At the start of its launch in 2009, several thousand bitcoins were used to buy pizza. Since then, the cryptocurrency’s meteoric rise to $65,000 in April 2021, dropping by almost 70% in mid-2018 to nearly $6,000, has taken many by surprise: crypto investors, traders, or simply those eager to miss the train.
How it all started
Note that dissatisfaction with the current financial system has led to the development of the digital currency. The development of this cryptocurrency is based on Satoshi Nakamoto’s blockchain technology, which is a pseudonym used by a single developer or group of developers.
Despite many opinions predicting the death of the cryptocurrency, the performance of bitcoin has inspired many other digital currencies, especially in recent years. The success of crowdfunding with blockchain fever has attracted even those who deceived the unsuspecting public and attracted the attention of regulators.
Bitcoin has inspired the launch of many other digital currencies, currently, there are over 1000 versions of digital coins or tokens. They are not all the same and their value in terms of liquidity varies greatly.
Coins, altcoins, and tokens
Suffice it to say at this point that there are minor differences between coins, altcoins, and tokens. Altcoins or altcoins are commonly used to describe currencies other than bitcoin, although altcoins such as Ethereum, Litecoin, Ripple, Dogecoin, and Dash are considered part of the “core” category of coins, meaning that they are used on more than bitcoin exchanges. Cryptocurrency. takes place
Coins serve as currency or stores of value, while tokens offer the use of assets or utilities, such as a blockchain service for supply chain management, to validate and track the winery of products from cellar to consumer.
One thing to note is that coins or coins of lesser value offer upside opportunities, but don’t expect a surge of growth like bitcoin. In short, lesser-known tokens can be easy to buy but harder to sell.
Before venturing into the world of cryptocurrency, start by studying the value proposition and technical considerations, such as the trading strategies outlined in the whitepaper that accompanies each initial coin offering or ICO.
For those familiar with stocks and shares, it is no different from an IPO or an IPO. However, IPOs are issued by companies with tangible assets and business history. All this is done in a regulated environment. In contrast, an ICO is purely based on an idea proposed in a white paper by a company that is not yet operational and without assets and is seeking funds.
Not regulated so buyers should be careful
“Nobody can control the unknown” probably explains the situation with digital currency. Regulators and regulations are trying to catch up with the ever-changing cryptocurrency. The rule of thumb in the crypto space is “blank warning”, buyer beware.
Some countries are adopting a hands-off policy for cryptocurrencies and blockchain applications with an open mind while keeping an eye on outright scams. However, regulators in other countries are more concerned about the benefits than the benefits of the digital currency. Regulators generally realize the need to strike a balance and are looking to try to regulate the many flavors of cryptocurrencies around the world by looking at existing securities laws.
Digital Wallet: The First Step
A wallet is essential to get started in cryptocurrencies. Think electronic banking, but without the protection of the law as in the case of virtual currency, so security is the first and last consideration in the crypto space.
Wallets are digital. There are two types of purses.
Internet-connected hot wallets put users at risk of being hacked
Cold wallets that are not connected to the internet are considered secure.
Apart from the two main types of wallets, it should be noted that there are wallets for one cryptocurrency and other wallets for multiple cryptocurrencies. There is also the possibility of having a multi-signature wallet, which is like having a joint account with a bank.
A cryptocurrency wallet consists of a public and private key as well as individual transaction records. The public key contains a reference to a cryptocurrency account or address, much like the name required to receive check payments.
The public key is accessible to everyone but the transactions are only confirmed after verification and verification which is based on the consensus mechanism linked to each cryptocurrency.
The private key can be thought of as the PIN commonly used in electronic financial transactions. It follows that the user should never disclose the private key to anyone and create a backup of this data which should be stored offline.
It makes sense that a hot wallet has a minimum amount of cryptocurrency while a large amount should be in a cold wallet. Losing the private key is like losing your cryptocurrency! The usual precautions for online financial transactions apply, from having strong passwords to being on the lookout for malware and phishing.
There are a variety of wallets available to suit individual preferences.
Hardware wallets are created by third parties to buy. These devices work much like a USB device which is considered secure and connects to the internet only when needed.
Web-based wallets, for example, those provided by crypto exchanges, are considered hot wallets that put users at risk.
Software wallets for desktop or mobile are mostly available for free and can be provided by coin issuers or third parties.
Paper wallets containing relevant data of cryptocurrency held by public and private keys can be printed in QR code format. These should be kept in a safe place until required during crypto transactions and copies should be made in case of accidents such as water damage or loss of printed data over time. time.
Crypto exchanges and marketplaces
Crypto exchanges are trading platforms for those interested in virtual currencies. Other options include websites for direct trade between buyers and sellers, as well as brokers, where there is no “market” price, but it is based on an agreement between the parties to the transaction.
Therefore, many crypto exchanges are located in different countries, but with different standards of security practices and infrastructure. They range from anonymous registration to requiring a simple email to open accounts and start trading. Yet some require users to comply with international identity verification measures, known as Know-Your-Customer and Anti-Money Laundering (AML) measures.
The choice of crypto exchange depends on user preference but may be subject to anonymously permitted trading limits or may be subject to sudden new regulations in the exchange’s home country. Minimal administrative procedures with anonymous registration allow users to start trading quickly without going through KYC and AML processes will take longer.
All crypto transactions must be duly processed and validated, which can take anywhere from a few minutes to a few hours, depending on the coins or tokens being transacted and the volume of the transaction. Scalability is known to be a problem with cryptocurrencies and developers are working on ways to find solutions.
Cryptocurrency exchanges fall into two categories.
These fiat cryptocurrency exchanges offer purchases of fiat cryptocurrency through direct transfers from banks or credit and debit cards, or through ATMs in some countries.
Cryptocurrency only. Crypto exchanges that only operate in cryptocurrencies, meaning customers must already own a cryptocurrency – like bitcoin or Ethereum – must be “exchanged” for other coins or tokens based on rates of the market.