The world of cryptocurrency is constantly changing. New coins are emerging, technologies are improving, the blockchain is increasingly becoming the part of the modern life. And that is why we decided to collect on this page all the relevant information on the topic of cryptocurrencies and even a bit more.
IN THIS SECTION YOU WILL LEARN ABOUT:
What is a cryptocurrency and how it differs from any electronic or ordinary money;
How the blockchain technology works and where it is applied;
HOW TO EARN
How to make money on cryptocurrency, conduct arbitrage transactions, etc.
BLOCKCHAIN TECHNOLOGY AND ITS APPLICATION IN DIFFERENT LIFE SPHERES
Perhaps the term “blockchain” has been heard by any Internet user. Even those who are not interested in cryptocurrency as such. And at the same time, this technology is already actively becoming a part of many areas of our life. Experts say that in the future this process will only accelerate. Therefore, let’s take a closer look at the technology itself and the possibilities of its application in our everyday life.
What is a blockchain?
Partly, the name itself describes the technology: “block” and “chain”. That is, formally a blockchain is a chain of blocks with a certain sequence. Now let us explain it in more detail.
Blocks are data about all transactions in the system. They are lined up in a single chain and are inextricably linked. To create a new block, it is needed to read the data from the previous ones. Together they form a large database in which all, even the most insignificant transactions are stored. They are actually open to users – each system participant can write and read data. It is believed that the blockchain is able to overcome corruption, since it will be possible to track any illegal transactions.
The blockchain technology can be explained more easily – by analogy with Torrent.
When you download a file through a torrent, you download it not from the server, but directly from other users connected to the torrent system. There is no central storage or server. In the same way you distribute the file to other participants. The blockchain works on the same principle – all transactions between users are carried out directly and decentralized.
The advantages of the blockchain are obvious:
- Decentralization. Each member of the system is actually a server, supporting the work of Blockchain.
- Transparency. All transaction information is open. But it is impossible to change it in any way.
- Limitless. Blockchain can be endlessly added with new blocks.
- Reliability. It is impossible to replace the hash in the blockchain system. The principle of the blockchain does not allow this.
But how and where can technology be used today and what opportunities does it open up? Most people associate Blockchain with financial transactions. However, the scope is much broader. Here are some of the “non-financial” options for the use of the blockchain.
Retail stores logistics and more
Network trading platforms, by using a blockchain-based applications can easily track the movement of all their orders. The system allows one to place and at any time monitor the data on the processing of various items and their receipt at checkpoints. All processes of working with products and raw materials are completely transparent. Accordingly, the risks of loss of goods, theft, damage, etc., are reduced.
Today there are companies that use blockchain technology to create paperless delivery logs. Experts agree that over time, such programs will become ubiquitous.
Control of the origin of certain products
Already there are developed applications that allow one to track in detail the chain of movement of certain goods – from the moment of its creation to getting to the counter. It doesn’t matter how many times the goods have been moved, packaged, marked on the way – all this information is saved. The buyer can access this data at any time if the manufacturer has marked its products in a special way and posted information about the blockchain. This is one of the best ways to protect yourself from buying fake or just low-quality products available to everyone.
Regular warranty cards are a relic of the past. It is a fact. After all, if a person loses this card, the goods are not subject to warranty exchange or repair. Blockchain allows one to transfer warranty cards to the network and use them at any time from anywhere in the world. They cannot be lost or destroyed, one cannot change any information in them, which is just an indisputable advantage for the end user.
Some manufacturers of home electronics and other product categories are already switching over to blockchain guarantees. Although there are not many of them yet, a substantial increase is expected in the future.
More extensive ways to use Blockchain technology
If the previous methods seem less significant to you, take a look at the ones below. They perfectly demonstrate that the blockchain is the future.
- Finance. Some world banks are already conducting the entire flow of documents on the blockchain. In addition, all banking operations are carried out using the same technology, allowing one to transfer money from virtually anywhere in the world, convert currencies, and track transactions. All operations are carried out almost instantly.
- Medicine. This is an area where data storage and processing plays a key role. Blockchain allows one to very quickly enter patient information into the system – his medical history, the results of examinations and tests. And most importantly – if necessary, access to this data will be possible from anywhere in the world. In a critical situation, the blockchain is really able to save a person’s life. For example, if something happens to him in another city or country.
- Law. In some countries, the blockchain is already actively used for legal regulation. Estonia was one of the pioneers in this sphere. Some time ago it was even possible to get a special e-citizenship there. By the way, right now there is an original cryptonation called Bitnation in the world. And smart contracts even allow one to register a marriage.
- Internet of things. No wonder they say that the Internet of things is our future. Already, BLE and NFC microchips are embedded in many products and items. Together they form completely new principles of interaction between themselves and directly with the consumer. And this is the basis for managing industrial systems, sophisticated equipment and the “Smart Home” systems, already familiar to many contemporaries.
