The

CRYPTO CODE
Unlocking The Power Of Virtual
Assets
,,

By
Charles Fletcher

Copyright © 2023

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 TABLE OF CONTENTS

The CRYPTO CODE

Introduction

Chapter 1: What is Cryptocurrencies?

A Brief History
How a Blockchain Is Formed
Decentralization
Understanding the Blockchain Technology
Blockchain and Blockchain Services
The Decentralized Consensus
Trusted Computing
Agreements
Smart Contracts

Chapter 2: Cryptocurrencies: How Do They Work?

How Do Cryptocurrency Work?
Back to our question, how does cryptocurrencies works?
Decentralization
Networks
Benefits
Chapter 3: Advantages and Disadvantages of Cryptocurrency
Advantages
• ​Easy Transactions
• ​Asset Transfers
• ​More Confidential Transactions
• ​Transaction Fees
• ​Greater Access to Credit
• ​Easier International Trade
• ​Individual Ownership
• ​Adaptability
• ​Strong Security
• ​Growth Investment
• ​Financial Stability
• ​Smart Contracts
 • ​Decentralized Social Media
Disadvantages

Chapter 4: Cryptocurrency Parameters to Analyze in Investing

Bullish and Bearish Markets
Volume
Charts
Candlesticks
Moving Averages
• ​RSI
• ​MACD
• ​Stochastic
• ​A/D Line
Chapter 5: Major Cryptocurrencies
Chapter 6: What is a Bitcoin?
Chapter 7: Identification Of The Main Cryptocurrencies: Altcoin
Chapter 8: Which Option Is Better To Start With Cryptocurrencies
—Mining or Trading?
Mining
What is mining in simple words
What do miners earn: who pays them for mining?
Solo mining and mining in pools: what is the difference
Back to Cryptocurrency: How the Mining Pool Works
Ways to make money on mining
What is better to mine?
Is it worth it to enter the market?
Does mining have a future?
What to mine besides bitcoin?
Is It Legal to Own, Use, and Mine Cryptocurrencies?
But What Is Cryptocurrency Mining Based On?
Trading
The Benefits of Learning Cryptocurrency Trading
The Basic Steps on How to Trade In Cryptocurrency
Mining or Trading
Chapter 9: The Step-By-Step Guide to Protect Your
Cryptocurrencies from Hacker Attacks
Step 1 — Make the Password You Use to Access Your Computer Complicated
Step 2 — Install an Anti-Malware and Start Scanning Consistently
Step 3 — Adopt an Encrypted E-mail and Use It Only for Cryptocurrencies
Step 4 — Set Up a Dual Identity Recognition Method
Step 5 — Buy a Crypto Wallet External to Your Portal
Step 6 — Mark Down with Pen and Paper on a Personal Planner
Step 7 — Put Your Diaries and Crypto Wallet in a Safe Place
Chapter 10: How To Choose The Best Cryptocurrencies For Short-
Term And Long-Term Bets?
Categories of Short-Term Traders
Long-Term Investment

Chapter 11: How Much To Invest?

1st Generation (2008–2011) $0.001–$1
2nd Generation (2011–2013) $1–$100
3rd Generation (2013–2017) $100–$20000
4th Generation (2017–2021)

Chapter 12: Analysts' Expectations For The Crypto Market In The

Next Decade
1: Blockchain Is a Decentralized Ledger That Can Split Itself from Bitcoin
2: Thousands or Tens of Thousands of Merchants Use Bitcoin
3: Bitcoin Transactions Are Processed in Real-Time Like Many Banks Process Their Transactions
4: The Transactions Done on Bitcoin Are “Nearly Free”
5: Bitcoin Is More Secure Than Other Currencies
6: The Ecosystem for Bitcoin Is Decentralized
7: Bitcoin Is Nothing More Than Idealistic and Is Non-Profit
8: Blockchain Is Secure
9: Blockchains Are Encrypted
Chapter 13: How To Generate Income From Cryptocurrency?
What are the different types of wallets?

Chapter 14: How to Become Successful in Cryptocurrency?

Chapter 15: Tips on how to protect your cryptocurrency
 Backup Your Wallets in a Safe Place
Update Software Regularly
Protect Your Computer
Keep Backups of Files on Paper
Use 2-Factor Authentication
Look for Websites That Are Secure by Design
Keep Multiple Secure Copies of Your Backup
Use Strong, Unique Passwords for Each Account and Site You Visit
Change All Your Passwords Habitually —Minimum Every 90 Days
Use Decoy Wallets
Use an Encrypted Password Manager to Help Manage Your Passwords
Be Careful With Social Media, As Some Profiles May Be Fraudulent
Avoid Using Generic Passwords
Avoid Using Phones or Computers Used by Other People
Create an Idea of How Much Total USD Value Is Stored on All Accounts at Any Given Time
If Your Private Key Has Been Compromised, Transfer Your Funds to a New Address Immediately
Never Leave Cryptocurrency Funds on Exchanges or Other Platforms without Creating a
Withdrawal Wallet First
Never Submit Your Private Key or Recovery Phrases for Any Reason

Conclusion
Introduction
In the not-so-distant past, a groundbreaking technology emerged from the
depths of the internet, forever altering the way we perceive and interact
with money. Cryptocurrencies burst onto the scene like a supernova,
captivating the attention of innovators, investors, and dreamers alike. This
disruptive force has shaken the very foundations of our traditional financial
systems, paving the way for an era of unparalleled possibilities and
uncharted territories.
In this era of unprecedented disruption, the foundations of our traditional
financial systems were rattled, as if shaken by an earthquake of ingenuity.
Cryptocurrencies dared to challenge the status quo, daring to redefine the
very essence of money. No longer confined by physical borders or
centralized authorities, these digital marvels emerged as a beacon of
financial autonomy.
In the wake of this profound transformation, the world stood witness to the
birth of decentralized systems that transcended the limitations of the past.
Blockchain, the technology underpinning cryptocurrencies, etched its
indelible mark on the annals of human progress. Immutable ledgers ensured
transparency, while smart contracts enabled secure, automated transactions,
unfettered by human intermediaries.
Cryptocurrencies became more than just a means of exchange; they became
a symbol of empowerment for the unbanked, the disenfranchised, and the
marginalized. With access to a smartphone and an internet connection,
individuals previously excluded from the financial ecosystem found a
newfound avenue for economic participation. The chasms of inequality
began to shrink as financial inclusivity took center stage.
Welcome to a world where digital currencies reign supreme, where
transactions transcend borders with a mere click, and where decentralized
systems challenge the status quo. This is the dawn of the cryptocurrency
revolution.
In this brave new world of the cryptocurrency revolution, the landscape of
finance and commerce has undergone a dramatic transformation.
Traditional intermediaries and centralized authorities have taken a backseat
as decentralized networks, powered by blockchain technology, have
emerged as the backbone of the digital economy.
Cryptocurrencies, such as Bitcoin, Ethereum, and many others, have gained
widespread adoption, fueling an unprecedented wave of innovation and
experimentation. These digital assets, based on cryptographic principles,
enable secure and transparent transactions, without the need for
intermediaries like banks or governments.
With cryptocurrencies, financial transactions can occur directly between
individuals or entities, eliminating the need for costly intermediaries and
reducing transaction fees. This has opened up new possibilities for cross-
border payments, remittances, and international trade, making transactions
faster, cheaper, and more accessible.
The underlying technology behind cryptocurrencies, blockchain, is a
distributed ledger that records and verifies transactions across multiple
computers, creating an immutable and transparent record of all transactions.
This decentralized nature of blockchain ensures that no single entity has
control over the network, making it resistant to censorship, fraud, and
manipulation.
Beyond financial transactions, blockchain technology has found
applications in various industries. Smart contracts, for example, are self-
executing contracts that automatically enforce the terms and conditions
encoded within them. These contracts enable the automation of complex
business processes, reducing the need for intermediaries and increasing
efficiency.
However, as with any disruptive technology, the cryptocurrency revolution
has also faced challenges and controversies. Regulatory frameworks around
the world are still catching up to the rapid pace of innovation, leading to
uncertainties and debates over the legal and regulatory status of
cryptocurrencies. Additionally, concerns around security, scalability, and
energy consumption have also sparked discussions and efforts to address
these issues.
Despite the challenges, the cryptocurrency revolution continues to evolve
and reshape the global financial landscape. As technology advances,
scalability improves, and regulatory clarity emerges, cryptocurrencies have
the potential to become an integral part of our everyday lives, transforming
not only how we perceive and interact with money but also how we conduct
business, govern societies, and exchange value on a global scale.
As we venture further into this uncharted territory, it is clear that the
cryptocurrency revolution is still in its early stages, and the possibilities for
innovation and disruption are vast. The future holds the promise of
decentralized ecosystems, tokenized assets, and new economic models yet
to be imagined. The journey has just begun, and the world eagerly awaits
what lies ahead in the ever-evolving realm of cryptocurrencies.
However, if this sounds like something you would like to drive
into, congrats, you have made your first move. In this book, you will
find a list of actions you can take to achieve your financial goals, you will
embark on a journey to explore the exciting world of cryptocurrencies and
blockchain technology. Throughout this book, you can expect to find a
comprehensive and insightful exploration of various topics related to
cryptocurrencies, including:
Understanding the Basics: We will start by demystifying the fundamental
concepts of cryptocurrencies, such as blockchain, decentralization, and
cryptography. You will gain a solid understanding of how cryptocurrencies
work and why they have the potential to revolutionize various industries.
Exploring Different Cryptocurrencies: We will delve into the diverse
landscape of cryptocurrencies, covering popular options like Bitcoin,
Ethereum, Ripple, and more. You will learn about their unique features, use
cases, and the technology that powers them.
Investing and Trading Strategies: Cryptocurrencies have gained significant
attention as investment assets. In this book, you will discover different
strategies and techniques for investing and trading cryptocurrencies
effectively. We will explore topics like risk management, technical analysis,
and long-term investment approaches.
Navigating the Crypto Market: The cryptocurrency market can be volatile
and complex. We will guide you through the intricacies of buying, selling,
and storing cryptocurrencies securely. You will also gain insights into
selecting reputable exchanges, managing wallets, and staying safe from
potential risks.
ICOs and Tokenomics: Initial Coin Offerings (ICOs) have become a
popular way for blockchain projects to raise funds. We will explore the
concept of ICOs, tokenomics, and how to evaluate the potential of new
projects in the crypto space.
Blockchain Beyond Cryptocurrencies: Cryptocurrencies are just one aspect
of the revolutionary technology called blockchain. We will discuss the
various real-world applications of blockchain beyond digital currencies,
including supply chain management, decentralized finance (DeFi), voting
systems, and more.
Regulatory Landscape and Future Trends: The regulatory environment
surrounding cryptocurrencies is constantly evolving. We will provide an
overview of the current regulatory landscape and its implications for the
crypto market. Additionally, we will discuss emerging trends and potential
future developments in the cryptocurrency industry.
Security and Privacy: Cryptocurrencies offer a high level of security and
privacy, but it's crucial to understand the best practices for keeping your
digital assets safe. We will cover topics such as private and public keys,
two-factor authentication, hardware wallets, and secure online practices.
By the end of this book, you will have a solid foundation in the world of
cryptocurrencies, empowering you to make informed decisions, navigate
the market confidently, and potentially benefit from the exciting
opportunities that digital currencies offer.
So, buckle up and get ready to unlock the world of crypto. Let's embark on
this fascinating journey together!
Chapter 1: What is
Cryptocurrencies?
Cryptocurrency is a virtual currency, in the sense that it does not exist in
physical form, but is exchanged exclusively electronically, whose
transactions are carried out directly between two subjects in peer-to-peer
mode, or directly between two devices, without the need of intermediaries
(i.e., banks) to purchase goods and services.

Cryptocurrency is a digital representation of a monetary asset, devoid of

contextualization in a physical factor (the minted coin) channel that
provides you with great potential and connect you with millions of people
without even seeing them in a person or having close contact with them.
Starting blockchain business can be a big step. Although there are many
aspects to consider, it does not have to be a complicated or overwhelming
experience. Some of the most popular investors, miners and brokers started
small.
Just like when starting any business, learning how to start investing in
Cryptocurrency isn't always easy.
However, the goal of creating, launching and maintaining your own wallet,
either you are a newbie or you have been in the business for years ago, to
trade, mine and store your coin has now become much easier than in the
past.
If you are looking for the right strategy; Investing and the technology
behind Bitcoin or you are planning to create your own blockchain or you
are looking for Pros and Cons of Bitcoin Trading or you are looking for tips
and ideas to help you increase your chances of generating huge profit at the
end of every trade, this guide is for you.

A Brief History
Blockchain technology is set to be one of the biggest innovations of the 21st
century given its ripple effect ranging from finance to manufacturing to
education. Unknown to many, the history of blockchain dates back to the
early 1990s.
Since its popularity began to rise a few years ago, there have been several
applications that have only highlighted the impact it is destined to have as
the race for the digital economy heats up.
How did the blockchain appear? Stuart Haber and W. Scott Stornetta
introduced what many people have come to call the blockchain in 1991.
Their first job was to work on a cryptographically secure blockchain in
which no one could forge the timestamps of documents.
In 1992, they upgraded their system to include Merkle trees, which
improved efficiency, allowing more documents to be collected in one block.
However, it is in 2008 that the history of blockchain begins to take on
relevance, thanks to the work of one person or group of people named
Satoshi Nakamoto.
Satoshi Nakamoto is considered the brains of blockchain technology. Very
little is known about Nakamoto, as people believe he may have been a
person or group of people who worked on Bitcoin, the first application of
digital ledger technology.
Nakamoto conceptualized the first blockchain in 2008, from where the
technology developed and found its way into many applications beyond
cryptocurrencies. Satoshi Nakamoto released the first white paper on the
technology in 2009. In this paper, he detailed how this technology was well-
equipped to increase digital trust, given the aspect of decentralization that
meant no one would ever be in control of anything.
,

How a Blockchain Is Formed

Each blockchain is made up of blocks, each containing a valid transaction.
Each block will include a previous block hash, which links the 2 together.
These links form the chain. As well as containing a hash-based history,
every blockchain database will also contain a specific algorithm. This is
used to score different versions of the histories, enabling one version of a
higher value to be chosen above the others. Peers that support the
blockchain databases do not have access to the same versions of the history
all the time. Instead, they just hang onto the version that scores the highest
(at least that they know of).
When a peer gets a newer version with a higher score, it will normally be
the one that already has a new block added to the chain. At this point, they
will overwrite the database they hold and then send the improvement to the
other peers. However, there is absolutely no guarantee that any entry will
stay in the highest-scoring database version forever. As a blockchain is built
to add the score of a new block to the total score of the existing blocks,
there is a low probability that an entry will be superseded, especially as
more blocks advance and because there is some incentive to work on
adding new blocks to extend, rather than just working with older blocks.

Decentralization
The fact that a blockchain stores the data on the network cuts out the risks
that always go with centralized data. This is because the network does not
have vulnerable centralized points, which means that hackers cannot exploit
them. We all know that the internet has a lot of security problems today;
how many of us still rely on username and password systems to protect data
and identity—these are easily hacked, whereas the blockchain uses
encryption technology for security.
The encryption technology is based on a system of private and public keys.
The public key is a long string of randomly generated numbers, which is the
user's blockchain address. The transaction that goes across the network is
recorded in that key and noted as belonging to that specific user. On the
other hand, the private key is similar to a password and is what allows the
owner to access their digital assets. If you store the data on a blockchain, it
cannot be corrupted, but you will need to take some extra measures—you
will need to create a paper wallet and print your private key to safeguard it.
Each node in a decentralized system contains a copy of the blockchain.
There is no official centralized copy anywhere, and no one user is given any
more trust than another. All transactions are sent to the network using the
software. Mining nodes are then used to validate each of the transactions
and then add them to the blockchain that is being created. The entire block
is then sent to the other nodes. Each change is serialized using timestamps.
In the beginning, blockchains used to be permissionless, which has led to
some controversy over whether a permission database containing chained
data blocks should actually be known as a blockchain. This is an ongoing
debate, and the crux of it is whether private systems that have verifiers who
are tasked by and authorized by a central authority should actually be a
blockchain.
Those in favor of private chains say that the term “blockchain” should be
applied to all data structures that put batches of time-stamped data because
blockchains are a distributed version of MVCC (multi-version
concurrency). MVCC will not allow 2 transactions to modify an object
within a database simultaneously. In the same way, blockchains stop 2
transactions from spending the same output within a blockchain.
Opponents say that a permissioned blockchain looks very much like a
traditional database and doesn’t support decentralized data verification.
These systems are not safe from tampering and are not secure from being
revised by the operators. According to the Harvard Business Review, a
blockchain is a “distributed ledger or database that is open to anyone,” and
Computerworld says that most of the hype surrounding blockchains is
nothing more than “snake oil and spin.”
Understanding the Blockchain Technology
There is absolutely no doubt that the focus on the single cryptocurrency
(bitcoin) is fast moving towards applications based on cryptocurrency and
built on the blockchain. The technology behind a blockchain is pretty much
the same as that in a database, but with one exception—how we interact
with them is different.
For a developer, the blockchain concept is a radical change in the way that
software applications of the future will be written. It is a crucial concept
that must be thoroughly understood and the other 4 of the 5 main concepts.
We also need to understand how the concepts interrelate in the context of
blockchain technology. Those key concepts are:

Proof of Work
This concept is at the heart of blockchain operations. Proof of work is an
important part of the original blockchain role as the transaction
authenticator. Proof of work is what provides the right to take part in the
blockchain and is displayed to be a major obstacle that prevents users from
making changes to records stored on the chain without providing a new
proof of work.
It is one of the main building blocks simply because it can never be undone
and is cryptographically secured through the hashes used to prove its
authenticity. However, it is an expensive concept to maintain, estimated to
cost about $600 million a year just for bitcoin, and that means there could
be future scalability and security issues. This is because it depends entirely
on incentives for miners—mining will decline as time goes by. A better
solution is called “proof of stake”—much cheaper for enforcing but way
more expensive and much more difficult to compromise. This concept will
determine who can update the consensus and stop the underlying
blockchain from being forked.
This paradigm is fundamental because it is the drive behind creating the
decentralized application, the next step up in the evolution of the
architectural constructs of distributed computing.
But this is by no means only a computing wonder. Applications that have
been decentralized will enable a trend of decentralization at 4 levels—
business, governance, legal, and societal. This is because that race makes
everything decentralized and puts the power at the edge of the networks.

