Distributed Ledger Technology: Crypto, an FAQ
Discussion
What is Distributed Ledger Technology (DLT)? - AKA Blockchain technology & Cryptocurrencies
Destributed Ledger Technology might be better known to you as Cryptocurrency, or even Blockchain technology. This refers to the technological infrastructure and protocols involved in the simultaneous access, validation, and record updating in real time over an immutable ledger record. This is done over a decentralised network of nodes. This technology enables the secure functioning of a database that isn't stored in a single location. This distribution eliminates the need for manual verification and cross checks for errors as each member node performs that function as part of its algorithm. It also allows for almost unlimited storage of information in a secure and accurate manner through cryptography. The access and ownership of this network is through the keys, better known as coins or tokens. Once information is written to this ledger it becomes impossible to alter and is an immutable part of the systems database and is governed by the rules of the network.
Why should you care?
It is expected that DLT / Blockchain technology will bring a disruptive paradigm shift in the way transactions are conducted in the manufacturing and service enterprises. By eliminating the drawbacks of trust-related issues in a business chain, the distributed database of blockchain can bring transparency with pseudonymity and irreversibility of records.
In short, the adoption of Blockchain technology into modern business is inevitable because it brings about a level of operational efficiency far above current methods. Current systems are open to personal bias, corruption and human error. DLT eliminates a lot of the current problems. In addition, and probably the primary focus of a lot of the media attention, is the shift that it will make in the financial markets. There is the potential for DLT and blockchain to supplant almost every form of record keeping and asset allocation in every facet of the business and financial market. It will also change the face of international money markets.
You should also care because the western world, and thusly its economic forces are about to undergo the largest demographic shift in a century as the baby-boomer generation leaves the workforce. Ex-Goldman Sachs and ex-hedge fund manager, Raoul Pal, discusses this upcoming crisis in the below video.
https://youtu.be/5OFaZcC0lRU - The Coming Retirement Crisis Explained and Explored (w/ Raoul Pal)
Adoption Curve
Crypto and Blockchain adoption is growing at an exponential rate & is being adopted faster than any technology previously invented.
Cryptocurrencies are seeing the biggest adoption rate in the developing world where inflation is high, currency stability is low and a large percentage of people are unbanked. The rise of p2p payment networks that reduce the cost of remittance internationally is a large driver to adoption. Access is available to anyone with a mobile phone. As of 2021 smartphone adoption worldwide has surpassed 6 billion and by 2026 likely exceed 7.5 billion.
Source: https://www.statista.com/statistics/330695/number-...
“At the end of Q2 2020, following a period of little growth, total global adoption stood at 2.5 based on our summed-up country index scores. At the end of Q2 2021, that total score stands at 24, suggesting that global adoption has grown by over 2300% since Q3 2019 and over 881% in the last year.”
Source: https://blog.chainalysis.com/reports/2021-global-c...
Scenarios
Bearish
a. Cryptocurrency will only takeover 1 % of the entire target addressable market.
b. The cryptocurrency will take two years to achieve 10 % of the 1 % adoption.
c. The number of years that the cryptocurrency will take to achieve 90 % of the 1 % adoption will be seven.
Modest
a. Cryptocurrency will only takeover 10 % of the entire target addressable market.
b. The cryptocurrency will take two years to achieve 10 % of the 1 % adoption.
c. The number of years that the cryptocurrency will take to achieve 90 % of the 1 % adoption will be five.
Bullish
a. Cryptocurrency will only takeover 20 % of the entire target addressable market.
b. The cryptocurrency will take two years to achieve 20 % of the 1 % adoption.
c. The number of years that the cryptocurrency will take to achieve 90 % of the 1 % adoption will be five.
Source: https://cryptoresearch.report/crypto-research/the-...
Blockchain and it’s implication in broader money and asset markets
Due to the technology involved, the Decentralised Ledger Technology essentially allows the trading of tokens without a record keeper or middleman. This simplifies the subject of ownership, provides faster exchanges, increased security, trust, reduces risk and increases transparency. Thus, as a result, it has the potential to impact almost every single facet of a modern business.
"Secure and trust-free blockchain-based transactions have the potential to transform many existing trust-based transactions systems. Lee (2015) showed that a crypto-securities market would not entail the replacement of the traditional stock market. Rather, it would be an alternative market for users who are dissatisfied with the current regime. Catalini and Gans (2016) showed that blockchain technology allow market participants to perform costless verification, lowers the costs of auditing transaction information, and allows new marketplaces to emerge. They showed that when a distributed ledger is combined with a native cryptographic token (such as Bitcoin), “marketplaces can be bootstrapped without the need of traditional trusted intermediaries, lowering the cost of networking”
Source: https://mpra.ub.uni-muenchen.de/99212/2/MPRA_paper...
Corruption & The Black Market
The early days of Bitcoin and crypto currencies were demonized for the ties to Black Market and the Dark Web. Such sites as The Silk Road aka the Amazon of illegal drugs, only allowed transactions with bitcoins. At one point, the Silk Road drew the line at selling products harmful to others like firearms, stolen credit card numbers and more, but as the site grew things changed for the worse and in January 2012 guns were found for sale on the site. In 2012, studies estimated the Silk Road was doing $2 million dollars a month in drug sales – all transactions completed with bitcoins.
Even as recently as 2018 when the Crypto market cap was only ±$650 billion it was estimated that approximately one-quarter of all users (25%) and close to one-half of bitcoin transactions (44%) were associated with illegal activity.
Compare that to estimates today which put that figure at around 3% with around 80% of the daily Bitcoin volume now attributed to centralized exchanges.
Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_i...
Web 1.0 / 2.0 / 3.0
Web 1.0 of the 1990s and early 2000s was the era of walled gardens of information with initially limited use, curated information and sceptics were quick to discount its advantages over traditional forms of media. Those who were early to the game and saw the explosive opportunities prospered massively through early investments in Web 1.0 startups.
Web 2.0 is the current version of the Web with which we are all familiar and could be described as the Internet of self-publishing/user generated content and the rise of global social networks.
Web 3.0 has been described as the Internet of Value. Where blockchain technology allows us to assign a tokenized form of value and immutable ownership rights to almost any asset or network, be it digital or physical. Where Web 2.0 was governed and controlled by several large companies (Google, Microsoft, Apple etc.) the Internet of Value allows users to own part of the network through a tokenized distribution of power and control.
Users of Web 3.0 have voting rights on how the network that they part own, will operate, and thus they will prosper from the continued growth of the token and network that they believe in.
See also the dApps section below.
Cryptocurrency and Blockchain as part of your portfolio of investments
In this brief introduction I wanted to highlight that there are several important things to consider when it comes to cryptocurrencies and blockchain adoption.
Firstly, the internet is changing, and adoption of this technology is increasing exponentially. Secondly, there is a broader argument that needs to be clarified and this is the Bitcoin as a sound money, and other cryptocurrencies as an investment.
As Bitcoin is the largest piece of the pie and the most controversial when it comes to defining it, I think it should be first on the table. Whether or not you agree that it is a suitable ‘digital gold’ or not is almost irrelevant at this point. It has single handedly outperformed every other asset class over the last 5-7 years. Whether it can be considered an inflation hedge is still debatable because we are still so early in the technological adoption curve. Price behavior is still volatile but steadily decreasing over time due to market adoption.
Bitcoin, the Sound Money Argument - FIAT currency & history
The sound money argument has some very strong supporters worldwide. It is likely that they will hold some gold as part of their portfolio as an investment hedge even though they understand that it is not the best "money" for performing transactions.
To quote the definition: "Sound money is money that is not prone to sudden appreciation or depreciation in purchasing power over the long term, aided by self-correcting mechanisms inherent in a free-market system. "
Over the decade, since the last financial crash, we have witnessed the central banks around the world printing money as part of quantitative easing. Or more recently as part of the COVID crisis. Some estimate that in the last 18 months the USA has printed 40% of the dollars that have ever existed. This has the catastrophic effect of devaluing the dollars already in existence. This is the cause of the rise in prices for most goods and services that we buy day to day. Things aren't getting more expensive to produce, the money you are buying it with is worth less!
