Crypto Basics

 Basics Of Cryptocurrency



  • Defi
  • Exchange
  • NFT
  • Hot Wallet
  • Cold Wallet
  • Cryptocurrency
  • Peer To Peer Payment
  • Staking
  • Lending
  • Earn With Crypto
- Defi:
Decentralized finance or better known as De-Fi is basically all of the financial products that you use today. The decentralized part means that there is no central bank that governs your money or financial accounts. This could be both a good and a bad thing depending on how you look at it. If you are in a state that has state tax you will still be liable for these taxes at the end of the year. Defi can also apply to video games as there is a whole crypto gaming industry. Cryptocurrency is in its infancy stages so beware of this developing technology. This is the perfect opportunity to get into something at the ground floor and become one of the Pioneers of Crypto. We are not as early as the founders but we are still close to the birth of crypto at the time of this writing. You may pick one way or as many ways as you'd like to explore Cryptocurrency investing and its decentralized functions.
 
- Exchange:
A Crypto exchange is where you buy or sell cryptocurrency. Some exchanges also allow you to buy and sell NFTs but more on that later. Having a reputable Cryptocurrency exchange is imperative to our Cryptocurrency journey as this will be our main point of contact when buying and selling Cryptocurrencies. Some exchanges also offer Cryptocurrency debit cards that allow you to spend your Crypto as well as earn rewards when you spend, similar to a rewards card. You would have to do your own research on all of the products that your exchange offers 

- Hot Wallet:
This is an online blockchain-based Crypto wallet that lives online and on the Blockchain. It has its own wallet address which allows you to send and receive Crypto and can be used to verify transactions on the blockchain. Your cold wallet can also be used as a means to verify your own transactions and identity at times when you are purchasing NFTs or logging into your social accounts on websites. You can even use your wallet to play and earn in blockchain-based games.  Always be sure to secure your private keys and never provide this information to anyone. In the event that you forget your wallet login or change devices, this would be the only way for you to regain access to your wallet and cryptocurrency. You can back up this recovery phrase in any way that you like. Just be sure to have it. 

- Cold Wallet:
Offline Crypto wallet has its own wallet address. This address allows you to receive Crypto and can be verified on the blockchain. This may be a piece of hardware similar to a USB drive or any other form of hardware that you use to store your Crypto. The main purpose of this type of wallet is to give you complete and absolute control of your money. This is not to say that it does not come with its own risks and also a set of benefits. For instance, this type of wallet is virtually in-hackable if you take the correct security measures such as not providing anyone with your Crypto Security phrase and limiting other people's access to your device as this wallet is essentially stored offline. One risk associated with this type of wallet is that you are the only one who is responsible for managing your security keys. In the event that you lose or forget your security keys then you may be unable to recover this type of wallet and your access to these funds will be lost as well. It is a good idea to backup your security phrase in multiple locations and backup your information to the cloud. This will help mitigate data loss. Of course, you can back up this information in any way that you wish. This is just a general rule of thumb to make sure that you have it. 

- NFT
An NFT is what is called a Non-Fungible token. In the Crypto industry these are unique tokens created and verified on the blockchain and can be almost any digital asset such as an image, a file, or a video. You may then hold this NFT in your Crypto wallet or you can choose to list if for sale on any Cryptocurrency Exchange. You may also sell this NFT directly to one of your peers and transfer it directly from your wallet to theirs. The original asset cannot be copied as it is verified on the blockchain and it has a track record on the ledger that would be used to verify the authenticity of that specific NFT. This information is also available to the public as it is located on the blockchain. An NFT is the bridge between the physical and virtual world of Cryptocurrency. This is due to the fact that you have to prove ownership by verifying that you are the owner of the wallet that this digital asset is contained in. In the real world you are able to verify on the blockchain that you own this asset as long aa you own the NFT. This digital asset can be used in games, social media, and all around the Crypto industry to prove who you are or which collection you are representing.

- Cryptocurrency:
Cryptocurrency is a digital asset and a form of payment or specified coins used on the blockchain to verify this cryptos authenticity. Think of this as digital money that exists on the internet and has a whole ledger to verify the transactions to the public without a bank. Most projects or decentralized protocols have the protocol itself and then the crypto such as Ethereum and Ether respectively. Bitcoin itself is a cryptocurrency and is the grandaddy of all cryptos as the first form of a decentralized digital asset.

- Peer Payments:
This is a great part of the Cryptocurrency ecosystem. Crypto allows you the opportunity to pay each other directly in the form of Cryptocurrency or an NFT to provide you with digital ownership of something on the blockchain. All you would need is a wallet address to pay someone else. You do want to be sure that you have the correct wallet address to ensure that your Crypto or NFT is not lost in the process as it would be irretrievable. Some exchanges like Coinbase for example allows you to send Crypto through an email address or a phone number which is very convenient for new user as this give them a short form to send their Crypto to and mitigate the risk of lost funds. You can also pay people for goods or services this way if you are paying a specific person directly. This does not require a bank and is one of the many benefits of Crypto. 

- Staking:
Staking is the process of lending your Cryptocurrency to exchange for a lock-up period. During this period you will not be able to sell the Crypto in which you are staking. You will earn interest on your Crypto in the form of coins or the allocated Crypto. You will be able to find the information about how you will earn prior to staking so you will be able to determine if it is worth it to you. This can be a great form of passive income if you have a long enough time horizon due to the fact that you will get it back. Staking is used to validate transactions on the blockchain. This used to require heavy computer equipment but now it is able to be done automatically through certain exchanges. Please do your own research on this method. 

- Lending:
Similar to staking, lending is the process of lending your Crypto to someone else via the blockchain for a specified amount of time. During this time you will have received some sort of Crypto deposit and after the time period has passed you will then receive your Cryptocurrency back along with a bit of interest. You will then provide the person to who you lent your Crypto back their own Crypto that they paid to you as a deposit. 

- Earn With Crypto:
There are multiple ways for you to earn with Crypto. You are able to simply invest in cryptocurrency and hope that it goes up in the long term or you can become a Crypto trader which requires a substantial amount of capital to be effective. You can also stake your cryptocurrency which is an interest-bearing account where you put up your Cryptocurrency and you gain a set interest percentage based on the exchange rate at the moment. Your Cryptocurrency will be locked and you will not be able to trade it or do anything with it for a set period of time. After the time period has passed you will then receive your Crypto back along with the amount of interest that you earned while staking it. You may also lend your Cryptocurrency to your peers. This process is similar to staking in a way that you earn interest but instead of lending it to an exchange you are lending it to a particular individual. You may also play blockchain-based games that pay you in crypto for completing specified tasks while inside the game.

Getting started with Cryptocurrency

- Necessary Item: Phone or Computer, Bank account for deposits, Account on a Crypto exchange to purchase Cryptocurrency, Hot and Cold wallet for storage, Backup Keys.

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