In the coming decades, the blockchain will increasingly become a part of our daily life, entering its most diverse spheres. And if today it seems to be something complicated and incomprehensible to the majority, then very soon the blockchain will be as accessible as the Internet.
MARGIN CRYPTOCURRENCY TRADE
Previously, the concept of margin trade was relevant only for the stock market. However, with the active development of the cryptocurrency market, the situation has changed. There appeared cryptocurrency assets and professional traders, working with cryptocurrency.
Today, margin cryptocurrency trading no longer seems like something new. It is already being implemented on a large scale on many Internet sites. And with the right approach, it turns out to be quite profitable. But if you thought that this way of earning is suitable only for experienced traders, then it is not. Due to the low risks, it is suitable for beginners. The main thing is to understand all the intricacies of the process. And we are going to provide you with introductory information right now.
Features of trading with leverage
The principle of trading is as follows: a trader borrows certain cryptocurrency assets, which he uses to conduct trade transactions. These assets are called leverage. A cryptocurrency exchange at the same time takes a deposit from the trader as a pledge, giving it a substantially larger amount of assets.
Trading process for the user of the exchange can be really profitable:
- the amount of funds that can be used for trading is constantly increasing;
- if you have enough experience and knowledge, you can increase profits in a short time;
- after the closing of the position, the platform takes only the credit funds issued by it, and everything else goes to the trader’s personal account.
The stock exchange itself can increase the size of the leverage for the trader, depending on the success of its activities. Similarly, a reduction in leverage is possible if the trader makes unsuccessful transactions.
Margin trading in simple language
Suppose, you are an investor. You have 100 dollars in stock, and a firm confidence that a certain cryptocurrency will soon jump in price. You need to buy it now to sell when it becomes more expensive. But for a serious and profitable deal, hundreds of dollars are not enough.
And at this point you go to a cryptocurrency stock exchange with the possibility of margin trading and borrow money there. But the loan does not come from the exchange itself, but from another person – an investor who gives a loan in order to get a percentage of successfully completed transactions. This is how you receive a leverage. Newbies usually get 1: 1 leverage – the same amount that they have in their account. Further, this value will increase if the trade is successful.
Now you do not have $100, but $200. And if the price of cryptocurrency increases by 20%, you will earn $40 instead of $20. Yes, the difference is not so significant. But imagine that you have $10,000 plus you receive a leverage of $40,000. With a total amount of $50,000, you will receive a net income of $10,000 (minus the exchange commission). Again, subject to the price increase of the selected cryptocurrency by 20%. And now the trade becomes more than profitable.
How to choose a suitable stock exchange for trading
The success and profitability of margin trading in cryptocurrencies depends not only on the level of awareness in the world of cryptocurrencies or even luck, but also on which platform you decide to trade. Therefore, we have collected for you several criteria that determine a good platform.
- There should be an extensive toolkit not only for trading, but also for a detailed analysis of the market situation. Yes, it is possible to carry out the analysis on other platforms, but when everything is in one place it is more convenient and indicates a greater reliability of the stock exchange.
- Be sure to have two-factor authentication, the ability to enter additional passwords, etc. The site must be safe. Spend some time reading other users’ reviews about this exchange.
- Read reviews. And do not limit yourself with those that appear first on request. There may be paid comments. Visit less popular sites with reviews – there may be much more real reviews.
- Choose only platforms with high liquidity assets. The more users re on the stock exchange, the better. This increases the chances of buying the necessary cryptocurrency on time and selling it faster. Otherwise, no strategy will simply work with low liquidity.
- Pay attention to the commission system. On most exchanges, this amount equals 0.2%. If the commission is much higher, it is better to bypass this exchange platform – you may lose a lot of money you earned.
- Learn how and how fast the withdrawal of funds from the system is performed. It will be very unpleasant then to face a different bureaucracy in the withdrawal. Especially if you need money urgently.
Several rules for successful trading
Of course, over time you will develop your own trading method. But for those who are just beginning to delve into this issue, we have compiled a few rules that will help to be more successful from the very beginning.
- Never bring the situation to the so-called margin call. This is when the deal with the broker ends forcibly. This is possible when the amount on your balance moves to zero – less than 20-30% of the necessary funds. In such a situation, it is better to close unprofitable positions and revise money management.
- Count how much you will have to pay the lender, before you take a loan. Some lenders set the interest rate too high. As a result, you will be obliged to give an impressive part of your profit to the lender. Look for smaller rates.
- Very carefully approach the choice of transactions cryptocurrency. Unnecessarily volatile cryptocurrencies can be dangerous to trade. Their price may rise rapidly or fall sharply. Again, this can trigger a margin call.