These central banks aim to manipulate the inflation rate to grow or stabilise an economy to achieve their goals for growth. Unfortunately this free market meddling, and the large swings in purchasing power are causing the very problem they are attempting to solve.
A negative consequence of central bank control of money is the disconnect between the money supply and the demand for money. Economic downturns strike when changes in the demand for money are not met with an automatic adjustment in its supply.
Bitcoin maximalists will argue that Bitcoin is the soundest money of all. It is tokenized energy at its base level distributed through a decentralized, immutable and incorruptible ledger where every transaction is fully auditable and traceable for all time.
For those who are gold maximalists the same maxims apply in that gold is the ultimate sound money. However, I would recommend watching the below short video that explains that both Gold and Bitcoin have a place to work together.
https://youtu.be/czdPJpRa9KI - Lawrence Lepard Gives An Amazing Bitcoin & Sound Money Speech At New Orleans Conference: Oct 21 2021
https://youtu.be/jwgOVPJ2FnU – Bitcoin & Michael Saylor – A Masterclass in Economic Calculation
Source: https://www.soundmoneydefense.org/sound-money-expl...
The “Everything Else” Discussion
If we want to split the argument that Bitcoin is a store of digital energy, or is digital gold, or is an inflation hedge, then everything else is your dot.com boom investment opportunity. The vast portion of the coins & tokens will become irrelevant as they are found to be scams, useless, inefficient, criminal or just fail due to lack of investment and use case.
The others offer an investment opportunity that has never been seen before as the technology has the ability to encompass almost every aspect of our financial world. It will also likely form the basis of Web 3.0, as mentioned previously which will be as revolutionary and disruptive as Web 2.0.
I urge anyone with even an inkling of interest in this as an investment space to please watch the video before and understand that from a macro perspective this is the largest opportunity we have possibly ever seen.
https://youtu.be/i9TXVjYBM3U – The Ultimate Macro Framework with Raoul Pal
Why decentralisation will win
Recently the US senate held a hearing and took testimony from six representatives of some of the largest names in Crypto. Brian Brooks, previously held the office of the Comptroller of the Currency, was one of the breakout stars. He presented testimony in an eloquent and easy to understand fashion without resorting to disdain at the lack of understanding some of the committee members showed.
One of his statements, I think, was the most telling. When discussing what will succeed and what will fail in a completely new technological space is that decentralisation will win. The most decentralised projects have the best chance of succeeding. Bit coin and Ethereum are sufficiently decentralised that the SEC does not consider them securities.
A common misconception is that the aim of decentralisation is to subvert the control of governments, resist government censorship or because of libertarian points of view. These are not the important points of decentralisation. The problem lies with the centralised platforms (Google, Apple, Facebook and Amazon) and the lifecycle that they have. Initially they do everything they can to attract users and 3rd party developers and advertisers. As they move up the S-Curve of adoption their power over their users and 3 parties increases drastically going from positive-sum to zero-sum. Suddenly the users are the commodity and extracting ever more data and metrics becomes the business model.
Truly decentralised Crypto networks on the other hand are specifically designed to stay neutral through the fully auditable code and immutability of the blockchain. This allows developers to build on a network knowing that the relationship will not turn sour further down the line once tied into a specific ecosystem (see Apple and it's 30% developer app profit take). Secondly the networks are kept in check by the 'Voice' and 'Exit' mechanisms. Participants are given voice through community governance both on chain, via protocol, and off chain, via the social network that builds up around a project. Participants can also leave the network by selling tokens, or in the extreme case, forking the protocol.
Centralised platforms have become such a dominant way of viewing the world through the internet that we have forgotten that there is a better way to build internet services. Crypto networks are a powerful way to build community-owned networks that provide a level playing field in terms of 3rd party app developers, creators and businesses.
Edited by RichTT on Tuesday 14th December 09:42
Proof of Work / Proof of Stake – How DLT / Blockchain works
“Proof of work” and “proof of stake” are the two mechanisms that the cryptocurrency networks use to verify new transactions, thus adding them to the blocking, and in cases, adding new tokens. Bitcoin is know for being an energy intensive Proof of Work blockchain, with crypto's like Ethereum transitioning soon from Proof of Work to Proof of Stake consensus.
Proof of work is the original cryptocurrency consensus mechanism, first used by Bitcoin. Proof of Work is also known as mining and this requires a huge amount of processing power and energy. Each miner on the network is called a node and each node provides processing power to solve a cryptographic math puzzle. Which node solves the puzzle gets rewarded in bitcoin and a new block is mined. Each new block holds all the transactions performed over the whole network since the last block was mined. Thusly the size of the blockchain increases by one block and the transactions are processed.
This has some advantages in that it's a proven and robust way of securing a decentralised blockchain. As the price of the coin increases more miners are incentivised to participate. Which in turn increases it's power and security.
With proof of stake there is no need to maintain huge server farms for calculating the blockchain. When a person buys a token for the network in question they can stake the coin in order to assist in the blockchain verification process. In return for staking your coins you earn a percentage reward as your pool of tokens get chosen to add the latest batch of transactions.
Exact details will vary by project but in general there is a minimum quantity of coins required to become a validator on the network. It is common for people to pool their coins together in order to form a validator node, this could be a DeFi project, a centralised exchange, a custodial wallet service.
Source: https://www.coinbase.com/learn/crypto-basics/what-...
The Trilemma
Each blockchain is currently constrained by what the founder of Ethereum, Vitalik Buterin described as the Trilemma. Here, each project has to decide between the three facets described below and make sacrifices between them. A network that is secure and decentralised, like Bitcoin, isn't very fast. A project like Solana is fast and secure but not very decentralised.
There are projects that are working towards solving the Trilemma and it is hoped that one they they will manage to have all three aspects within a Blockchain.
Decentralized: creating a blockchain system that does not rely on a central point of control
Scalable: the ability for a blockchain system to handle an increasingly growing amount of transactions
Secure: the ability of the blockchain system to operate as expected, defend itself from attacks, bugs, and other unforeseen issues
Source: https://medium.com/certik/the-blockchain-trilemma-...
Stable coins vs CBDCs
Central Bank Digital Currencies (CBDC's) have been in research and development for 5-6 years in over 100 countries worldwide. Some have already adopted this technology (China) and others have performed central bank, cross border transfer trials (Europe & America). A CBDC is essentially an electronic record or digital token of a countries currency. It is backed and regulated by the nations monetary authority or central bank. This system is the slow change of cash to digital money.
CBDCs will have many advantages to the Governments that issue and support them, and many privacy and monitoring concerns to the people who use them. At this time the UK remains in the research phase and hasn't made any declaration that it will or wont produce a 'Britcoin'.
The benefits to a central bank would be the ease of issuance and tracking of each digital coin. This allows for easier tracking of tax, benefits, cross border transfers and would reduce inefficiencies within central banking and the horde of civil servants currently tasked with financial auditing. For a central bank and government this would be a huge money saver in the long term even if it put tens of thousands out of civil servants out of work.
Each coin will incorporate metadata that will track its issuance, any transactions made with it, who and where it was spent by and what they bought. The risks for this technology to form part of a fully monitored state (like China and the digital Renminbi) is massive. Whereas submitting and monitoring your yearly tax would be instant and painless, the government would also have the ability to stop you buying a bottle of wine if you've gone over your monthly allocated booze limit (hypothetical scaremongering).
Stable coins on the other hand are decentralised tokens representing a pegged value (usually USD) and backed by dollar denominated cash or cash alternatives (government bonds, corporate paper etc). These are run on top of a blockchain layer 1 as a layer 2 technology. USDT, or Tether, is the largest of all the stable coin issuers and works on the Ethereum network.
Stablecoins can also be pegged to other assets. In the case of KGLD they are looking at issuing a physical gold backed token, and some stablecoin projects have developed algorithmic stablecoins.
CBDC’s are not cryptocurrency and bring the detractors of central government monitoring, inflation and control.
