Money Making Beginners Guide to Cryptocurrency by Ajeet Kumar (classic reads .TXT) 📕

Chapter 2: Why Cryptocurrency Works

Now you see why gold is compared, fiat currency is not real money; This is the time to turn our attention to cryptocurrencies as a solid alternative, as we know why they are so close to gold rather than money, and why they will work better than Fiat currencies.

Low risk of disruption

According to David John Grandi, head of global blockchain at Dansk Bank, one of the largest banks in the world, the only way anyone can turn a blockchain on or off is to turn off the Internet manually.

And so far, I think you know it's practically impossible. It is like saying that someone can stop the sun from shining or the wind from blowing.

Portability

Unlike fiat currencies, cryptocurrencies can be easily transferred from one account to another using online gadgets such as computers, tablets or smartphones. With Fiat currency, you have to do this physically or through the same bank. Also, you don’t have to bring them with you physically as they are stored in the internet. So you can go anywhere with a good internet connection and bring your cryptocurrency with you regardless of the amount!

Better price collection

You can only consider an asset as a good value collection if it is able to maintain a relatively unchanged utility or satisfaction over time. To use this in financial assets, it means to have the ability to maintain purchasing power over time. There may be the ability of financial assets to hold value Which is estimated by what is called fundamental analysis, which takes into account the quantitative and qualitative aspects of such an asset.

The ability to hold or store value has become the primary foundation for investing or HODLing cryptocurrencies such as Bitcoin, Ethereum and others. But can cryptocurrencies really be trusted at store value and if it is, can it do it well?

Comparison of gold

Precious metals are compared or compared to precious metals when judging the ability of cryptocurrencies to store value in the long run, i.e., do not hesitate to get bitcoin or litecoin from gold or silver from ether. One reason is - albeit shallow - the color of cryptocurrency. Bitcoins are visually represented as gold while litecoins are visually represented as silver. But there are more than just visual cues that justify the cryptocurrency's ability to store values like the two precious metals on Earth. We should not dismiss behavioral economics based on both asset classes.

While more and more people believe that the way cryptocurrencies like Bitcoin, Ether or Litecoin can store value for precious metals like gold and silver, it can help push the prices of these cryptocurrencies upwards. When their values increase over time, then it is very likely that they will be able to maintain or maintain their values over a certain period of time.

Comparison of precious metals, e.g., gold from Bitcoins, can be a very strong factor that can influence the general market outlook regarding the potential of Bitcoin and Altcoin to retain or store value in the long run. And this could have a big impact on the number of investors who would generally view cryptocurrencies as good investment vehicles.

Limited doses, i.e., deflationary

Like gold in its physical form, cryptocurrencies such as Bitcoin usually have a limited number of units, which are defined or set in their respective blockchain protocols. Bitcoin, for example, has a cap of only 21 million units that could ever be created. Litecoin, on the other hand, has a cap of 84 84

million units which is also controlled by its operating protocols. This is what makes cryptocurrency deflationary or disinfectant over long distances.

Remember our discussion of supply and demand and how change in both affects asset values?

Because cryptocurrencies have a fixed number of units that will ever be minted, their supply is effectively reduced given the amount of goods and services they can purchase in the future. This means that its purchasing power can be expected to grow from a long gap and have a deflationary effect on goods and services.

Independence from other wealth classes

Compared to all other financial asset classes such as stocks or fiat currencies, whose values depend on announcements or moves made by central bankers or financial regulators, the actual value of gold and silver cannot be determined by any central financial authority. Macro-policy decisions. Due to the autonomy of any financial power, precious metals such as gold and silver are able to withstand price shocks over time, making them a very good collection of long-term value.

Cryptocurrencies are like gold because they are usually decentralized and autonomous by nature. This means that like gold, government decisions or policy changes have little direct impact on their long-term values. The amount of decentralization and autonomy can be hot A topic of discussion among cryptocurrency users and investors, where some favor a fully autonomous version while others seem more comfortable with the compromise, i.e., hybrid combinations of certain types of governance (not from the government) and decentralization. In general, the models of cryptocurrency regimes can change drastically when it comes to making big decisions on the one hand, with some adopting a balanced power structure framework among its users while on the other hand it goes for an indirect dictatorial model. And between the two there are various other mix or hybrid models. But in general, cryptocurrencies with more decentralized systems may pose a better risk in terms of hedging against the risks of regulators influencing or tampering with their values.

Underlying or intrinsic values

Assets that are considered to be a true store of value have inherent characteristics that serve as the basis of their values. From the common man’s point of view, such assets have intrinsic utility values, i.e. practical uses that give them their values. For example, gold is used to make jewelry and electronic parts such as semi-conductors. The underlying value or utility of land or real estate is the ability to build structures on them and get as much foot traffic in their area.