- Remember that your assets may be cheaper too. Today you bought, for example, one Litecoin for $100, and tomorrow its price falls by 10%. Now, accordingly, the equivalent of your account is not $100, but $90.
If you decide to try yourself in the margin trading of cryptocurrency, start with small loans, determine the amount you are willing to lose without much damage, set order limits by 20-30% and work with familiar cryptocurrencies. This is how you can minimize the risks and get valuable work experience.
MAIN TERMS IN THE WORLD OF CRYPTOCURRENCY
Despite the fact that cryptocurrency is a relatively new phenomenon in the world, they are already of great importance in the economy, social sphere and relations between people in many countries. At the same time, there remains a huge number of those who are not even familiar with the basic terminology in the world of cryptocurrencies. We will try to fix it. We offer you to familiarize yourself with the basic terms that you may encounter when dealing with cryptocurrency. For more convenience, we will distribute them in alphabetical order.
- Address is a special sequence of characters and numbers with which you can identify and find a cryptocurrency wallet. This code allows you to view any transactions made by the user. The address is the equivalent of a unique plastic bank card number.
- Altcoin is actually any alternative to the first coin in the world cryptocurrency – Bitcoin. Today there are hundreds of altcoins and their number continues to grow rapidly. By the way, some of the experts in the field of cryptocurrency believe that litecoin does not belong to the list of altcoins, being an independent cryptocurrency.
- ASIC – a device specifically designed to make money on cryptocurrencies. It is important to note that ASIC is used for bitcoin mining, but not for other coins.
- Bitcoin is the first cryptocurrency in the world created by Satoshi Nakamoto. It was it that gave impetus to the development of the cryptocurrency market, the emergence of the blockchain and many other economic changes around the world.
- Blockchain is a large structure (network) in which all information about transactions that users conduct is stored. In fact, this concept is much more complex and is recommended for more detailed study in separate articles.
- Volatility is the variability of the cryptocurrency’s price. That is, if a certain cryptocurrency strongly and often changes the price, then it is called volatile, and vice versa.
- Dump – a one-time sale of a large amount of a certain cryptocurrency, which provokes a further drop in its value. Earnings on pumps and dumps is not considered illegal, but it is not encouraged at all, because in fact it is fraudulent.
- Decentralization is a process in which the management of a monetary (or other system) is assigned not to one structure or person, but equally to all participants in the system. Decentralization is considered one of the most effective methods of combating corruption and other phenomena that have a negative impact on the economies of many modern countries.
- Capitalization is the amount of cash that is invested in particular cryptocurrency. The most capitalized cryptocurrency today is Bitcoin.
- Cryptocurrency is a currency based on cryptographic codes and mathematical calculus. It can be mined through the use of computing power, buy, sell, exchange, etc.
- Kefir/Ether are the alternative names for the popular cryptocurrency Ethereum, often used in everyday life.
- Miner – a person engaged in cryptocurrency mining. For this purpose he uses special productive equipment – mining farms.
- Mining farm – ASIC devices or other equipment that allows to mine coins of various cryptocurrencies. The more powerful equipment is used, the more you can get cryptocurrency for a certain period of time. Mining farms are sold in finished form or they can be assembled by yourself.
- Cloud mining – a mining procedure without using your own equipment. The essence of production comes down to the fact that the user pays money to a third-party service, renting its capacity remotely. This approach allows you to not spend a lot of money on the initial purchase of expensive equipment and electricity. Plus, no space is required for bulky mining farms. But there is a high risk of getting into fraudsters – the choice of resources for cloud mining should be approached carefully.
- Pump – a sharp buying-up of a large number of cryptocurrencies, which provokes an active increase in its price due to the increased interest of potential buyers. Pumpers thus force up the price of a certain cryptocurrency, and then sell it profitably, after which the price plunges (dump).
- Key – an alternative name for the address of a cryptocurrency wallet.
- Satoshi – the minimum component of Bitcoin. 1 Satoshi equals 0.00000001 Bitcoin. In addition, Satoshi Nakamoto is the pseudonym of the anonymous author, who is considered to be the creator of Bitcoin. By the way, it is still unknown who actually stands behind the pseudonym Satoshi Nakamoto.
- Tokens – shares of ICO-projects that are received by investors who give their money for the implementation of a project. In the future, if this project is successful, these assets are becoming more expensive, they can be profitably sold or exchanged, earning additional income.
- Fiat – real money that exists offline (dollars, rubles, euros, etc.).
- Fork – a different kind of cryptocurrency branches. For example, there are many Bitcoin forks, such as Bitcoin Cash, Bitcoin Atom, Bitcoin Sudu, Lightning Bitcoin and others. There are soft forks and hard forks.
- Ethereum – the second most popular cryptocurrency in the world, developed by Vitaly Buterin. Its level of capitalization is second only to Bitcoin.