Blockchain and Blockchain Services

A blockchain is a place where data is stored semi-publicly in a block.
Anyone can see who verified the block because it will have a signature on
it, but the only ones who can actually unlock the data inside the block are
you or a specified program. This is because only the data owner has the
private key to unlock it.
So, a blockchain is pretty much like a database except that the header, or
part of the stored information, is actually public. Stored data can be a
cryptocurrency balance or a toke of some value. In essence, the blockchain
is an alternative system for value transfer that can be tampered with by
malicious third parties or accessed by centralized agencies. The encryption
is based on public and private keys—public visibility, but only for a private
inspection. Your home address could be publicly advertised, but it wouldn’t
give any information about how to get into your home or what it looks like
inside. That can only be done through a private key and, as that address has
been claimed as yours, no one else can claim it.
A blockchain is also a software approach that binds several peer computers
together, all of which will obey the consensus process of releasing
information or record what information is held and is also where every
interaction is cryptographically verified.

The Decentralized Consensus

This breaks the existing model of the centralized consensus, for example,
when a central database was used to rule over the validity of transactions.
Decentralized schemes, in which the blockchain is based on transferring the
authority and the trust over to a virtual network that has been decentralized,
thus allowing the nodes to record all transactions continuously and in
sequence on public blocks, thus creating the chain. Each block contains a
fingerprint or a hash of the block before it. Cryptography is used as a way
to secure the authentication of each source using these hashes, and that
eliminates the requirement or need for any centralized intermediary. The
combination of blockchain technology and cryptography ensures that no
transaction is ever recorded in duplicate.
An important factor in this unbundling is that the consensus logic is kept
separate from the application, which means that the application can be
written specifically to be decentralized. That is the dynamite needed to kick
off a whole series of system-changing innovations within the application
software architecture, whether or not they are related to money.
Trusted Computing
Or, as some call it, trustless transactions. When you put together the
concepts that are behind the blockchain—the smart contracts and the
decentralized consensus—you begin to see that they are actually helping
transactions and resources to spread in a lateral peer-to-peer manner and, in
doing so, they are also enabling the computer to have trust in one another at
a very deep level.
Where central organizations and institutions are seen as necessary to be
trusted authorities, some of the centralized functions can be codified in a
smart contract that is under the governance of a decentralized consensus on
the blockchain. Because the blockchain has the role of validating
transactions, each of the peers can go head and trust each other because
living on the technology is many rules:

Trust.
Compliance.
Governance.
Authority.
Contracts.
Law.

Agreements
Suppose you look ahead to the future, not too far ahead. In that case, smart
property and smart contracts will be automatically created and executed
between parties without either knowing that the blockchain was even
involved as the trusted intermediary.

Smart Contracts
These are building blocks for decentralized applications. Smart contracts
are like small programs that you can give a unit of value to, whether money
or a token, along with the rules governing that value. The idea behind the
smart contract is so that any contractual governance between at least 2
parties for each transaction can be verified via the blockchain. There is no
need to have a centralized agency when the parties can agree between them
and when they can put the terms and the implications of the agreement
directly into the program. Those terms include the fulfillment of services
sequentially and penalties if a transaction is not fulfilled.
When you apply a smart contract, you assume that there is no need for a
third-party intermediary to conduct any transaction between 2 or more
parties. Instead, the parties will agree between them on the definition of the
rules and ensure that they are embedded within the transaction. This means
that the end-to-end resolution is self-managed between the computers
representing the user's interest. A smart property is a digital asset that
knows who owns it, and the property is generally linked to the blockchain.
Chapter 2: Cryptocurrencies:
How Do They Work?
How Do Cryptocurrency Work?
Cryptocurrencies are lines of code on a decentralized server. If the words in
that sentence meant nothing to you, you’re in the right place! Here, I’m
going to lift the veil on cryptocurrencies and help you understand how they
work, their utility, and why they’re so important in the new financial world
we find ourselves in.
To better understand the utility of cryptocurrencies, it’s best to examine the
weaknesses inherent in the current system. Right now, governments and
banks control every financial transaction that takes place around the globe.
These controls have been imposed with the best of intentions.
For instance, financial crime has always been a major issue in the world
since it affects real-world situations. 2 good examples of this are money
laundering, which finances rebel wars worldwide, and arms dealing, which
propagates these endless wars. Money earned through nefarious means
needs to be cleaned, and the world’s financial system has always sought to
clamp down on this behavior.
Cash made it easy for bad actors to push money around the world. In turn,
the rise of digital money created audit trails that made it easy to verify
sources of income and the legitimacy of business transactions. However, the
financial system has gone overboard when it comes to verifying client
legitimacy. These days, everyone who opens a bank account has to pass
through Know Your Client or KYC norms. These norms are rigid
boundaries that every bank’s compliance department defines. Thanks to
KYC enforcement being automated these days, the slightest infraction by a
client leads to access being denied. Essentially, banks behave as if they’re
doing us a favor by holding our money.
This is why I mentioned in the introduction that the financial system treats
everyone as if they’re guilty until proven innocent. The result is a “nanny
state” that defines what one can and can’t do with their money. This stance
comes is extremely hypocritical when one witnesses the routine manner in
which the rich and privileged are bailed out by the government.
Governments have resorted to printing money on masse to shore up their
economies these days. With every currency around the world divorced from
gold reserves, nothing is governing the value of money anymore, other than
our collective agreement to accept it as a means of transaction.
If one means of transaction is less convenient than another, it makes sense
to adopt a less friction venue. This is why cryptocurrencies are legitimate.
Their utility lies in the fact that there isn’t a single entity that gates access to
money. Anyone can access it freely without having to answer questions
about where it came from or worrying about explaining its legitimacy.

Back to our question, how does cryptocurrencies

works?
People who mine cryptocurrencies are called miners. Minors are part of
integral process. Without them, the Blockchain would be frozen. A miner
confirms the transactions that take place on the Blockchain.
For example, imagine that Paul gives 3 Bitcoins to Peter. The transaction
will therefore be immediately broadcast over the network, peer-to-peer,
made up of computers called nodes. However, only after a certain period of
time, the transaction will be confirmed and verified by the computers to the
networks using the algorithms specific to said Blockchain. Once committed,
the transaction will now form a new data block for the ledger. It's added to
others in the current Blockchain, permanently.

Behind this computer on the network, miners validate the transactions. To

confirm the transaction, the miner must find the product of a cryptographic
function that attach the new block to its predecessor. This is called proof of
work. In change for their services (and the computing power mobilized for
this purpose), they obtain a reward that takes the form of tokens.
The Break-down
Cryptocurrencies have peculiar characteristics that distinguish them. The
constituent elements are shown below:
 ❖ A set of rules (called "protocol") that establishes the modalities by
which participants can carry out transactions.
❖ A sort of "ledger" (distributed ledger or Blockchain) which,
according to a block structure, allows the construction of a shared and
immutable architecture on which the various transactions exist.
❖ A decentralized network of miners who update, store and consult
the distributed ledger of transactions, according to the rules of the
protocol and of the particular type of Blockchain on which the virtual
currency is built.
❖ When we send (payment) via Bitcoin, we essentially send a
candidate transaction to the Blockchain, waiting to be validated by a
distributed consensus system called mining that exploits a consensus
algorithm (for Bitcoin Hashcash Proof of Work). To be "committed,"
transactions must comply with the encryption rules established by the
protocol which will be confirmed by the network; or else, the
transaction will be lost.

Decentralization
Decentralization, or the absence of a single centralized authority that
defines access to money, is cryptocurrency’s biggest advantage. Cryptos
don’t exist in physical form. As I said at the beginning, they are lines of
code that reward people when their computers complete a certain task.
The task one needs to complete earning crypto coins depends on the coin's
rules. There are over 5,000 different cryptocurrencies out there, and all of
them have different aims and rules. For instance, to earn a Bitcoin (BTC)
token, a computer on the network needs to solve a complex mathematical
problem called a cryptographic problem.
Upon completing this task, the network validates the solution, and coins are
awarded. This process is called ‘mining,’ something I’ll address in more
detail later in the book. For now, understand that not every cryptocurrency
is mineable. Some can only be bought via specific wallets. Currencies, such
as Stellar and Cardano, are examples of currencies whose coins are already
in circulation and don’t need to be mined.
Networks
Every cryptocurrency exists on a network designed using the blockchain
architecture. Blockchain represents a significant leap forward in network
design since it is virtually unhackable. Technically speaking, one can hack a
blockchain network and change data, but the resources needed to do this are
almost unfeasible.
Thus, it represents the best method for ensuring network security. Every
cryptocurrency’s blockchain is different from others. However, blockchains
can ‘fork.’ This means a new currency can utilize another currency’s rules
and add new layers on top of it to create new protocols.
For instance, Bitcoin Cash (BCH) is a hard fork on the Bitcoin blockchain.
A hard fork indicates that users will need to update their software to
recognize the new rules. These new rules are typically incompatible with
the old ones. In contrast, soft forks are intended to increase the degree to
which certain long-standing rules apply selectively. A good example of this
is SegWit, which is a soft fork of Bitcoin. This soft fork increases the
transaction speed of Bitcoin by selectively applying validation protocols.
Hard forks are generally used to create new currencies altogether, while soft
forks are used to enhance certain features of the existing network.
The first question everyone has regarding crypto is, “Is that safe?” First, it’s
important to understand that a currency is different from a blockchain.
These 2 terms are often used interchangeably, and this is incorrect.
Blockchain refers to the underlying network, while a cryptocurrency is
simply a set of rules built on top of it.
A good analogy to explain this difference is to think of blockchain as the
operating system, much like Windows or O.S. on a Mac, and a
cryptocurrency as an app that runs on the O.S. The safety of the O.S., along
with certain features of the app, is what guarantees the ultimate security.
The blockchain is the closest thing the world currently has to a completely
secure computer network. It is completely decentralized, so there isn’t a
single server or computer that someone can attack and compromise. Data is
shared across the entire network, and every node (connection point)
validates new transactions.
Therefore, data cannot be corrupted without the entire network agreeing on
a change. This is what makes cryptocurrencies extremely secure. In
addition to this, every currency has its own rules. For instance, the currency
Monero is geared toward extreme privacy and therefore masks all
information about the transaction and the parties involved in it. This means
privacy is guaranteed at all times, thus building an additional layer of
security.
Security isn’t always the goal of a cryptocurrency. Some coins exist to
provide people with an alternative means of transaction. For instance, Ether
(ETH) was developed as an alternative to Bitcoin and aimed to replace the
world’s reliance on paper (fiat) currencies. This is why they're
decentralized.

Benefits
So, what’s the big deal with the decentralization of money, anyway? The
most significant advantage is that no entity can control the supply of money
or coins in a system; for instance, governments worldwide can print and
govern access to money at will. In developed economies, such as the United
States, people have access to mediation systems and appeals to rectify
issues. However, large parts of the world are extremely unstable and have
governments that seek to hold onto power for as long as possible. A good
example of this is the way the government of Venezuela responded both to
election results in 2018 and throughout the earlier decade.
Thanks to a worsening economy, the Venezuelan currency, the Bolivar, was
almost worthless. The result was hyperinflation, where the prices of goods
rose all the time. For instance, a person would buy a loaf of bread in the
morning and find that the price had increased tenfold by the evening.
People began converting their paper money to gold and silver as a result
since they were better stores of value. However, the government responded
by banning both gold ownership and currency conversion in masse. They
could restrict such actions because they controlled the flow of money in the
economy. With currency conversions to even USD impossible, the only
solution was to convert money to cryptocurrencies, especially Bitcoin. The
decentralized nature of the network meant that the government had no way
of monitoring transactions and deciding who could or couldn’t convert their
money. Thus, the Venezuelan people had the opportunity to exercise full
control over their money instead of giving into their rigid government.
These events might seem like typical third-world situations that won’t affect
the United States. However, no one can predict the future. A centralized
system is also vulnerable to cybercrime and hacks. With money
increasingly becoming digital, there’s no guarantee that your dollars will be
safe when they are stored in a digital vault with a bank.
There’s also the question of how trustworthy the average bank is. Most
banks have proved themselves to be less than trustworthy thanks to their
actions since the turn of the millennium. As more economic stimuli have
been offered to them, they’ve figured out ways of making more money
while controlling the access common people have to that same money.
Decentralization offers a wealth of opportunities, not just in terms of
transactions but also when it comes to real-world financial applications.
Areas of high finance, such as wealth management and commercial loans,
suffer from security and confidentiality vulnerabilities that a centralized
system cannot address.
Mainstream adoption of decentralized finance is the best way forward, and
as a result, the adoption of cryptocurrencies is inevitable. Understand that
individual coins can offer their own advantages to the system in addition to
a decentralized network. For instance, privacy, ease of verification, and
transaction speed are just some of the advantages of cryptocurrencies. The
bottom line is that as the world moves forward and technology gives
centralized authorities even more power to control the narrative, having a
decentralized option is far more necessary than ever.
Many critics of cryptocurrencies point out that decentralization incentivizes
criminal behavior; this is true. In the early days, Bitcoin was notorious for
being a means for criminals to launder their cash. However, as mainstream
adoption has increased, authorities have realized that Bitcoin doesn’t offer
criminals a free pass. It is possible to track transactions and verify identities
through gated fiat currency exchanges. After all, to effectively launder
money, criminals need to convert their crypto into fiat money at some point.
Another point to note is that money laundering and financial crime have
also existed in fiat money. It isn’t as if cryptocurrencies have created new
crime. With every form of monetary exchange, crime occurs. This is simply
a fact and doesn’t imply that a new form of currency is somehow deficient.
Chapter 3: Advantages and
Disadvantages of Cryptocurrency
Advantages
This is just the tip of the iceberg, though, and some other advantages of
cryptocurrency trading can be seen below:

• Easy Transactions
The otherwise easy deal may be made costlier by conventional company
contracts, traders, marketers, and legal representatives. Paperwork,
brokerage fees, commissions, and any other special terms can apply.
One of the benefits of blockchain trading is that it is one-on-one, a peer-to-
peer networking structure that traditional practices are “cutting the middle
man off.” This makes audit tracks simpler, less ambiguous as to who should
pay whom, and more accountable since each of the 2 parties involved in a
deal knows who is involved.

• Asset Transfers
One financial specialist defines the cryptocurrency blockchain as equivalent
to a “massive property rights ledger,” which can be used to introduce and
implement contracts with two-party parties for commodity goods, such as
cars or property. However, the cryptocurrency ecosystem blockchain may
also be used to promote professional transition processes.
Cryptocurrency contracts may be structured to complement third-party
permissions, mention external evidence, or settle in the future at some time
or date defined. And because you, as the owners of cryptocurrency, rule
your account entirely, this minimizes time and cost in allowing transactions
of properties.

• More Confidential Transactions

Each time you exchange the cash/credit schemes, the entire transaction
history will become a bank/credit agency reference record. The most
straightforward stage requires checking your account's balance to make sure
enough money is given. A complete financial record review may be
sufficient for more complex or business-critical transactions.
Another critical benefit of cryptocurrencies is that any deal you do is a
single exchange of terms and conditions between 2 parties. Furthermore,
information sharing occurs press to relay specifically what you intend to
give to the receiver—and nothing more.
This safeguards your financial past privacy and prohibits you from being
revealed at some point in the transaction chain by a more considerable
danger to account or identification amount in the conventional system.

• Transaction Fees
You have read the monthly bank or credit card business account statements
and have balked at the volume of the payment’s charges levied for checks,
moving cash, or breathing in the face of the banking firms concerned.
Transaction charges can take a big bite from your savings—especially if
you carry out several transactions in a month.
Benefits from cryptocurrency networks typically do not extend because the
data miners (remarkable and different computer systems) who crunch the
number created by bitcoin earn compensation. Bitcoin and other
cryptocurrencies use third-party maintenance providers to administer the
cryptocurrency wallet. There might be individual external costs, but another
drawback of cryptocurrency is that everything is expected to be cheaper
than the processing charges paid through conventional finance structures.
• Greater Access to Credit
Cryptocurrencies are enabled by automated data transmission and the
Internet. These services are also feasible for anybody with a viable data
connection, a specific knowledge of the provided cryptocurrency networks,
and ready access to their respective websites and portals.
There are figures that globally, 2,2 billion people now have internet or
telephone connectivity but do not currently have access to conventional
banking and exchange networks. This massive market of eager customers—
if the appropriate infrastructure (digital and regulatory) is placed together—
can enable an ecosystem of cryptocurrency wealth transactions and
available transaction processing.
• Easier International Trade
While currently largely unregulated as a legal tender at the national level, it
is by their very existence that cryptocurrencies are not subject to a
particular country's exchange rates, interest rates, transaction costs, and any
extra fees.
Cross-border exchanges and transactions can be carried out without risks of
currency volatility, etc., using the peer-to-peer system of blockchain
technology.

• Individual Ownership
You turn the administration of your finances over in a conventional bank or
credit card scheme to a third party who conducts life or death over your
money. Accounts can be suspended without warning for infringements of a
financial company's terms of operation—forcing you as a store manager to
leap through hoops to add to the scheme.
Maybe the main benefit in the case of cryptocurrencies is that you alone
possess the associated private and public cryptocurrency keys to shape the
identification or address of your cryptocurrency network unless you have
assigned the control of your wallet to the third-party provider.

• Adaptability
More than 1200 separate cryptocurrencies and altcoins are already in
worldwide circulation. Many of them are brief, but importantly,
cryptocurrencies' versatility is demonstrated in actual cases.
There are, for example, “privacy coins” to cover up the identity on the
blockchain and supply chain tokens to allow supply chain processes for
different types of industries.
• Strong Security
Since the sale of a cryptocurrency is accepted, it cannot be revoked, as in
credit card companies' “chargeback” purchases. This is a precaution against
theft, forcing the customer and vendor to agree on refunds with an error or
return policies.
The robust encryption methods used in the distributed ledger (blockchain)
and transaction processes in cryptocurrencies are secure against theft,
account abuse and maintain customer confidentiality.

