Trading Education

Beginners' Guide about Cryptocurrency and Blockchain. Lesson 2

What opportunities do cryptocurrencies provide?


Cryptocurrency is a digital asset powered by blockchain technology. As we have discussed in the previous lesson, blockchain provides several important opportunities that ordinary money does not have.

Cryptocurrencies are fast, convenient, reliably protected and only their owner has full control. These are the key points that have ensured such rapid growth and popularity for cryptocurrencies.

In addition to the cryptocurrencies, there are tokens, that are the companies’ shares converted into digital format, but they do not always meet all the criteria for a real cryptocurrency. This is a relevant topic for the discussion among the community concerning the cryptocurrency meaning, and the format it should correspond to.

The main cryptocurrency at the moment is Bitcoin (BTC). It has an open registry and all movements of bitcoins on the network can be easily overviewed, but at the same time, users who own bitcoins are completely anonymous.

Bitcoin's competitor is the main altcoin, Ethereum (ETH) cryptocurrency. Ethereum is cheaper than bitcoin and appeared later. It is a platform for many projects and today is actively developing. Ethereum plays an important role in the development of the crypto market and the blockchain industry.

Cryptocurrencies are divided into the main cryptocurrency (Bitcoin), alternative cryptocurrencies (Altcoins), and stable cryptocurrencies (Stablecoin).

Altcoins


Altcoins are alternative cryptocurrencies that are not related to the main cryptocurrency, bitcoin, but also work on the blockchain. Altcoins are coins of alternative projects that develop the blockchain sphere and implement certain technical solutions. These are projects that create cryptocurrency exchanges, crypto wallets, or games on the blockchain. So they also play the role of digital stocks of companies.

There are even altcoins-mems like Dogecoin. The coin is a joke, but it brought its users a real profit when bloggers spread it on TikTok!

Altcoins are subject to sharper price rises than Bitcoin, so owning and trading them is a very risky business.

Stablecoins


Stablecoins are stable cryptocurrencies, usually backed by fiat currencies such as the US dollar. Accordingly, their price is completely identical to the price of such an asset. A striking example of a stablecoin, USDT, is traditionally perceived as a digital dollar on the crypto market. However, stablecoins can also rely on a whole basket of assets, and this can be not only fiat money but also precious metals or other assets.

Stablecoins are of course boring, almost like ordinary money, but with them, you definitely won't lose all your funds in an instant, as can sometimes happen with altcoins. Although the company Tether, which issues boring USDT, has repeatedly got into very high-profile scandals, intrigues, and investigations.

Exchanges


Crypto-exchanges enable users to exchange cryptocurrency, trade, and use many earning methods for their living.

The main activity on crypto exchanges is trading. You buy a cryptocurrency at a low price, then sell when the price rises. It's simple. If only the price rises, of course.
Crypto exchanges are similar to stock exchanges but more accessible and easier to use. Any user can register on the crypto exchange and trade or exchange.

Crypto exchanges are divided into centralized like KickEX exchange and decentralized ones. Centralized ones are more convenient and faster, decentralized ones give more freedom and anonymity of user assets.

People who make money trading cryptocurrency are called traders. A trader must be cold-blooded, systemic, and not react to manipulations, which are more than enough on the crypto market. With more practice, you will see everything for yourself.

Traders receive income from the difference in the rates of cryptocurrency or fiat currency. They are interested in short and medium-term price movements of coins.

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