- ICO – the process of producing tokens and further collecting deposits for development. Usually, it is ICO-projects that become the basis for the emergence of new cryptocurrencies.
By the way, there are many informal terms that, however, are constantly used in everyday life. For example, bulls (buyers, cryptocurrency traders), bears (sellers), hamsters (inexperienced traders, often losing money), whales (especially large players), bottom (minimum price of a coin for a period) and others.
Of course, it is not compulsory to know all the terminology literally, in order to understand the cryptocurrency world well. But it is still important to know at least basic terms and concepts. Even if you are not particularly interested in cryptocurrency in general.
EARNINGS ON PUMPS AND DUMPS
Before talking about earning opportunities on pumps and dumps, you need to understand the terminology. Both concepts are quite large-scale and may seem difficult for a beginner, but we will try to describe everything as accessible and understandable as possible. Let us start with pumps.
Pump – is an artificial way of forcing the price of a certain cryptocurrency, the creation of some kind of a hype. Pump allows one to significantly increase the price of cryptocurrency and thus more profitable to sell it. How to make money on it?
A pumper (a person working with pumps), as a rule, buys cryptocurrency in large quantities. This fact itself is already fueling interest from other potential buyers. Further, they are already activated, the price of cryptocurrency increases due to growing demand. And at the moment when the price tag grows to a high mark, the pumper simply sells all his assets at a favorable rate. It is important to wait for the right time to sell. After all, if the course starts to fall, then there is a risk of not earning or even going into a red.
Of course, the pumping of the cryptocurrency rate is extremely expensive. In order to buy a sufficient amount of assets, thus provoking interest from other users, one needs to buy them in huge volumes. And it is very hard to do for an ordinary person.
Basically, pumpers are especially large players in the cryptocurrency market who can afford to buy and sell cryptocurrency. It is impossible to perform without experience and impressive capital.
How to make money on pumps for an ordinary person without big capital?
How to make money on pumps for an ordinary person without big capital? Good question. And this possibility really exists. The main thing here is to timely detect when a large pumper buys a cryptocurrency, provoking its price hike. Having time to be in the first wave of buyers, you can increase investments by several times. You only need to have time to buy a cryptocurrency before it begins to actively increase in value. Such buyers in everyday life are called “hamsters”.
Note! Earnings in this way are possible, but there is one important thing. Only pumper decides to which peak he wants to raise the price of the cryptocurrency, after which he immediately sells it. Usually, after this there is a significant depreciation of assets. Hamsters often miss this peak and do not have time to sell their cryptocurrency at a bargain price. And it can collapse almost in one moment. Therefore, here is an advice: do not delay the sale and wait until the last moment. Otherwise, you will lose your assets or freeze your account until better times.
How to recognize a big pump
Remember that making money on the pumps is always a risk. But if you learn to use all its capabilities, you will be able to climb into positive territory. One can recognize a pump on several grounds:
- A lot of news about not very famous cryptocurrency, including on authoritative official resources.
- The emergence of fictional informational grounds, which main goal is to increase interest in cryptocurrency.
- Active work with the loyalty of the audience in order to create more confidence in the cryptocurrency and stimulate the purchase.
- Activation of discussions in thematic forums and various chat rooms.
In other words, if there is a lot of active discourses about certain cryptocurrency, this is definitely a sign of pumping. Whether you participate in it or not – the decision is yours. But again, this is a risk. Always.
Dump is actually the opposite of pumps. Only in this case one does not buy cryptocurrency in large volume, but sell it. Accordingly, its value falls very quickly. As a rule, it is because of the dump that the so-called “hamsters” lose their investments – they simply do not have time to sell cryptocurrency in time to its sharp depreciation.
Why does this happen?
As you already understood, pumpers control the cryptocurrency price growth process in many aspects. If you have the financial capabilities and experience, you can really become a pumper. However, there is a feature here.
Any cryptocurrency once reaches its peak value, after which it declines – just like a roller coaster. However, the experienced pumpers usually do not bring the price to its peak, realizing that there will be a sharp decline further. Instead, they launch a dump a bit earlier – when the rate is still growing, and hamsters are still massively buying assets. That is why the fall in the course turns out to be so sudden for the overwhelming majority – the price may collapse in just a few hours.
Should an ordinary person try to make money on pumps and dumps?
Summarizing all the above said, we can say with confidence that the pumps and dumps are only for large players with significant capital. After all, it is necessary not only to buy a large amount of cryptocurrency, but also to launch an active campaign to increase the interest of the audience to specific assets. And this sometimes requires a large investment than in the cryptocurrency itself.
For an average user, the risk is always greater than the potential income. The number of people earning money on pumps and dumps is insignificant compared to those who lose. Many of them buy cryptocurrency at the moment of dumping, a mass selling. They do not even suspect that tomorrow the price of their assets may fall in several times.
