What is blockchain technology? Blockchain technology and trading are some of the most growing investment practices that most young entrepreneurs use to produce more money.
A lot of people that are starting their investments have a number of questions about what’s the best way to use blockchain technology.
Which platform is best for beginners?
Why do people lose money when investing in cryptocurrency?
Or how can they avoid losing money?
This is because sometimes one misses some aspects of blockchain technology.
- 1 10 Tips to understand blockchain technology (and Cryptocurrency)
- 1.1 1. The Core of Blockchain Technology
- 1.2 2. What is Cryptocurrency?
- 1.3 3. The legal boundary
- 1.4 4. Some basic concepts
- 1.5 5. Top 5 Cryptocurrency where you can Invest:
- 1.6 6. How to trade Crypto
- 1.7 7. Reading the Charts
- 1.8 8. Be aware of the last news!
- 1.9 9. Did you Know?
- 1.10 10. The first steps:
10 Tips to understand blockchain technology (and Cryptocurrency)
If you are a beginner in Blockchain technology and cryptocurrency, you want to have more tools to have the best profits and avoid beginners’ mistakes: You are in the right place! Here we show you 10 tips that will make your life easier.
1. The Core of Blockchain Technology
Blockchain is a digital record of transactions composed of a series of individual records or blocks that link together on a single list.
Blockchain is most commonly used to record transactions of different cryptocurrencies. However, with expansion, the use of this technology extends to other economic sectors
According to Euromoney:
A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain.
A record of that transaction is added to every participant’s ledger. The decentralized database managed by multiple participants is known as Distributed Ledger Technology (DLT).”
A Blockchain is a type of DLT. In this particular one, transactions are recorded and encrypted. This means it has a cryptographic signature called Hash. This makes it really difficult to hack.
In order to do that, hackers would have to make changes in every block of the chain. This makes cryptocurrencies like Bitcoin not faked, hackable or double-spent.
2. What is Cryptocurrency?
Cryptocurrency is secured digital money encrypted by cryptography. It works in a peer-to-peer network, which means it does not need a central bank or a government to control the transactions or the way in which the currency fluctuates. It means there is no intermediary between the transaction and the profit you get. According to Surfs Up! using Cryptocurrency has a lot of benefits:
- Eliminates extreme money printing.
- Reduces corruption.
- Eliminates the middleman.
- It reached the unbanked or those that do not have access to the banking system.
- People get custody of their own money.
- It makes mobile payments easier.
- Higher security than the money you may have on the conventional banking system.
- It protects your identity.
3. The legal boundary
According to Statista, by 2020 cryptocurrencies like Bitcoin had a great increase in trading volume on online exchanges. The numbers it shows are in millions of dollars. But, is it legal? Does having Cryptocurrency bring legal problems?
In most countries like the United States, the European Union member states, and the United Kingdom. Blockchain is neither legal nor prohibited. Within higher populated countries such as India, the same thing happens. And In China, things change a lot as the government has strict restrictions on different cryptocurrencies.
4. Some basic concepts
As Bitcoin became the first cryptocurrency on the market, we will use it as an example. Here are 3 basics that every cryptocurrency beginner should know according to Surfs Up!:
- Balances – blockchain: The blockchain is a shared public ledger on which the entire Bitcoin network relies. All confirmed transactions become included in the blockchain. It allows Bitcoin wallets to calculate their spendable balance so that every new transaction can be verified, thereby ensuring the spender owns what they are spending. The integrity and the chronological order of the blockchain are enforced through cryptography.
- Transactions – private keys: A trade is a transfer of value between Bitcoin wallets included in the blockchain. Bitcoin wallets keep a secret piece of private key or seed used to sign transactions, providing mathematical proof that they have come from the wallet’s owner. The private key also keeps the transaction from manipulation once issued. All transactions broadcast to the network and confirmed within 10-20 minutes through a process called mining.
- Processing – mining: Mining is a distributed consensus system used to allow the confirmation of pending transactions by including them in the blockchain. It enforces a chronological order in the blockchain, preserving the network’s impartiality and allowing different computers to agree on the system’s state.