Better Payment Structure

You will want to explore crypto use if you have ever been angry waiting for
a cash transfer from a bank account. Instant payments are less costly than
services, such as PayPal. The use of crypto also prevents illegitimate
charges, and transfers cannot be reversed on a blockchain.
You can also transfer money anywhere you want using crypto without any
broker checking your transaction history. This requires foreign beneficiaries
who willingly stop the costly currency exchange costs of PayPal. Another
benefit when using blockchain is the idea of micropayment or on-demand
payment structure. The embedded fees you pay with a credit card vanish
with blockchain, making micropayments a fact every second or minute.
Instead of paying a streaming video subscription fee, you can pay crypto-
only if you watch a movie, for example. Streamium is also a video
streaming service that does.

• Growth Investment
Even if you are not an enormous crypto buff, you undoubtedly learned
about Bitcoin's mania around Christmas 2017. Bitcoin soared in terms of
valuation, hitting nearly $20,000 a penny. It was the most significant
financial investment ever. Since then, Bitcoin's value compared to the dollar
has decreased, but crypto bulls believe it can improve its performance in
2017 and take over the rest of the crypto market.
More than ever, investors—both individuals and institutions—have a kind
of crypto. This includes very public skeptics, such as Jamie Demon,
JPMorgan Chase Chief Executive Officer. The Chicago Mercantile
Exchange (CME) provides Bitcoin's Futures options, giving the mainstream
sustainability it had not had until its 2017 start. The crypto market is
marked by robust potential investment in growth: increased visibility and
sense, a relatively low market cap compared with the conventional asset
classes, and a steady increase in utility.
 • Financial Stability
Most U.S. investors consider crypto as an investment risk. The U.S. dollar
can be the reserve currency globally and is one of the planet's most reliable
currencies. Crypto is potentially a more stable source of money for a nation
such as Venezuela. This is more than just a fantasy or an experiment—all of
them have doubled their Bitcoin use year after year, Nigeria, Australia,
Spain, and Canada.
The public uses Bitcoin to save their lives in countries like Venezuela. The
government cannot regulate bitcoin just as much as it can control a fiat
currency. Russia is finding its cryptography and criminalizing all such non-
sanctioned rivals. Zimbabweans tend to cryptograph the government's gold-
backed money.

• Smart Contracts
Imagine that a prosecutor never needs to pay another lawyer. Dream of an
immobilization contract without any escrow costs. This is a future where
Ethereal advocates believe is real. The intelligent agreement built on the
ethereal framework and quantified by the Cryptocurrency of Ether takes the
unchangeable, fraud-less blockchain into the law sector. Smart contracts
create a 100% safe route for a transaction to be reached without the
judiciaries.
Ethereal was too well-received to surpass Bitcoin's new users during the last
year. The principle of smart contracts. Developers from ethereal say that
ethereal is soon to beat Bitcoin in the number of developers, day-to-day
exchanges, and purchases.

• Decentralized Social Media

Recent tensions were raised between Facebook and Twitter due to their
readiness to regulate their website. We fail according to whom you ask. A
shared social network is one of the intentional applications of
cryptocurrencies. There is no higher authority to censor or not censor
divisive content in this system.
The debate over privacy also ends with decentralized social media, as no
central body is present to collect and sell private data. Invasive ads as the
network finance process were replaced by cryptocurrency micropayments.
Spam is still unwelcome but is moderated by a smart contract rather than an
arbitrary mod.
Disadvantages
The risks of exchange are primarily related to the uncertainty of
cryptocurrencies. It is high-risk and speculative, and before you begin
trading, you need to understand the risks.
The fluctuations in consumer emotions will lead to sharp and sharp price
swings. They are unpredictable. There are rarely hundreds, if not thousands
of dollars, for the valuation of cryptocurrencies. It is not regulated: both
governments and central banks currently do not regulate cryptocurrencies.
Recently, however, they began to draw further attention. There are
concerns, such as whether they can be listed as an asset or virtual currency.
They are vulnerable to failures and malware. Technological crashes, human
error, or hacking are not entirely avoided.
Forks or disruption can impact them. Crypto-monetary trading brings
additional risks, such as rough forks or interruption. Before trading these
goods, you should become acquainted with these risks. When a complex
bifurcation happens, significant price instability may occur all over the
case, and we can suspend trade if the underlying market does not deliver
stable rates.
Before you start investing, you can ensure you thoroughly understand the
risks involved only if you are a professional trader with advanced stock
market experience. Trading in cryptocurrencies may not be ideal for
everyone.
Chapter 4: Cryptocurrency
Parameters to Analyze in Investing
Cryptocurrency traders have many tools readily available to evaluate the
market; one of the most common and used methodologies is technical
analysis. When traders use this approach, they receive a better read on
market sentiment and use these tools to figure out the key trends, and with
all of this information, they can make better predictions. Technicians, or
chartists, take a more practical approach. They look at the history of
cryptocurrencies apply different analytical tools to see where the market
goes.
Fundamental analysis is the opposite of technical analysis, is more about
figuring out what cryptocurrency should be worth. Chartists or technical
traders only look at the real price movements. When you look at the history
of cryptocurrency’s price, the main pattern to find is price resistance and
price support. This book will only cover technical analysis as
cryptocurrency has an inherent worth of being the first-mover advantage,
the primary trading pair, and the currency with the biggest market
capitalization per day and overall trading, cementing its position as the
master digital currency.

Bullish and Bearish Markets

The market is known as bullish when it is believed that the price of a stock
or Cryptocurrency will go up. When investors believe that the price will go
up, they will buy calls. They will have paid the right to buy a stock at a
certain price, which is referred the strike price or exercise price. An investor
is considered bullish if they sell puts. When investors sell a put, they are
obligated to buy the stock, which means they likely believe the price will go
up.
The market is known as bearish when it is believed that the price of
Cryptocurrency will fall. When an investor sells a call, they are obligated to
sell their stock to the fg4buyer at a certain price. They do this because they
believe that the price will fall. An investor who buys a put is looking for the
price to fall to sell the stock at a better price to the person who sold the put.
Volume
Cryptocurrency traders need to consider that volume plays a huge role in
assessing price trends. High volume, whether hourly or daily, shows you
there is a strong price trend, and low volume tells you there are weaker
trends. If the cryptocurrency's price was to experience a large loss or gain, a
trader needs to make sure that they examine the volume. If cryptocurrency
had a long uptrend and suddenly declined, it would be worth checking the
volume to figure out if this downward movement is showing a new trend or
a temporary pullback.
A price increase will typically coincide with a volume increase. If the
cryptocurrency price was to experience an uptrend, but the upward
movement happened during weak volume, this might mean that the trend is
losing steam and may end soon.

Charts
Even if you have not given it much thought, you have likely seen a common
pricing chart at one point or another. As the name implies, it simply shows
the movement of the price of a given asset over a set period. There are
charts based on a wide variety of intervals, from those that show movement
by the minute all the way to those that show it by the year.

Candlesticks
Candlestick charting appeared around 1850. The credit for developing
candlestick charting goes to a rice trader, Homma, who lived in Sakata.
More than likely, his ideas were refined and modified from many years of
trading, and eventually, the results were the charts we use now.
To make a candlestick chart, you must have data that contain close, low,
high, and open values for all the periods you might want to display. The
portion that is hollow or filled is called the body. The thin lines above or
below show the high or low range. They are called shadows, tails, or wicks;
all used interchangeably. The high is marked by the top of the top and the
low by the lower wick. Suppose the price of cryptocurrency closes higher
than it was when it opened. In that case, a hollow candlestick is drawn at
the bottom, indicating the opening price and the top indicating the closing.
If the stock closes lower than when it opened, a filled candlestick is drawn
at the top, indicating the opening price and the bottom indicating the
closing.
Compared to normal bar charts, most traders think that candlestick charts
are easier to read and look better. Each candlestick will show a way to
figure out the price of action. A trader can compare the relationship
between the opening and closing and the highs and lows. The relationship
between the opening and closing is vital information that shows the
significance of the candlesticks. Hollow ones will show buying pressure.
This is when the closing is bigger than the opening. Filled candlesticks will
show selling pressure. This shows the closing was less than the opening.
Long green candlesticks show strong buying pressure. The longer the
candlestick, the farther the closing was about the opening. This will show
that the price increased from opening to closing, and buyers were
aggressive. Long green candlesticks are bullish, indicating an upward trend.
After long declines, a long green candlestick might mark a turning point. If
buying becomes extremely aggressive after a long advance, it could lead to
greater bullishness.
Long red candlesticks show a large selling pressure. The longer the
candlestick, the farther the close was from the opening. This will show that
prices went down from the opening, and sellers were very aggressive in
selling. After a long advance, this candlestick could indicate a turning point
or mark where a resistance level might be in the future. After a decline, a
red candlestick shows capitulation or panic.
Wicks on candlesticks provide significant information about the session.
Upper wicks indicate the highs, and the lower wicks indicate the lows of
that session.
Candlesticks with short wicks indicate that most of the actions were close to
the opening and closing prices. Candlesticks with long wicks indicate prices
went far past the opening and closing of that session, whether an hour or a
day.
Candlesticks with long upper shadows and short lower shadows indicate
that buyers had control of the session and bid high. Sellers forced the prices
down later from the high, and the weak close made long upper shadows.
This can indicate strong short trading activity.
Candlesticks with long lower shadows and short upper shadows indicate
sellers were in control of the session and caused the prices to go lower.
Buyers came back later to cause the prices to go high near the end of the
session. The strong close created a long lower shadow. This usually
indicates FOMO (fear of missing out) activity.
Candlesticks with long upper and long lower shadows and small bodies are
called spinning tops. A long shadow indicates a reversal. Spinning tops
indicate indecision. The small body that is either filled or hollow indicates
an insignificant movement from opening to closing. The shadows indicate
that both bears and bulls were active. The session could have opened and
closed with little change, or prices might have moved higher or lower
during the session. If sellers or buyers do not have the upper hand, the result
is a standoff. After a long advance, a spinning top indicates weakness with
bulls and an interruption of the trend. Once a decline is over, a spinning top
shows weakness with bears and an interruption of the trend. This indicated
that the price activity is flat and is quite boring and unprofitable for traders.
Candlesticks give valuable information on the opening, highs, lows, and
closing positions. This activity makes all candlesticks differ. Bullish
reversals need preceding downtrends, while bearish reversals need prior up
trends. The direction is figured by using trend lines, moving averages,
peat/through analysis, and other technical analysis tools. A downtrend
might occur if the Cryptocurrency is trading below the downtrend line,
below the prior high, or below a moving average. Since candlesticks relate
to a specific period selected by the user, it is best to consider price action by
analyzing the historical candlesticks to determine future price movement.
A candlestick that is away from the earlier candlestick is in the star
position. The first will have a large body; the second will have a small body.
It will depend on the prior candlestick. The star position could gap up or
down, which seems isolated from the former price action. The candlestick
could be any combination of red or green. Spinning tops, shooting stars,
hammers, and doj is have small bodies that could show up in the start
position.

Moving Averages
A great technique for cryptocurrency traders to find trends is moving
averages. This technique helps smooth out the currency’s fluctuations so
that the participants can better understand where the price is going. The
basic type of moving average is the ‘simple moving average.’ This is
calculated using the security’s average price over a certain period. A trader
could choose to look at what cryptocurrency has done over a 50, 100, or
200 days/hourly period. Being such a strong cryptocurrency, it usually finds
resistance on the 50 days/hour moving average daily but can drop to the 100
day/hour average. If the price of cryptocurrency falls below that, it could
signify a temporary bearish trend.
Another tool that these traders could use is ‘exponential moving average.’
This provides more of an emphasis on the recent price values when looking
at the average. A trader can better understand when the momentum tends to
shift by analyzing the averages. If the cryptocurrency price crosses the 21-
day/hour average and ends up falling below the 51-day/hour average, this
may point to a bearish move. The converse is true if you were to see that the
shorter average is moving higher than the longer average.

• RSI
The relative strength index (RSI) is typically used to calculate results in
increments of 3 days and measures the total sum of positive days and
negative days before calculating a value with a range between 0 and 100. If
the movement of the cryptocurrency in this period is generally positive,
then the indicator will end up closer to 100, and if the movement is
negative, the result will be closer to 0. If the result is close to 50, the results
are considered neutral.

• MACD
Moving average convergence divergence (MACD) is a type of trend-
following momentum indicator that expounds on the relationship between 2
different averages and prices. The MACD can be determined by taking the
26-day EMA and subtracting the 12-day EMA from it.
MACD can be interpreted in multiple ways. The first of which is the
crossover. When the MACD falls underneath the signal line, then this
creates a bearish signal that says it is time to sell. Alternately, if the MACD
is above the signal line, it shows that the underlying asset's price is about to
experience upward momentum. It is common for traders to wait for
confirmation of a crossover above the signal line before making a position-
based move to ensure that the price will not go through a false breakout
phase.
• Stochastic
The stochastic oscillator is a type of momentum indicator that compares the
closing price of an underlying asset to the range of prices it achieved over a
specific period. The sensitivity of this oscillator to specific market
movements can be reduced by adjusting the period or taking a moving
average of its results.
The stochastic oscillator also plays an important role when it comes to
determining if a specific underlying asset is oversold or overbought because
it remains in range. Its range is between 0 and 100 and will always remain
constant regardless of how quickly or slowly the underlying asset moves.
The traditional setting for this oscillator is 20 as the oversold threshold,
with the overbought threshold appearing at 80.
• A/D Line
The advance-decline line (A/D) is a breadth indicator that considers net
advances, which is the number of cryptocurrencies that are seeing gains
compared to those that are seeing losses. The line can be used to compare
the market's expected performance as a whole compared to how it is
actually doing. When bearish or bullish divergences are found in the A/D
line, it signals that a reversal could be on the horizon.
Chapter 5: Major
Cryptocurrencies
❖ Bitcoin
Bitcoin is considered the most original and most famous cryptocurrency.
Satoshi Nakamoto is a person or a group of people under this name,
founded in 2009. It can be said that its characteristics are more like
commodities than traditional currencies. This is reflected in the fact that it is
now used more as a form of investment than a payment method. As of
December 2018, there are approximately 16.7 million Bitcoins (a limited
number may be 21 million) in circulation. Traders can buy Bitcoin through
exchanges or speculate on its price trends through CFDs and spread betting.
Learn more about Bitcoin

❖ Ethereum
Ether is relatively new in the cryptocurrency field. It was launched in 2015
and is currently the second-largest digital currency at the time of writing. It
operates similarly to the Bitcoin network, allowing people to send and
receive tokens representing value through the open network. The token is
called Ether and is used as payment on the network.
However, the main use of Ether is as a smart contract rather than a payment
method. Smart contracts are code scripts that can be deployed in the
Ethereum blockchain. The restrictions on Ethereum are also slightly
different from Bitcoin. The issuance limit is 18 million Ether per year,
which is equivalent to 25% of the initial supply. Therefore, although the
absolute issuance is fixed, the relative inflation rate is declining every year.
Learn more about Ethereum

Bitcoin cash
Bitcoin Cash is a cryptocurrency and payment network created by the
Bitcoin hard fork in December 2017. When the digital cryptocurrency
community diverged, a hard fork occurred. In general, the point of
divergence is mainly related to the software updates used in the network,
but for Bitcoin Cash, the divergence point that produced its hard fork is
mainly derived from a proposal to increase the block size limit. After the
fork, the Blockchain is divided into two, and miners and the wider
community decide which digital encryption currency to choose. After the
emergence of the Bitcoin hard fork, a Bitcoin Cash coin is generally
allocated for each Bitcoin held (but some exchanges do not recognize
Bitcoin Cash).

Litecoin
Litecoin (LTC) is a peer-to-peer digital encrypted currency founded by
Charlie Lee (a former Google employee) in 2011.
Litecoin is an early "altcoin" derived from Bitcoin. It was originally created
for smaller transactions than Bitcoin. Technically speaking, Litecoin is
almost identical to Bitcoin but has some significant differences. For
example, Litecoin can process blocks up to 4 times faster than Bitcoin. The
technical requirements for Litecoin mining are higher, but the total amount
is also much higher-currently set at 84 million, which is four times the
number of Bitcoins. Learn more about Litecoin

Ripple
Ripple is a network that can trade any currency (including fiat currency and
digital encrypted currency) in the world. Ripple aims to ensure safe, fast,
and low-cost transactions within the network without the risk of fraud or
refunds.
Ripple is much faster than Bitcoin-it only takes a few seconds to complete
the transaction. The minimum transaction price is also much lower, which is
one of the reasons why more and more banks choose Ripple for settlement.
Ripple also refers to Ripple's digital cryptocurrency Ripple used on the
network.
Chapter 6: What is a Bitcoin?
Bitcoin is the first cryptocurrency or crypto currency as well as being the
most popular. Its price continues to rise from year to year, making bitcoin a
digital asset that is sought after by many people.
Bitcoin is a decentralized digital currency that was created in January 2009.
The invention of bitcoin is Satoshi Nakamoto.
Bitcoin is known as a type of cryptocurrency because it uses cryptography
to keep it safe. There are no physical bitcoins, only balances stored in a
public ledger that can be accessed by everyone transparently (even though
every record is encrypted).
In other words, bitcoin is a set of ideas and technologies that serve as the
foundation for a digital money ecosystem. Bitcoins are digital money units
used to store and transport value among bitcoin network participants. Users
of the bitcoin protocol connect primarily over the internet; though
alternative networks can also be used. The bitcoin protocol stack, which is
open-source software, can be executed on various devices, including
laptops and cellphones, making the technology widely accessible.
Users can use bitcoin to do almost anything that can be done with
traditional currencies, such as buying and selling items, sending money to
people or organizations, and providing credit. Bitcoin can be purchased,
sold, and swapped for other currencies at specialized currency exchanges.
Bitcoin is, in some ways, the ideal form of internet money because it is fast,
safe, and borderless.
Bitcoin, unlike traditional money, is purely digital. There are no actual
coins, nor are there any digital coins. Transactions that transfer value from
sender to recipient imply the use of cash. Bitcoin users have keys that they
can use to prove ownership of bitcoin on the bitcoin network. They can use
these keys to sign transactions that unlock the value and be spent by
transferring it to a new owner. Keys are frequently maintained on each
user's computer or a smartphone in a digital wallet. The only requirement
for spending bitcoin is accessing the key that may sign a transaction, putting
complete control in the hands of any user.
Bitcoin is a peer-to-peer, distributed system. As a result, there is no
"centralized" server or control point. Bitcoins are constructed through a
process known as "mine," in which participants compete to solve a
mathematical problem while processing bitcoin transactions. Any bitcoin
network participant (i.e., anyone with a device running the full bitcoin
protocol stack) can function as a miner, verifying and recording transactions
with their computer's computing power. On average, every 10 minutes, a
bitcoin miner can validate the previous 10 minutes' transactions and is paid
with brand new bitcoin. Bitcoin mining, in essence, decentralizes a central
bank's currency issuance and clearing activities and eliminates the need for
any central bank.
Despite not being a legal tender in much of the world, Bitcoin is very
popular and has fueled the launch of hundreds of other cryptocurrencies,
collectively referred to as altcoins. Bitcoin is commonly abbreviated as
BTC when it is traded.