DLT and Cryptocurrency Layers
Layer 0 – Blockchain
Blockchain layer zero is made up of components that help to make blockchain a reality. It's the technology that allows Bitcoin, Ethereum, and other blockchain networks to function. Layer 0 components include the internet, hardware, and connections that will enable layer one to run smoothly.
Layer 1 – Foundation
This is the foundation layer, and its security is based on its immutability. The Ethereum network, or layer one, is what people allude to when they say Ethereum. This layer oversees consensus processes, programming languages, block time, dispute resolution, and the rules and parameters that maintain a blockchain network's basic functionality. It is also known as the implementation layer. Bitcoin is an example of a layer one blockchain.
Layer 2 – Protocol
The overlapping networks that sit on top of the base layer are known as L2 solutions. Protocols make use of layer two to increase scalability by removing some interactions from the base layer. As a result, smart contracts on the primary blockchain protocol only deal with deposits and withdrawals and ensure that off-chain transactions follow the regulations. Bitcoin's Lightning Network is an example of a layer two blockchain.
dApps
Decentralized applications (dApps) are digital applications or programs that exist and run on a blockchain or peer-to-peer (P2P) network of computers instead of a single computer. DApps (also called "dapps") are outside the purview and control of a single authority. DApps—which are often built on the Ethereum platform—can be developed for a variety of purposes including gaming, finance, and social media.
dApps can be considered the user interface to access Web 3.0 as discussed previously.
Source: https://ethereum.org/en/developers/docs/dapps/
CEX / DEX - Centralised Exchanges vs. Decentralised Exchanges
Centralized exchanges can be used to conduct trades from fiat to cryptocurrency (or vice versa). They can also be used to conduct trades between two different cryptocurrencies. While this may seem to cover all the potential transaction types, there is still a market for another type of cryptocurrency exchange as well.
Decentralized exchanges are an alternative; they cut out the middleman, generating what is often thought of as a "trustless" environment. These types of exchanges function as peer-to-peer exchanges. Assets are never held by an escrow service, and transactions are done entirely based on smart contracts and atomic swaps.
The crucial difference between centralized and decentralized exchanges is whether or not a middleman is present. Decentralized exchanges are less widespread and less popular as compared with centralized exchanges. Nonetheless, there are more decentralized exchanges all the time, and it's possible that they will give centralized exchanges a run for their money in the future.
Source: https://www.investopedia.com/tech/what-are-central...
DEFI / CEFI
One of the biggest differences between decentralized finance and centralized finance is the fact that the system is regulated in case of CeFi whereas exactly the opposite is the case with DeFi. In centralized finance, the responsibility of safeguarding the money of the users is with the exchanges. On the other hand, the assumption behind DeFi is that the transactions would be successful as a result of smart contracts (an agreement between two parties that enforces certain rules/terms of negotiation when a particular/specific condition is met). In simple terms, the users are themselves responsible for managing their own funds and activities.
In CeFi, it is possible to prevent trade and impose limitations on users. However, the same is not possible in case of decentralized finance. Decentralized finance is permission-less whereas this is not the case with CeFi. There are two areas where CeFi stands apart – One, wherein the CeFi exchanges enable the conversion of fiat currency to cryptocurrency and vice-versa in an easy and seamless manner and the other where it supports cross-chain exchange for multiple cryptocurrencies, thus displaying interoperability of cryptocurrencies.
Source: https://www.analyticsinsight.net/defi-vs-cefi-expl...
ETF / Spot & Futures – market traded access
Investors around the world, including in Germany and Switzerland, are flocking to physically backed exchange-traded products (ETPs). The 21Shares bitcoin ETP, which is 100% exposed to spot BTC, is listed on both the Swiss Exchange and several German exchanges and is nearing half a billion dollars in AUM. Much like the Canadian ETFs, 21shares ETP has 100% exposure to single asset bitcoin and has significantly more demand than their crypto indexes and multi-asset counterparts, of which the largest has $215 million in AUM.
In addition to ETFs, investors can invest in publicly traded companies that hold Crypto on their balance sheets or are active listed mining companies. The companies who hold the most Bitcoin:
• Microstrategy (MSTR)
• Tesla (TSLA)
• Galaxy Digital Holdings (BRPHF)
• Voyager Digital (VYGVF)
• Square (SQ)
Source: https://www.coingecko.com/en/public-companies-bitc...
Source: https://www.coindesk.com/markets/2021/10/20/bitcoi...
Staking & Yield & LP farming
With cryptocurrencies that use the proof-of-stake model, staking is how new transactions are added to the blockchain. Participants pledge their coins to the cryptocurrency protocol. From those participants, the protocol chooses validators to confirm blocks of transactions. The more coins you pledge, the more likely you are to be chosen.
Every time a block is added to the blockchain, new cryptocurrency coins are minted and distributed as staking rewards to that block's validator. The rewards are usually the same cryptocurrency that participants are staking, although some blockchains use a different type of cryptocurrency for rewards.
If you want to stake crypto, you need to own a cryptocurrency that uses the proof-of-stake model. Then you can choose the amount you want to stake.
Your coins are still in your possession when you stake them. You're essentially putting them to work, and you're free to unstake them later if you want to trade them. The unstaking process may not be immediate, and, with some cryptocurrencies, you're required to stake coins for a minimum amount of time.
https://g.foolcdn.com/image/?url=https%3A//g.foolc...
The primary benefit of staking is that you earn more crypto, and interest rates can be very generous. In some cases, you can earn more than 10% or 20% per year. It's potentially a very profitable way to invest your money. And, the only thing you need is crypto that uses the proof-of-stake model.
Staking is also a way of supporting the blockchain of a cryptocurrency you're invested in. These cryptocurrencies rely on holders staking to verify transactions and keep everything running smoothly.
Source: https://www.fool.com/investing/stock-market/market...
Yield farming is the practice of staking or lending crypto assets in order to generate high returns or rewards in the form of additional cryptocurrency. This innovative yet risky and volatile application of decentralized finance (DeFi) has skyrocketed in popularity recently thanks to further innovations like liquidity mining. Yield farming is currently the biggest growth driver of the still-nascent DeFi sector, helping it to balloon from a market cap of $500 million to $10 billion in 2020.
In short, yield farming protocols incentivize liquidity providers (LP) to stake or lock up their crypto assets in a smart contract-based liquidity pool. These incentives can be a percentage of transaction fees, interest from lenders or a governance token. These returns are expressed as an annual percentage yield (APY). As more investors add funds to the related liquidity pool, the value of the issued returns decrease accordingly.
Source: https://coinmarketcap.com/alexandria/article/what-...
DAO – Decentralised Autonomous Organisation
The backbone of a DAO is its smart contract. The contract defines the rules of the organisation and holds the group's treasury. Once the contract is live on Ethereum, no one can change the rules except by a vote. If anyone tries to do something that's not covered by the rules and logic in the code, it will fail. And because the treasury is defined by the smart contract too that means no one can spend the money without the group's approval either. This means that DAOs don't need a central authority. Instead the group makes decisions collectively and payments are authorised automatically when votes pass.
The most revolutionary of the crypto DAO’s is Olympus which uses protocol backed liquidity. Olympus DAO has achieved that feat by borrowing engineering principles from hundreds of failed experiments before it. Algorithmic stablecoins are a class of cryptocurrency that leverage a series of bonds, coupons, staking mechanisms and “rebases” – tools that programmatically and automatically expand or contract the circulating supply of a currency – to create a digital asset, usually one intended to track the U.S. dollar.
OHM’s interpretation casts aside the notion of a dollar peg (like those behind FRAX and FEI), and now sustains what may be the most successful algorithmic asset experiment in the sector’s short history.
Source: https://ethereum.org/en/dao/
Source: https://www.coindesk.com/policy/2021/12/05/olympus...