5. Top 5 Cryptocurrency where you can Invest:
- Bitcoin ($BTC): its main developers are Satoshi Nakamoto and Davin Andersen and have a 671.62B capitalization.
Chart source: ycharts.com
- Ethereum ($ETH): developed by Gavin Wood, Jeffrey Wilcke, and Heikoheiko and it has a $318,127,734,669 capitalization.
Chart Source: coindesk.com
- Binance Coin ($BNB): Its developers are Chanpeng Zhao or CZ and Yi He and have a $60,656,642,219.69 capitalization.
Chart Source: coinmarketcap.com
- Tether ($USTD): issued by Tether Limited and it has a $62,279,965,419 Capitalization.
Chart Source: https://www.coindesk.com/es/price/tether
- Dogecoin ($DOGE): its a Litecoin bifurcation and it has a $72,644,993,984.63 Capitalization.
Chart Source: coindesk.com
6. How to trade Crypto
There are 3 main different ways to trade through CFD (Contract for Difference). It means you have to speculate in a short time to buy and sell cryptocurrency in order to get more gains of profit.
According to Surf Up!, these are the main ones:
- “Buying and selling Crypto using CFDs – With CFD trading you don’t actually buy and sell the underlying asset (in this case the asset being a cryptocurrency). Instead, you can buy or sell exposure to units of a cryptocurrency, based on whether you believe the value will go up or down. In other terms for every point the price of the instrument moves in your favor, you gain multiples of the number of CFD units you have bought or sold. For every point the price moves against you, you will make a loss. Tradeview offers CFDs on crypto through its platforms.”
- “Outright buying and holding a digital portion of a cryptocurrency – Alternatively, people choose to buy and own crypto by holding it in their own digital wallet (Cold Storage) or a wallet in an account at a cryptocurrency exchange. This makes you the owner of a portion of the cryptocurrency that you decide to buy and hold in hopes of it gaining value.”
- “Buying Exchange-traded products – Similar to a stock or commodity you can find a number of on-exchange products such as ETFs or CME traded Options & Futures.”
7. Reading the Charts
The main components to read charts are:
Chart Source: es.tradingview.com
The main colors that you will find are green (which means growth) and Red (which means decline).
You may also find a Doji Pattern. According to Surfs Up!:
“After an advance, or long white candlestick, a Doji signals that the buying pressure is starting to weaken. After a decline or long black candlestick, a Doji signals that selling pressure is starting to diminish, indicating that the forces of supply and demand are becoming more evenly matched and a change in trend may be near.”
The Hammer pattern indicates when a trend is about to end and “shows that the bulls took control of the trading. (indicated by the wick) but quickly lost it (short body). As a result, the price returned close to the opening number”
Last, but not least, the Shooting Star pattern. It shows a pattern is about to end, It shows the end of a bullish trend.
8. Be aware of the last news!
When beginning with Blockchain and cryptocurrency it is vital to be aware of the last news about what happened with the trends of the cryptocurrency you are investing in. As an example, you may find that Bitcoin crashed on May 2021 for $30.000 before rebounding. To have all the information on the issue we highly recommend Surfs Up!.
9. Did you Know?
- The first-ever recorded cryptocurrency transaction was made by Laszlo Hanyecz, a programmer who bought 2 Papa John’s Pizzas for 10.000 Bitcoins or $576.000.000.
- With Bitcoin trading above $54.000, its market has reached 1 trillion USD.
- In 2021 Visa launched credit cards offering Bitcoins instead of air miles or cash.
- In 2021 Tesla invested $1.5 billion in Bitcoin and also announced that people can use that currency to pay for the cars.
10. The first steps:
- Open an account: Open a position and an account. One of the best places to start is in Tradeview as it opens the operation faster.
- Develop a Cryptocurrency trading plan: One of the most important things is to control your emotions so that you do not take impulsive reactions. Try to think about it as a game. You do need to have a plan on what to do when things go right and what to do when things go wrong. Make sure you take into account that until the money is in your bank account your gains or profit is theoretical.