If you’re new to the crypto world, you might be feeling a little too overwhelmed with so many new and technical terms. I know I was when I first started my crypto journey. Went out in search of as many crypto terms as I could find, then saw countless videos to understand the basics of the crypto world. So here is a Detailed yet easy-to-comprehend Crypto Basics Tutorial for you.
Btw, If you’re interested in buying or selling cryptocurrencies, you should visit Mcx. They have a portfolio of more than 100 digital currencies and the best exchange rates.
A Beginner’s Guide to Understanding Blockchain and Digital Assets
As a beginner, I know you’re confused about what a digital asset is and what Blockchain is, So follow me as I explain everything to you in simple words.
With a more thorough understanding of the current state of NFT copyright\ security and potential solutions, market participants can better understand their options as they navigate the evolving landscape of digital assets while safeguarding the interests of creators and collectors alike.
Let’s start with
What is a Blockchain?
Blockchain is a technology that offers a transparent, secure, and decentralized approach to handling digital transactions, serving as the building block for all digital currencies. In a world where the only 2 modes of transactions are exchanging money by hand or via banks, Blockchain introduced the concept of cryptocurrencies.
Let me explain to you what Blockchain is via an Example:
Take an example of a classroom where students collect and trade digital cards with one another, using the blockchain model for this exchange. You and your friend trade each other’s cards, and then you mention this trading in a digital notebook. Let’s call this digital notebook a Ledger. This ledger acts as a central record system that guarantees transparency and security in every trade.
Everyone in your class has a copy of this exact digital notebook and can see if and when anyone makes a deal. Once a trade is made, the data on that page is safe and secured, and a new page is created. Each of these pages is a block in the Blockchain. This new page refers back to the previous page, creating a chain of pages like a blockchain.
Now, here is the cool part: every student in the class has a copy of this ledger (digital notebook). No one person controls this ledger. When a new trade happens, everyone who has a copy of this ledger, their copy is updated all at once. This decentralized nature ensures that there is no central authority or single point of control, stressing equality in the network. Once a trade is recorded in the ledger, no one can fake or edit the ledger or any one of the pages (blocks). The fact that no one can alter or manipulate this data ensures the integrity and authenticity of each transaction. And if someone tries to fake a trade, everyone will know that this trade is fake, and it won’t match.
If by any chance someone tries to alter this data, they will have to edit the unique hash on the block, which will be indicated invalid as everyone has the same ledger, or they will have to alter more than 50 % of the network to get the validity which will cost them a boatload of cash, energy and time even after which this whole thing might turn fruitless which is why Blockchain is reliable and secure.
What is a Digital Asset?
A digital asset is something that is in a digital or virtual form and has value. It can be anything from text, audio, video, documents, NFTs, software, domain names, digital contracts, cryptocurrencies and much more. These digital assets can be stirred, replicated, reproduced, shared and downloaded over a computer network.
An image can be stored, duplicated, edited, or shared via a computer, an application, an email, etc.
An NFT (Non-Fungible Token) can be replicated, shared, sold and bought on the internet.
Both are Digital Assets and have value.
What is a Digital Wallet?
A digital wallet, also known as an e-wallet, operates as a software-based system that securely stores all your digital assets, such as cryptocurrencies. You can use these digital wallets to conduct financial transactions in the digital realm. The concept is similar to that of a bank account, where you possess a bank account number or, in this case, a unique identity (your digital identity on the Blockchain) and a private key, similar to a secret password that only you can access. You can access this wallet only when you enter your private key.
When you wish to make a transaction using a digital wallet, like buying Bitcoin, you share your unique identity with the seller, and the seller reciprocates. You send the payment to the seller’s unique identity, and the seller sends the Bitcoin to your unique identity. This transaction is then stored on a block in the Blockchain.
Using Bitcoin eliminates the need to rely on cash or bank transactions. Your digital wallet , like a Girdlock MPC wallet, serves as your virtual pocket for digital assets, providing a user-friendly interface for managing things in the digital realm.