That is why, if you really want to make money on cryptocurrencies, it is better to choose safer methods: mining, trading on the stock exchange, etc. And in order not to fall for the next pump, follow our tips:
- Do not believe very loud headlines in the news, especially from unverified sources.
- Do not trust all the information in various forums and chats. There are often fake users.
- Do not buy little-known cryptocurrencies. Especially, if it has an unreasonable and unnatural growth rate.
- Do not invest in questionable ICO projects. Especially if you are offered to do this in various advertisements, spam e-mails, etc.
Of course, only you can decide how to earn on cryptocurrency. It is possible that you will be among those who have time to invest in time during the pumps and bring up to dump. But in practice, the chances of this are quite low, so to go for such risks without knowledge and understanding of the case is definitely not worth it.
MOST FAMOUS CRYPTOCURRENCIES
Every day appear new cryptocurrencies. And if you regularly read our articles, you know that if wished, everyone can create their own cryptocurrency. But at the same time, only some of them really succeed. We shall consider such cryptocurrencies in this article. At the same time, we will touch upon not only ultra-popular ones, like Bitcoin or Ethereum, but also those less known to the broad masses. And, of course, consider the main features of each of them.
Ethereum is a so-called bitcoin fork. It is a platform for implementing decentralized online services based on blockchain technology. And unlike Bitcoin, Ether uses smart contracts. In Bitcoins, smart contracts were specifically limited.
Ether’s Smart Contracts are used in various financial products:
- recurring payments.
Ether was launched on July 15, 2015, but the active dynamics of its price growth began in mid-2017. At the same time Ethereum differs in frequent and rapid course jumps. It is for this reason that it is most often used for trading on the stock exchange. If several years ago the price of Ether was 1-2 dollars, then as of the beginning of 2019, the exchange rate ranges from 150 to 300 dollars.
TRON (TRX) is a decentralized open source cryptocurrency. It was launched by the eponymous Chinese company in 2017. Today, Tron is a sort of social network, where users mainly place entertainment materials. Several types of coins are used inside the platform – Bitcoin, Qtum and Ethereum.
It is noteworthy that today experts estimate the digital entertainment market at more than $1 trillion. At the same time, the price of the TRX is very low – about 2 cents (at the beginning of 2019). But many experts predict a future price increase, which is why those who want to make money on the growth of the cryptocurrency exchange rate should definitely consider Tron.
For a long time Neo cryptocurrency did not have a big reputation, but today many experts put it on the same level with Ethereum. It is even called one of the most stable cryptocurrencies in the world. Neo is the first Chinese blockchain project created in 2014, however cryptocurrency appeared two years later, in 2016. The goal of the developers was not just the creation of a new cryptocurrency, but development of a new model of economic relations between people.
Neo allows one to digitize and change a variety of assets: real estate, transport, precious metals and much more. Like Ethereum, Neo uses the principles of smart contracts. Among the advantages of cryptocurrency, it is worth noting the simplicity of mining – the effectiveness does not depend on technical capacity. Plus, the absence if commissions, the ease of creating smart contracts and high reliability are worth mentioning.
Bitcoin Cash и Bitcoin SV
Bitcoin Cash (BCH) is a Bitcoin version resulting from the hard fork of the original blockchain. Bitcoin Cash was created as a result of the dispute between the miner communities and as one of the ways to scale cryptocurrency. Moreover, if you are the owner of Bitcoins, you can exchange them for the same amount of Bitcoin Cash.
Bitcoin SV is a hard fork of Bitcoin Cash, which was released only at the end of 2018 and almost immediately hit the top of the cryptocurrency market capitalization. The developers themselves are striving to preserve the main principles laid down by the creator of Bitcoin Satoshi Nakamoto: scaling, security, low commissions, convenience for miners and investors.
Monero (XMR) is an anonymous digital currency launched in 2014. Today it is actively used to conduct various financial transactions on the Internet. With a series of unique cryptographic methods, Monero provides unprecedented anonymity for all users.
Thanks to its security and anonymity, Monero cryptocurrency quickly entered the TOP-10 in terms of capitalization. True, at the end of 2018, it took the 11th place because of the appearance of two Bitcoin forks.
Experts say that the price of Monero can reach $1000, which makes it promising for those who want to invest in cryptocurrency and further increase their own assets. A high level of anonymity makes it especially interesting for many users.
Like Monero, Zcash (ZEC) focuses on anonymity. All payments are published in the public blockchain, however, information about the parties, as well as the amount of the transaction remain completely confidential. Although the cryptocurrency is based on the Bitcoin protocol, it uses its own special blockchain and token. Zcash can be easily sent around the world and exchanged to other cryptocurrencies, which makes the use of this cryptocurrency convenient and versatile.
The main feature of Zcash is the use of evidence with zero disclosure. That is, transactions are confirmed without any additional information. Perhaps that is why Zcash is called the most anonymous cryptocurrency.
