October 28, 2020

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Wallebi Author

Money is a metal coin or a piece of paper that drives its value by being a medium of exchange. It allows people to trade goods and services indirectly. It’s valuable because everyone accepts it as a form of payment.

Money has been part of human history from about 3000 years ago. Before that time, people use the bartering system in daily life. Bartering means to trade goods or services directly. For example, give a hunting tool to someone and take some amount of meat in return. This system had problems because it was difficult to find a person who will get agree to the deal.

It was around 770 B.C. that Chinese started to use weapons as medium of exchange. Over time, its shape changed and first coins created. Although Chinese were pioneer in this field, the first minted coins created in where we know as western turkey today.

The first official currency minted in 600 B.C. which made from a mixture of gold and silver with picture stamped on it. But after a while Chinese took the power back and created the first paper money.

Europeans were still using coins until 16th century and the first paper currency that issued by European governments was actually issued by colonial governments in North America like Canada and after that French colony.

The 21st century gave rise to two disruptive forms of currency: Mobile payments and virtual currency. Then in 2009, a new form of currency called cryptocurrency created by anonymous person called Satoshi Nakamoto. Its name was Bitcoin, what is the strongest and most famous cryptocurrency till today.

History of Money 

Digital currency is a type of currency recorded electronically and is accessible only in digital form using computers or mobile phones connected to the internet. Although it exists only in electronic form, they have same properties similar to physical currencies. They can use to buy goods or services or even be restricted to certain community like only using inside an online game.

The main feature of digital currencies is that transactions in the network happen directly between parties without any middle-man interruption. So, they can be transferred instantaneously and also is the cheapest method to trade currencies. For instance, it is possible for someone in America to send funds to someone in Singapore in the form of digital currency by being connected to the same network for transacting.

A cryptocurrency is a digital or virtual currency which use as a medium of exchange. It uses cryptography for security, anti-counterfeiting measures, verifying transactions and control the creation of additional units. It gives a feature to cryptocurrencies that no one can make any changes unless specific conditions are fulfilled. Unlike central banking systems, cryptocurrencies are decentralized. It means no person, government or institution control it. This feature works due to using a technology called blockchain. All the data stored and transactions get process on the blockchain network.

 

Below is the list of what can you do with cryptocurrency:

  • Pay for goods or services
  • Invest
  • Mine
  • Use as a payment gateway for your business

What is Cryptocurrency?

A Blockchain is a type of diary or spreadsheet containing information about transactions. Basically, Blockchain make users be able to send and receive data and information by using its network securely. Each transaction on blockchain network generates a string of numbers and letters called “hash”. Every hash is depended on the previous transaction’s hash and even a small change in a data or information of the hash affect the previous hash and creates completely a new one.

There are users on the network that referred as “nodes”. Every node has a copy of the blockchain on his computer. Once a transaction is verified and approved by a majority of the nodes then its written and combined to a block. By the end, the combination of blocks makes blockchain.

blockchain 

In general, Bitcoin (BTC) is a type of digital currency. They aren’t printed like dollars or euros. It distributed only electronically. It’s a decentralized peer-to-peer network that introduced in 2009, by anonymous programmer or group of programmers named Satoshi Nakamoto.

Bitcoin is a combination of cryptography and blockchain technology. The blockchain network contains all the transactions ever processed. Users get connected to the blockchain using Bitcoin wallet and be able to see the amount of Bitcoin they have in their wallet and the record of transactions.

Here are the main features of Bitcoin:

 

Decentralized

Bitcoin network is not depended to or control by any person, government or institution. As a result, even if some part of the network goes down, the network will keep working.

 

Anonymous

Unlike bank accounts you do not need to provide any personal information to have a Bitcoin wallet. Everyone who is interested can have an account and start to buy, sell or transfer Bitcoin.

 

Transparent

Bitcoin blockchain is transparent. Every transaction that ever happened is stored in the blockchain and can be tracked by studying the blockchain ledger.

 

Fast

Bitcoin transactions happen instantly. In fact, it takes a few minutes to receive the money sent by Bitcoin worldwide.

 

Non-repudiable

Bitcoin transactions are irreversible. Once a transaction is done, there is no way of cancel it or return the money back.

Ethereum is a decentralized system. It means that it does not get control by any person, government or institution entity. Ethereum runs from thousands of computers globally called “nodes”. Nodes are volunteers that download the entire Ethereum’s Blockchain on the computers and keep the network honest, enforce all the consensus rules which dictated by “smart contracts” and receive rewards in return.

