In the early days of its launch in 2009, thousands of bitcoins were used to buy a pizza. Since then, after the cryptocurrency meteorite rose to US $ 65,000 in April 2021, it dropped by almost 70 percent to about US $ 6,000 by mid-2018, much to the dismay of many people – cryptocurrency investors, traders or general curious people Miss.
How it all started
Keep in mind 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 apparently using a developer or group of developers.
Despite many opinions predicting the demise of cryptocurrencies, the effectiveness of Bitcoin has inspired many other digital currencies, especially in recent years. The success of crowdfunding brought on by blockchain fever has also attracted them to scandalize the undoubted public and it has come to the notice of regulators.
Outside of Bitcoin
Bitcoin has inspired many other digital currencies, with more than 1,000 versions of digital coins or tokens now available. These are not all the same and their values vary greatly as to their liquidity.
Coins, altcoins and tokens
Suffice it to say that there are subtle differences between coins, altcoins and tokens at the moment. Altcoins or alternative coins usually describe other than the advanced bitcoin, although altcoins such as ethereum, litecoin, ripple, dogecoin and dash are considered the ‘major’ categories of coins, meaning they are traded on more cryptocurrency exchanges.
Coins act as a currency or value store where tokens use resources or utilities, an example being a blockchain service that manages the supply chain to validate and track wine products from wineries to consumers.
One thing to note is that low-priced tokens or coins offer the opposite opportunity but do not expect the same kind of meteor growth as Bitcoin. Simply put, lesser known tokens can be easy to buy but difficult to sell.
Before entering a cryptocurrency, start by studying the trading strategies described in the white paper, including each initial currency offer or ICO, such as pricing and technical considerations.
For those familiar with stocks and shares, this is not like an initial public offering or an IPO. However, IPOs are issued by companies with real assets and a business track record. It is all done in a controlled environment. On the other hand, an ICO is based entirely on an idea proposed by a business on a white paper – still functional and without resources – which is looking for funding to start.
Uncontrolled, so buyers beware
‘Unknown things that cannot be controlled’ is probably the sum of the situation with digital currency. Regulators and regulators are still trying to catch up with cryptocurrencies that are constantly evolving. The golden rule of crypto space is ‘cavit emptor’, let the buyer be careful.
Some countries are keeping an open mind to adopt a hands-off policy for cryptocurrency and blockchain applications, and are directly monitoring scams. Yet regulators in other countries are more concerned with the disadvantages than the benefits of digital money. Regulators generally recognize the need to maintain a balance, and some are looking at existing securities laws to try to handle one of the many tastes of cryptocurrency worldwide.
Digital Wallet: The First Step
A wallet is essential for getting started in cryptocurrency. Think e-banking but subtract the protection of the law in the case of virtual currencies, so security is the first and last thought in the crypto space.
Wallets are digital type. There are two types of wallets.
A hot wallet connected to the Internet that puts users at risk of being hacked
Cold wallet that is not connected to the Internet and is considered secure.
In addition to the two main types of wallets, it should be noted that one is for cryptocurrency and the other is for multi-cryptocurrency. There is also the option of having a multi-signature wallet, somewhat like having a joint bank account.
The choice of wallet depends entirely on the user’s preference for Bitcoin or Etherium, as each currency has its own wallet, or you can use a third-party wallet that incorporates security features.
Cryptocurrency Wallet contains a public and private key with a record of personal transactions. Public key includes references to cryptocurrency accounts or addresses, not unlike the name used to receive check payments.
The universal key is available for public viewing, but transactions are confirmed only after verification and validation based on the relevant consensus process with each cryptocurrency.
The personal key can be considered as a PIN that is commonly used in e-financial transactions. This follows that the user should never disclose a private key to anyone and should back up this data which should be stored offline.
It is understandable to have a minimum cryptocurrency in a hot wallet while a large amount should be in a cold wallet. Losing a personal key is as good as losing your cryptocurrency! The usual caution applies to online financial transactions, ranging from having strong passwords to warnings of malware and phishing.
Different types of wallets are available according to individual preferences.
Hardware wallet made by a third party that must be purchased. These devices work somewhat like USB devices that are considered secure and only stay connected when the Internet is needed.
Web-based wallets offered by crypto exchanges are considered hot wallets, putting users at risk.
Software-based wallets for desktop or mobile are mostly available for free and may be provided by a currency issuer or a third party.
Paper-based wallets can be printed in QR code format with relevant data related to proprietary cryptocurrencies, including public and private keys. These should be kept in a safe place until they are needed during crypto transactions and should be copied in case of accident such as loss of water or fading of printed data over time.
Crypto Exchange and Marketplace
Crypto exchanges are trading platforms for those interested in virtual currencies. Other options include websites for direct transactions between buyers and sellers as well as brokers where there is no ‘market’ value but it is based on agreement between the parties to the transaction.
So, there are many crypto exchanges in different countries but the security practices and infrastructure standards are different. Allows anonymous registration starting from which only email is required to open an account and start trading. However, there are some that require users to comply with international identity verification, known as no-your-customer, and anti-money laundering (AML) measures.
The choice of crypto exchange depends on the user’s preference but anonymous trading may be limited to the permitted levels or may suddenly be subject to new rules in the exchange’s residential country. Minimal administrative procedures, including anonymous registration, allow users to quickly start trading while KYC and AML processes take longer.
All crypto trades need to be properly processed and verified depending on the amount of coin or token being traded and traded which can take minutes to hours. Scalability is known as a problem of cryptocurrencies and developers are working on ways to find a solution.
Cryptocurrency exchange in two sections.
Fiat-cryptocurrency offers such exchanges for the purchase of Fiat-cryptocurrency through bank or credit and debit cards or by direct transfer via ATM in some countries.
Cryptocurrency only. There, crypto exchanges only trade in cryptocurrencies, meaning that customers must already own a cryptocurrency – such as Bitcoin or Etherium – to ‘exchange’ for other coins or tokens based on market rates.
Fees are charged for the convenience of buying and selling cryptocurrencies. Users should research to be satisfied with the infrastructure and security measures as well as determine the comfortable fees they charge at different rates charged by different exchanges.
Don’t expect a common market price for the same cryptocurrency with difference exchanges It may be worthwhile to spend time researching the best prices for coins and tokens of interest to you.
Online financial transactions carry risks and users should be aware of warnings such as two-factor authentication or 2-FA, the latest security measures and phishing scams. A golden rule of phishing is not to click on the links provided, no matter how authentic a message or email is.