ICO / IDO
When the crypto industry went mainstream around 2017, projects emulated this technique by selling a part of their total crypto token supply to the public in ICOs. ICOs then became an instant hit in the crypto space, with investors jumping at the opportunity and raising an estimated $4.9 billion by the end of 2017. However, the rise in scam projects and Ponzi schemes led to a terrible downfall in the popularity of ICOs.
An Initial DEX Offering, or IDO in short, is a novel crowdfunding technique that allows crypto projects to launch their native token or coin via decentralized exchanges (DEXs). A successor of the infamous Initial Coin Offering (ICO), IDO is a fool-proof way for projects to bootstrap themselves or raise funds for growth and development.
However, in 2019 when DEXs came into the picture, many crypto projects were drawn to the decentralized nature of these exchanges. Thus, making them a better avenue to launch tokens and raise funds without the complications of centralized exchanges.
This resulted in the birth of the concept of IDOs, to which the Raven protocol was the first-ever project to launch an IDO. Then, there also came IDO launchpads that offered services tailored specifically for new projects to conduct IDOs. This further boosted the popularity of IDOs as a fundraising method in the crypto space
Source: https://phemex.com/blogs/what-is-a-dex-ido
Airdrops
An airdrop, in the cryptocurrency business, is a marketing stunt that involves sending coins or tokens to wallet addresses in order to promote awareness of a new virtual currency. Small amounts of the new virtual currency are sent to the wallets of active members of the blockchain community for free or in return for a small service, such as retweeting a post sent by the company issuing the currency.
Source: https://www.investopedia.com/terms/a/airdrop-crypt...
NFTs
Non-fungible tokens or NFTs are cryptographic assets on blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency. This differs from fungible tokens like cryptocurrencies, which are identical to each other and, therefore, can be used as a medium for commercial transactions.
The distinct construction of each NFT has the potential for several use cases. For example, they are an ideal vehicle to digitally represent physical assets like real estate and artwork. Because they are based on blockchains, NFTs can also be used to remove intermediaries and connect artists with audiences or for identity management. NFTs can remove intermediaries, simplify transactions, and create new markets.
Further to the tokenisation of art the technological potential for NFT's is massive. NFTs can represent proof of ownership, manage licensing, provide social status, grant exclusive access and certify authenticity. NFT status can also be assigned to things like festival tickets, business assets, documentation, supply chain, personal identification, intellectual property for example; at the moment the general perception of NFT application seems to be primarily around art.
NFTs can bring that collectability back to music. Artists and record companies can issue an NFT for each copy of an album. Each NFT can allow a user to stream the album it represents as many times as they want. It can also contain lyrics, images and other media that are not available on subscription or advertising-based platforms and that add value to the ownership of the album.
If a user decides that they no longer like a particular band, they can resell its albums, granting the right to stream each album to the new owner. If they buy a band’s first album before it becomes popular, they may even find that they can sell the album for a profit.
Another place where NFTs can shine in the future is in the real estate space. Transferring ownership of property is extremely complicated and costly today.
But with NFTs, an owner can theoretically issue a token that represents their property, and this token can be transferred to a buyer to complete the sale. An owner can even use the token in a future real estate DeFi app to extract equity from their home. This would be far cheaper and efficient than using a bank
Source: https://www.nasdaq.com/articles/why-the-future-of-...
Source: https://www.investopedia.com/non-fungible-tokens-n...
METAVERSE
The metaverse is a hypothesized iteration of the Internet, supporting persistent online 3-D virtual environments through conventional personal computing, as well as virtual and augmented reality headsets.
Metaverses, in some limited form, have already been implemented in video games such as Second Life. Some iterations of the metaverse involve integration between virtual and physical spaces and virtual economies.
Current metaverse development is centered on addressing the technological limitations with virtual and augmented reality devices.
The term "metaverse" has been used as a buzzword for promotion, and as a way to generate hype for public relations purposes by making vague claims for future projects. Information privacy and user addiction are concerns within the metaverse, stemming from current challenges facing the social media and video game industries as a whole.
Additional recommended video:
https://youtu.be/JApG3Uym_rY - Money, Macro, Metaverse and Crypto w Raoul Pal: Some very surprising points of view!
Source: https://arstechnica.com/gaming/2021/11/everyone-pi...
Hot Wallet / Cold Wallet / Custodial Services
If you buy any amount of crypto and you want to store it yourself, you must choose between holding your cryptocurrency in a “hot” wallet, a “cold” wallet, or using a combination of the two. A hot wallet is connected to the internet and could be vulnerable to online attacks — which could lead to stolen funds — but it’s faster and makes it easier to trade or spend crypto. A cold wallet is typically not connected to the internet, so while it may be more secure, it’s less convenient.
Source: https://www.gemini.com/cryptopedia/crypto-wallets-...
Once you’ve purchased cryptocurrency, you must decide whether to use a custodial vs. non-custodial wallet to store your funds.
With a non-custodial wallet, you have sole control of your private keys, which in turn control your cryptocurrency and prove the funds are yours. While there is no need to trust a third party when using a non-custodial wallet, this also means that you are solely responsible for not losing your keys and requires that you take your own precautions to protect your funds.
With a custodial wallet, another party controls your private keys. In other words, you’re trusting a third party to secure your funds and return them if you want to trade or send them somewhere else. While a custodial wallet lessens personal responsibility, it requires trust in the custodian that holds your funds, which is usually a cryptocurrency exchange. Most custodial wallets these days are web-based exchange wallets.
Source: https://www.gemini.com/cryptopedia/crypto-wallets-...
“Proof of work” and “proof of stake” are the two mechanisms that the cryptocurrency networks use to verify new transactions, thus adding them to the blocking, and in cases, adding new tokens. Bitcoin is know for being an energy intensive Proof of Work blockchain, with crypto's like Ethereum transitioning soon from Proof of Work to Proof of Stake consensus.
Proof of work is the original cryptocurrency consensus mechanism, first used by Bitcoin. Proof of Work is also known as mining and this requires a huge amount of processing power and energy. Each miner on the network is called a node and each node provides processing power to solve a cryptographic math puzzle. Which node solves the puzzle gets rewarded in bitcoin and a new block is mined. Each new block holds all the transactions performed over the whole network since the last block was mined. Thusly the size of the blockchain increases by one block and the transactions are processed.
This has some advantages in that it's a proven and robust way of securing a decentralised blockchain. As the price of the coin increases more miners are incentivised to participate. Which in turn increases it's power and security.
With proof of stake there is no need to maintain huge server farms for calculating the blockchain. When a person buys a token for the network in question they can stake the coin in order to assist in the blockchain verification process. In return for staking your coins you earn a percentage reward as your pool of tokens get chosen to add the latest batch of transactions.
Exact details will vary by project but in general there is a minimum quantity of coins required to become a validator on the network. It is common for people to pool their coins together in order to form a validator node, this could be a DeFi project, a centralised exchange, a custodial wallet service.
Source: https://www.coinbase.com/learn/crypto-basics/what-...
The Trilemma
Each blockchain is currently constrained by what the founder of Ethereum, Vitalik Buterin described as the Trilemma. Here, each project has to decide between the three facets described below and make sacrifices between them. A network that is secure and decentralised, like Bitcoin, isn't very fast. A project like Solana is fast and secure but not very decentralised.
There are projects that are working towards solving the Trilemma and it is hoped that one they they will manage to have all three aspects within a Blockchain.
Decentralized: creating a blockchain system that does not rely on a central point of control
Scalable: the ability for a blockchain system to handle an increasingly growing amount of transactions
Secure: the ability of the blockchain system to operate as expected, defend itself from attacks, bugs, and other unforeseen issues
Source: https://medium.com/certik/the-blockchain-trilemma-...
Stable coins vs CBDCs
Central Bank Digital Currencies (CBDC's) have been in research and development for 5-6 years in over 100 countries worldwide. Some have already adopted this technology (China) and others have performed central bank, cross border transfer trials (Europe & America). A CBDC is essentially an electronic record or digital token of a countries currency. It is backed and regulated by the nations monetary authority or central bank. This system is the slow change of cash to digital money.