Smart contracts are designed to automatically perform actions within the network as well as transactions with parties that you may not trust. All the terms are pre-programmed into the contract and needs to get fulfill with both parties for a transaction or any other specific action to happen.

Ethereum is a whole network, it has its own internet browser, algorithms and payment system. In fact, it took the technology behind Bitcoin and expanded its features and capabilities. Its network never goes offline which means there is no central point of failure.

Ethereum

Litecoin is a peer-to-peer cryptocurrency that created by a google employee named Charlie Lee in 2011. Litecoin and Bitcoin have similarities and always compare together. Basically, Litecoin is based on Bitcoin’s original source code and was an early altcoin.

Litecoin is a form of digital money that utilizing blockchain technology to transfer funds directly between individuals or businesses. Same as other cryptocurrencies, Litecoin is decentralized and is not issued or control by any government. In fact, it designed to make transactions faster and cheaper in order to make it suitable for daily purchases.

The total number of Litecoin is limited to 84 million coins and every 2.5 minutes a new block is generated and add to the blockchain.

Litecoin 

Tether is a stable coin that works based on blockchain. It allows you to store, send and receive digital tokens same as bitcoins or any other cryptocurrency . Tether coins in circulation pegged by traditional fiat currencies like dollars or euros. It means it always maintains $1 in reserves for each Tether issued. Tether tokens trade under the USDT symbol.

Tether created specifically to build a bridge between fiat currencies and cryptocurrencies. It offers stability, transparency and low transaction fee to its users.

Coin:

Coins are type of digital currencies that have the same features as money and use just like physical cash. They are fungible, devisable and limited in supply.

To make it simple, coins use their own blockchain. They all may be sent, receive or mined. The examples of coins are Bitcoin, Monero, Ether, etc. However, there are exceptions like Ether, which not only is a coin but also play a role in Ethereum blockchain as a token to facilitate transactions.

The coins which has their own blockchain but it’s not Bitcoin called “altcoins”. Some altcoins used Bitcoin blockchain and just made some changes on it and then use it as separate blockchain like Litecoin or Dogecoin.

 

Token:

The main difference between coin and token is that tokens need another blockchain platform to operate and they do not have their own blockchain. Ethereum is the most common and popular platform to create tokens. These tokens called as ERC20 tokens like Tether (USDT). Some tokens also work on Neo or Waves platform.

Tokens which use as means of payment called “currency tokens”.

There are so-called “utility tokens”. These tokens use within decentralized applications (DApps) like Basic Attention Token (BAT).

“Security tokens” are the other type of tokens which represent an investment in a project. People buy these tokens with the hope that their value will increase in the future.

Coin Vs Token 

Since Bitcoin announced and introduced to the public in 2009, it had meteoric rise and subsequent fall of value. It made a lot of people interested to join the cryptocurrency market and invest in Bitcoin or other coins with the hope that the price will grow up and they can make profit. Crypto enthusiasts believe that blockchain and altcoins are making a major shift in the global economic system. But the question is that should we invest in cryptocurrencies? Or why do we have to invest in them?

Cryptocurrencies market is volatile and unlike other markets it works 24/7. You can trade your coins or tokens anytime, anywhere. Moreover, they are borderless, which gives you freedom to trade it with any preferred local currency. There are a lot of stories about people who invested in this market and became millionaire by their wise investing. Today, Bitcoin as the first cryptocurrency ever is known as the best and most profitable investment in the recent 10 years.

Furthermore, in the recent years the laws and regulation around cryptocurrencies has changed and todays a lot of governments have clear regulations about it. Even mostly knows the cryptocurrencies equal to other commodities. So, it would be one the safest choice to invest in.

It’s clear that holding our money in a saving account won’t make us rich. Instead, we need our money to make money and that is what investing is. But to have a successful investment you need to follow the basic rules of investment.

 

Have strategy

Have a strategy for your trades. First read and learn the basics about cryptos and its market. Then implement a strategy for your trades base on your knowledge and researches.

 

Set a target

To secure your asset, you need to set a target for your investment. Open and close your trades when the target is met to avoid big lost.

 

Diversify to control risk

There is a golden rule for investment what says “do not put all your eggs in one basket”. As the crypto market is volatile and the changes are unpredictable, it’s recommended to diversify your investment.

 

Control your emotions

Take responsibility of your trades and control your emotions when market has pumps and dumps.

 

Invest long-term

If you want to have a successful investment in crypto market, you should be patient. Have a long-term plan and strategy.

