same, their values ​​are as different as their liquidity.

Coins, altcoins և symbols

Suffice it to say at this point that there are good differences between coins and altcoins. Altcoins or alternative coins generally describe something other than the advanced bitcoin, although altcoins such as ethereum, litecoin, ripple, dogecoin և dash are considered the “main” category of coins. which means they are sold on more cryptocurrency exchanges.

Coins serve as a currency or storehouse of value, while symbols offer assets or useful applications, such as a blockchain supply chain management service, from winemaking to tracing and validating wine products.

It should be noted that low-value tokens or coins offer positive opportunities, but do not expect meteorite-like growth in bitcoin. Simply put, lesser known signs may be easier to buy but harder to sell.

Before entering the cryptocurrency, start by examining the value proposition և technological considerations, that is, the trading strategies outlined in the white paper accompanying the initial offering of each coin or ICO.

For those who are familiar with stocks և stocks, it is no different than the initial public offering or IPO. However, IPOs are issued by companies with business experience with tangible assets. Everything is done in a regulated environment. The ICO, on the other hand, is based solely on an idea put forward in white paper by a business that still needs to operate without assets looking for a way to start.

Out of order, so beware of buyers

“What is unknown can not be settled,” probably sums up the situation with digital currency. Regulators and regulators are still trying to reach the ever-evolving cryptocurrencies. The golden rule of crypto space is “use of warnings”, let the buyer beware.

Some countries are open-minded in adopting a policy of closing their hands to cryptocurrency blockchain applications while pursuing blatant fraud. However, in other countries there are regulators who are more concerned with the disadvantages of digital money than the advantages. Regulators are generally aware of the need to strike a balance, with some considering existing securities laws in an attempt to control the many flavors of cryptocurrencies around the world.

Digital wallets. the first step

A wallet is a great place to start with cryptocurrencies. Consider 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 area.

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

  • Internet-connected hot wallets that expose users to hacker attacks

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

In addition to the two main types of wallets, it should be noted that there are wallets for only one cryptocurrency and others for multiple cryptocurrencies. There is also the option of having a wallet with several signatures, which is somewhat similar to having a joint account with a bank.

The choice of wallet depends on the preferences of the user – interest in pure bitcoin or etherium, as each coin has its own wallet, or you can use a third-party wallet that includes security features.

Wallet notes:

The cryptocurrency wallet has a public-private key with personal transaction records. A public key includes a link to a cryptocurrency account or address that does not differ from the name required to receive a check.

The public key is available to everyone, but transactions are only approved upon verification and validation based on the appropriate consensus mechanism for each cryptocurrency.

The private key is the PIN, which is commonly used in electronic financial transactions. The bottom line is that the user should never reveal anyone ‘s private key, back up that data, which should be stored offline.

It makes sense to have a minimal cryptocurrency in a hot wallet, while a larger amount should be in a cold wallet. Losing a private key is just as good as losing your cryptocurrency. The usual precautions for online financial transactions apply, from having strong passwords to being alert to malware և phishing.

Wallet dimensions

Different types of wallets are available to suit individual tastes.

  • Hardware wallets made by third parties to buy. These devices work somewhat like a USB device, which is considered secure և connected to the Internet only when needed.

  • Web-based wallets provided, for example, by crypto exchanges are considered hot wallets that put users at risk.

  • Software-based wallets for desktop or mobile phones are generally available for free և can be provided by coin issuers or third parties.

  • Paper wallets can be printed with relevant QR code cryptocurrency data with public-private keys. They should be kept in a safe place for as long as required during the crypto transaction; են copies should be made in the event of water damage or print data fading over time.

Crypto exchanges և markets

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

Consequently, there are many crypto exchanges located in different countries, but with different standards of security practice and infrastructure. These range from those that allow anonymous registration, which simply requires an email to open an account or start a business. However, there are others who require users to comply with the International Identification, known as the “Know Your Customer” դեմ Anti-Money Laundering (AML) Remedies.

The choice of crypto exchange depends on the preferences of the user, but anonymous may have restrictions on the size of the trade or may be subject to sudden new regulations in the country of residence of the exchange. Minimum administrative procedures with anonymous registration allow users to start trading quickly, while the KYC և AML process takes more time.

All cryptocurrencies need to be properly processed and validated, which can take from a few minutes to a few hours, depending on the coins or tokens traded and the trading volume. It is well known that scale is a cryptocurrency issue, and developers are working on ways to find solutions.

Cryptocurrency exchanges are of two categories.

  • Fiat-cryptocurrency Such exchanges involve purchases of fiat-cryptocurrency through direct transfers from bank or credit-debit cards, or through ATMs in some countries.

  • Only in cryptocurrency. There are cryptocurrencies that only work with cryptocurrencies, which means that customers already need to have a cryptocurrency, such as bitcoin or etherium, to “exchange” it for other coins or tokens based on market exchange rates.

Fees are charged to facilitate the purchase and sale of cryptocurrencies. Users need to research in order to be satisfied with the infrastructure, security measures, as well as determine the fees that are convenient for them, at different rates charged by different exchanges.

Do not expect a common market price for the same cryptocurrency with different exchanges. It may be worthwhile to take the time to research the best price for the coins և tokens you are interested in.

Online financial transactions involve risks, և users should heed warnings such as two-factor authentication or 2-FA, be aware of the latest security measures, be aware of phishing scams. One of the golden rules of phishing is not to click on the provided links, no matter how valid the message or email.