CBDCs will have many advantages to the Governments that issue and support them, and many privacy and monitoring concerns to the people who use them. At this time the UK remains in the research phase and hasn't made any declaration that it will or wont produce a 'Britcoin'.
The benefits to a central bank would be the ease of issuance and tracking of each digital coin. This allows for easier tracking of tax, benefits, cross border transfers and would reduce inefficiencies within central banking and the horde of civil servants currently tasked with financial auditing. For a central bank and government this would be a huge money saver in the long term even if it put tens of thousands out of civil servants out of work.
Each coin will incorporate metadata that will track its issuance, any transactions made with it, who and where it was spent by and what they bought. The risks for this technology to form part of a fully monitored state (like China and the digital Renminbi) is massive. Whereas submitting and monitoring your yearly tax would be instant and painless, the government would also have the ability to stop you buying a bottle of wine if you've gone over your monthly allocated booze limit (hypothetical scaremongering).
Stable coins on the other hand are decentralised tokens representing a pegged value (usually USD) and backed by dollar denominated cash or cash alternatives (government bonds, corporate paper etc). These are run on top of a blockchain layer 1 as a layer 2 technology. USDT, or Tether, is the largest of all the stable coin issuers and works on the Ethereum network.
Stablecoins can also be pegged to other assets. In the case of KGLD they are looking at issuing a physical gold backed token, and some stablecoin projects have developed algorithmic stablecoins.
CBDC’s are not cryptocurrency and bring the detractors of central government monitoring, inflation and control.
- Stablecoins are cryptocurrencies that attempt to peg their market value to some external reference.
- Stablecoins may be pegged to a currency like the U.S. dollar or to a commodity's price such as gold.
- Stablecoins achieve their price stability via collateralization (backing) or through algorithmic mechanisms of buying and selling the reference asset or its derivatives.
DLT and Cryptocurrency Layers
Layer 0 – Blockchain
Blockchain layer zero is made up of components that help to make blockchain a reality. It's the technology that allows Bitcoin, Ethereum, and other blockchain networks to function. Layer 0 components include the internet, hardware, and connections that will enable layer one to run smoothly.
Layer 1 – Foundation
This is the foundation layer, and its security is based on its immutability. The Ethereum network, or layer one, is what people allude to when they say Ethereum. This layer oversees consensus processes, programming languages, block time, dispute resolution, and the rules and parameters that maintain a blockchain network's basic functionality. It is also known as the implementation layer. Bitcoin is an example of a layer one blockchain.
Layer 2 – Protocol
The overlapping networks that sit on top of the base layer are known as L2 solutions. Protocols make use of layer two to increase scalability by removing some interactions from the base layer. As a result, smart contracts on the primary blockchain protocol only deal with deposits and withdrawals and ensure that off-chain transactions follow the regulations. Bitcoin's Lightning Network is an example of a layer two blockchain.
dApps
Decentralized applications (dApps) are digital applications or programs that exist and run on a blockchain or peer-to-peer (P2P) network of computers instead of a single computer. DApps (also called "dapps") are outside the purview and control of a single authority. DApps—which are often built on the Ethereum platform—can be developed for a variety of purposes including gaming, finance, and social media.
dApps can be considered the user interface to access Web 3.0 as discussed previously.
Source: https://ethereum.org/en/developers/docs/dapps/
CEX / DEX - Centralised Exchanges vs. Decentralised Exchanges
Centralized exchanges can be used to conduct trades from fiat to cryptocurrency (or vice versa). They can also be used to conduct trades between two different cryptocurrencies. While this may seem to cover all the potential transaction types, there is still a market for another type of cryptocurrency exchange as well.
Decentralized exchanges are an alternative; they cut out the middleman, generating what is often thought of as a "trustless" environment. These types of exchanges function as peer-to-peer exchanges. Assets are never held by an escrow service, and transactions are done entirely based on smart contracts and atomic swaps.
The crucial difference between centralized and decentralized exchanges is whether or not a middleman is present. Decentralized exchanges are less widespread and less popular as compared with centralized exchanges. Nonetheless, there are more decentralized exchanges all the time, and it's possible that they will give centralized exchanges a run for their money in the future.
Source: https://www.investopedia.com/tech/what-are-central...
DEFI / CEFI
One of the biggest differences between decentralized finance and centralized finance is the fact that the system is regulated in case of CeFi whereas exactly the opposite is the case with DeFi. In centralized finance, the responsibility of safeguarding the money of the users is with the exchanges. On the other hand, the assumption behind DeFi is that the transactions would be successful as a result of smart contracts (an agreement between two parties that enforces certain rules/terms of negotiation when a particular/specific condition is met). In simple terms, the users are themselves responsible for managing their own funds and activities.
In CeFi, it is possible to prevent trade and impose limitations on users. However, the same is not possible in case of decentralized finance. Decentralized finance is permission-less whereas this is not the case with CeFi. There are two areas where CeFi stands apart – One, wherein the CeFi exchanges enable the conversion of fiat currency to cryptocurrency and vice-versa in an easy and seamless manner and the other where it supports cross-chain exchange for multiple cryptocurrencies, thus displaying interoperability of cryptocurrencies.
Source: https://www.analyticsinsight.net/defi-vs-cefi-expl...
ETF / Spot & Futures – market traded access
Investors around the world, including in Germany and Switzerland, are flocking to physically backed exchange-traded products (ETPs). The 21Shares bitcoin ETP, which is 100% exposed to spot BTC, is listed on both the Swiss Exchange and several German exchanges and is nearing half a billion dollars in AUM. Much like the Canadian ETFs, 21shares ETP has 100% exposure to single asset bitcoin and has significantly more demand than their crypto indexes and multi-asset counterparts, of which the largest has $215 million in AUM.
In addition to ETFs, investors can invest in publicly traded companies that hold Crypto on their balance sheets or are active listed mining companies. The companies who hold the most Bitcoin:
• Microstrategy (MSTR)
• Tesla (TSLA)
• Galaxy Digital Holdings (BRPHF)
• Voyager Digital (VYGVF)
• Square (SQ)
Source: https://www.coingecko.com/en/public-companies-bitc...
Source: https://www.coindesk.com/markets/2021/10/20/bitcoi...
Staking & Yield & LP farming
With cryptocurrencies that use the proof-of-stake model, staking is how new transactions are added to the blockchain. Participants pledge their coins to the cryptocurrency protocol. From those participants, the protocol chooses validators to confirm blocks of transactions. The more coins you pledge, the more likely you are to be chosen.
Every time a block is added to the blockchain, new cryptocurrency coins are minted and distributed as staking rewards to that block's validator. The rewards are usually the same cryptocurrency that participants are staking, although some blockchains use a different type of cryptocurrency for rewards.
If you want to stake crypto, you need to own a cryptocurrency that uses the proof-of-stake model. Then you can choose the amount you want to stake.
Your coins are still in your possession when you stake them. You're essentially putting them to work, and you're free to unstake them later if you want to trade them. The unstaking process may not be immediate, and, with some cryptocurrencies, you're required to stake coins for a minimum amount of time.
https://g.foolcdn.com/image/?url=https%3A//g.foolc...
The primary benefit of staking is that you earn more crypto, and interest rates can be very generous. In some cases, you can earn more than 10% or 20% per year. It's potentially a very profitable way to invest your money. And, the only thing you need is crypto that uses the proof-of-stake model.
Staking is also a way of supporting the blockchain of a cryptocurrency you're invested in. These cryptocurrencies rely on holders staking to verify transactions and keep everything running smoothly.
Source: https://www.fool.com/investing/stock-market/market...
Yield farming is the practice of staking or lending crypto assets in order to generate high returns or rewards in the form of additional cryptocurrency. This innovative yet risky and volatile application of decentralized finance (DeFi) has skyrocketed in popularity recently thanks to further innovations like liquidity mining. Yield farming is currently the biggest growth driver of the still-nascent DeFi sector, helping it to balloon from a market cap of $500 million to $10 billion in 2020.