The Bitcoin Protocol

The bitcoin protocol has built-in algorithms that control the network's
mining function. The difficulty of the processing works those miners must
complete dynamically changed so that someone succeeds on average every
10 minutes, regardless of how many miners (or how much processing) are
competing at any given time.
The protocol also cuts the number of new bitcoins issued every four years
in half and caps the overall number of bitcoins created at slightly under 21
million coins. As a result, the number of bitcoins in circulation is expected
to hit 21 million by 2140. Bitcoin is a deflationary currency in the long run
because of its decreasing rate of issue.
Furthermore, bitcoin cannot be inflated by "creating" more money than is
intended to be issued.
Bitcoin is the name of the protocol, a peer-to-peer network, and a
distributed computing breakthrough behind the scenes. Bitcoin money is
merely the first implementation of this technology. Bitcoin is the result of
decades of encryption and distributed systems research, and it combines
four fundamental ideas into a unique and powerful combination. Bitcoin is
made up of:
• A decentralized peer-to-peer network (the bitcoin protocol)
• A public ledger of transactions (the blockchain)
• A set of rules for independently validating transactions and issuing
currency (consensus rules)
• A system for achieving worldwide, decentralized consensus on a
legitimate blockchain (Proof-of-Work algorithm)
Chapter 7: Identification Of The
Main Cryptocurrencies: Altcoin
It is a straightforward to define what an altcoin is. It's any coin that isn't
bitcoin in terms of technicality. Bitcoin is as traditional as this field can get,
having been the first to strike the scene and gain a mainstream following.
Altcoins refers to the rest of the coins that make up the cryptosphere. Yes,
Ethereum and XRP are included. They acquired their name because they
offer services, functionalities, and usability characteristics that bitcoin either
doesn't have or doesn't want to supply. They also provide crypto enthusiasts
with options other than bitcoin in terms of investing.
Within a portfolio, altcoins offer two advantages: protection against bitcoin
and the potential for greater interest in the token.
Since the market is new, no one knows what the future holds for any coin in
this arena, including bitcoin. While it is currently the most prominent
currency, there is no certainty that another coin will emerge to take its place
as the crypto's bellwether. If such a coin grew, it would emerge from the
altcoin world (unless it was one of bitcoin's splits). While you shouldn't
invest in altcoins that you believe will entirely dethrone bitcoin, it's a good
idea to have some exposure to a couple of them in case one of them begins
to rise as a result of its rising market power, independent of bitcoin.
Corporations are only now beginning to grasp the full potential of
blockchain technology. As a result, they're turning to these startup coins to
see if they can meet their digital currency needs while maintaining safety,
security, and legality. When new blockchains emerge, they will be tested,
and the most trustworthy ones will gain popularity with a community
beyond the initial investors. These altcoins' prices may climb as a result of
this. You can typically get a more significant part of the coins at a lower
price because they're significantly cheaper than bitcoin. They also give hope
that businesses will latch on to certain coins that bring value to their
business via the token's blockchain.
You buy altcoins in the hopes that they will appreciate it. However, there's
no guarantee that they will, which is why you shouldn't put your entire
crypto portfolio in altcoins. Many coins have done little to demonstrate that
the company will become a viable business or that transaction volume will
rise at a substantial enough rate to support an investment thesis and justify a
greater valuation. They have yet to be proven. Like most unverified
investments, your cryptocurrency investment is more likely to fail than
thrive.
While it is a great idea to diversify your crypto portfolio with altcoins, keep
in mind that they're not the same as any other investment. Cryptocurrencies
have a high amount of volatility as a whole. Bitcoin, in itself, experiences
substantial ups and downs in a matter of days (or even hours). Unless no
one invests in them at all, cryptocurrencies, particularly smaller altcoins,
have an even higher level of volatility. If you buy in, it's something you'll
have to accept. While some will use this uncertainty to sell as soon as a
spike occurs, you shouldn't have to bother too much about the daily ups and
downs of these coins if you keep that volatility in mind about your entire
crypto portfolio—and your crypto portfolio's place in your overall
investment holdings. If you keep track of them daily, you can find yourself
sipping champagne one day and taking nausea medicine the next.
Less mainstream altcoins, like the more prominent altcoins covered in
previous chapters, will follow bitcoin's path. However, because many of
these coins have a smaller value per coin, this results in higher highs and
lower lows as investors rush into the names to profit from a bitcoin rise.
Speculation is driving these moves rather than something concrete in the
coins themselves.
Take Stellar's lumen, for example. It crested immediately after bitcoin's
apex, rising from $0.20 per coin in late December 2017 to $0.75 per coin in
early January, a 275 percent increase in less than two weeks. It had dropped
to $0.20 by the end of March. If transaction volume increases, bitcoin prices
may stabilize. However, because these coins are newer and have fewer
users, fewer transactions exist. That's why, when prices soar, speculation is
at the helm. When bitcoin does well, deduction occurs.
Many altcoins will go months, if not years, without seeing any activity. The
coin has a low level of curiosity and chatter. Perhaps they're brand-new
coins. Maybe they've been left behind. It's critical to comprehend why some
coins are still in the basement. Simply because something is cheap or
inexpensive does not imply it is a good deal. The low price maybe since no
one will ever use the currency in their right mind. Don't confuse low cost
with low quality.
Chapter 8: Which Option Is Better
To Start With Cryptocurrencies —
Mining or Trading?
Mining
Everyone is now interested in how to make money on bitcoins? This is
probably the number one question for those people who want to make a
profit via the Internet remotely. Earnings on mining is a great opportunity to
receive cryptocurrency. Its features will be discussed in this chapter.
This chapter is prepared for those who do not fully understand the process
and do not have several million in their nightstand in order to immediately
buy a mining hotel.
In this chapter you will learn

What do miners get paid for?

How much can you earn
How much you need to invest
What equipment to choose
And how to choose a cryptocurrency for mining

What is mining in simple words

Mining is the process of adding new blocks to the blockchain.
For the system to function, someone must pack new transactions into
blocks, and then attach them to the blockchain. This process is called
mining.

How to add blocks to the blockchain?

A block is added to the chain only when solving a complex mathematical
problem - it is precisely this task that miners, or rather, their mining
devices, are busy solving. This device can be a home computer, a mining
hotel, a server, or an entire data center.
Miners solve the problem in a race: whoever gave the right answer first,
added the block, and, accordingly, received a reward for it.

What do miners earn: who pays them for mining?

There are two categories of money miners receive.
Transaction fee
Everyone who wants to conduct a transaction with a cryptocurrency (for
example, transfer from wallet to wallet) pays the miner a certain amount for
the transaction.
In Ethereum, this money is called Gas and is set custom for each transaction
by the customer of the transaction. The more gas a client promises for a
transaction; the more miners try to fulfill that order.

New coin minted by the system itself

When a block is added, an emission occurs - for each added block,
Ethereum issues 2 new ethers, which are received by the miner who added
the block. The issuance of new coins is called emission.
This money is paid to the miner by the system itself.
As a result, the miner's earnings consist of the commission for the operation
+ freshly minted coins - burned coins
Now that we have figured out what miners get paid for, let's look at how
mining itself works.

Solo mining and mining in pools: what is the

difference
Solo mining
It implies mining alone on your own or rented equipment. This means that
your device alone is trying to solve the problem and add a block.
If successful, all proceeds go to you.
Solo mining was relevant until 2013 - now the competition is so high that it
is almost impossible to make money on solo mining.
But once a year the stick shoots.
Pool mining: what is a pool
A pool is a server where the resources of many miners are combined. They
jointly solve the mining problem
The pool is based on a server that sends out a task with a simpler condition
to the participants. Let's look at how a mining pool works using a simple
analogy.
How does a mining pool work?
This is Hakeem, and he has a big problem - he lost a beautiful gem on a
pebble beach.
The stone is expensive and Hakeem is even ready to sell it and share the
cost with someone who will help him in his search. While Hakeem is
working alone and just sorting through every stone on the beach.
For the second week of the search, his friend Koloa, a wealthy IT specialist,
comes to the island and proposes a new search scheme: he proposes to set a
reward for the find for the entire island.
The locals immediately perked up, because Koloa pays not for the treasured
stone found, but for each similar in size and shape. For now, the entire
population is pulling tons of various stones to the IT specialist, and Hakeem
simply checks: the right stone or the wrong one.
And what do you think? For a week on the island, they sorted out all the
stones in general and found the very one!
Back to Cryptocurrency: How the Mining Pool Works
A mining task is a request from the blockchain to find a number (special
stone) with which the block hash function will start with the requested
number of digits
Ways to make money on mining
Miners have access to the following methods of mining cryptocurrency:

Independent mining with the help of special equipment - ASIC

mining;
Earnings on fluctuations in cryptocurrency rates - buying /
selling;
Group mining - cloud mining.
,

Self-Mining
Main advantages:

Sale of equipment - the miner can always sell his own equipment
at the price at which he bought it, if it is still under warranty and
is assembled. That is, he will be able to sell the acquired
equipment and reach at least 0% without losing his own money;
Complete minimization of the possibility of speculation - the
user will see the power of the equipment used and the real
income from it;
The miner will decide on his own which cryptocurrency to hunt
and mine;
It is possible to create a fully automatic way to earn bitcoin;
Realization of passive income with the help of installed
equipment;
The opportunity to successfully invest free investments in the
construction of a Bitcoin farm.
Cloud mining
Miners are united in a pool that buys for their funds and maintains
equipment for cryptocurrency mining. The advantages of this method are
that there is no need to bother with the acquisition and subsequent
maintenance of ASICs. That is, you need to invest a certain amount of
money in cloud mining, after which you can make a profit every day, which
is divided among all participants.
,

What is better to mine?

Today, the majority of mining devices are video cards or ASICs (equipment
designed exclusively for mining cryptocurrencies). Each option has
advantages and disadvantages:
❖ ASICs is a small device designed to solve only one task: to mine
cryptocurrency. ASICs have computing power hundreds of times
higher than video cards. But they also cost several times more. They
are noisier and consume more electricity. At the same time, they
quickly become obsolete - their relevance is calculated in a year or
two. In addition, due to their narrow specialization, no one needs
them in the secondary market.
❖ Video cards are less powerful, less noisy and "gluttonous". The
effective service life reaches up to 5 years, and they are always in
demand in the secondary market of PC components. Able to compete
with ASICs on some algorithms.

The profit of miners depends on 3 components:

The number of coins received. This important indicator of a
miner's earnings is based on the power of the equipment, the
difficulty of mining, and the size of the reward.
Cryptocurrency prices. The prices for cryptocurrencies are
formed by the market. And the miners cannot influence them in
any way. Unless, of course, the miner of digital assets is the
owner of a large number of coins who wished to sell them at a
time.
 Cost of equipment and associated costs (electricity costs,
equipment maintenance, Internet fees, etc.).
It is possible to determine how profitable mining is only in the short term:
today, this week, this month. The longer the analysis period, the more
difficult it is to make reliable profitability forecasts. This is due to the
factors on which the income of cryptocurrency miners depends. They are
impermanent and change dynamically over time.

Is it worth it to enter the market?

Before entering the market from scratch, you need to ask yourself the
question: for what purpose are you going to mine cryptocurrencies. If you
are counting on the opportunity to earn a tidy sum in a few months, you
definitely should not start now.
Yes, today the value of the crypto is growing, but no one can predict how
long this growth will last. Maybe a month, maybe six months. As can be
seen from the above calculations, the payback period for the equipment
exceeds these terms.
Of course, if the rate grows by 2 times, then you can have time to return the
investment and earn. But relying only on this would be the height of
naivety. In addition, there is a shortage of mining devices on the market
now. And if you manage to find the necessary amount of equipment, its cost
will be much higher than just a couple of months ago.
If mining is a long-term investment, then you can try. This will require a
willingness to hold the cryptocurrency for a long time without selling on the
market to cover costs. Even if the market collapses, as happened in 2018,
sooner or later the value of the crypto will return to its previous level and
even exceed it. Then it will be possible to sell the accumulated coins.
Considering the situation in the cryptocurrency mining industry as a whole,
it should be noted that today the break-even threshold for mining (the profit
from the sale of BTC will cover the cost of electricity) on ASICs is about
$7,000–$8,000 per bitcoin. For GPU mining, this figure will be $2,000 per
1 ETH.

Does mining have a future?

In the entire history of cryptocurrencies, mining has already been “buried”
several times. But, as we can see, he is still alive and brings profit to the
miners. Yes, the threshold for entering this business has increased
significantly compared to what it was just 5 years ago. There is a shift from
small miners to large investors who can finance the launch of industrial
farms worth millions of dollars.

What to mine besides bitcoin?

Yes, in 2020 its profitability decreased due to halving - the mining reward
fell from 12.5 to 6.25 BTC.
However, this is the very first and most expensive (at the time of writing,
worth about $50,000) coin. However, the cryptocurrency market is
constantly replenished. Each new one has its own features. We have
prepared a list of popular cryptocurrencies that will interest even an
experienced miner.
Ethereum (ETH)
The second cryptocurrency in terms of capitalization, breathing in the back
of bitcoin. Distinctive features: unlimited emission, support for smart
contracts and the imminent release of Ethereum 2.0 with the transition to
the Proof-of-Stake method.

Litecoin (LTC)
Litecoin is often referred to as an improved version of Bitcoin. One of the
top ten digital currencies in terms of the maximum volume of market
capitalization. Halving in its network occurred in 2019. Litecoin has
predictable volatility, and daily turnover of almost $500 million speaks of
the high liquidity of the asset. In addition, there are buns in the form of low
commissions and popularity in the market.
Zcash (ZEC)
The problem of anonymity in the network is becoming more and more
urgent. Zcash allows you to send and receive cryptocurrency completely
anonymously. In our time, such a wonderful property will have a steady
demand.
Bitcoin Cash (BCH) and Bitcoin SV (BSV)
These bitcoin namesakes compare favorably with a good development
team.
Plus, these are the two most successful configurations of the first
cryptocurrency. Prudent and patient miners can try to play on their strong
volatility, fixing additional profits during the coin price jump.
Is It Legal to Own, Use, and Mine Cryptocurrencies?
Laws are not the same for all countries, so it is not easy to generalize an
answer. Cryptocurrencies work in a decentralized way and outside of the
traditional banking system. However, this type of coin is not untouchable.
Regulations regarding mining and transactions of digital currencies are
already being implemented in several countries.
In Latin America, as far as we know, the only country that does not allow
the use of currencies that are not legal tender backed by a government is
Bolivia. Due to the scams and cyber-attacks that involve these types of
currencies, in Bolivia, you will probably have serious problems if you use
cryptocurrencies and probably also if you want to mine.
While it is true that cryptocurrencies are strongly associated with
cybercrime, we must not forget that they are useful tools that provide
significant benefits to financial transactions in the digital age and that soon
they will be far from disappearing. Concerning the rest of Latin America,
regulations regarding the use and possession of cryptocurrencies are null or
scarce, so we can interact with them calmly, as long as we handle ourselves
within legal businesses and operations.
Finally, if you are interested in venturing into the world of mining, do not
forget to take the appropriate security measures to protect your mining
equipment and protect the cryptocurrencies that you acquire for work.
But What Is Cryptocurrency Mining Based On?
To give you a quick idea, money is not created in the world of
cryptocurrencies; it is discovered. This process is known as mining. As in
every mining, some miners are the ones who obtain rewards
(cryptocurrencies) from time to time. Now, we will explain how
cryptocurrency mining works in simple steps:
Cryptocurrency users send virtual money all the time.
 The transactions made with cryptocurrencies are registered in a
chain of blocks, better known as the Miners confirm and record
those transactions. In return, they receive a small commission as
a form of payment. You see, working in a virtual mine is very
different!

A miner follows this procedure in a cryptocurrency mine. If you

want to mine Ethereum, you need to build a powerful computer
at a network's service. Therefore, components, such as graphics
cards, dramatically increase their price.

Trading
What is cryptocurrency trading? Like traditional stock market trading,
cryptocurrency trading involves the short-term buying and selling of
cryptocurrency. Quite possibly, the most famous ‘trade’ will forever be the
Hanyecz pizza trade in 2010, which involved the exchange of 10,000
bitcoins for 2 pizzas, each one of those pizzas being worth over
$80,000,000 at the time of writing this guide!
Comparing trading and investing; investing in acquiring cryptocurrency and
holding it for an extended period. The purpose is for the currency to grow in
value over that time. It requires the investor to weather the downtrends,
anticipating that the value will once more increase and grow to exceed its
loss.
On the other hand, trading is looking at the relatively short-term ownership
of a cryptocurrency to make a faster (and generally smaller) profit. To do
this, it is necessary to buy when the price is low and sell when it has
increased in value and reached your desired profit margin, trying to avoid
ownership during any downtrend.
There are various trading styles: position trading, swing trading, day
trading, and scalp trading. These trading styles refer to the length of time
that elapses between buying and selling and can range from months and
years to merely a few seconds or minutes. Profit can also be achieved by
‘selling short,’ which would involve borrowing cryptocurrency at a high
price, selling it, and then repurchasing it when it has lowered in value.
Understanding how trading in cryptocurrency works is important. It is
possible to make short-term gains by keeping a close eye on trends and
taking a more active role in managing your cryptocurrency investments. It
requires you to check values and trends daily actively. This allows you to
sell for the highest and immediate profits rather than holding out for long-
term peaks and troughs.
The Benefits of Learning Cryptocurrency Trading
You can take advantage of the short-term highs and lows in the
market.
You can take control over the money that you have invested in
cryptocurrency.
More frequent short-term profits can be achieved.
Faster returns.