Ripple is a whole platform for payment systems. It allows to perform the currency exchange, but does not allow back payments. The project was launched in 2012, the network uses the XRP cryptocurrency.
the network uses the XRP cryptocurrency. Ripple is known to be one of the main competitors of Bitcoin or Litecoin. And many experts are confident that in future the price of cryptocurrency will only grow. Although its price now is much lower than that of Bitcoin, Ripple has good prospects. In addition, many believe that by 2020 Ripple will attract a lot of banks and will be used much more actively. Some even say that in the next 5-10 years, Ripple can become the basis of all banking operations.
SMART CONTRACTS IN CRYPTOCURRENCIES
A smart contract is a special computer algorithm that allows one to enter into and maintain all sorts of self-fulfilling contracts that are executed inside the blockchain-environment. Simply put, with the help of smart contracts system users can quickly exchange assets without intermediaries, that is, more profitably, quickly and confidentially.
How smart contracts appeared and how they work
The beginning of the era of this phenomenon can be considered the year of 1994, when cryptographer and lawyer Nick Szabo thought that by using a decentralized registry, it is quite possible to create self-executing contracts, when writing them down as a code. And the execution of these contracts can be provided by a large computer network with a chain of blocks.
The idea was a breakthrough for its time, but for a long time it was not possible to implement it. Only in 2008, smart contracts gradually began to appear and be used in practice. This was made possible thanks to the blockchain technology. Without it, perhaps, smart contracts would not exist in the form that we see now.
The practical use of smart contracts intensified even later – in 2013. And here the Ethereum project played a big role.
Basic operations of a smart contract
Through the use of blockchain technology, users can conduct transactions, transfer data and funds without the participation of any third parties, in particular, banking structures. Smart contracts can be compared with small programs that are transmitted in the coded form. To change the terms of the contract or otherwise interpret them the way a person wants is simply impossible.
We can give an example of how a transaction is conducted:
- One user decides to conduct a transaction.
- The transaction is sent to the network, which consists of many computers of its participants.
- The network confirms this transaction.
- Further, this transaction is combined with the rest, creating a new unit of the digital registry.
- This new block gets into the blockchain.
- The transaction is completed.
In fact, smart contracts respond to transactions. The program created from the smart contract independently monitors the fulfillment of the contractual terms. And at the time of their full implementation, the money is received by the recipient.
For the sake of simplicity, we can compare smart contracts with the most common vending machines selling soda, candy bars, coffee, and other things. First you throw money and get the goods. And no intermediaries!
Please note: today, smart contracts are concluded on a set of blockchain platforms. Among the main ones are Bitcoin, Ethereum, Side Chains, NXT and others. Moreover, if you have the skills, you can develop smart contracts yourself or entrust their development to professional programmers.
Areas of application for smart contracts
Despite the fact that the technology of smart contracts is relatively new, it is already used in many areas, and mainly in quite large and significant. Let us give you some examples.
- Real estate. Often, smart contracts are used to automate leases, manage leases, cash flows, etc. This makes it much easier to work with various tenants, landlords, agents and other representatives of the real estate industry.
- Supply chains. In logistics, smart contracts allow one to track the movement of goods and, more importantly, to ensure that they reach their destination. Tracking costs are low, contract terms are open and fair. Plus it provides excellent protection against fraudsters.
- Financial sphere. Many call smart contracts the future of the entire financial industry in the world. Some banks are already using smart contracts and blockchain technology in their work, although the phenomenon is still not broadly used. If the number of such banks increases in the future, the system will eliminate the inconvenient delays in conducting various banking operations that are caused by centralized institutions.
- Health care. Health organizations transmit huge amounts of data to one another each day. Blockchain also allows one to conveniently store this data and access it at any time. This applies not only to various goods and drugs, but, for example, to patient records. Blockchain and smart contracts will provide information from a person’s medical card almost anywhere in the world.
- State institutions. Here, while smart contracts are practically not used, but the prospects for technology are enormous. For example, you can check your identity or vote, monitor the implementation of election promises by politicians, conduct transactions at the state level and monitor their compliance with each of the parties. One of the countries that is already working on the implementation of smart contracts in government institutions is the United States of America.
Pros and cons of smart contracts
We have already noted the main advantages, but we will turn your attention to a few more:
- high level of security for all transactions;
- faster resolution of controversial issues;
- less need to use the services of lawyers, auditors, other intermediaries, etc.
But still it is impossible not to mention some of the shortcomings of smart contracts:
- because of the incomplete work of the programmers, all sorts of bugs and malfunctions in the programs can still occur;
- creating a smart contract is not an easy task, which is not yet possible for an ordinary user;
- most contemporaries simply do not understand what it is, and that is why the development of technology is slow;
- devices and records of smart contracts can be lost without the ability to recover data;
- regulatory oversight is still required in order to resolve some issues;
- smart contract code is sometimes malfunctioning.
