In the first days of its launch in 2009, several thousand bitcoins were used to buy pizza. Since then, the cryptocurrency has fallen by about 70 percent in mid-2018 to $ 6,000 and then risen to $ 65,000 in April 2021, much to the chagrin of many cryptocurrency investors, traders, or just anyone else. missed the boat.
How it all started
Note that dissatisfaction with the current financial system has led to the development of digital currency. The development of this cryptocurrency is based on blockchain technology by Satoshi Nakamoto, a pseudonym probably used by a developer or a group of developers.
Despite numerous opinions predicting the death of the cryptocurrency, the performance of bitcoin has inspired many other digital currencies, especially in recent years. The success of the crowded financing brought about by the blockchain fever has undoubtedly attracted those who tried to deceive the public, and this has attracted the attention of regulators.
Bitcoin has inspired the release of many other digital currencies, with more than 1,000 versions of digital coins or tokens currently available. Not all of them are the same, and their values, such as liquidity, vary greatly.
Coins, altcoins and tokens
Suffice it to say that at this point there are wonderful differences between coins, altcoins and tokens. Although altcoins such as Ethereum, litecoin, ripple, dogecoin, and dashes belong to the ‘main’ category of coins, they are mostly traded on cryptocurrency exchanges, meaning that altcoins or alternative coins generally describe something other than advanced bitcoin.
Coins serve as a storehouse of currency or value, while tokens offer active or utility use, such as a blockchain service to manage the supply chain to inspect and track wine products from winemakers to consumers.
It should be noted that low-value tokens or coins offer positive opportunities, but don’t expect similar meteoric increases like bitcoin. Simply put, lesser-known tokens are easy to buy, but hard to sell.
Before you start cryptocurrency, start by studying the value proposition and technological considerations, i.e. the commercial strategies outlined in the white paper that accompany each initial coin offer or ICO.
For those who are familiar with stocks and stocks, this is no different than an initial public offering or IPO. However, IPOs are issued by companies with tangible assets and business experience. All this is done in a regulated environment. An ICO, on the other hand, is based solely on an idea proposed on a white paper by a business – which is still active and has no assets – looking for funds to get started.
what is cryptocurrency
Uncontrolled, so buyers be careful
“The unknown cannot be regulated” probably concludes the situation with the digital currency. Regulators and regulations are still trying to catch the ever-evolving cryptocurrencies. The golden rule in the cryptocurrency space is “caveat emptor”, let the buyer be careful.
While some countries focus on blatant fraud, they are open to adopting policies that are accessible to cryptocurrencies and blockchain applications. However, there are regulators in other countries who are more interested in the disadvantages than the advantages of digital money. Regulators are generally aware of the need to strike a balance, and some are looking at existing securities laws to try to manage the many flavors of cryptocurrencies globally.
Digital wallets: The first step
Wallet is important to start cryptocurrency. Consider e-banking, but exclude 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 digital. There are two types of purses.
- Hot wallets connected to the Internet, which put users at risk of breakage
- Cold purses 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 wallets for only one cryptocurrency, and others for multi-cryptocurrencies. There is also the opportunity to have a multi-signature wallet, to have a joint account with a bank.
The choice of wallet depends on the user’s choice, whether it is pure bitcoin or ethereum, because each coin has its own wallet or you can use a third-party wallet that contains security features.
Cryptocurrency wallets have public and private keys with personal transaction records. The public key contains a reference to the cryptocurrency account or address, as opposed to the name required to receive the check payment.
The public key is accessible to all, but transactions are only verified during verification and verification based on a consensus mechanism applicable to each cryptocurrency.
The private key can be considered a PIN code widely used in e-finance transactions. It follows that the user should never disclose the private key to anyone and should not back up this information, which should be kept offline.
It makes sense to have minimal cryptocurrency in a hot wallet, and a larger amount should be in a cold wallet. Losing a private key is as good as losing your cryptocurrency! From strong passwords to malware and phishing awareness, the usual precautions for online financial transactions apply.
There are different types of purses according to individual preferences.
- Wallets made by third parties and to be purchased. These devices work as a USB device, which is considered somewhat secure and can be connected only when the Internet is needed.
- For example, web-based wallets provided by cryptocurrency exchanges are considered hot wallets that put users at risk.
- Software-based wallets for desktops or mobile phones are mostly free and can be provided by coin issuers or third parties.
- Paper-based wallets can be printed in QR code format, containing relevant information about cryptocurrencies that are public and have private keys. They should be kept in a safe place for as long as required during cryptocurrency transactions, and copies should be prepared in the event of an accident, such as water damage or fading of print data over time.
Cryptocurrencies and markets
Cryptocurrencies are trading platforms for those interested in virtual currencies. Other options include websites for direct trading between buyers and sellers, as well as brokers that do not have a “market” price but are based on concessions between the parties to the transaction.
Thus, there are many cryptocurrency exchanges located in different countries, but with different security practices and infrastructure standards. They are those that allow anonymous registration, which requires only an email to open an account and start trading. However, there are others that require users to verify their international identity, known as Customer Identification, and to take anti-money laundering (AML) measures.
The choice of cryptocurrency depends on the user’s choice, but anonymous ones may have restrictions on the allowable range of trades or may be subject to sudden new rules in the country where the exchange resides. Minimal administrative procedures with anonymous registration allow users to trade faster and go through more KYC and AML processes.
All cryptocurrency trades must be properly processed and approved, which can take anywhere from a few minutes to several hours, depending on the coins or tokens traded and the volume of the trade. Scalability is known to be a problem with cryptocurrencies, and developers are working on ways to find a solution.
Cryptocurrency exchanges fall into two categories.
- Fiat-cryptocurrency Such exchanges provide direct transfers from banks or credit and debit cards, or the purchase of fiat-cryptocurrency through ATMs in some countries.
- Cryptocurrency only. There are only cryptocurrency exchanges that deal with cryptocurrency, meaning that customers must already have a cryptocurrency – for example, bitcoin or ethereum – to be “exchanged” for other coins or tokens at the market rate.
Fees are charged to facilitate the purchase and sale of cryptocurrencies. Users need to do research to be satisfied with infrastructure and security measures, as well as determine the fees they are comfortable with because different exchanges apply different tariffs.
Don’t wait for the total market price for the same cryptocurrency with different exchanges It may be advisable to spend time researching the best price for the coins and tokens you are interested in.
Online financial transactions are risky, and users should consider alerts such as two-factor authentication or 2-FA, keep up to date with the latest security measures, and be aware of phishing scams. One of the golden rules of phishing is not to click on the links provided, no matter how original the message or email.