The Basic Steps on How to Trade In Cryptocurrency

You will need cryptocurrency wallets for the currencies you want
to trade.
You will need to join a cryptocurrency exchange, such as
Coinbase.
Start by trading the more well-known coins, such as Ethereum
and Bitcoin.
Consider joining another currency exchange to trade coins that
are not traded on Coinbase.
Keep a very close eye on trends.
Remember, you don’t have to buy whole coins.
Follow the blogs and news concerning cryptocurrency.
Keep a record of all transactions for tax purposes.
Fees are payable on transactions.
Be aware that not all cryptocurrencies are the same and that as
well as huge gains, huge losses are also possible.

Mining or Trading
The answer depends on which cryptocurrency and which method of
exchange you choose. In general, there is no easy answer to this question
since it is more complex than “X is better than Y.” Straightforward
comparisons cannot be made because it applies to different
cryptocurrencies, economies, cultures, and people.
Mining is the process of using computer hardware to perform complex
calculations on blocks of data that verify cryptocurrency transactions,
confirm newly mined coins, and release new coins into circulation. In return
for giving up their personal information and assets to this process, such as
electricity and space in an apartment or house, miners receive a certain
number of coins split among themselves.
Trading is the act of buying and selling cryptocurrency. Like mining, for
currency transactions to occur, trust is required from both people involved
since you cannot do this with a self-executing contract. For example,
trading does not work with theft or loss of passwords and private keys
between 2 people. Trading encompasses all other ways of creating and
exchanging value: barter, payment for labor (including gambling), exchange
rates at which goods and services are sold and bought (which are more
common than the actual cryptocurrency world), writing something on a
piece of paper or at a computer screen and giving it to someone else.
About the attributes of money (scarcity, durability, portability, divisibility),
mined coins will always be in a limited amount. However, since mining
consumes resources (energy and equipment), at some point, the rate of
production will reach an equilibrium with its consumption level since the
investment yields a return. Therefore, for mined coins to become more
readily available for use in transactions—that means greater liquidity—
mining has a limited future at best.
In the case of traded coins, the number of coins available for exchange is
theoretically infinite. As long as someone wants to buy them, a market
exists for them, and they can be sold. The price will depend on the demand
and supply of that cryptocurrency and its liquidity (which depends on its
trade volume). Therefore, a greater number of tradable coins could increase
liquidity and utility, especially if one considers cryptocurrencies that have
reached an exchange value where they can be used in transactions.
Trading does not rely on trust between 2 people and does not require either
a legal framework or personal information from 2 parties. It can occur
between 2 individuals or between the same individual and an alcoholic
beverage distributor. In terms of Bitcoin, trading is the only way to
eliminate the volatility or uncertainty that affects cryptocurrencies since
they are not backed by anything except their own value (based on their
technology).
On the other hand, mined coins are portable, divisible, and scarce. They are
also valuable because you can get a better return from hardware investment
(for start-up costs), which is not the case with traded coins if they are not
backed by anything. It should be noted that trades are not financially
sustainable unless a person starts to buy and sell the same cryptocurrency at
an exchange rate that becomes liquid. This situation could arise if one of the
cryptocurrencies becomes more popular or has reached an exchange value
of around $0.20 because eventually be able to trade at that rate.
The conclusion is that both exchange methods are viable if cryptocurrencies
keep growing in terms of value, trade volume, demand, and utility.
However, they will both have different roles in the future since one is
limited while the other is not. On the other hand, mining and trading can be
complementary when a person wants to get started with cryptocurrencies,
mining them and then converting them into traded coins. This lowers the
initial risk, as it could keep staying at least 2 steps away from crypto
trading.
Now that you are up to date on this topic, perhaps at some point, you feel
like investing in digital currency or becoming one of these miners.
Whatever happens, remember that it can be the currency of the future!
Chapter 9: The Step-By-Step
Guide to Protect Your
Cryptocurrencies from Hacker
Attacks
If someone were to pull a bank robbery, your capital would still be safe as it
is protected by the bank itself, right? In turn, the financial institution has
protected itself from any risks by taking out strict insurance policies. If your
credit card is cloned during a normal transaction, the same thing happens.
After making a report to the competent authority, the bank will normally
proceed to the regular refund of the unduly stolen amount.
But if I buy cryptocurrencies, who protects me from hacker attacks?
Unfortunately, the possibility that someone steals all your virtual currencies
is a very real and widespread hypothesis. Hacker attacks, as already
anticipated, unfortunately, remain very frequent.
This aspect is not much emphasized by bloggers or self-styled experts or
completely glossed over by cryptocurrency buying portals since they earn
commissions on all transactions because aspect could undermine the
enthusiasm or hold back many investors.
However, one of the first and fundamental rules one learns when becoming
a trader or simple holder of digital currencies is that we are the ones who
must be the bank of our cryptocurrency. We must protect our own treasure
chest. It is crucial never to underestimate this aspect.

Step 1 — Make the Password You Use to Access

Your Computer Complicated
In fact, not just complicated; it needs to be extremely complicated,
extremely difficult. Forget about using the usual, simple, and trivial
password you have been using for years for your e-mails or accounts linked
to various platforms you are subscribed to. If you operate with the same e-
mail and, for convenience, you have stored it on the network; it will be
child's play for hackers to get into your computer. For them to steal capital
from your virtual wallet will be like stealing candy from a baby or throwing
a steak into a tank full of hungry sharks.
Use a new password, create one especially for the occasion, and make sure
you have never used it before. This password should be at least 20
characters long and consist of alternating letters, numbers, and special
characters. Do not use sequences already used in other accounts or old e-
mails, or personal subscriptions. Eliminate birthdates, wedding
anniversaries, names of children or pets, birthdays of relatives or friends,
etc. Nothing can be traced back to your personal data and easily be found
through social networks or other sources.
This first trick will turn your password from weak to strong, making it
overly complicated for outsiders to access your PC. Remember, never
forget, or underestimate this element. Not having a complicated and robust
password would be the same as not having a secure or locked door at home.
A commonplace password, for example, personal birth date plus your dog's
name, is equivalent to going to sleep or going out of the house, leaving the
door wide open.
Step 2 — Install an Anti-Malware and Start
Scanning Consistently
Anti-malware software protects against viruses and other types of malware,
including Trojans, worms, and spyware. Basically, all you do is run a scan
to detect malicious programs and eliminate the “weeds from the field.”
In particular, such programs (you can find many of them even free on the
net) might detect known malware, unknown prior malware, or recent
suspicious files that would be better not to download to your device.

Step 3 — Adopt an Encrypted E-mail and Use It

Only for Cryptocurrencies
Another especially important step that should not be underestimated is to
raise the security level of your e-mail. This can happen thanks to an e-mail
called “encrypted,” compared to a simple e-mail. This step is essential
because, to access your profile or personal portfolio, regardless of the server
you prefer, you will always be required to verify access and confirm your
identity via e-mail.
If someone could easily access your credentials, enter your computer
device, and access through your e-mail on the portal where you usually buy,
sell or exchange cryptocurrencies and to which your credit card and
personal bank account are linked, the hacker in attack would only need a
snap of his fingers to transfer all your virtual currencies.
Step 4 — Set Up a Dual Identity Recognition
Method
To access the portal, you have chosen and then the profile where you
usually make transactions, make sure that the portal sends you a
confirmation e-mail to your encrypted e-mail. You must confirm this e-mail
to gain access also send you a verification code to your smartphone; this is
so that the portal is 100% sure that it is really you and that it is not a fake
trying to enter the profile illegally.
In short, you need to make sure that you have the keys to your chest firmly
in place.
Step 5 — Buy a Crypto Wallet External to Your
Portal
Another strategy to safeguard yourself from external hacker’s attacks and
various scams is to buy a crypto-wallet (on average, a crypto-wallet costs
from $80–120) where you can transfer all your cryptocurrencies as it is not
recommended to leave them for a long time on the portal in your virtual
wallet.
Hardware Wallets store a user's private keys on a hardware device like a
USB pen drive. They can support multiple currencies. They are the most
secure methods globally, but they involve one big problem. If they break or
you lose them, you will lose everything.

Step 6 — Mark Down with Pen and Paper on a

Personal Planner
Just in the most traditional methods, all passwords and crypto wallet
recovery codes. It is essential to adopt complicated passwords and difficult
to keep in mind to raise security. Nevertheless, it applies to the various
recovery codes of the crypto wallet.
Therefore, it is necessary to have a special diary (well, it would be much
better to have two, where one serves as a backup of the first one) to jot
down all the codes. It would help if you kept this diary like the famous
briefcase containing the nuclear codes that always travel with the President
of the United States of America. This is the most valuable advice I can give
you.
It seems like a joke, but it often happens that young neo-millionaires are
very proud to have bought Bitcoin in times when nobody knew about it. But
they are sad because they can't find their crypto-wallet or simply can't
access it because they can't find their passwords anymore. It is not so
difficult to suppose that they have absent-mindedly written them down who
knows where. Maybe in some paper thrown in the trash at the cafeteria or
stuck who knows where among other documents of 5 or 6 years ago, maybe
in the storage room of a rented apartment where they no longer live.
It is a pure truth. After all, many people started out almost as a joke or as a
bet, underestimating the real scope of the investment. Recently, an
interview with an American person with an estimated fortune of about $220
million (now quadrupled, given the current value of Bitcoins), who was
unable to access his fortune, has been released in the press. This would be
the drama and the worst-case scenario that could happen to an investor.
Therefore, please always act like true professionals; protect yourself. File
and handle everything with order, rigor, and precision.

Step 7 — Put Your Diaries and Crypto Wallet in a

Safe Place
Finally, yet important step is to prevent someone from stealing your crypto
wallet or your password diary. Therefore, keep them in a safe place, where
only you or extremely trusted people (usually no more than one or 2 people,
never enlarge the circle) can access them.
In essence, using a further metaphor, imagine you are in ancient Egypt, and
you must use all the tricks (secret tunnels, deceptive writing, walled rooms,
and passages that lead off course) so that no thief inside the Pyramid can
access the tomb of Pharaoh and loot all the gold. Think, for example, of the
incredibly famous tomb of Pharaoh Tutankhamun. Only the coffin
containing the mummy, made of solid gold, given the value of the same to
the ounce, in correspondence of its weight, is worth about $40 million.
Now, this priceless treasure is in the Cairo Museum and the funeral mask of
the deceased young ruler, priceless artifacts found along with other precious
objects and furnishings. If this unique patrimony in the world, not only for
its economic value but also for its historical value, had not been found in
1922 by the English archaeologist Howard Carter but by one of the many
grave robbers, it would have been lost and would not be admired by the
whole of humanity.
Chapter 10: How To Choose The
Best Cryptocurrencies For Short-
Term And Long-Term Bets?
Investing may be defined as putting a certain amount of money in a
business, commodity, or asset with the hope of getting returns from it when
it appreciates. Typically, investing could be short-term or long-term.
Short-term investments run for a very little span; it could be between a few
minutes, days, or weeks. A short-term trader doesn’t hold positions longer
than weeks before making a profit. However, long-term investments require
the investor to buy a certain cryptocurrency and hold it for longer periods;
typically, I define long-term investments as investments that run for 6
months and above. Of course, you could hold a coin for a lifetime if you
want. There is no wrong approach to trading cryptocurrency, whether short-
term or long-term. If you want, you can combine both approaches, and
you’d be successful in trading cryptocurrency. Short-Term Investment
(Trading)
Short-term investment, otherwise called trading, is a way to get profitable
returns on crypto assets. It involves buying a coin and monitoring the coin
for only a very short span. It could be a few minutes, hours, days, or
sometimes a few weeks.

Categories of Short-Term Traders

There are 3 main categories of short-term traders. They are:

Scalpers: Traders who hold positions for a few minutes. They

intend to make short quick profits throughout several trades before
the day runs out. A very good scalper could make $5 on a hundred
 trades in a single day. Scalpers rely on the volatility of the market
to make short, quick profits before getting out quickly.
Day traders: Day traders also do not hold positions for long
periods, but they hold positions longer than scalpers. A day trader
may not close positions within minutes but will typically close all
positions before the end of the day.
Swing traders: Swing traders hold positions for days or even
weeks and do not have to monitor charts all day long, as day traders
or scalpers do. With sound knowledge of Technical Analysis, swing
traders utilize good risk management to ensure they do not rest.

Unlike swing trading, scalping and day trading are regarded as very short-
term trading. The idea is to sell your commodity in seconds, minutes, or
hours before the end of the day in the hope of making a small but fast
profit; this may also be regarded as “aggressive trading.” Why is this so?
Since you’re taking more chances in the hopes of making more money, any
investment necessitates a continuous balance and trade-off between risk and
return; therefore, you would take more chances to gain a higher return.
When attempting to make money in the short term, you must also be
prepared to lose your investment (and possibly more!) in that period,
especially in a volatile market, such as cryptocurrencies. It is a common
belief that all active traders are day traders by definition, but this is not the
case. The word “day trading” comes from conventional markets, where
trading is only permitted at certain hours of the day. As a result, when
trading is suspended in such markets, day traders never remain in positions
overnight. Most digital currency exchange sites are available 24 hours a
day, 365 days a year. So, day trading is seen differently when it comes to
the crypto markets. It usually refers to a short-term trading style in which
traders join and leave positions 24 hours or less.
Scalpers and day traders commonly use price action and technical research
to generate trading ideas. Furthermore, they can use various other strategies
to identify business inefficiencies. Aggressive trading of cryptocurrencies
can be very lucrative for others, but it can also be extremely frustrating,
challenging, and risky. As a result, it is only recommended for more
experienced traders.
Another well-known technique is “map analysis;” this is where traders
study a certain cryptocurrency market action and attempt to predict which
direction will go based on earlier price movements. It is important to
remember that short-term trading is risky, and traders must learn to accept
losses in good faith, with the mindset of “I win some days, I lose some
days.”
Successful day traders would have a thorough knowledge of the industry
and substantial experience. Day traders commonly use technical analysis
(T.A.) to generate trade ideas. To define entry and exit points for trades,
they can typically use length, market movement, chart trends, and technical
indicators. Risk management is important for day trading performance, just
as it is for every trading approach. Day traders will not be concerned with
fundamental research, and actual events may take a long time to play out
(F.A.). Nonetheless, several day traders base their policy on “trading the
papers.” This entails locating assets with high volume due to a recent report
or piece of news and capitalizing on the sudden increase in trading interest.
Short-term traders aim to benefit from market fluctuations and volatility. As
a result, volume and liquidity are critical components of day trading. After
all, day traders need adequate liquidity to conduct swift trades. This is
particularly valid when it comes to getting out of a trade. A significant
slippage on a single deal may have a crippling effect on a day trader’s
trading account. As a result, day traders usually exchange liquid stock pairs.
Any day traders will only exchange one market pair, for example,
BTC/USDT. Others may make a watch list based on technological or
fundamental characteristics (or both) and then select which instrument to
exchange from that list.

Long-Term Investment
Long-term investing, also known as position trading, is a trading strategy in
which a trader holds a position for an extended period. A role exchange can
range from a few weeks to several years. Many long-term traders rely
heavily on fundamental analysis because they are primarily concerned with
the market’s prospects. They are less concerned with intraday fluctuations
and instead concentrate on the fundamental factors that drive long-term
trends. Long-term traders can typically analyze regular, weekly, and even
monthly charts because of their longer-term outlook. Long-term trading
strategies are effective for many forex traders. Long-term Forex trading,
also known as “big picture” trading, entails holding a deal for a long time
while considering all the variables influencing a currency pair.
One long-term position may be more competitive than many short-term
positions with the right planning and execution. The word “long term”
applies to trades that can last days, weeks, months, or even a year when it
comes to a forex strategy. Since it involves holding a single position for an
extended period, this practice is often referred to as positional trading.
Long-term trading strategies may be profitable, but they are generally best
suited to those willing to be patient and forego the thrills of short-term
trading. Leverage (controlling a large sum of money with just a small
amount of your own money and borrowing the rest) is a crucial weapon in a
forex trader’s arsenal. While the greater the leverage, the greater the
possible benefit, it may also function in the opposite direction, resulting in
significant losses. More leverage can be beneficial in a short-term trade
where positions are limited. However, the increased pips involved in a long-
term role mean that high leverage can be disastrous if the trade goes wrong.
As a result, in long-term trading strategies, high leverage is neither
desirable nor required.
No long-term place has to last weeks or months. When several short-term
trades last just a few minutes, a position kept for more than a day can be
considered long-term. Swing trading is a forex strategy that can be used for
a day or a few days. Swing trading entails holding a position for several
days, watching market fluctuations, and exiting on an upward trend. This
approach is perfect for a trader who does not want to trade all day but can
track the market once a day and keep their cool before acting. Short-term
day trades seldom produce better returns than waiting for a swing that lasts
a few days. Buying or selling an asset over a brief period, such as seconds
or minutes, is known as day trading. A trader can make a sale if the market
price increases and benefits from it. All positions (purchase or sale) are
opened and closed on the same day when day trading.
On the other hand, long-term investing entails purchasing or selling security
and keeping it for months or years. Traders keep their shares and benefit
from selling them at a profit when the share price moves in their favor. A
day trader’s decision-making process differs significantly from a long-term
trader's; each approach necessitates different skills and personality traits.
The main distinction is that day trading necessitates more focus during the
day, while trading necessitates more supervision and long-term patience.
The stock market is where most long-term investing takes place. Futures
aren’t suitable for long-term trades because they have an end date.
Thousands of stocks and exchange-traded funds (ETFs) are available.
Currency ETFs can be used to trade futures and currencies over the long
term if you’re interested in currency trading but don’t have the capital to
day trade. Long-term trading strategies can be very profitable. They
necessitate a very different approach to short-term trading and come with
their own set of challenges and rewards. A calculated approach will benefit
a trader who is willing to forego the thrilling and fast-paced essence of
short-term day trading. Taking a step back and researching the various
factors that influence a country’s currency fluctuations will greatly enhance
one’s overall trading abilities. Understanding and recognizing patterns
based on economic, social, and political factors would lead to a thorough
understanding of the foreign currency market as a whole.
Certain personality styles may be better suited to long-term trading than
others, but if a trader believes they will succeed in this manner, they will be
rewarded handsomely. However, due to the often unpredictable and ever-
changing existence of the global currency markets, any form of forex
trading carries risks. Therefore, a trader must be sure to take the necessary
precautions to mitigate risk and maximize their chances of success.
Chapter 11: How Much To Invest?
If you invested in cryptocurrencies between 2017 and 2021, you are a
fourth-generation investor in the cryptocurrency market. If you have
purchased your cryptocurrency within 2018 or 2019, you have bought into a
bear market—one controlled by sellers rather than buyers. This is a good
strategy for long-term returns but not for short-term returns (unless you are
intentionally shorting the market).
It is a psychological struggle to buy long positions during a bear market, as
the price is likely to decrease for some time after you have made a
purchase. An investor is faced with a black-box problem regarding when
the price will stop dropping. No one can predict the lowest price and when
the market will start rising in value again. This only becomes clear after the
event, by which time it is, of course, too late to purchase at the ideal price.
The best solution to this problem is to use ‘dollar-cost-averaging.’ You start
by making an initial purchase at any price low enough to feel comfortable.
You then purchase more of the asset as the price decreases. Suppose your
purchase does not use any advantage. In that case, you can sleep at night
knowing that no matter how far the price decreases, you are only getting a
better price to enter another position to average down your investment.
There is no risk to your positions purchased at higher prices. When the
market recovers and shows considerable gains, you can decide when to take
profit and repeat the process, if necessary.
As we have already seen, the market cycle of bitcoin (and therefore of the
entire cryptocurrency market) is related to its splitting process in 2 and lasts
about four years. The bull market generally lasts around 3 years, during
which the price increases exponentially in its final movements.
A bear market follows this for around one year, during which the price
decreases by around 80% before starting to climb again. These dramatic
fluctuations can lead the uninformed investor to think that cryptocurrencies
are a risky investment. If bought in the late stages of the bull market,
investors tend to think of 80% losses. However, they forget that it is only a
realized loss if the cryptocurrency is sold—it doesn't even have to be a loss
if you are patient and employ the correct investment strategy. Unlike other
investments, it is usually better to stay in the market no matter what the
price does by trusting the fundamentals of strong cryptocurrency projects
due to the unique properties of this asset class.
When investors do sell out of fear, they forget about the growth that easily
exceeds that of any other asset class in the world. This is not hyperbole.
Bitcoin was up 150,000,000% at its all-time-high of $20,000. No other
investment in history has delivered this kind of return or anything like it.
Effectively, ill-advised investors focus too much on the price and neglect
the fundamentals that are the true indications of probable future profit.
Bitcoin has the longest history of any cryptocurrency and is by far the
largest cryptocurrency in terms of capital, so I will use it to demonstrate the
generational effect of the cryptocurrency market.