Most famous Cryptocurrencies in 2023
Cryptocurrencies are digital currencies that do not exist in a physical form but are virtual or digital. They are not issued by a government or an agency but use a decentralized system to maintain and record all the transactions. These allow for secure online payments. From Bitcoin and Ethereum to Dogecoin and Polygon, there are currently more than 10,000 cryptocurrencies in the world, which puts investors in a big dilemma as to which might be profitable for them. The Crypto market is volatile due to its uncertainty, and even the big coins such as Bitcoin and Ethereum are in a bearish mode. I know the overwhelming feeling and knowledge you are facing, and I want to help you understand the market capitalization and the value of the coins that are already in circulation.
Top 3 Cryptocurrencies to Invest in
|Price as of December 2023
|Binance Coin (BMB)
Advantages and Potential Risks of Investing in Cryptocurrency
Here is a list of Advantages of Investing In Cryptocurrency:
1. High Potential Returns
We have seen firsthand how high the potential returns on cryptocurrencies are these past couple of months. Bitcoin was once worth $0, and then at its highest, it was $68,789.63. This high potential of crypto investment has made it a worth-it investment opportunity.
2. Global Reach
With cryptocurrencies, there are no restrictions, limitations, or obstructions faced with traditional systems. We have Global reach with these digital assets.
Because of the blockchain technology on which cryptocurrencies were made. No one person has access to it, and everyone has access to it. This makes it difficult to manipulate or alter. This promotes trust in this system, making investing in crypto a trustworthy investment.
Blockchain technology, the foundation of cryptocurrencies, provides a transparent and secure record of all transactions.
5. Inflation Protected
A few cryptocurrencies, such as BTC (bitcoin) and Ethereum (ETH), have limited supply, which offers a unique advantage by being less vulnerable to inflation. This feature is a safeguard against the devaluation that traditional fiat currencies may experience over time, making crypto an appealing choice for investors seeking protection against inflationary pressures.
This investment opportunity allows investors to increase their portfolios. Adding crypto with bonds, stocks, real estate and more
7. 24/7 Market Access
Having a cryptocurrency allows you 24/7 access to the market when you have the flexibility to buy and or sell crypto at will.
Here is a list of Potential Risks of Investing In Cryptocurrency:
Cryptocurrency prices are volatile and can change any minute. This can result in huge profits or huge losses. It’s more like a gamble with a 50-50 chance.
2. Security risk
Hackers these days are targeting people’s digital wallets, which makes this a risk.
3. Regulatory uncertainty
With crypto being new to the traditional value, some countries have imposed a ban on crypto while some support it and yet have not recognized cryptocurrencies as legal, such as Dubai. This creates an uncertainty.
4. Limited adoption
Many people in the world have been introduced to the concept of crypto; however, very few people around the world accept these coins as payment methods. People still prefer the traditional methods over the new ones.
5. Lack of fundamental value.
People still need to value cryptocurrencies as they do for bonds, stocks, real estate, and cash.
A Comprehensive Guide for Newcomers
Introduction to various aspects of the Crypto Ecosystem
The crypto ecosystem consists of a diverse portfolio, including currencies, exchanges, wallets, mining, smart contracts, blockchain technology, NFTs, and much more. All these things together make up the crypto digital space.
Regulatory developments, trading, innovations, potential growth opportunities, risks, and losses are a part of this ever-evolving crypto space.
What is a Cryptocurrency Exchange?
A cryptocurrency exchange is an online platform that facilitates the buying and selling of crypto coins. In these marketplaces, people can exchange their fiat currencies, such as USD or EURO, for digital assets. Or trade 1 cryptocurrency for another. There are different types of crypto exchange platforms. 2 of the most popular exchanges are CEX, DEX and OTC
1. OTC (Over The Counter)
Over The Counter Exchange is where people buy digital assets from one another in a secret meeting. This meeting is anonymous; both buyer and seller can remain anonymous. These transactions are facilitated by a trusted broker.