In short, yield farming protocols incentivize liquidity providers (LP) to stake or lock up their crypto assets in a smart contract-based liquidity pool. These incentives can be a percentage of transaction fees, interest from lenders or a governance token. These returns are expressed as an annual percentage yield (APY). As more investors add funds to the related liquidity pool, the value of the issued returns decrease accordingly.
Source: https://coinmarketcap.com/alexandria/article/what-...
DAO – Decentralised Autonomous Organisation
The backbone of a DAO is its smart contract. The contract defines the rules of the organisation and holds the group's treasury. Once the contract is live on Ethereum, no one can change the rules except by a vote. If anyone tries to do something that's not covered by the rules and logic in the code, it will fail. And because the treasury is defined by the smart contract too that means no one can spend the money without the group's approval either. This means that DAOs don't need a central authority. Instead the group makes decisions collectively and payments are authorised automatically when votes pass.
The most revolutionary of the crypto DAO’s is Olympus which uses protocol backed liquidity. Olympus DAO has achieved that feat by borrowing engineering principles from hundreds of failed experiments before it. Algorithmic stablecoins are a class of cryptocurrency that leverage a series of bonds, coupons, staking mechanisms and “rebases” – tools that programmatically and automatically expand or contract the circulating supply of a currency – to create a digital asset, usually one intended to track the U.S. dollar.
OHM’s interpretation casts aside the notion of a dollar peg (like those behind FRAX and FEI), and now sustains what may be the most successful algorithmic asset experiment in the sector’s short history.
Source: https://ethereum.org/en/dao/
Source: https://www.coindesk.com/policy/2021/12/05/olympus...
ICO / IDO
When the crypto industry went mainstream around 2017, projects emulated this technique by selling a part of their total crypto token supply to the public in ICOs. ICOs then became an instant hit in the crypto space, with investors jumping at the opportunity and raising an estimated $4.9 billion by the end of 2017. However, the rise in scam projects and Ponzi schemes led to a terrible downfall in the popularity of ICOs.
An Initial DEX Offering, or IDO in short, is a novel crowdfunding technique that allows crypto projects to launch their native token or coin via decentralized exchanges (DEXs). A successor of the infamous Initial Coin Offering (ICO), IDO is a fool-proof way for projects to bootstrap themselves or raise funds for growth and development.
However, in 2019 when DEXs came into the picture, many crypto projects were drawn to the decentralized nature of these exchanges. Thus, making them a better avenue to launch tokens and raise funds without the complications of centralized exchanges.
This resulted in the birth of the concept of IDOs, to which the Raven protocol was the first-ever project to launch an IDO. Then, there also came IDO launchpads that offered services tailored specifically for new projects to conduct IDOs. This further boosted the popularity of IDOs as a fundraising method in the crypto space
Source: https://phemex.com/blogs/what-is-a-dex-ido
Airdrops
An airdrop, in the cryptocurrency business, is a marketing stunt that involves sending coins or tokens to wallet addresses in order to promote awareness of a new virtual currency. Small amounts of the new virtual currency are sent to the wallets of active members of the blockchain community for free or in return for a small service, such as retweeting a post sent by the company issuing the currency.
Source: https://www.investopedia.com/terms/a/airdrop-crypt...
NFTs
Non-fungible tokens or NFTs are cryptographic assets on blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency. This differs from fungible tokens like cryptocurrencies, which are identical to each other and, therefore, can be used as a medium for commercial transactions.
The distinct construction of each NFT has the potential for several use cases. For example, they are an ideal vehicle to digitally represent physical assets like real estate and artwork. Because they are based on blockchains, NFTs can also be used to remove intermediaries and connect artists with audiences or for identity management. NFTs can remove intermediaries, simplify transactions, and create new markets.
Further to the tokenisation of art the technological potential for NFT's is massive. NFTs can represent proof of ownership, manage licensing, provide social status, grant exclusive access and certify authenticity. NFT status can also be assigned to things like festival tickets, business assets, documentation, supply chain, personal identification, intellectual property for example; at the moment the general perception of NFT application seems to be primarily around art.
NFTs can bring that collectability back to music. Artists and record companies can issue an NFT for each copy of an album. Each NFT can allow a user to stream the album it represents as many times as they want. It can also contain lyrics, images and other media that are not available on subscription or advertising-based platforms and that add value to the ownership of the album.
If a user decides that they no longer like a particular band, they can resell its albums, granting the right to stream each album to the new owner. If they buy a band’s first album before it becomes popular, they may even find that they can sell the album for a profit.
Another place where NFTs can shine in the future is in the real estate space. Transferring ownership of property is extremely complicated and costly today.
But with NFTs, an owner can theoretically issue a token that represents their property, and this token can be transferred to a buyer to complete the sale. An owner can even use the token in a future real estate DeFi app to extract equity from their home. This would be far cheaper and efficient than using a bank
Source: https://www.nasdaq.com/articles/why-the-future-of-...
Source: https://www.investopedia.com/non-fungible-tokens-n...
METAVERSE
The metaverse is a hypothesized iteration of the Internet, supporting persistent online 3-D virtual environments through conventional personal computing, as well as virtual and augmented reality headsets.
Metaverses, in some limited form, have already been implemented in video games such as Second Life. Some iterations of the metaverse involve integration between virtual and physical spaces and virtual economies.
Current metaverse development is centered on addressing the technological limitations with virtual and augmented reality devices.
The term "metaverse" has been used as a buzzword for promotion, and as a way to generate hype for public relations purposes by making vague claims for future projects. Information privacy and user addiction are concerns within the metaverse, stemming from current challenges facing the social media and video game industries as a whole.
Additional recommended video:
https://youtu.be/JApG3Uym_rY - Money, Macro, Metaverse and Crypto w Raoul Pal: Some very surprising points of view!
Source: https://arstechnica.com/gaming/2021/11/everyone-pi...
Hot Wallet / Cold Wallet / Custodial Services
If you buy any amount of crypto and you want to store it yourself, you must choose between holding your cryptocurrency in a “hot” wallet, a “cold” wallet, or using a combination of the two. A hot wallet is connected to the internet and could be vulnerable to online attacks — which could lead to stolen funds — but it’s faster and makes it easier to trade or spend crypto. A cold wallet is typically not connected to the internet, so while it may be more secure, it’s less convenient.
Source: https://www.gemini.com/cryptopedia/crypto-wallets-...
Once you’ve purchased cryptocurrency, you must decide whether to use a custodial vs. non-custodial wallet to store your funds.
With a non-custodial wallet, you have sole control of your private keys, which in turn control your cryptocurrency and prove the funds are yours. While there is no need to trust a third party when using a non-custodial wallet, this also means that you are solely responsible for not losing your keys and requires that you take your own precautions to protect your funds.
With a custodial wallet, another party controls your private keys. In other words, you’re trusting a third party to secure your funds and return them if you want to trade or send them somewhere else. While a custodial wallet lessens personal responsibility, it requires trust in the custodian that holds your funds, which is usually a cryptocurrency exchange. Most custodial wallets these days are web-based exchange wallets.
Source: https://www.gemini.com/cryptopedia/crypto-wallets-...
Edited by RichTT on Tuesday 14th December 09:58
A guide to the best crypto resources on the internet
All of this information is overwhelming to someone new to the space. You have to accept that this is a fundamental shift in the way that a lot of the internet will function, and also how a lot of businesses will streamline operations.
I suggest heading to the following links and taking advantage of the learning resources:
Coinbase Learn - https://www.coinbase.com/learn
Coinbase Learn has beginner guides, practical tips, and market updates for first-timers, experienced investors, and everyone in between. Working from simple information on what Bitcoin is all the way up to NFT art collecting guides.
Binance Academy - https://academy.binance.com/
Binance is the largest Crypto exchange by volume in the world. It, like Coinbase also has learning materials from beginner to intermediate.
You can also earn crypto just for watching and learning about different products. Think of it like instead of the advertisers paying google, they pay you instead!
Coinbase Earn - https://www.coinbase.com/rewards
Coinmarketcap Earn - https://coinmarketcap.com/earn/
Once you are familiar with most of the topics discussed in the sites then I can personally recommend the following YouTube channels as a way to keep current and educated on the state of the market.
