Understanding Cryptocurrency (#2)
Hello everyone, it’s me again, Neo — Admin — Community Manager of Optimus Finance and Growth Marketing of LECLE Vietnam. We’ve already explored Cryptocurrency (#1) and will continue to explore the next part of Cryptocurrency with #2.
Let’s get started!
11. How to get and earn Cryptocurrency
11.1. Crypto Mining
You can mine cryptocurrency, or in other words, earn it from mining. Blockchains that use the proof-of-work consensus to work (like Bitcoin) need nodes to keep the network operating securely. By being a node, you will earn rewards as you are directly involved in the process of running the blockchain.
11.2. Skin in the game
Skin in the game means participating directly in DeFi to earn rewards. This can be done by Providing Liquidity, Yield Farming, Staking, and other kinds. Be aware that DeFi is still highly risky, so you should be responsible for your own funds and DYOR before investing in any form.
11.3. Others
Cryptocurrency is constantly evolving. More and more ways to earn with cryptocurrency are showing up. Some of which, for example, are Play to Earn or Move to Earn. In these kinds of methods, you can simply play games or work out to receive rewards. These revolutionary ideas are the reasons why the crypto market rose so dramatically in the previous few months.
12. How to invest in Cryptocurrency
12.1. HODL
Hodl (Hold On for Dear Life) is the most popular investment method. Investment decisions depend on fundamental analysis, judgments, anticipations, and future potentials about the invested projects.
The investment can last for months, years, sometimes even decades. The crypto market is relatively small in comparison to other traditional financial markets. Therefore, the potential profit can be up to 10x, 100x, or xxx of your investment.
Compare other similar projects in terms of technologies, tokenomics, roadmap, team, etc.
12.2. Trading
In simple terms, you’re trading when you constantly hop in and out of an investment for a quick profit.
The trading time frame can range from seconds, minutes to hours, days, or months.
Traders use technical analysis to break down the chart, find the buy and sell positions and take profits or cut losses. However, liquidation can occur due to the high-volatility market.
12.3. Tips to invest in cryptocurrency safely
Investing in cryptocurrency bears high risks if you are unaware. Here are some tips to help you on your way to investing in cryptocurrency:
DYOR before putting your money into any project/cryptocurrency.
Manage your portfolio and diversify it based on your level of trust.
Most of the time, cryptocurrencies can be used to stake or provide liquidity to earn even more rewards. If you understand these mechanisms deeply, you can utilize this and maximize your profits instead of leaving your tokens idle in your wallet.
Learn about tokenomics designs and product models to understand how your cryptocurrency accrues value. Some tokens have little to no use cases and value, making them only go down in price.
13. Cryptocurrency information sources
The crypto world is developing at a fast pace, and news is published daily, so it’s not easy to catch up with. It’s easy for any website to copy and publish the same news with little editing.
News: Telegram, Twitter, Facebook, Reddit,…
Market news: Coindesk, Coingecko, Coinmarketcap, Cointelegraph,…
Insight information: Messari, The Block Crypto, Delphi Digital, Medium, Binance Research,…
14. Cryptocurrency environmental impact
As mentioned above, some blockchains use the proof-of-work (PoW) consensus to keep the network secure. However, running a node requires a large amount of electricity usage. At the same time, a large of heat will be radiated by the computers running nodes, which imposes a bad effect on the environment.
Nevertheless, most blockchains now move to the proof-of-stake (PoS) consensus, making them more environmentally friendly.
15. The future of Cryptocurrency
Cryptocurrency is still evolving at a rapid pace, and no one can predict what it will look like, even within the smallest time frames.
With that being said, we can deny how quickly and constantly cryptocurrency is growing. So, the future of cryptocurrency may not be obvious in terms of the specific result, but it may be clear that it will be bright with lots of innovations and growths kicking in.
16. What is required to invest in cryptocurrency?
16.1. Knowledge
Without knowledge, you can throw your money into anything, but the outcome is sometimes flawed. Therefore, you should acquire sufficient knowledge about the crypto space.
New technologies and news are constantly released every day. It’s hard for investors to keep up with that amount of information. News is released today, but it can be out of date a few days later.
DeFi is now the most promising application of blockchain technology. Every blockchain has its own DeFi ecosystem, namely, Ethereum, Solana, BNB Chain, Near,…
Knowledge is the invisible power and the key to success in this crypto world.
16.2. Security and Safety
Every investor should put security and safety above everything else. It’s painful since you lose all your funds for non-sense reasons. In many countries, crypto investors are not protected by the government since it’s not legalized and sometimes illegal.
The crypto space has a bad reputation since numerous scams have happened. Some scams can be easy to spot, but some are organized by professional fraudsters. They create very promising and illusory scenarios to scam money from investors.
Therefore, you should be careful and responsible for your investment decision.
Check the validity, credit, and authenticity of the crypto platforms.
Keep your passphrase via multiple methods, and don’t share it with anyone.
Do research on projects that you invest in.
17. How much money to invest in Cryptocurrency?
In the crypto world, how much money do you invest?
Your risk tolerance is the maximum amount you can lose without feeling bad or impacting your life style. Never invest more than that. — CZ, Binance CEO
There is no specific answer to this question, it depends on knowledge, investment appetites, ages, experiences, leverages, etc. As a result, it’s common in the crypto world when there are differences among the community.
Be responsible for your money. There are countless investors who risk their own lives. “High risk, high reward” is the phrase you usually hear. However, nobody knows which direction the market will go.
For instance, you have the right investment in a project, but you lose patience and hop out of the investment.
Those risky investments affect your personal life and the people around you, which drains your mental health. The advice here is to manage your funds and gradually increase them as you level up your knowledge and investment skills.
18. What people ask about Cryptocurrency
18.1. Is Cryptocurrency safe and legal?
The majority of cryptocurrencies in the market are safe. However, most of them are still unregulated, up to this moment.
18.2. Is Cryptocurrency a good investment?
Cryptocurrencies are extremely volatile compared to other assets. As a result, they often return high profits if you select the right moment and the right token.
On the opposite, they can also cause you massive losses. Be aware of such risks before investing in them.
18.3. Is Crypto the future?
To say whether Crypto is the future is a difficult task. One thing that I can assure, Crypto will constantly be growing, and in the long term, every market will go up in value.
18.4. Is Crypto taxable?
Crypto is taxable in a few countries, like the U.S.
18.5. Is Cryptocurrency real money?
The liquidity of the Cryptocurrency market is growing in size day by day. Cryptocurrencies can now be easily converted to Fiat, and can even be used to pay for real-life assets. So it is not wrong to call Cryptocurrency real money.
18.6. How many Cryptocurrencies are there?
We can check it out on CoinGecko or CoinMarketCap.
18.7. What is the point of Cryptocurrency?
Cryptocurrency is used for a variety of purposes, like as a medium of exchange or a store-of-value asset.
18.8. Can I create a Cryptocurrency?
Yes, you can.
19. Closing thoughts
Cryptocurrency is changing the way the traditional financial system works with DeFi. This article has shown the most important information about cryptocurrency. I hope you’ve gained helpful insights to understand the potential behind cryptocurrency.
What about your thoughts? If you want to know further about cryptocurrency, don’t hesitate to share with us! 😀
This post is for educational purposes only. All materials I used were the different reference sources. Hope you like and follow us and feel free to reach out to us if there is an exchange of information. Cheers! 🍻
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