This crypto exchange provides its users with limitless transactions, anonymity and personalized service. If you’re interested in this OTC Exchange, visit MCX. They are one of the leading and trusted OTC platforms in Dubai.
2. CEX (Centralized Exchanges)
CEX is a traditional platform where users create accounts, deposit funds, and trade assets. Examples include Binance and Coinbase.
3. DEX (Decentralized Exchanges)
Decentralized Exchanges (DEX) Operate without a central authority, allowing users to trade directly from their wallets. They can buy and sell directly. Uniswap and Sushiswap are famous examples.
Crypto Trading and Risk Management Strategies
1. Set realistic Profit and Loss Limits
Define clear profit and loss thresholds for each trade. Stick to these limits and avoid chasing unrealistic gains or holding onto losing positions out of fear or hope.
2. Diversify your Portfolio
Do not put all your eggs in one basket. Invest in different coins and build a diverse portfolio, including well-established currencies such as Bitcoin and Ethereum and other digital assets such as NFTs. Stay informed about the market to determine optimal buying and selling times, and explore opportunities to strategically swap cryptocurrency for other coins’ to further broaden your portfolio diversity.
3. Start small and scale gradually
Start investing small at the beginning of your journey, then scale gradually as you get experience and better insights into the market, industry, and trends,
4. Employ Risk Management Tools
Use different risk management tools, such as stop-loss orders, position sizing calculators, and risk-reward ratios, to control your exposure to potential losses. These tools can help you make informed decisions and manage your risk appetite effectively.
5. Conduct thorough research
Conduct detailed research on different digital asset investment opportunities. Evaluate its fundamentals, such as currencies, usage cases, and competitive landscape.
6. Practice Emotional Discipline
Maintain emotional discipline and avoid impulsive trading decisions driven by fear or greed. Stick to your trading plan and avoid reacting to short-term market fluctuations.
7. Stay informed on the latest Market Trends
You need to start up to date on the recent market trends and fluctuations of different coins. We know that the crypto market is volatile, so you need to be on top of any crypto-related news as soon as it is published. So that you take appropriate action when required. You need to be fully informed on topics that are related to the market or your investments.
8. Stable Coins and Fiat holdings
Allocate a portion of your portfolio to stablecoins or fiat currencies to mitigate exposure to the volatility of cryptocurrencies.
Potential of Cryptocurrency and Its Real-life Implications
Crypto Usage Beyond Financial Investment
Cryptocurrencies are rapidly evolving beyond their initial usage, which was a financial investment. The underlying technology, which is Blockchain, is being used and explored in different ways. There have been a plethora of uses of crypto beyond its financial usage. Here is a list of real-life examples of industries that are using crypto for other purposes.
Supply Chain Management:
- Everledger: A blockchain-based platform used to track the provenance and authenticity of diamonds, preventing fraud and ensuring consumer confidence.
- uPort: A blockchain-based identity platform used by UNICEF to provide digital identities for refugees, enabling them to access essential services.
Healthcare Data Management:
- IBM Blockchain Health Network: A consortium of healthcare organizations using Blockchain to improve collaboration and data sharing for patient care.
Intellectual Property Protection:
- IBM Blockchain IP Registry: A blockchain-based platform used to register and protect intellectual property rights, such as patents, trademarks, and copyrights.
Voting and Governance:
- Agora: A blockchain-based platform used by the Estonian government to facilitate secure and transparent online voting for national elections.
Non-Fungible Tokens (NFTs):
- OpenSea: A peer-to-peer marketplace for trading NFTs, including digital art, collectables, and in-game assets.
Social Media and Content Creation:
- Steemit: A blockchain-based social media platform where users earn STEEM tokens for creating and curating content.
Decentralized Finance (DeFi):
- Uniswap: A decentralized exchange (DEX) where users can trade cryptocurrencies without the need for intermediaries like banks or brokerages.