Real Vision Crypto - https://www.youtube.com/c/realvisioncrypto
Some seriously smart and savvy investors in the Cyrpto space. Ex-hedge fund operator and macro investor Raoul Pal and his team really bring some macro level market analysis and advice to the viewers.
Coin Bureau - https://www.youtube.com/c/CoinBureau
Guy and his team bring a light hearted theme but in depth look at projects, markets, opportunities and also warnings on various crypto topics.
Digital Asset News - https://www.youtube.com/c/DigitalAssetNewsDAN
Daily short vidoes on the state of the market and any notable news in the crypto space. Well presented and informative.
Anthony Pompliano - https://www.youtube.com/c/AnthonyPompliano
Panel format videos and some great interviews with both pro and anti crypto views.
Benjamin Cowen - https://www.youtube.com/channel/UCRvqjQPSeaWn-uEx-...
Does mostly daily vidoes focusing mainly on Bitcoin and Ethereum but also looks at other projects from time to time. If you want to learn more about reading the trading charts and interpreting possible macro trends then this is the channel for you.
There's a million web pages and YouTube channels all seeking your attention, some more honest than others. But the ones linked above give great advice, for free, and its where I've learned most of what I know (about crypto).
TradingView and Order Book Live
Another great way to get involved in the space would be to spend some time with TradingView.
You can open a free account and watch live price action for stocks, shares and crypto. Once you start playing with TradingView you can utilise some simple indicators to help interpret the swings and trends within a certain timeframe. For new investors I would suggest starting with the Daily timeframe to help understand the macro framework.
There is hundreds of different indicators to use, to start off with I would be looking at the simpler indicators (RSI, Volume, MACD) as well as some of the trend lines (200 day Simple Moving Average / 200 day Exponential Moving Averge) for the macro trends. Once you are more comfortable with that you can move to lower timeframe indicators.
Another great resource, primarily for BTC would be the Live Order Book streams on Youtube. This allows you to see where people have placed Limit Orders on exchanges and can be a good idea where support and resistance forms in the price structure.
All of this information is overwhelming to someone new to the space. You have to accept that this is a fundamental shift in the way that a lot of the internet will function, and also how a lot of businesses will streamline operations.
I suggest heading to the following links and taking advantage of the learning resources:
Coinbase Learn - https://www.coinbase.com/learn
Coinbase Learn has beginner guides, practical tips, and market updates for first-timers, experienced investors, and everyone in between. Working from simple information on what Bitcoin is all the way up to NFT art collecting guides.
Binance Academy - https://academy.binance.com/
Binance is the largest Crypto exchange by volume in the world. It, like Coinbase also has learning materials from beginner to intermediate.
You can also earn crypto just for watching and learning about different products. Think of it like instead of the advertisers paying google, they pay you instead!
Coinbase Earn - https://www.coinbase.com/rewards
Coinmarketcap Earn - https://coinmarketcap.com/earn/
Once you are familiar with most of the topics discussed in the sites then I can personally recommend the following YouTube channels as a way to keep current and educated on the state of the market.
Real Vision Crypto - https://www.youtube.com/c/realvisioncrypto
Some seriously smart and savvy investors in the Cyrpto space. Ex-hedge fund operator and macro investor Raoul Pal and his team really bring some macro level market analysis and advice to the viewers.
Coin Bureau - https://www.youtube.com/c/CoinBureau
Guy and his team bring a light hearted theme but in depth look at projects, markets, opportunities and also warnings on various crypto topics.
Digital Asset News - https://www.youtube.com/c/DigitalAssetNewsDAN
Daily short vidoes on the state of the market and any notable news in the crypto space. Well presented and informative.
Anthony Pompliano - https://www.youtube.com/c/AnthonyPompliano
Panel format videos and some great interviews with both pro and anti crypto views.
Benjamin Cowen - https://www.youtube.com/channel/UCRvqjQPSeaWn-uEx-...
Does mostly daily vidoes focusing mainly on Bitcoin and Ethereum but also looks at other projects from time to time. If you want to learn more about reading the trading charts and interpreting possible macro trends then this is the channel for you.
There's a million web pages and YouTube channels all seeking your attention, some more honest than others. But the ones linked above give great advice, for free, and its where I've learned most of what I know (about crypto).
TradingView and Order Book Live
Another great way to get involved in the space would be to spend some time with TradingView.
You can open a free account and watch live price action for stocks, shares and crypto. Once you start playing with TradingView you can utilise some simple indicators to help interpret the swings and trends within a certain timeframe. For new investors I would suggest starting with the Daily timeframe to help understand the macro framework.
There is hundreds of different indicators to use, to start off with I would be looking at the simpler indicators (RSI, Volume, MACD) as well as some of the trend lines (200 day Simple Moving Average / 200 day Exponential Moving Averge) for the macro trends. Once you are more comfortable with that you can move to lower timeframe indicators.
Another great resource, primarily for BTC would be the Live Order Book streams on Youtube. This allows you to see where people have placed Limit Orders on exchanges and can be a good idea where support and resistance forms in the price structure.
Edited by RichTT on Friday 17th December 04:38
Alright, you’ve convinced me, how do I get started? (safely)
Before buying any crypto I recommend that you assess your risk profile and investment timeframe as you would with any investment of money. If you are heading towards retirement soon, then you would likely be looking to put money towards the blue chip blockchain. These are the oldest and well-established networks and the two biggest in market cap would be Bitcoin and Ethereum (not financial advice). If Bitcoin is gold, then Ethereum is the money of the Internet of Value.
https://bitcoin.org/en/
https://ethereum.org/en/
If you are already dealing with your own investments, then one route to invest in the blockchain revolution is through an Exchange Traded company that deals with Blockchain on the periphery. They can have exposure either indirectly through mining companies, blockchain technology startups, or just holding crypto on their balance sheets as an asset.
Exposure availability in the UK is limited due to current restrictions and the fact that the MPs on the Treasury select committee recently told the FCA they do not consider crypto to be an investment at this time. As a result, we have very little in the way of a clear buy in strategy and lack the investor protection given to mainstream investment strategies.
Source: https://www.thetimes.co.uk/article/buying-cryptocu...
The UK banking system is also a particularly hostile to crypto as a whole and there are very few high street banks that allow a direct transfer or purchase on a crypto exchange. At this time the easiest way to on-ramp and buy crypto is through a custodial wallet provider detailed in the next section.
Sorry, my wallets in my other trousers.
How you buy store your crypto is very important and, at the moment, a little confusing for the uninitiated. Thankfully there are a lot of companies out there who see value in offering custodial wallet services that can also bring you benefits in terms of interest. I like to think of it as staking ‘lite’.
These services are centralized, non-exchange finance groups who will buy, hold, sell and trade you a limited number of crypto currencies. Some allow withdrawal and deposit, some don’t.
At the low end of the scale is PayPal and Robinhood. You can buy crypto from them but cannot withdraw and do not earn anything other than the intrinsic value of the coin (minus trading fees).
The biggest names in this space, and well verified and trusted. They are all independently audited, generally with robust private insurance protection and strict security protocols in place to protect your investment.
https://nexo.io/ - Available in UK
https://blockfi.com/ - Available in UK
https://celsius.network/ - Not available in UK
https://crypto.com/ - Available in UK
If you want to dip your toe in the water, then I suggest using one of the above links.
An interesting proposition
As with personally staking Proof of Stake coins, you can also earn interest on the crypto that you hold on these custodial wallet services. This is normally done on a sliding scale, with you having to buy a certain percentage of their own token to achieve different tiers of rewards.