1st Generation (2008–2011) $0.001–$1

First-generation investors are generally young, technologically
sophisticated individuals who are unlikely to be motivated by profit.
Ironically, these individuals are now the wealthiest investors involved in the
cryptocurrency space. The early adopters of bitcoin are likely to have been
politically and socially motivated to create a new form of currency that
avoided all the problems associated with traditional fiat currency (which
were exposed all too clearly by the 2008 financial crash).

2nd Generation (2011–2013) $1–$100

After the growth of bitcoin to $1 (a 100,000% increase), the price fluctuated
significantly and took a further 2 years to rise to $100. Around this time, the
second generation of investors became involved. These were more focused
on profit and speculated on the price of bitcoin intending to generate
additional fiat currency from their trading. Numerous exchanges were
established (some better and longer-lasting than others), and the market
started to become much more liquid as the number of individuals trading
bitcoin (and, as a direct result, the number of bitcoin available to trade)
increased. Because of its pseudo-anonymity, the media started to run stories
of bitcoin being used for illegal and morally dubious transactions on
websites, such as Silk Road. This is ironic given that every single crime in
history up to this point in time had used fiat currencies and the traditional
means of exchanging value anonymously: physical cash!
3rd Generation (2013–2017) $100–$20000
With the most significant price rises (to call it a volatile market would be a
significant understatement), the mainstream media and institutions started
to notice bitcoin (along with other cryptocurrencies) and refer to its extreme
price movements. Most of this attention was overwhelmingly negative
regarding the adoption and use of cryptocurrencies. As the price rose,
mainstream financial pundits were asked their opinion of cryptocurrencies,
and very few of them had anything positive to say.
Despite large institutions, banks, and traditional investors knocking bitcoin,
retail investors continued to buy, pushing the price above $10,000 for the
first time. By this point, bitcoin had become a popular talking point, and
practically everyone who could afford to started to pay attention and invest.
Suddenly, bitcoin was everywhere and had gained a level of validity among
a subset of investors that very few investments ever achieve. A little over
one month after breaking higher than $10,000, the price started to drop
severely.
Ironically, bitcoin was being watched (and purchased!) the most when it
was most likely to fall in value. Opinions were polarized. Some investors
were intensely supportive of bitcoin, whereas others were hypercritical and
derogatory. When the price rose massively, bitcoin investors celebrated and
attacked the detractors. When the price fell, exactly the opposite happened.
You were either for bitcoin or against it, with both sides being highly
disparaging about the other. This left the uninformed investor extremely
confused about whether bitcoin was a glorious investment opportunity or a
huge criminal bubble about to burst.

4th Generation (2017–2021)

The number of people who have heard about bitcoin has reached an all-time
high—even if most opinions are based on myth and rumor rather than facts.
The number of people who have invested in bitcoin or have a bitcoin wallet
is also at an all-time high. Bitcoin and other cryptocurrencies have never
been more accessible, and larger financial institutions' interest has never
been higher.
Because of the price action and subsequent sell-off, the number of
interested parties willing to expose capital to the market is also high, though
paradoxically not as high as when bitcoin rose above $10,000 for the first
time. As of the start of 2020, there are businesses and infrastructure in place
to purchase goods using bitcoin and other cryptocurrencies, involving either
instant conversions to cash (via a bitcoin cash machine) or a debit card
service, such as Revolution.
In 2019, a movement by Intercontinental Exchange (owner of the New York
Stock Exchange, alongside 22 other mainstream markets) launched the
words first SEC-approved cryptocurrency futures exchange called Bakkt, its
declared aim being “to expand access to the global economy by building
trust in and unlocking the value of digital assets.” This capital will almost
exclusively be used to purchase bitcoin, ether, and ripple, causing the prices
of these assets to increase dramatically as the market expands through
institutional investors for the first time.
The number of investors interested in the cryptocurrency market has
increased the liquidity so much that anyone can confidently buy and sell
bitcoin, ether, and ripple without any issues. Furthermore, with the
development of cryptocurrency synthetics, such as CFDs (Contracts for
Difference), it is now easier than ever to speculate on the price of
cryptocurrencies without owning any coins or even setting up a
cryptocurrency wallet. This arrangement suits investors who are not
concerned about the long-term security of their investment when trading
through synthetic investments (refer to page 39 for more details).
This situation is highly attractive to institutional investors who want to
make short-term trades without physically trading the underlying asset
(which can result in liquidity issues, slippage, insurance, and other costs
they'd prefer to avoid). However, due to economic uncertainty, investors
hold and trade the genuine asset and keep their cryptocurrency holdings
when the inevitable global economic recession occurs. After all, synthetic
contracts rely on the company behind the contract remaining operational,
which may not be the case during a global economic recession or another
currency, debt, or fractional reserve crisis.
The future looks brighter than ever for cryptocurrencies that solve real-
world problems, have a large amount of fundamental support, and are now
backed by major institutions that can see and exploit their potential. Bitcoin,
ether, and XRP are likely to remain the most valuable cryptocurrencies for
the near future. They present knowledgeable and proactive investors with
an opportunity to avoid (and profit from) all the issues facing fiat currencies
which are likely, at some point, to cause another severe economic crash of
mainstream markets and products.
Chapter 12: Analysts' Expectations
For The Crypto Market In The
Next Decade
What is the future of cryptocurrencies? Within this space, it's the age-old
question. It's also why investing in cryptos has such a high level of risk and
volatility due to the absence of a clear answer. While prognosticators
anticipate a plethora of possible outcomes, the only thing that is certain is
that bitcoin is dependent on the blockchain. It depends not only on the
growth of the blockchain but also on the necessity to incorporate
specialized cryptos in order to provide its service. However, there is a
universe where sophisticated cryptography isn't required. That world could
appear in fifty years, five years, or never at all. There's no way of knowing.

The Evolution to Come

Many have compared the current condition of the blockchain to the dot-com
boom of the 1990s. Given the current status of the blockchain, that may be
a little premature. It's closer to the garage stage of development than the
Silicon Valley level of acceptability in terms of utilization and viable
businesses. However, the blockchain has been dubbed a "foundational
technology," implying that it would not only disrupt the internet but will
also build new platforms and applications that the world has yet to
envisage.
What does this mean for bitcoin and other cryptocurrencies? It all relies on
how tightly cryptos are tied to the blockchain. It's important to realize that
while cryptocurrencies rely on the blockchain, the blockchain itself does not
require cryptocurrencies—or even its own cryptocurrency—in order to
work. The continual rise of cryptocurrencies as the constant currency within
the blockchain will determine whether they progress beyond this early
phase, where the coins act as the primary entrance point for investors and
enthusiasts. The worst-case scenario for people investing in
cryptocurrencies is for a government to create crypto that becomes the
industry standard, as this suggests that the blockchain gamble, while
exemplary, did not result in crypto wealth.
It's also a less likely situation today, given that blockchain founders appear
to be enticed by the cryptocurrency funding model, which allows them to
obtain funds without handing over control of their company to a venture
capital firm.

Testing It Out

Businesses and governments are primarily just dipping their toes into the
blockchain ecosystem at this stage. Financial institutions are experimenting
with blockchain technology to see if it can handle cross-border transactions.
Countries like Estonia are considering the use of blockchain to securely
store information for various government organizations, where it serves as a
hacker-proof digital storage file that is available 24 hours a day, seven days
a week. The blockchain has been considered by hospitals as a means of
securely storing medical records. This could theoretically be modified such
that each person has their own living health record on a blockchain that
doctors can access, providing them access to the patient's whole medical
history in one place. These use cases have a lot of potential, but they haven't
yet been shown to be successful. And they haven't created any viable
enterprises to date.
Look for clear winners and losers to emerge from all of this testing in the
future, similar to how Apple and Microsoft split from the rest of the
computer companies back in the day, or how Google became the leading
search engine or Facebook the dominating social media organization. The
application of cryptocurrencies in these breaks will be determined by the
company strategy, technology, and specific use case.

Blockchain is Everywhere
The early adoption of blockchain and cloud computing share certain
commonalities. Companies wanted to market their use of cloud computing
as it became a more powerful tool for storing large blocks of data, but most
people didn't understand what a company meant when it said it would store
your information "in the cloud." It became more of a buzzword, adding a lot
of distractions to cloud computing, and some companies were just
marketing services as a type of quasi-cloud storage, even if it had very little
to do with storing information on independent servers.
Don't be shocked if you see more companies promoting the blockchain
concept when the technology or use case has nothing to do with the
blockchain. The idea of the blockchain has become a widespread
phenomenon as a result of the success of cryptocurrencies, even if
understanding of the blockchain remains quite a niche. While more people
will presumably become familiar with this type of platform, don't be tricked
into thinking that more mentions of the blockchain would result in a higher
valuation for your coin, as many of these discussions may be superficial.
Consumers will eventually recognize when they are adopting existing
blockchain technology, just as they have with the cloud. Similarly, with
Amazon and Google in the consumer cloud market, a few companies will
most likely step into the mainstream as the dominant suppliers.

Expect a Bursting Bubble

Valuations among this early set of creators will rise as technology advances,
and new companies emerge that find momentum in the broader market.
Many of these companies will become unicorns or startups valued at $1
billion or more if this technology has the legs that some believe it does.
Some will be sold to much larger firms for millions to billions of dollars in
initial public offerings, while others will be sold for millions to billions of
dollars in sales to much larger firms. The price of blockchain companies
will eventually reach unsustainable levels as belief in the technology
reaches peaks similar to those observed in the cryptocurrency industry. The
market will fall back once the euphoria hits these levels, similar to how the
tech bubble burst in the late 1990s and early 2000s.
Optimism has led the crypto market since its mainstream entry, but that's to
be anticipated. Rarely, if ever, is investing in a new tool and technology as
simple as this. However, it will take even more enthusiasm to reach the
heights to which many people believe it can soar. This will inevitably lead
to a downturn, but in a booming industry, this is to be expected.
The blockchain will not be extinguished as a result of this. Instead, it will
distinguish between legitimate enterprises and weaker businesses. A culling
of the fat, like the introduction of a large number of cryptocurrencies, isn't
always a terrible thing. It will cause some suffering in the short term, but
the blockchain world will be a better place as a result. It is hoped that it
would help bring stability to the crypto markets.

How Technology Needs to Develop

There are a few difficulties that firms are attempting to resolve in order for
cryptocurrencies to have a seat at the table as the blockchain continues to
advance. These characteristics will be critical for the development of
cryptos. While solutions have already emerged, if individual
cryptocurrencies are to continue to function as the primary tools for
transacting on the blockchain, numerous rounds of repairs will be required
before they are set in stone.

Cryptocurrency Scaling

There is a massive issue with scale, which refers to the ability of a

cryptocurrency to grow in size without sacrificing transaction speed or
liquidity. Bitcoin and ether, the most popular cryptos, only process a few
transactions per second. It poses a significant difficulty for cryptos, as they
must compete with conventional processors in order to become more
widespread. Visa is capable of processing over 55,000 transactions per
second, but on average, only handles about 2,000. Even though it may go
considerably faster, PayPal averages roughly 200 transactions per second. If
cryptocurrencies want to compete for the types of customers that Visa,
Mastercard, PayPal, and others cater to, they will have to address this issue
head-on.
Privacy of Using the Coins
The transactional history of Bitcoin is stored on the blockchain, ready to be
downloaded by anyone who wants to look at it. There is nothing that
precludes someone from following a coin's spending history (even if it
would be challenging to do). It's one of the reasons why businesses are
afraid to use the coin on a larger scale, among other things. Instead, if a
company accepts bitcoins, the coins are usually cashed out right away. This
not only locks in a set price, but also inhibits them from spending bitcoin
for other purposes, such as purchasing company supplies. Why wouldn't
they want to do that using bitcoin?
Even if it takes time to identify the person or entity making the purchase,
most businesses do not desire a public record of all of their transactions.
The larger the company, with more competitors, investors, followers,
critics, and journalists, the more it will want to keep practically all of its
transactions hidden as much as possible. They will not want to trade on a
public blockchain.
Ethereum has taken moves to make transactions more private, which will
encourage commercial clients to adopt it more. Other cryptos have also
implemented more secure options. But, with these remote possibilities,
these coins will have to combat the acceptance of the currencies for more
sinister purposes, including on the black market. The more private these
coins become, the more probable they will be adopted by a criminal
subculture. The purpose is to establish a secure environment for privacy.

They Must Overcome Threats from the Government

Cryptocurrencies piqued the interest of anti-government activists because

they offered an alternative to fiat currency, which is controlled by a central
bank. For the general public, however, having the dollar as the principal
means of conducting business or transacting has appeal. It's simple:
knowing the money is secure, functional, and not in danger of becoming
obsolete is comforting.
For all of these cryptocurrencies to exist, they must continue to offer a
benefit that the fiat currency cannot match. That benefit is currently the use
of the currency in the digital realm. However, if a significant fiat currency,
such as the US dollar, wanted to create a cryptocurrency version of itself,
there's no reason why it wouldn't become the most widely accepted
cryptocurrency. Companies would seek blockchain companies to provide
solutions that would allow them to accept the dollar cryptocurrency. And if
the dollar crypto gained enough traction, it would swiftly become the most
widely acknowledged cryptocurrency.
It's unlikely that blockchain companies would embrace it right now, given
that cryptocurrency has been the source of the majority of their profits in
the industry thus far. However, if blockchain companies grow to be billion-
dollar corporations, this could alter. The value of the company will then
appear to be as appealing — if not more so — than the specific
cryptocurrency. Would they accede to these demands? It's entirely plausible,
which is why these cryptos will need to continue changing, adapting, and
growing to compete with fiat currencies. Acceptance by the general public
is a big part of it. The other aspect has to do with technological
advancements.

Legal Clarity Will Help

In the crypto market, trading the news isn't a profitable strategy, but it's
understandable why investors are concerned when another government
takes a hard stance against cryptocurrency. With such a new industry, there's
no guarantee that this technology will continue, which makes an investor
worried if another government decides it's not a solution that should be
allowed to thrive within the country's borders. From a mainstream
standpoint, the development of regulations around cryptocurrencies—with a
clear definition of what is and isn't legal—will undoubtedly result in a
higher capacity to trust the tools.
If, on the other hand, regulations continue to change according to the whims
of particular leaders, cryptocurrencies will struggle to gain traction since
another restrictive law will suffocate any upward momentum. These
guidelines are constantly being developed, and none have been put in stone.
Hopefully, some clarity will emerge shortly.
Smart Safety Measures

As a believer in cryptos and a coin investor, what you want to see from a
legal aspect are measures that make trading and transacting with the coins
considerably safer. Restrictions on exchanges and developers to encourage
more robust security will enable for better understanding, study, and
implementation of the currency. For this reason, you do not want to
discourage legal limitations on currencies. You only want the constraints to
do with securing your investment rather than completely restricting it.

Options for All

Currently, cryptocurrencies are only used in a few fields. It's all about
spending bitcoin for mainstream people. Ethereum, Ripple, Stellar, or
another up-and-coming altcoin may be used by businesses, depending on
their goals. For the time being, Ripple is attracting banks, while Ethereum
appears to be a viable development alternative. Despite this, there hasn't
been a cryptocurrency that can be used for all of these uses. It's also why, in
terms of both valuation and technology, no single cryptocurrency stands
out. (Keep in mind that bitcoin is the technology underpinning many of the
altcoins that were created to improve on the original idea.)
Whether or whether one cryptocurrency will one day stand out from the
crowd will be determined by how adaptable it is to various situations,
technology (such as blockchains), and goals.

What Happens If This Currency Is Created?

Let's pretend that one coin is the only one in the market. Ultimatecoin has
become the recognized coin for all blockchain companies, mainstream
users, and businesses and is dubbed ultimatecoin. It's the only one who has
made it. While this situation may appear far-fetched at this time, it is
possible.
If this happens, ultimatecoin will trade like other fiat currencies, with tiny
fluctuations over time influenced by inflation or demand, depending on
whether the coin has a maximum quantity of coins available.
If you buy in this form of cryptocurrency early on, you will be rewarded
handsomely, as it will have to gain considerable value before reaching this
level. Aside from that, it won't be a fascinating investment because once it
reaches a level of consistency, it won't move much.