Despite this, more and more specialists are talking about the rapid development and distribution of smart contracts in the world. And, looking at current trends, one cannot but agree.
TECHNICAL AND FUNDAMENTAL ANALYSIS OF THE CRYPTOCURRENCY MARKET
Cryptocurrency market is developing by leaps and bounds. Only recently, the world has discovered what cryptocurrency is, and already today Bitcoins, blockchain, ICO projects are widely known. Many people want to make money on this and are looking for the most rational ways. But in order to choose which coins are worth investing in, and which ones should be avoided, a deep analysis of the cryptocurrency market is required.
There are two main methods of such analysis – technical and fundamental. We consider both methods, their principles, advantages and disadvantages.
Technical analysis of cryptocurrency
It is based on a detailed study of price change charts. When considering a particular cryptocurrency, its market price is taken into account. And here it is necessary to emphasize several aspects of this approach:
- In the price itself there are already all the factors influencing its formation. The goal is to determine how the price changes, but not how changes occur.
- Any change in the value of assets is not accidental. There are special trends that affect the price and which can be seen directly on the price chart.
- History is cyclical and repetitions often occur. The technical analysis adheres to the principle that, with the same incentives, there will be the same responses. That is, if a year ago there was a shock of cryptocurrency price in this period, we can expect the shock at the same time this year.
That is, the basic principle is the study of indicators of growth and fall in the rate of cryptocurrency.
Please note: technical analysis can be used as a way to briefly predict the price of cryptocurrency. Accordingly, to select the optimal time intervals for conducting trading manipulations for earnings.
Often, technical analysis is considered new to the world of cryptocurrencies. It is relatively easy to understand it and there is an opportunity to work with insignificant risks, thus, sharpening one’s skills But still this is not an ideal way. It has many flaws:
- Long-term forecasting through technical analysis is not possible. Yes, sometimes you can predict price fluctuations for a day, a week, or even a month. But this does not mean that at a certain point the situation will not change radically.
- As it was said, analysts do not take into account the principles of raising or lowering the price of assets, but only its dynamics. Therefore, it is impossible to talk about the correctness of technical analysis. The most vivid example is the pumps. Someone is massively buying a little-known cryptocurrency, it begins to rise in price. The analyst sees a positive trend, buying up coins. And then the investor sells everything and the exchange rate falls rapidly (for more details, see our article on pumps and dumps). The result is a loss of money.
- The absence of any templates. The market is changing. And even if the principle of cyclicity works, the difference in dynamics can still be very strong.
Is it possible to consider technical analysis as possible to use? Yes, but you need to do it wisely, because it is very superficial and does not give answers, why price fluctuations occur. To understand this, we need another approach, which we shall discuss later.
Fundamental analysis of the cryptocurrency market
In this case, not only price changes are analyzed, but also the reasons for these changes. Among such reasons are:
- the popularity of a particular coin;
- the actual possibilities of its use;
- how much the cryptocurrency is integrated into the real economy;
- investor interest;
- relation to the cryptocurrency of a certain state.
Fundamental analysis faces a fundamental task – to assess what the real price of assets is and at the same time compare how it corresponds to the market value at the present time.
Important: only fundamental analysis allows to identify overvalued or undervalued coins, and then choose a more reliable option for investment. Technical analysis does not provide such an opportunity.
Of course, basic research requires a deep dive in the question, the study of various sources of information, etc. However, the analyst gets much more valuable data on the cryptocurrency of interest, knowing whether to invest his money in it.
But there are some nuances that can alienate you from fundamental analysis:
- Too many analysis criteria. To get all the necessary information, it takes a very large amount of time and effort and not all the necessary information is freely available.
- Interpretations of the results are very ambiguous. Often, the results of the analysis may differ dramatically from each other, and forecasts based on them are diametrically opposed. And the more the cryptocurrency market expands, the more difficult it becomes to process data.
- The process is very time consuming. We have to study a lot of foreign resources, logically analyze and compare data, isolate real ones from fake. For the average investor, this sometimes becomes physically overworking.
So what type of analysis should you choose?
Unfortunately, we cannot give you a definite answer here. Technical analysis is simpler and quite accurate in the short term. It does not need a lot of experience, but the risks are much greater. This analysis is chosen by beginners, while experienced traders give preference to fundamental analysis.
There is a third option – a combination and it can be optimal for you. For example, with the help of technical analysis it is possible to identify several interesting cryptocurrencies growing in price, and after that conduct a fundamental analysis among them, choosing the most promising ones for you. Of course, the time and effort required for this is even bigger, but many traders and portfolio investors prefer such a combination.
Which way to go is up to you, but remember that sometimes it is better to spend more time and effort than to hastily invest money where it should not have been invested. Be careful and attentive when working with any cryptocurrency.