These wallet services earn money through several different avenues and hand down the rewards to you, with a margin off the top as profit. This could include:
For some extra reading and investigation into DeFi possibilities I can recommend https://defirate.com/
Before buying any crypto I recommend that you assess your risk profile and investment timeframe as you would with any investment of money. If you are heading towards retirement soon, then you would likely be looking to put money towards the blue chip blockchain. These are the oldest and well-established networks and the two biggest in market cap would be Bitcoin and Ethereum (not financial advice). If Bitcoin is gold, then Ethereum is the money of the Internet of Value.
https://bitcoin.org/en/
https://ethereum.org/en/
If you are already dealing with your own investments, then one route to invest in the blockchain revolution is through an Exchange Traded company that deals with Blockchain on the periphery. They can have exposure either indirectly through mining companies, blockchain technology startups, or just holding crypto on their balance sheets as an asset.
Exposure availability in the UK is limited due to current restrictions and the fact that the MPs on the Treasury select committee recently told the FCA they do not consider crypto to be an investment at this time. As a result, we have very little in the way of a clear buy in strategy and lack the investor protection given to mainstream investment strategies.
Source: https://www.thetimes.co.uk/article/buying-cryptocu...
The UK banking system is also a particularly hostile to crypto as a whole and there are very few high street banks that allow a direct transfer or purchase on a crypto exchange. At this time the easiest way to on-ramp and buy crypto is through a custodial wallet provider detailed in the next section.
Sorry, my wallets in my other trousers.
How you buy store your crypto is very important and, at the moment, a little confusing for the uninitiated. Thankfully there are a lot of companies out there who see value in offering custodial wallet services that can also bring you benefits in terms of interest. I like to think of it as staking ‘lite’.
These services are centralized, non-exchange finance groups who will buy, hold, sell and trade you a limited number of crypto currencies. Some allow withdrawal and deposit, some don’t.
At the low end of the scale is PayPal and Robinhood. You can buy crypto from them but cannot withdraw and do not earn anything other than the intrinsic value of the coin (minus trading fees).
The biggest names in this space, and well verified and trusted. They are all independently audited, generally with robust private insurance protection and strict security protocols in place to protect your investment.
https://nexo.io/ - Available in UK
https://blockfi.com/ - Available in UK
https://celsius.network/ - Not available in UK
https://crypto.com/ - Available in UK
If you want to dip your toe in the water, then I suggest using one of the above links.
An interesting proposition
As with personally staking Proof of Stake coins, you can also earn interest on the crypto that you hold on these custodial wallet services. This is normally done on a sliding scale, with you having to buy a certain percentage of their own token to achieve different tiers of rewards.
These wallet services earn money through several different avenues and hand down the rewards to you, with a margin off the top as profit. This could include:
- Arbitrage Trading
- Staking
- Lending
- Token sales
For some extra reading and investigation into DeFi possibilities I can recommend https://defirate.com/
Edited by RichTT on Monday 13th December 15:46
dimots said:
Good stuff. Big effort and a really useful resource!
Thanks, it's a work in progress as will continue to tweak it as time goes on. rfisher said:
Can we have some details on how to invest (dabble) safely for the 'mature' crypto virgins among us?
Paypal?
Revolut?
Kraken?
Ta.
Of course, it's on the cards to have some advice in there as well. Paypal?
Revolut?
Kraken?
Ta.
cavey76 said:
At times i think of leaving forums like this as its a bunch of gammon faced misanthropes then a brilliantly generous post like the above reminds me why a come back.
Thank you very much RichTT. Very kind of you to share your effort and understandings with complete strangers
How dare you, I might be a gammon faced misanthrope who just wants to profit off the latest Thank you very much RichTT. Very kind of you to share your effort and understandings with complete strangers
*not financial advise. The value of your investments could drop to zero
rfisher said:
Can we have some details on how to invest (dabble) safely for the 'mature' crypto virgins among us?
Paypal?
Revolut?
Kraken?
Ta.
I've updated the last post with where I think a complete newcomer should start. I will start to delve into exchange purchase / safety and procedure this week when I get a chance. Paypal?
Revolut?
Kraken?
Ta.
Ben Lowden said:
Thank you for compiling Rich. I haven't gone through all of this but had to delete a big chunk of text that was a direct copy and paste from another website as this is in breach of our rules of posting (link left to content). Also we don't allow referral links, so removed too.
My apologies, didn't mean to cross any lines. I will update the content as requested.
RichTT said:
My apologies, didn't mean to cross any lines.
I will update the content as requested.
No problem at all. Appreciate it must have taken you a long time to pull together, so thanks for the effort and I'll enjoy educating myself at some point by having a proper read through! I will update the content as requested.
tertius said:
I’d question whether that Nex.io table should be included - it’s a bit like advertising/a recommendation, and the rates shown are (in my opinion) a bit misleading - as they can only be achieved in quite exceptional circumstances.
Fair point, I hadn't got round to adding the other tables in yet. I do also state in the post that they require you to hold a certain percentage of their coin in order to achieve those rates. I do however recommend them as I've found them easy to use and very supportive.
RichTT said:
rfisher said:
Can we have some details on how to invest (dabble) safely for the 'mature' crypto virgins among us?
Paypal?
Revolut?
Kraken?
Ta.
I've updated the last post with where I think a complete newcomer should start. I will start to delve into exchange purchase / safety and procedure this week when I get a chance. Paypal?
Revolut?
Kraken?
Ta.
Paypal is unlikely to go bust.
The other 3 companies you listed may do.
Is it worth taking the risk for the promise of a few % in interest?
Admittedly Paypal is offering crypto dabble lite.
But they are removing the need for me to have to worry about wallets, hard drive failure or USB stick loss.
rfisher said:
Thanks.
Paypal is unlikely to go bust.
The other 3 companies you listed may do.
Is it worth taking the risk for the promise of a few % in interest?
Admittedly Paypal is offering crypto dabble lite.
But they are removing the need for me to have to worry about wallets, hard drive failure or USB stick loss.
Well, I agree. Paypal is very unlikely to go bust in the near future. But even they are at risk of falling prey to this financial ecosystem that is growing right under them. What use is a payments system middleman when people can transfer money to each other instantly and almost free via their phones? What business model is going to survive when its primary source of income (transaction fees) are made redundant through new technology adoption. Paypal is unlikely to go bust.
The other 3 companies you listed may do.
Is it worth taking the risk for the promise of a few % in interest?
Admittedly Paypal is offering crypto dabble lite.
But they are removing the need for me to have to worry about wallets, hard drive failure or USB stick loss.
Paypal will be the gateway for a lot of people to enter the crypto space, and I certainly am not going to recommend against them for ease of use.
However, the way I see it is that the main benefit of this growing DeFi space is not just about accumulation in and of itself. You can buy and hold your Bitcoin or Ethereum or Doge on Paypal and it should in theory, over time, increase in value. But Paypal doesn't actually give you the crypto, it's just an IOU on a screen.
For me it's definitely worth it, earning 5% APY on my Bitcoin (compounded daily I might add) as well as various percentages on my other crypto and stablecoins is just as important as the base price increase. In fact due to the fact that the price should rise over time then the compound interest is even more valuable later on down the line. More importantly they are part of a finance ecosystem that is flexible and rewarding. I can use my crypto as collateral for loans, 20% loan to value for 0% APR sounds pretty appealing if I needed it. Better than the email I received from PayPal today offering me credit at 23% APR. I can have a Visa card linked to my Stablecoin holdings (earning 10% APY) and spend as I would any other bank account.
The other companies I listed are multi billion dollar revenue generating businesses. These are not small fish and very unlikely to go bust. If I thought the business was in trouble then I go to my wallet there and transfer it off to an exchange or another defi project.
Please take the time to look at the links I posted, check trust pilot reviews, ready Investopedia articles about them. Same as you might do when considering an ISA platform or an investment company to look after your money.
RichTT said:
tertius said:
I’d question whether that Nex.io table should be included - it’s a bit like advertising/a recommendation, and the rates shown are (in my opinion) a bit misleading - as they can only be achieved in quite exceptional circumstances.
Fair point, I hadn't got round to adding the other tables in yet. I do also state in the post that they require you to hold a certain percentage of their coin in order to achieve those rates. I do however recommend them as I've found them easy to use and very supportive.
(Not taking anything away from the work you have done - it’s a great job.)
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