You may have heard of Bitcoin, and of all the “altcoins” that have sprung up since Bitcoin was first introduced to the world. Since Bitcoin’s introduction, countless new crypto has emerged to erode away Bitcoin’s crypto market dominance. How should a beginner navigate the crypto space? These tips from Crypto Intel Hub make a great guide.
Cryptocurrency, Stocks, and Fiat
The currencies we are familiar with, such as USD, Euros, and Yen, are referred to as “fiat” by the cryptocurrency community. Although they have the word “currency” in their name, cryptocurrencies actually share more similarities with stocks than currencies; when you purchase crypto, you’re actually buying some tech stock in the form of a piece of the network and part of the blockchain, both of which the cryptocurrency runs on.
Cryptocurrency Exchanges
The place where people can buy and trade cryptocurrency is on cryptocurrency exchanges. You can buy and sell crypto using different crypto coins, or by using fiat money. Different measures are used to judge the quality and reliability of an exchange, such as fees, spread, liquidity, withdrawal limits, security, and user-friendliness. If you are using a currency other than USD, check the exchange’s ease of funding and withdrawal. Many people say Coinbase is the best exchange.
Arbitraging
As you become involved in multiple exchanges, you may wish to buy from one exchange and sell on another to make “arbitrage” gains. Two things to note about arbitrage betting: remember to factor in fees, and remember that the price could change when you’re transferring your coin between exchanges, especially during volatile times.
Cryptocurrency Wallets
Exchanges have built-in, online wallets that will hold the crypto coins you’ve purchased. If you feel uneasy about putting your crypto holdings onto an exchange, you’ll have the option to either use a paper wallet service like myetherwallet.com, or spend $99 USD on a hardware wallet such as Keep Key. Both will serve the purpose of removing risk, at an added cost for taking up the responsibility of keeping your cryptocurrency safe.
Some people own hardware wallets because they enjoy the feeling of keeping a tangible reminder of their crypto holdings. Additionally, the hardware wallet’s user interface will make it easy to keep multiple coins, which will come in handy when you participate in ICOs (Initial Coin Offerings).
Mining
Mining is the best method for people who are more comfortable with a predictable form of reward. The process involves setting up a rig that consists of CPUs or GPUs and an investment in the electrical power required to compute. Mining is only possible on crypto networks that follow the Proof of Work (PoW) protocol. Setup takes some effort, as well as keeping things running, but it can bring a long-term passive income as long as you handle the work.
Staking
Staking is the Proof of Stake (PoS) version of “mining.” This can be considered as making dividends on your stock. The reward rate and staking method differ greatly among PoS coins, but in general, it requires less effort than mining.
Beginners may be lost as they face the cryptocurrency world. However, basic understanding of fiat money, exchanges, and mining and staking protocols can get you far.
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