WHAT IS TOKEN?
A token is an integral element of any ICO, a form of cryptocurrency crowdfunding. Tokens are conventional units created by the issuer and denoting a certain amount of an asset. That is, when the issuer creates its asset, it distributes its value into equal shares – these are the tokens that can be bought, sold or exchanged.
The issue of tokens has two main objectives:
- To determine a clear cash asset value.
- To attract as many investors as possible.
Almost always, tokens are created before the asset directly enters the market. After all, the release of an asset also needs some money. And the sale of tokens just allows you to get it.
What could be the basic asset for a token? Many different things – from goods and services to electronic money and cryptocurrency, and even virtual money in computer games, paid applications, etc.
Saying it in a simple language, a token is a digital analogue of a digital or real asset.
Are token and cryptocurrency the same thing?
No, they are different concepts. Cryptocurrency is a virtual currency with cryptographic protection and it can be mined. Tokens are only a unit of expression of value, their mining is impossible. Although in some cases it is possible, if the issuer provides such a possibility.
The issue of tokens is strictly limited. They cannot be issued more than the assets allow. In addition, they have a limited scope of use. From a certain perspective, tokens can be compared to ordinary metro tokens or coins for a payphone.
Tokens do not have their blockchain, and they can be issued both in a centralized and decentralized way. The price of tokens is formed depending on the price of the asset itself, as well as the activity of supply and demand.
The main types of tokens today
There are actually more types of tokens, but let us distinguish three popular ones:
- Appcoins, application tokens. They are virtual money that can be purchased for real money. With the help of appcoins, you can buy various goods within the system, pay for services, carry out various internal calculations, etc.
- Credit tokens. Most often they are used to receive funds from investors, offering, in return, income after a certain period of time. If the project is successful, then investors really get income. Credit tokens can be compared with bonds on the stock exchange.
- Tokens for ICO. A similar option, but with the difference that investors are attracted to cryptocurrency projects. An investor receives a certain share of assets for his contribution. And if the project is successful, it also earns income.
Some key facts about tokens
- The existence of tokens and cryptocurrency is closely related. The first appeared precisely because of the latter. And the more actively cryptocurrencies develop, the more new tokens appear. A particularly active jump in the popularity of tokens is associated with the creation and development of the Ethereum platform, as well as the technology of smart contracts.
- Initially, tokens for the most part were only bitcoin forks. Now, Ethereum is used as the base, as well as the source code of the ERC20 platform.
- When a person or an organization buys tokens, they actually receive private keys, which contain all the information about the number of assets that now belong to the buyer.
- Many tokens really show a rising cost trend. At the same time, investors can use their tokens not only directly within the project system, but also receive certain dividends from them.
- Some tokens are available for free. For example, there are some projects and services that provide them for registering or performing other actions. Another question is how promising they are and whether the user will at least get some benefit from them.
Where to buy tokens and how to earn on them
Over the past few years, tokens have really become a very interesting investment object. It is possible that gradually they will even become more popular than cryptocurrencies. You can buy them on cryptocurrency exchanges or closed trading platforms. The latter are often created by the issuer itself for the convenience of its investors.
Often, tokens are also used by owners of various start-ups, offering potential investors convenient conditions and tools for buying tokens. In general, there are no problems with their purchase. Another more important question is how to make money on tokens.
A popular way to make money with all its risks is to buy tokens in various ICO projects. In 2017, this type of crowdfunding allowed to collect about $200 million. A descent amount of ICO projects are initiated weekly around the world and this number is increasing gradually.
It is important to understand that not all of these projects are promising. You must not blindly buy tokens in the hope that the assets will rapidly rise in price. Perhaps any of them will become successful and you will just lose money by getting useless assets.
To make money on tokens, you need to carefully analyze many aspects:
- what are these tokens and for what purposes they can be used;
- what is needed to increase the price of these tokens;
- what niche is the project involved in and does it have any prospects.
Practice shows that today ICO are more profitable for investors, which are associated with cryptocurrency, blockchain and various innovations. One should pay attention to them in the first place.
If project assets become more expensive, then tokens grow in price. Accordingly, they can be profitably sold, exchanged, used for various internal purchases. That is, we are talking about really promising earning opportunities, if you approach the issue wisely and consciously. Otherwise, we recommend not to invest money in projects in which you are not sure or are not yet sufficiently knowledgeable in this matter. Investing in ICO is always a significant amount of risk. And your task is to minimize this risk.
ACCESS TO RECENT DATA
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You have full access to training materials and new knowledge. Just choose what you are interested in and need, and study the information without restrictions. We will open to you many secrets of successful trading in the cryptocurrency market, help you deal with complex topics and find your best way to make money. Well, if the information provided seems insufficient to you, then we are always ready to provide advice individually.