What Happens If There Isn't Any Such Currency?

By looking at the current market, you may argue that this appears to be the
most probable situation. Instead, crypto coins will become more like
equities in that they will be solid coinage with a documented track record.
Meanwhile, new coins will emerge with legitimate purposes and use-cases,
addressing issues that the current market is unable to address.
As they'll be dependent on a high level of adoption in this situation, these
coins will continue to offer fluctuating returns. Even if the acceptance is
granted, the market will be divided, with daily volatility that will frighten
some investors. However, you may picture a few coins demonstrating
constancy in this situation, indicating that they will be the portfolio's
stalwarts, while others opt to bet on newer names.
The good news is that as the market develops in this direction, the use of
phony ICOs will decrease. Weak coins or technology will not mislead the
market as readily, especially when best practices emerge, and organizations
adjust to filter out unscrupulous players before they acquire popularity.

If the Funds Have Been Approved

It's not as if you'd want to leap into the market right away if your finances
were approved. To be sure the funds are worth the money; you'll want to
look at a few details about them first. These would include the following:
• Fees: You don't want overly high fees to eat up all of your gains.
• Cryptocurrencies: What does the ETF or index fund invest in? You
want to be able to access a large portion of the crypto market.
• Active management: Who makes the decisions on where the money is
spent? An index fund connected to the scale of the crypto industry is a
 better bet.
It's crucial to keep in mind that just because you have access to a fund like
this doesn't mean you're diversified. Because so many coins trade alongside
bitcoin, there's little proof that the crypto ecosystem is diverse. Instead,
you've increased your exposure to a more considerable number of names in
the crypto market, capturing those that begin to rise or break through the
bitcoin ceiling.
If the crypto market becomes more prominent, the SEC may be forced to
accept these funds in the future. It helps that more traditional financial
businesses are showing interest, but whether the government will start to
take the market seriously is still unknown.
The Long-term Hope

The reason you put your additional investing cash into cryptocurrencies is
to see where they go from here. The options are still wide open. Could they
become a global currency that can be used to transact in financial markets
all over the world? Will they be consigned to the outskirts of the digital
marketplace, staying a specialized purchasing tool? The most likely
scenario is somewhere in the middle.
However, you want to see those transaction rates increase. The most
incredible comfort—and eventual stability—in the marketplace will come
from seeing organizations really use the tools to do big-sized business,
which will lessen the volatility of your investment. It will also lead to rises
that aren't inconsistent or bubble-like but rather reflect a long-term value in
the purpose and technology that reflects the digital age's evolution.
And what if it does become the world's global currency? You'll be glad you
were able to get in when you did.
Chapter 13: Debunking Myths
About Cryptocurrency
1: Blockchain Is a Decentralized Ledger That Can Split Itself
from Bitcoin
Depending on who you talk to will depend on whether you hear that Bitcoin
is a currency that failed. Following that line, they will conclude that
blockchain is isolated and can be rebuilt onto a decentralized transaction
system. Sadly, this is nothing but a myth.
Reality shows us that blockchain is a system that is already strongly
decentralized. This is due to Bitcoin's encryption through its algorithms and
the protocols established in the network to determine how a miner should
validate its transactions.
Like Bitcoin, the other systems out there, like Ethereum, are developing
their own type of blockchain. But as of this moment, Bitcoin is the only
truly decentralized system and does not require someone to supervise it like
other systems.
2: Thousands or Tens of Thousands of Merchants Use Bitcoin
While this would be amazing! This is not true. In fact, very few merchants
out there accept Bitcoins for payment. Somewhere around 8% of the
currency on Bitcoin is used for nothing more than speculative hoarding. If a
merchant allows you to pay with Bitcoin, they will be allowing you to use
them in a facility that is their partner so that they can turn that Bitcoin into
actual dollars they can use to buy the things that they need to keep their
business running. However, in doing this, any risks and fees will be placed
on you rather than the merchant.
The few merchants that are accepting Bitcoins as payment will have to
check how it works to see if it is going to work for them. But they are
mostly doing it to get more exposure through the media and thus get more
customers into their stores.
3: Bitcoin Transactions Are Processed in Real-
Time Like Many Banks Process Their
Transactions
Wrong! There is a ten-minute delay between when transactions are
processed on the blockchain. So ultimately, less than 2 transactions are done
per second with Bitcoin.
4: The Transactions Done on Bitcoin Are “Nearly
Free”
Again, this is a mistake. There is a processing fee involved in using Bitcoin,
but it is not charged to users or merchants. Those who use Bitcoin to mine
will be processing the transactions that they are making, along with about
99% of their revenue going to come from when they are mining new
Bitcoins. Thus, this will keep going up until around 21 million Bitcoins are
mined, which is estimated to happen sometime around 2140. But, after that,
no set plan will tell people what the transaction costs are going to be.
Those processed transactions are rewarded minimally through the network
via small amounts of Bitcoins. This represents the actual revenue that a
miner receives. Most miner rewards will justify the high investment and
operation costs that it takes for mining. The purpose is to have the cost of
the transaction take the total cost for mining into account so that no one is
getting left out. Exchange commissions add up all the costs, and soon there
will not be negligible costs on the system.

5: Bitcoin Is More Secure Than Other Currencies

Bitcoin indeed holds a high resilience to any attack it might suffer. But it is
just like most other transaction systems that will have breaches in security
due to human error or fraud.
In 2015 alone, there were:

$387 million in fraud by clients that vanished from a Bitcoin

exchange in Hong Kong.
Thanks to a phishing attack, $2 million in Bitcoin were lost.
 The Bitcoin exchange in Canada was shut down because
someone compromised their database.
And trading was temporarily suspended because a wallet in
operation compromised the entire system.

6: The Ecosystem for Bitcoin Is Decentralized

The mining pools for Bitcoin have increased some. At least one of the top 4
Bitcoin mining pools in their Bitcoin exchange is in China. The larger
mining farms will artificially limit themselves so that democracy does not
show any favoritism in the system. But those that work with smaller mining
pools are being driven out of business by the larger ones. It is like any other
system; the bigger you are, the more money you can spend, and thus you
will end up controlling the market.
One of the reasons behind this dominance is that the Bitcoins generated
through mining become harder because the number of Bitcoins in the
system has increased. And, the larger mining farms have all the money that
is necessary to invest and operate and keep operating while other ones are
being shut down because of how high the costs are.
A few opaque players are controlling Bitcoin, which allows them to modify
the transaction rules, thus making it harder for others to enter investments
because they cannot keep up with the ever-changing protocols. Think of it
as the schoolyard bully who is losing in a game; however, he keeps
changing the rules because he does not want to show that he is losing, so
the rules always end up getting changed so that the bully wins and you lose.
It does not seem fair, but you will not argue with the bully because they are
bigger and can hurt you.

7: Bitcoin Is Nothing More Than Idealistic and Is

Non-Profit
Millions of dollars have gone into investments with Bitcoin. Somewhere
around $5 billion has already cumulated into the Bitcoin currency to get it
up and running for others to use. Along with that, other billions of dollars
are being invested in exchanges, Bitcoin wallets, and the operation of
miners.
Just a few examples are:
 $50 million has been invested in a startup called Circle by
Goldman Sachs
VC in Silicon Valley has raised $116 million for a stealth mode
to be placed on Bitcoin.
The Coinbase program has raised around $100 million for
Bitcoin to use for operations.

8: Blockchain Is Secure
Some features are put into place to write data because of the proof of work
needed for blockchain. Blocks have to be added to the chain. Then, the
transactions have to be validated and placed on that block before any repeat
calculations are made so that numbers can be located; that makes your
block accepted by blockchain and usable by other users. Plus, it will be
expensive if you are going to try your own subversive chain.
Private Blockchains will have mechanisms that will replace the need for
proof of work so that there is a limit to the ability that others must subvert
the chain you create. In other words, block validators are going to be
created.
However, rules will end up making sure that the blocks are specified for
what must be signed in the list of signatories. The list must be limited by
ensuring that entries take turns writing the blocks so that there is enough for
everyone. Bad behavior will be discouraged and limited thanks to this
round-robin style of work.

9: Blockchains Are Encrypted

Several different cryptographic methods are used with Bitcoin and the data
that is encrypted and stored on the blockchain. Because of this, many
people believe that all the data that is stored on the blockchain is encrypted;
however, this is not true.
Most of the data on the blockchain is unencrypted, being that the data will
need to be validated by the nodes. So, you can look at all the transaction
data that is on the blockchain servers. But, the biggest problem with the
encryption of data is going to be that the nodes cannot validate it because
the nodes are not going to be able to unencrypt the data and see what they
are supposed to be validating.
While using a private chain, the nodes will be able to be decrypted using
decryption keys. If you are doing this, you will need to think out why you
are encrypting the data in the first place. Research with cryptography is
constantly revealing solutions that will show the data without underlying
data, which are zero-knowledge proofs. When looking at this technology,
you will realize that it is not fully mature yet.
Privacy is important to everyone, but what should you encrypt about
blockchain? Should you encrypt data that is in motion? Data at rest? Or
should you encrypt the entire database? Then, when it is encrypted, who
will have access to the data? When is it going to be decrypted? Can
someone’s permission to the data be revoked?
Data management is crucial to the security of the data on the server. When
the data is freely shared between 2 different parties, it will be even more
crucial. So, carefully consider the security of the data that is in the
blockchain solution so that what needs to be protected is protected while
still getting it validated by the nodes.
Chapter 13: How To Generate
Income From Cryptocurrency?
You know about investing in crypto-currencies to try to generate capital
gains on your investments. However, unlike a normal asset, crypto assets
have the characteristics of a currency (exchangeable, storable, and
benchmark values).
Did you know that cryptocurrencies can earn your passive income? Indeed,
thanks to cryptocurrencies, you can make money investments in order to
collect capital gains. Admittedly, the latter have characteristics which differ
slightly from those of fiat currencies. Nonetheless, they agree with them
when it comes to profit-making. For this reason, there are a good number of
methods for making ends meet. Among these are:

Mining
This may be the first time you've heard of mining. Be aware, however, that
this is the best-known way to profit from cryptocurrency. Indeed, mining
works by means of a blockchain network. Thus, after the transactions, the
miners secure the network. But first, blockchain transactions are confirmed
using mathematical calculations.
Although this is not the only method, it is quite common for bitcoin to be
used for mining. In addition to this motto, there is also the Ether, the
cryptomonnaie of Ethereum, that works very well with this protocol.
During the operation, the minor pays himself for his work. For this, he tries
to create new coins or tokens by securing the POW network, also called
Proof-Of-Work. This is why you must have an idea of the progress of
halving the cryptomonnaie. Only then will you be able to assess the profit
(in coins), as the progress of the halving will determine the number of coins
distributed.
With your own machine
Before you start mining, you must have a computer with a graphics card
(GPU) or processor (CPU). Also, choosing one or the other will depend on
the currency you want to mine.
Indeed, there are different types of Blockchain. First, they do not all have
the same value. In addition, their operations differ. So, you need to be more
vigilant and check the type of Blockchain you are about to use.
One thing for sure is to have a powerful machine when you want to mine.
But the incidental costs that this could generate are quite another. As the
machine operates on electricity, you must also add up its costs among those
incurred. It is only after deducting the total expenses incurred that you will
be able to assess the amount of your return (ROI).
With the races between manufacturers for the design of more powerful
equipment, the recent machines are more greedy than the old ones. Thus,
the more powerful a machine, the more energy it consumes. In addition,
machines very quickly become obsolete, given technological innovations
every day.
Thanks to a pool of miners
The income generated by mining is neither stable nor regular. The winnings
are generated based on your participation in the pool. The pool (mining or
cooperative pool) is a group of miners allowing to combine several
computing powers. Thus, the amount of winnings is increased. At the end
of the day, the profits are distributed to the members of the "pool."
Furthermore, each person's share is proportional to their participation in the
"pool."
Masternodes
Masternodes are among the easiest methods to generate passive income.
They are mainly suitable for blockchains using the PoS (Proof-of-Stake)
protocol and its variants.
Masternodes play the same role as mining. Thus, they also make it possible
to secure the network once you have locked some of your cryptocurrencies.
This is called collateral and allows you to rebuild your Masternodes. It is
located at a strategic point on the Blockchain and serves as a means of
support for the entire network. Thus, the collateral is in the form of a
motorway network where the stake plays the role of a service station.
The master node is perceived as a toll point, reserved for a privileged few,
hence the name of the node. This node is often located on a server such as
DigitalOcean or AWS that you will find at Amazon. The important thing is
that you have a masternode that works all the time without maintaining it
regularly. The important thing is to carry out transactions. Then, you will
perceive fees varying between 5 and 20%. In fact, the profits are greater
than those generated by staking.
To see for yourself, here are two examples of annual returns via
Masternodes taken from the market:

Dash: 7.9%
Zcoin: 14.49%

However, it is not always easy to manually configure a master node. Indeed,

it requires some technical skills (Linux server requires). In addition, the
collateral is sometimes very high. In addition, the masternode has enough
similarity to investing in a cryptocurrency or an ICO. By paying attention to
some small details, it is easy to get by. You can also approach companies
that have specialized in the field for more convenience, such as feel mining.

Staking
Staking and master nodes work on the same principle. You need to own
cryptocurrency and participate in the process of securing the network. In
return, a part of these exact costs is returned to you without your having to
provide the slightest effort. But before this works, your Blockchain must be
in PoS protocol or one of its variants.
To help you understand the difference between staking and master nodes, I
share comparison by analogy.
Staking is a superior trusting to his subordinates who are the nodes of the
tasks to be fulfilled.
Masternodes (master nodes), on the other hand, are team leaders made up of
nodes. They must therefore carry out the missions entrusted to them to
develop the company. Each of the missions that they ultimately fulfill is
registered on the Blockchain.
There are exchange platforms that allow easy access to staking. These
platforms are, among others, Binance, Coinbase, Poloniex, or Coinhouse.
With such platforms, the user is no longer forced to lock his funds.
In addition to these platforms, cold wallet also allows you to effectively use
this solution. Alternatively, you can simply join a staking group. Whether
you opt for one or the other of these pools, your funds will be pooled, and
your profits will be generated evenly.
If you plan to get into master nodes, mining, or even staking, do not hesitate
to contact professionals. Otherwise, you will only have to integrate "a
pool." The latter option, in addition to presenting less risk, is easier to
implement. On the other hand, if you opt for a masternode instead, Just
Mining and Feel Mining can accompany you in the process. In addition to
accompanying you for the purchase of equipment, one or the other of the
two will accompany you for the purchase of mining equipment. You can
also get help with staking.

What are the different types of wallets?

We can consider three types of wallets:

Online Wallet
Desktop / Mobile Wallet
Cold wallet

In the rest of this guide, we will go through these three wallets and see the
advantages and disadvantages.