In the field of investing and finance, the term risk use to define the chance outcome of an investment will differ from an expected outcome. In other words, risk includes the possibility of losing some or all of an original investment. In fact, no investment is without risk and to build a wealth over time, investors required to accept a particular amount of risk.

Cryptocurrency market is not exception and investing in this market has its own risks too. cryptocurrency market is volatile and as well as other financial markets has some unexpected ups and downs. Although you can study the market behavior pattern by using analytical tools to have better decision for your next move, the market is unpredictable and has unexpected changes. Its recommended to first get enough knowledge on the market behavior and how to use analytical tools to predict the market and then put your hard-earned cash to invest in cryptocurrency or any other market.

Cryptocurrency mining is a process in which transactions get verified and added to the public ledger called blockchain. Basically, the mining process involves competing with other miners to solve complicated mathematical problems. Each time a cryptocurrency transaction is made, a miner is responsible to ensure the authenticity of data and update the blockchain with the new transaction. The first miner who crack the code is rewarded by some amount of crypto called “block reward”.

In order to start mining, miners need specific computer hardware such as ASIC (Application-Specific Integrated Circuit) or GPU (Graphical Processing Unit), continuous internet connection, a legitimate mining software package, membership in an online mining pool and an account in a cryptocurrency exchange.

Mining 

Generally, there are two ways of getting cryptocurrencies. You can either buy it or mine it. Not all cryptocurrencies could get mined, you can mine coins like Bitcoin, Ethereum, Litecoin Dogecoin and etc. If you are beginner in mining, it’s recommended to choose a coin which has lower network difficulty and could get mine by common personal desktop computers or laptops. For instance, Litecoin or Dogecoin could be a good choice to start with. As we mentioned in the last sections there are different types of hardware that use to mine cryptocurrencies. From ASICs which designed specifically to mine Bitcoin efficiently to common CPUs which use to mine coin such as Dogecoin and etc. so, do your own research and choose a coin which is more compatible with your hardware. As first step you need a computer with high performance CPU or GPU (graphical processing unit) and a high-speed stable internet connection and a wallet to store your cryptos in it.

These days, there are many people who are interested in cryptocurrency mining and are operating massive Bitcoin or other cryptocurrency farms. These farms are assembled using various mining hardware. Those wishing to make some money on Bitcoin or other cryptocurrency mining require to compete with worldwide corporations and even hundreds of individual miners.

Below is a list of hardware which use for cryptocurrency mining:

 

CPU

CPU stands for Central Processing Unit, and implies your computer’s processor. It was get used to mine Bitcoin back in the days but today the network difficulty for Bitcoin increased and it doesn’t use for that purpose anymore. CPU could still be a choice for another cryptocurrencies which network difficulty is still low like Litecoin or etc.

 

GPU

GPU stands for Graphical Processing Unit, which is a feature of high-end graphics cards. GPUs gave miners a significant advantage over CPU hashing. However, much like CPU mining, GPU mining is largely dead these days.

These days to mine Bitcoin even if you have access to free electricity, GPU rigs will most likely never even pay for themselves.

FPGA (Field Programmable Gate Array)

FPGA is an integrated circuit designed to be configured after being built. It was the first ever hardware manufactured specifically for mining and it changed Bitcoin mining landscape. They provided miners with the benefits of power efficiency and ease of use. They allowed for the first large Bitcoin mining farms to be constructed.

ASIC (Application-Specific Integrated Circuit)

ASIC’s designed and manufactured specifically for Bitcoin mining purposes at extremely high speed. Not only they process data 100 times faster but also, they consume less power. Many believe that ASIC is the ‘end-of-the-line’ technology for mining and it would not get replace.

Todays, the cryptocurrency mining has become a global phenomenon. Large mining farms are mostly located where affordable electricity is available. Moreover, the climate also plays a role. Canada, Iceland or other countries with harsh winters have the added benefit, which makes the cooling of equipment easier. Although mining farms are active in many countries, but each country has different laws and regulations. For some mining is legal but trading cryptocurrency is banned and for some both trading and mining is legal and they have clear rules and regulation about it. For example, although trading crypto is banned in china but this country has the highest amount of hash rate in bitcoin mining. Canada is crypto-friendly, it openly providing opportunities for cryptocurrency mining operations to set up shops.

Cryptocurrencies don’t exist physically. So, technically they can’t be stored same as traditional currencies. A cryptocurrency wallet could be a device or program which stores your private and public keys. You can send, receive or store cryptocurrencies using the wallet. The cryptocurrency itself is not in the wallet, it stored and maintained in a publicly ledger called blockchain. In fact, a cryptocurrency wallet connects the user to the blockchain network. It shows your account balance and transaction history.

