Updated date:

Cryptocurrency Introduction for Beginners

Seth has been in the cryptocurrency space for 3 years and is currently getting his series 65 to become a accredited investor

cryptocurrency-introduction-for-beginners

Crypto basics


Cryptocurrency was born in 2008. Born out of the housing crash that turned the financial world upside down, and conceived by the internet. Bitcoin was created by a person or persons only known as Satoshi Nakomoto. Just as AOL, MySpace, and Napster, the first is never the best. Cryptocurrency is barely in its infancy. The last time an asset class was invented was in the 1700's by the Dutch East India Company creating stocks and bonds. To say its early is an understatement. Blockchain technology is here to stay and it's going to transform the way people do business every day. It's going to change the way people think about money and the financial system. A good analogy would be what the internet did for companies, markets, and investors. With the likes of JP Morgan, Chase, Visa, Mastercard, Morgan Stanley, Black Rock, Accenture, PayPal, Ebay, and Vanguard Group to name a few; all are getting in on crypto.

Defi (Decentralized finance) and DLTs (distributed ledger technology) will also be on the rise and will be a huge gamechanger. Things like NFTs (Non Fungible Tokens), DEXs (decentralized exchanges), tokenized real estate, smart contracts, and liquidity pools have all become popular in defi and it's only getting started. This new asset class is like the Wild Wild West. The only thing holding it back now is regulation and clarity. Once regulation and clarity are achieved there will be nothing left to stop this space from truly maturing and innovating. Real use case and utility will drive future bull runs, not speculation. This is a very exciting time to be an investor.

Things to consider:

Every cryptocurrency uses different algorithms to validate transactions on the crypto's network. These networks most of the time have a native token of that network. Interoperability between these networks and the way they communicate will eventually drive utility. These algorithms used are extremely important. There are different proofs that are utilized to verify these transactions on the network. Here are a few of the common proofs that are used, each have their own pros and cons.

Proof of work

Proof of stake

Proof of authority

Proof of time

Proof of importance

And then you have my favorite, which is strictly my opinion:

XRP ledger consensus protocol.

This is by far the best way to validate transactions on a blockchain network in my opinion.

You can do research into each of these. Bitcoin for example uses proof of work that validates transactions using miners to validate each block on the blockchain. They are then rewarded for successfully validating the transaction, using their time and computing power. This has many flaws which I will not dive into.

Main thing is to understand and research all of these topics extensively before investing your hard earned money.

Exchanges:

Decentralized

Centralized

Most common in the U.S are

Coinbase

Binance.us


Cold wallets / hardware wallets/ mobile wallets


Strategy

Buy and hold
-Use DCA, daily cost averaging
-Keep all assets off of exchanges
-Keep all your recovery phrases safe
-Keep copies of recovery phrase safe
-Use cold storage if possible
-Buy the dips or bear markets
-Have an exit strategy in place
-Research extensively on projects
-Keep up to date with market for opportunities or to adjust portfolio.
-Have multiple exchanges verified for when you sell.
-Don't listen to hype, be grounded and take your emotions out of the equation
-Dont chase green candles
-Learn Technical Analysis for indicators
-Know when to hold and know when to fold

Always put in what you are willing to lose

Learn, research, invest, repeat.

I am not a financial advisor.

Seth

This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.

© 2021 Seth Michael

Related Articles