When it comes to inherent utility value, cryptocurrencies have a lot of potential. In particular, cryptocurrencies have a great deal to offer in terms of changing the way online financial transactions are handled, including contract enforcement, record keeping and payments. As the use of cryptocurrencies such as Bitcoin, Litecoin and Ether is increasingly accepted in more and more markets, their practical utility values increase even more, which can increase their value over long distances.

Impossible to fake

Transactions Blockchain technology is a revolutionary in the facility of online transactions and data or record keeping. Because of this, it is practically impossible to create fake versions. And as blockchains evolve, it becomes more and more impossible - if there is such a period - to produce counterfeit cryptocurrencies that can be used to buy content.

Impossible to control

Especially for cryptocurrencies whose market capitalization is already in the billions of dollars like Bitcoin and Ether, enough units of such cryptocurrencies will only need a large amount to transact, so that they can only influence or manipulate their prices. For example, when you take a look at Bitcoin, for example, whose average market capitalization is somewhere around $ 50 billion, someone will need at least 10 10 billion just to manipulate demand and supply. If you're talking about ether, which has an average market cap of around 25 25 billion to around 30 30 billion, it will need a few billion dollars worth of transactions just to control the prices in its favor. .

The Little Guy Gets In more

Unlike stocks and other financial assets, which require relatively large amounts of investment capital, there are fewer barriers to entry into cryptocurrency. This also means that people who have only a relatively small amount of money can easily enter, for example, cryptocurrencies in general, at the stage that the number of investors participating in it becomes practically impossible to manipulate the market.

Relative Security

Finally, robbing cryptocurrencies is virtually impossible if you do your homework using the right type of storage, which we'll talk about later. But if you just leave it in your cryptocurrency exchange account, it is only when it is at high risk of being hacked and stolen. So if you later follow my advice regarding the collection of your Bitcoins or other cryptocurrencies, you can make your cryptocurrencies so secure that they will be practically impossible to steal.

Chapter 3: How to Store Your Bitcoins or Altcoins Safely In Chapter 2, I mentioned that if you do your homework and follow my advice, your cryptocurrencies can be practically impossible to steal or hack. In this chapter, I'll spill the beans on how you can do that, which can be summarized in 3 words - a cryptocurrency wallet.

A cryptocurrency wallet is where you store your cryptocurrencies. This may be considered a cryptocurrency investing because the financial assets you're dealing with have no physical counterparts, i.e., they're digital. And because they're digital, you can only store them via a digital storage facility, i.e., a cryptocurrency wallet. The only question is what type of wallet will you use?

There are two general types of wallets: hot storage and cold storage. Hot storage wallets are those that are online or Internet based. Cold storage wallets, on the other hand, are those that are offline or aren't connected to the Internet. So which of the two is best for safely HODLing your cryptocurrencies? If the only way to steal or rob your cryptocurrencies is via hacking, then the obvious answer is cold storage or offline wallets, which come in two general variants: paper and hardware. And I suggest using both.

But before I explain how these two cold storage wallets work, allow me to explain how cryptocurrency storage, particularly the blockchains, works. When you buy cryptocurrencies from any particular exchange, your transaction is assigned a public key that is linked to the number of units of a cryptocurrency that you bought. Your cryptocurrency exchange, on the other hand, assigns private keys that corresponds to your public keys. Therefore, your private keys are your lifeline to your cryptocurrencies, and if you lose or forget them, you can say goodbye to your cryptocurrencies.

For others to successfully "steal" your cryptocurrencies, they must get hold of your private keys. It's like your ATM card's personal identification number, which will allow other people to withdraw from your account without your permission. When you leave your cryptocurrencies in your hot wallet, i.e., your cryptocurrency exchange account, you put them at risk of being hacked and stolen. That's why as soon as you're done buying your cryptocurrencies, you must transfer them, including your private keys, to your cold storage or offline wallet.

Ok, now that we've got that covered, I can explain how the paper and hardware wallets work. The paper wallet isn't really a wallet but more of a backup. Write your private keys on a piece of paper and put that paper in a place where it's virtually impossible to steal or destroy them. A very good place to do so is a fire-proof vault or safe. Another's a safety deposit box.

Hardware wallets are USB-type devices that you can store your cryptocurrencies and its private keys in. These are devices whose sole purpose is to hold your cryptocurrencies and as such, they're offline most of the time. To use them to receive or transfer your cryptocurrencies from and to your cryptocurrency exchange account for executing transactions, you only need to plug it into the USB

port of your Internet-connected desktop or laptop computer and follow instructions.

Cold storage hardware wallets are much safer compared to software wallets, i.e., apps installed on gadgets for two reasons. One is if it's installed on a device that's mostly online, then the risk for getting hacked is still fairly high. Second, even if you install it