There are different types of wallets which use to store cryptocurrencies. Each wallet has different features and provide different level of security and accessibility. Cryptocurrency wallets divides into two main categories. Hot wallets and Cold wallets. Hot wallets include web, mobile and desktop and cold wallets include paper and hardware wallets.

Cryptocurrency wallets divide into two main categories. Hot wallets and cold wallets. Hot wallets include web, mobile and desktop and cold wallets include paper and hardware wallets.

 

Mobile Wallets

Mobile wallet is an app that runs on your smartphone and hold your private keys. It allows users to pay for things directly from their phones. Mobile wallets are easy to use and you can have access to your asset anytime, anywhere. But they provide less security in compare to other wallets like desktop or web wallets.

 

Web Wallets

web wallets store private keys on a server, which is constantly online. Users can have access to their assets through any device that is connected to the internet. The private keys on these wallets keep by the third party and store online.

 

Desktop wallets

Desktop wallet is a software that get downloaded and installed onto your computer. It’s more secure in compare to web and mobile wallets. This type of wallet is suitable for those who trade small amounts of cryptos from their computer.

 

Paper Wallet

Paper wallets are a document that printed in the form of QR-codes. It contains a public address for receiving Bitcoin and a private key to spend or transfer Bitcoin stored in that address. Paper wallet is the safest way of storing high amount of Bitcoin unless you don’t keep the paper in a secure place.

 

Hardware Wallets

Hardware wallets stores private keys in a hardware device. It’s one of the most secure way to store high amount of Bitcoin. The private keys store offline on the device so it cannot get attacked by hackers.

The main advantage of cryptocurrency and blockchain is their security. Blockchain is completely secure and it makes it impossible for someone to hack into your cryptocurrency. But there are security risks regarding your digital wallet. Hackers can get access to your information and data not through the blockchain but through the wallet or exchange provider.

Here are some points that you should consider about for the safety of your digital asset:

 

Secure your wallet

If you are using hot wallets, choose a strong password for it and use wallets which provide two factor authentication (2FA).

 

Separate your funds

Use different wallets for your trades or store purposes. It’s recommended to use hot wallets for your trades and payment purposes and to store your cryptos in high amount in long term use cold wallets.

 

Wi-Fi connection

Do not use risky wi-fi connections on your device which your wallet is on. Dangerous websites and risky wi-fi connections put your wallet at risk.

 

Be aware of phishing scams

Scammers are everywhere and are looking for an opportunity to get access to your personal information. In case of receiving any email from your wallet website provider, make sure that their domain spelled correctly and never click on or download any attachment from unknown sources or emails.

If you are one of those people who are curious to join the market, perhaps it’s your question too that how can I buy or sell cryptocurrency? Generally, there are two common ways to buy or sell cryptocurrencies. You can either trade in market place by finding people who own the crypto you have plan to buy and are willing to sell it or use one of cryptocurrency exchanges.

Usually finding a right person is not easy, although you can use P2P exchanges for this purpose. So, the best way is to use exchanges who provide services in the field of cryptocurrencies. You can simply make an account on their website and complete the verification process. By connecting your debit or master card to your account you can easily buy cryptos or sell it and receive cash in your account. Different exchanges provide different payment options and services. do your own research and choose popular exchanges with good reputation.

If you are one of those who are curios about cryptocurrency trading and also have a plan to join the market, you need to know about different types of trading. Generally, there are two methods to trade cryptocurrency. Exchange traditional fiat currency to cryptocurrency and vice versa or swap cryptocurrency with another one. In fact, a token or coin swap, is a process that one cryptocurrency is exchanged for another at a predetermined rate. You can simply create an account on the exchanges website which provide those services and start to exchange and swap cryptocurrencies.

Traders look at many factors and analyze the market by using them to choose a futures contract to trade. The analyzing method could be different from one to another. Some might use charts and indicators while other might look to see if demand might be increasing. These analyses classified into two broad categories, technical analysis and fundamental analysis.

 

Technical Analysis

Technical analysis uses patterns on a chart created by price to determine where the market is moving.

Various indicators use to track a movement of price on chart to determine the price next move. Supply and resistance are the common areas of interest for traders. Traders look at these levels and make a decision to buy or sell.

 

 

Fundamental Analysis

Fundamental analysis refers to analyzing the factors that contribute to a futures contract’s supply and demand. There are many factors that will increase demand and supply for a market. These factors’ effect on price can change over time.

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