1). What is an Online Wallet? The online portfolios (Online Wallet) are
the easiest to use. They are accessible everywhere, and all the time, the
management of your crypto-currencies is done by a trusted third party. It
can be an exchange like Binance or a specialized platform like
Blockchain.info, for example.
The exchange offers the advantage of allowing a very high reactivity with
regard to the purchase/sale of crypto-currencies. Indeed, if your tokens or
crypto-currencies are located on an external wallet (which would not be an
exchange), you will first have to transfer your funds to exchange before you
can resell them. You will, therefore, not be able to sell quickly and
impulsively given, and you may waste time transferring your funds.
An Online Wallet is represented by a platform that stores your crypto-
currencies, so you are not the actual owner of your funds. You will not have
private keys, and you will be dependent on the site that owns your money.
If it were to close or get hacked, there is not much you could do because the
cryptocurrency universe still lacks regulations and laws on this subject. This
is why it is strongly recommended to distribute your funds over several
platforms and several supports in order to limit the risks.
In addition, we can note other drawbacks to the use of exchanges, the
transfer fees are often very high to withdraw funds, and you must respect
withdrawal limits (a maximum amount per day). Some platforms can even
block all withdrawals as long as you have not communicated your personal
information (Know Your Customer procedure), which can raise
confidentiality issues.
These platforms are therefore more recommended for short-term operations
and for small amounts.
2). What is a Desktop Wallet? The office portfolio (Desktop Wallet)
allows you to store your private key in a device that you own. The wallet
then makes it possible to interact with the corresponding Blockchain. This
system does not require providing personal information; most of the time,
you have full control over the fees relating to transfers. Here, you are the
owner of your cryptocurrencies.
These wallets still have some drawbacks. First, the medium on which your
private key is stored remains vulnerable to computer attacks. So if your
computer is hacked, your private key can be stolen by the hacker.
These wallets require precautions for use. For example, in the event of a
cryptocurrency fork, if you don't update your wallet, you may end up
sending the wrong cryptocurrencies to the wrong Blockchain.
We must also distinguish between "heavy" wallets and "light" wallets. The
first (heavy) require downloading the entire Blockchain; it can weigh
several Gigabytes but has the advantage of allowing the integrity of the
entire Blockchain to be verified. The second (light) is generally present on
mobile; they are based only on the part of the Blockchain to verify its
integrity. There is then a risk of sending funds to the wrong blocks.
We advise you to promote the use of Desktop Wallets that are Open Source
and recognized by the community. These criteria make it possible to know
if the software is reliable and if it respects the confidentiality of its users (no
misappropriation of data or other).
3). What is a Cold Wallet? A Cold Wallet can be defined as a wallet that is
not connected to the Internet network. This then gives it the most important
level of security for a wallet since what is not connected to the Internet
cannot, by definition, be hacked. There are two types of Cold Wallets, paper
papers, and hardware wallets; these two types of wallets are fundamentally
different and are not used for the same purposes.
Paper Wallet
The paper wallet can be generated offline. You then write down your public
key and your private key on a medium that you put away. This wallet can
then receive the corresponding currency without it being connected to the
Internet network. This is the safest way to keep their crypto-currencies. This
type of wallet also has the major drawback that it cannot be used to make
outgoing transfers. To do this, you must import your private key into a
wallet (desktop, mobile or web client). And by doing this, you make your
private key vulnerable to computer attacks since it is now entered in
software connected to the Internet, so we lose all interest related to security.
Thus, to overcome this problem, it would be necessary to recreate a paper
wallet for each transfer. This could quickly turn out to be extremely
restrictive.
Hardware Wallet
Hardware wallets are devices on which different private keys are encrypted
(at least one per supported crypto-currency); they are regularly compared to
digital safes. The most famous hardware wallets are the Ledger Nano S and
TREZOR wallets.
Unlike the paper wallet, these allow regular transactions to be carried out in
complete security. It is even possible to use a hardware wallet on a
computer infected with malware without it being compromised. In addition,
your crypto-currencies are not stored on the hardware wallet but on a seed
phrase (mnemonic phrase) that you will be asked to note. So even if your
digital safe is broken, lost, or stolen, you have the option of getting your
funds back. For this, you will need to import your seed phrase on another
device. The major drawback of the hardware wallet is that it requires
spending a certain amount of money, unlike all other wallet formats. Also,
note that these hardware wallets support not all crypto-currencies.
The hardware wallet is, therefore, the most secure format for users who
make regular transfers.
Chapter 14: How to Become
Successful in Cryptocurrency?
Recently, people are increasingly concerned with the importance of
investment. In the midst of the turmoil of uncertain economic conditions,
we should no longer be trapped by excessive consumptive attitudes.
Bitcoin is now one of the most popular investment instruments. The
attention of the world community is drawn to events and tips for successful
Bitcoin trading, because the value of Bitcoin continues to soar. That said,
Bitcoin trading can bring profits up to tens of millions per month.
Of course you realize that the development of technology and the
investment period are things that must be prioritized.
Of course, this has a goal so that the financial planning you plan is
successful by using investment as one of the ways.
Many also have tried but never get a profit.
You don't need to worry about this because risk and profit are things that
must be accepted and understood properly.
Successful trading requires understanding with regards to blockchain.
Learning the basics regarding Bitcoin and cryptocurrencies is the main
capital for you to be successful.
Cryptocurrency is a type of investment that uses digital currency and of
course uses the main media, namely the internet.
To be safe, there are special passwords or codes that make it not easy to
abuse. New crypto assets have grown significantly in the last 8 to 10 years.
Therefore, trying to invest should start as early as possible, even with a
small number first. By investing, the assets you currently have will have the
opportunity to increase in the future.
1. Opening a Cryptocurrency Trading Account for Beginners
Opening a trading account in cryptocurrency for beginners should also be
careful. There are several things that must be considered before choosing a
trading service.
You must first distinguish two types of cryptocurrency transactions, namely
derivative transactions (derivative markets) or selling and buying coins. The
derivative market is a futures contract product that contains the value of
bitcoin.
In cryptocurrency trading, you can also access futures brokers. However,
you are not transacting in physical products, but in the form of a derivative
market.
I suggest for those of you who are beginners to look for a trading tool that
can sell and buy coins directly. So you have the coins in digital assets.
2. Have Careful Planning for Trading
For those who have tried trading Bitcoin or other cryptos, they must have
experienced difficulties at the beginning of trading. This is due to the much
greater volatility and risk involved in crypto assets.
One important thing you need is careful planning so you don't go wrong.
You can't just use a mediocre plan and not pay attention to the long term. If
you want to be successful in Bitcoin trading, you have to pay attention to
the slightest plan so that it can be used as a lesson or goal.
Put aside the unfavorable factors like emotions and others as this can have
quite a big impact.
3. Don't Add Capital Carelessly
For example, an investor initially buys Bitcoin (BTC) with a Bitcoin value
of $3,000,000 and it drops to $2,100,000. Then, he bought BTC again and
made an average price of $2,700,000.
This strategy will only reduce the break-even point to only 29%.
Meanwhile, the percentage of profit that should be obtained is 57%.
Losing positions like this should be prevented, and not improved. So, plan
your digital currency buying strategy before you start trading!
4. Take Small Risks at the Beginning
The next Bitcoin and Crypto Trading Success Tips is to take a small risk at
the beginning.
When you just understand how it works and how to make a profit, many are
too excited to take big risks.
This really must be understood for beginners, there is no guarantee. A big
risk can bring a lot of profit for you.
You have to leave feeling thirsty to get a lot of profit if you are a beginner.
Implementing Bitcoin trading with little risk is a very good choice.
With a small risk at the beginning of this start you will learn a lot of things
and will gradually increase your knowledge.
If your knowledge is enough to take a big risk with accurate information, it
can be the next choice.
5. Buying and Selling at the Right Time
How to successfully trade bitcoin and other crypto. The right time to buy
and sell when trading Bitcoin is also something you must understand.
Purchasing crypto when the price is cheap is recommended for those of you
who are still beginners.
This concept is the same as the concept used by stock traders. The purpose
of this trading principle is for you to profit or get a lot of money.
This method is actually very simple but there are still many who cannot
understand it optimally.
There is also a price difference that you must control. Because like buying
other products, everything has a price difference and you have to pay
attention to this.
By continuing to study crypto trading consistently and with discipline, you
will be successful in this regard.
6. Have backup Plan
Many are already convinced of the plans that you have arranged in such a
way but have failed.
This is the answer to Why you need plans B to D. Always have a backup
plan so that your trading runs smoothly.
If you have a backup plan, it means that you are ready to bear all the
consequences and risks.
This will also make you more professional and proficient at trading Bitcoin
and cryptocurrencies. No need too many backup plans but there must be
because not all the first plans work as you might think.
7. Make sure you Trade with the right Platform
The trading platform that you will use must also be safe and get legality
from the local government.
This can be sure that the money you will use will not be lost and will of
course come back to you. Lots of people are tempted by trading
performance that doesn't have legality and results in lost money.
To avoid and minimize this from happening you have to make sure
seriously that the counseling is safe.
8. Don't Give Up Quickly When You Lose
The last is not to give up quickly when you experience a loss. This
generally happens to those who have just joined and experienced their first
loss.
The will and desire to continue trading Bitcoin is fading and increasingly
non-existent.
If you have understood the initial concept well, you must admit that loss is
one thing that you must feel.
Therefore, when you experience a loss you should not immediately give up
and have to try again with another plan.
Chapter 15: Tips on how to protect
your cryptocurrency
When dealing with cryptocurrencies, you should always make sure to use
the best practices to ensure you're keeping your funds safe. This includes
practicing the following:
Backup Your Wallets in a Safe Place
You should make sure to keep a backup of your wallet details somewhere
safe—otherwise, you risk losing everything if your computer breaks or the
hard drive gets damaged. It is also significant to ensure that the location
where you keep your backup is safe from natural disasters and other issues
and that it isn’t vulnerable to fire or theft.
Update Software Regularly
You should always ensure you are using the latest version of any software
related to your cryptocurrency holdings, including wallet software and
mining clients. Out-of-date software can be compromised. You should
constantly preserve to be up to date with all security patches for the
software you are using and operating system updates.
Protect Your Computer
Cybercriminals will continuously be observing for ways to infiltrate your
computer, so you should make sure to use strong security measures. In
specific, you should continuously make sure that you regularly run up-to-
date anti-virus software and a firewall. You should also create strong
passwords and avoid connecting your computer to public networks or
untrusted networks.
Keep Backups of Files on Paper
If you need to retain a backup of any information related to your
cryptocurrency holdings—including private keys, the encryption seed,
logins, or passwords—it’s worth making sure that you keep redundant
backups in at least 2 different locations.
Use 2-Factor Authentication
When using exchanges or online wallets, it’s important to ensure that you
use 2-factor authentications (2FA) whenever possible. It is also a decent
idea to change to 2FA on any other accounts related to your cryptocurrency
holdings, including email accounts and social media accounts. Even if
someone steals your password, they won’t be able to access your account if
you have 2FA enabled.
Look for Websites That Are Secure by Design
You should always check that the site you are using is secure—otherwise,
you could find yourself vulnerable to hackers and cybercriminals. The site
should have the HTTPS protocol with a secure certificate—and this should
be displayed in the address bar. It’s worth double-checking that the site is
encrypted—and there should be a padlock icon at the bottom of your
browser window. It’s also worth checking that the site isn’t asking for any
unnecessary information from you or requesting personal details that could
be used to access your cryptocurrency holdings.
Keep Multiple Secure Copies of Your Backup
Ensure the only offline copy is stored in a bank deposit box or similar
location. If you are going to be transferring big amounts of money, it's
recommended that you keep a backup in at least 3 secure locations. One
should be on your computer (or on a USB stick that is not connected to the
internet), another on a private server, and the last one offline, such as in a
bank deposit box.
Use Strong, Unique Passwords for Each Account and Site You
Visit
You should use strong, unique passwords for each of your cryptocurrency
accounts. This will aid in guaranteeing that you do not end up in a situation
that leads to multiple accounts being compromised. It's also vital to ensure
that passwords are long and complex enough. Ideally, passwords should be
at least 8 characters long and include upper and lowercase letters and
numbers and symbols.
Change All Your Passwords Habitually —Minimum Every 90
Days
Changing your passwords regularly will help avoid situations where a
compromise could lead to your password being used for nefarious purposes.
If you obtain all emails requesting personal information, or if your
computer displays any alerts related to malware or security issues, it’s also
important that you change all of your passwords as soon as possible.
Use Decoy Wallets
If you discover yourself in a condition where someone has access to one of
your wallets, they may try to steal the funds in the wallet. This is especially
true if the wallet belongs to an exchange and contains a large amount of
money—so you should always have at least one decoy wallet on each
platform where you store funds.
Use an Encrypted Password Manager to Help Manage Your
Passwords
This is an effective way to help ensure you have strong and unique
passwords for each of your cryptocurrency accounts.
Be Careful With Social Media, As Some Profiles May Be
Fraudulent
If you are booking information related to your cryptocurrency holdings on
social media, it's vital that you double-check the account is legitimate
before sharing any sensitive information—especially if the profile has been
created in a hurry or seems like a fake. It's also worth double-checking any
links provided by the account, as these may lead to compromised websites.
Avoid Using Generic Passwords
You should avoid using generic passwords that are easy to guess, such as
“qwerty” or “password” on any accounts related to your cryptocurrency
holdings, including email and social media accounts. This is to avoid a
situation where a compromised account could lead to the compromise of
multiple accounts.
Avoid Using Phones or Computers Used by Other People
This should be a general rule for any technology you use—but avoiding the
use of shared devices will help to make sure that hackers do not
compromise your private keys and credentials. You must take complete
control of your devices, ensuring that they are encrypted with strong
passwords and that all software is kept up to date. Never leave
cryptocurrency wallets on public PCs and/or devices, as these may be
subject to malware and/or keylogger attacks designed to steal private keys
and login credentials.
Create an Idea of How Much Total USD Value Is Stored on All
Accounts at Any Given Time
If you have different cryptocurrency accounts, you should practice creating
an idea of how much total USD value is stored in all of your accounts at
any given time. This will aid in noticing any distrustful activity in real-time
should it occur.
If Your Private Key Has Been Compromised, Transfer Your
Funds to a New Address Immediately
If your private key has been compromised, attackers may try to access the
wallet and take the money stored within it. For this reason, it's important
that if you believe that your account may be at risk of being compromised,
you should make sure to transfer the funds to a new address as soon as
possible.
Never Leave Cryptocurrency Funds on Exchanges or Other
Platforms without Creating a Withdrawal Wallet First
If you want to store your funds on an exchange, it’s best to keep only the
amount of funds you need to use for trading on the exchange itself.
Due to the high risk of exchange hacks and exit scams, it’s recommended
that you create a withdrawal wallet outside of an exchange before
depositing any funds from your main wallet. This can be completed by
moving cryptocurrency to a different wallet address where you have
exclusive control over the private key or moving cryptocurrency into a
paper storage solution (e.g., physical hardware wallets).
Never Submit Your Private Key or Recovery Phrases for Any
Reason
Suppose you end up signing up for an exchange, cryptocurrency trading
platform, or another cryptocurrency service. In that case, many of them will
ask you to submit your private key and recovery phrase so that they can
help recover your account if it becomes compromised. Please note that this
is unnecessary, as these service providers have no reason to help you if your
account gets hacked since they would not be able to get the stolen funds
back from the hackers themselves, anyway.
Never submit your private keys or recovery phrase for any reason under any
circumstance. If you do so, there is a chance that attackers could use this
information to steal all of your cryptocurrency funds.
Conclusion
Many cryptocurrencies have seen a lot of growth in recent years, with some
like Bitcoin, Bitcoin Cash, Dash, and Ethereum seeing exponential growth.
As we move forward, the cryptocurrency space will only keep growing.
According to some industry experts, the coming year will increase public
awareness of cryptocurrencies. Here are some of the things expected to
happen in the cryptocurrency world in the future:
Taxation will become a huge issue: While many people have
amassed wealth in the cryptocurrency market, many have been
keeping it away from the eyes of the government. In the coming
years, you can expect that the IRS will be more focused on
clamping down on cryptocurrency investors to make sure they
pay their taxes.
Bitcoin to develop into a payment network: Though it was
meant to be an electronic payments system, many people
consider Bitcoin a store of value and a speculative asset.
However, according to Trevor Konerko, CEO of a
cryptocurrency technology company, Bitcoin’s utility and price
will increase dramatically, leading to its emergence as a fully-
fledged payment network. This will be driven by the emergence
of scaling solutions, such as Lighting Network. However, for
Bitcoin to become a fully-fledged payment network, its
community needs to be willing to adopt these upgrades.
Cryptocurrencies are here to stay: To some people, they are a
passing fad that will lose momentum as fast as they gained it.
However, industry experts believe that cryptocurrencies and
blockchain technology are here to stay. Some platforms like NEO
and Ethereum will push for the widespread adoption of the
technology since they help people create blockchain applications
that have meaningful uses in the real world. The corporate
world's adoption of these real-world applications will increase
the demand for cryptocurrencies and will therefore ensure their
longevity.
Diversification of assets by investors: Currently, most investors
hold their assets in Bitcoin and Ethereum. However, you can
expect that more people will start diversifying their portfolios
into other cryptocurrencies like Dash, Litecoin, IOTA, NEM, and
many more. Many investors will diversify their cryptocurrency
assets in the same way they approach other traditional assets. In
addition, many more cryptocurrencies will emerge in the coming
years. Some will be introduced to address challenges experienced
by existing cryptocurrencies, while others will introduce new
niches. There is a high likelihood that some of the new
cryptocurrencies will become very profitable.
Increased regulation: Currently, many countries do not have
any policies for cryptocurrencies. However, several governments
have been keenly watching their use and growth. As more people
adopt cryptocurrencies, governments will start putting
regulations surrounding their use.
Cryptocurrencies will force conventional financial systems to
level up: Currently, banks and traditional payment processors
enjoy extremely high transaction fees. They are also very slow,
with most international transactions being processed in 1–3 days.
On the other hand, cryptocurrencies are very fast and have
extremely low processing fees. These advantages might push
more businesses towards cryptocurrencies. If they are to remain
relevant, banks and traditional payment processors will need to
up their game.
Technological Future: Cryptocurrency, as a concept, has a
bright technological future. Increasingly powerful computers,
accompanied by an algorithm that is becoming easier to mine,
means that cryptocurrency will be less cumbersome to mine.
Changing dominance: Currently, Bitcoin is the leading
cryptocurrency. However, as technology advances and as demand
for tokens increases, there will be a shift towards other
cryptocurrencies. Thus, Bitcoin is likely to cede ground in the
future as the dominant cryptocurrency. Nonetheless, its position
as the ‘gold' standard of cryptocurrencies will remain
unchallenged for a long time. Ripple, Litecoin, and Ethereum
will take a greater role soon, as many financial institutions are
actively exploring them. Ripple is being preferred to form an
automated algorithmic clearinghouse. Ethereum is attractive due
 to its many customizable features, such as smart contracts,
among others.
Performance of fiat currency: One of the main factors that
have driven many people towards cryptocurrency is the
instability of their fiat currencies. For example, Zimbabwean
Dollar has become worthless. The Venezuelan Bolivar has
depreciated at such a high rate that it is hard to keep it as a store
of value. When a given fiat currency becomes unstable, users
become more willing to take up cryptocurrency. In most
jurisdictions where the economy is overheating, to such an extent
that they face hyperinflation, countries restrict the flow of foreign
currency so that people cannot buy them. Since governments
have no control over cryptocurrencies, they can become the
available options for citizens to safeguard their monetary
investment.

This brings us to the end of our learning journey. All the information in this
book is very crucial for beginners. Read it carefully, apply it to real-life
trading, and learn from it. Start out with the money you can afford to lose,
and enjoy the process of learning to trade. Remember; do not think you can
get rich overnight by trading.
This book aims to provide you with up-to-date information about
cryptocurrencies and the know-how you need to trade and maximize profits.
I hope you have gained valuable information that has enabled you to start
trading in cryptocurrencies. If this is the case, please help others succeed in
cryptocurrency trading by encouraging them to acquire a copy of this book
for knowledge and reference.
Due to the many advantages offered by cryptocurrency, many businesses
and individuals are gradually starting to accept it. Many investors have also
switched from traditional investment avenues to cryptocurrency assets.
Remember that the safety of your cryptocurrency, your cryptocurrency
wallet, and everything associated with it is entirely up to you. This form of
transacting enables a more secure way of transferring currency between 2
parties; therefore, always keep it so. Always keep your passwords and keys
securely with you. Do not share the private keys with anyone. The
implications of this could be quite hazardous. All your money could be
stolen, or even worse, used illegally.
With that said, using cryptocurrency is adjusting to the speed of the modern
and futuristic world. Cryptocurrencies are the way to transfer money in
today’s world. Not only is it secure, but the benefits are innumerable.
Therefore, use it wisely and be a benefactor of it. Cryptocurrency can be an
intelligent investment that may generate a fortune. All you need are some
smart skills.
Also, when diving into this cryptocurrency world, you should conduct in-
depth research to be ready from the start. This book will serve as a good
source of research. Additional research can be done through the internet as
well. You should decide which cryptocurrency you want to invest in. What
wallet do you want to use? What would be the purpose of cryptocurrency?
These things should be clear in your mind to take decisive steps.
Additionally, even if you do not really wish to invest in cryptocurrency,
there are many other ways related to cryptocurrency through which you can
make good money without actually investing in coins. Cryptocurrency
requires patience and good use of your mind. Therefore, put smart work
into the field and have patience. You are gradually but eventually going to
profit.
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