What exactly is a stablecoin? How should I recharge? Which exchange is better and how are handling fees calculated? Hi, everyone, I am Lao Zhong, and I will accompany you to learn about the currency circle. Today I am going to share with you 10 things you must know about cryptocurrency, so that you can gain more knowledge and avoid unnecessary mistakes on the road to investment.
First, virtual currency exchanges. Before you use virtual currency for consumption or investment, you must first purchase cryptocurrency. An exchange can be simply understood as a platform set up by a private institution to buy and sell cryptocurrency. It generally requires identity verification procedures and review. Through this, legal currency can be settled on the platform and converted into virtual currency for transactions. Exchanges can be divided into two types, those that support fiat currencies and those that do not. For example, exchanges that support legal currency will be more convenient, and you can purchase directly with a credit card. On the contrary, exchanges that do not support fiat currencies are generally called currency-to-crypto exchanges. As for how to choose an exchange, you still have to consider regulatory factors and handling fees in the end, because this will directly affect your experience of joining the exchange in the future. At the same time, you can also take the choice of currency, security, and interest into consideration. The currently more mainstream and famous exchanges include Binance, okx, Coinbase, Huobi, Kraken and Bitfinex, etc. Everyone can choose according to their own needs. Binance is highly recommended here. As the leader of exchanges, Binance is not comparable to other exchanges in any aspect.
Second, the virtual currency exchange platform will provide buying and selling exchange rates or prices, and users can exchange them directly. Just like going to a bank pawnshop or a money changer in Malaysia to exchange currency, you can convert legal currencies such as Taiwan dollars, Malaysian Ringgits, and Hong Kong dollars into virtual currencies according to the exchange rate, and then you can also convert your virtual currency into local legal currency. Compared with exchanges, its advantages are that it is relatively simple to understand and easy to operate, and there are few regulatory issues because they can only be established according to local regulations. The disadvantage is that they may have fewer currency choices, as well as the ability to earn interest, etc., which most exchange offices do not have.
Third, wallet. If you have not invested on an exchange or other platform, it is recommended that you transfer your wealth to your private wallet. After all, this is complete decentralization. There are currently many cryptocurrency wallet applications and types. Which one is right for you needs to be understood later. Let me briefly introduce to you the two major types of wallets, namely the cold wallet and the hot wallet. Hot wallets are simply wallets on the Internet, usually operated through a computer or mobile APP. , because there is no need to purchase additional equipment, it is very practical and is very popular among novice investors. But at the same time, the probability of the private key being stolen when stored on the network is relatively high, so the security is relatively low. Generally, we usually have hot wallets that are on the trading platform or investment platform itself, or hot wallets installed on mobile phones and computers, such as trust Walter or MetaMask.
Next is the cold wallet, also called an offline wallet. It usually exists in the form of a USB device. Human wallets are usually offline and are only connected to the network when transactions need to be made. Therefore, it is difficult to be hacked, so the security is relatively high. The more representative cold wallets include Ledger Nano X. When you buy a cold wallet, please make sure the merchant is trustworthy. It is best to buy directly from the official. Generally, it is not recommended to buy the second-hand ones you see on this e-commerce platform or have been used by others. There is a high possibility of the risk of private keys being leaked. If you don’t have a lot of cryptocurrency, you don’t want to buy them. I highly recommend using it because it’s really not cheap.
Fourth, KYC certification. Hey, didn’t you agree to decentralize? Why do you need to know my identity? KYC real-name authentication, which is called know your customer in English. Simply put, for the purpose of financial security, anti-fraud, anti-money laundering mechanism and combating the financing of terrorism, the platform requires customers to provide relevant information. Customers are usually required to provide identification and permanent address. . Of course, the reason why platforms currently do this is to comply with government regulatory conditions. You can also call it a reference point. If you use a certain platform and strictly implement KYC, then the risk of him taking away the money or being blocked by the government will be greatly reduced.
Fifth, stablecoins. If you want to invest in cryptocurrency, you must understand stablecoins, because they are the entry ticket to the investment currency circle. Stablecoins are cryptocurrencies anchored to fiat currencies. Their main functions are for value measurement, storage and investment convenience. Because Bitcoin can make people feel uneasy when it goes up and down every day, but if you have a stable currency, it is a stable dollar. For example, one dollar is equal to a USDT stable currency. When Bitcoin plummets and you want to buy the bottom, you can immediately use this stablecoin to buy Bitcoin to buy the bottom. Then when you feel that the Bitcoin is already high and you want to cash it out, you can immediately convert it into the USDT stable currency to avoid the problem of not being able to cash out. The current mainstream stablecoins include USDT and USDC, which you can think of as the U.S. dollar among virtual currencies. They are all linked to the U.S. dollar, so the price has been at one U.S. dollar from issuance to now. USDT is the oldest stablecoin. It is also the stablecoin with the most circulation and the highest market value on the market. It is issued by Tether, but it changes offices every few years and its asset allocation is relatively opaque, so it is regarded as underground. Operating stablecoin. USDC is the second largest stable currency, invented by exchange giants Coinbase and Circle. It insists on having a legal license in the United States, and every month it arranges for the top five accounting companies in the United States to publicly provide an asset verification report. Compared with Tether, which does not know where it is based, and whose founder and chief financial officer have always remained mysterious, USTC is generally considered a more transparent and safer choice, and dai is issued by the users themselves holding ETh collateral contracts. The operation of a vending machine is relatively complicated, and its use for hoarding coins and investing is not great, so I won’t elaborate on it here. To put it simply, everyone is using USDT and USDC, and holding USDT is safer.
Sixth, transfer and deposit. Let’s get to the point. This is a mistake that many novices make easily, so be sure to pay attention. The first is the address of the wallet. When you create a virtual currency wallet, you will also get a payment address, which is similar to your account number. If you want to receive payment but are only traveling out of Beijing, you can put this The coins are transferred to this address. On the contrary, if you want to transfer money today and only deposit it into a certain platform, you need to transfer your funds to the other party's payment address. Different currencies, such as Bitcoin, Ethereum, etc., all rely on different blockchain networks for recording. Different networks have different architectures. Just like different banks, the length of their account numbers is also different. Different countries have different address formats, but the meaning is the same, which is for you to collect money. of. The only thing you have to pay attention to is that, for example, when you are transferring USDT, you find that there are several different chain types for you to choose from, usually ERC 20, TRC 20 and Omni, and most people are stuck on Here it is. In fact, to put it simply, they all represent a chain type of blockchain, so which one should you choose? Usually, the more expensive one, the safer it is, but if it were me, I would choose the one with the lowest cost, because I think the blockchain technology itself is very transparent, but it should be remembered that they do not communicate with each other. , which means that the USDT on Omni cannot be transferred to the other two chains, so when withdrawing USDT on the exchange, you must pay attention to the type of this address. If you transfer it wrongly, it will be lost. The method for converting other currencies is the same, just follow the instructions.
Seventh, exchange rate and handling fees. This time, many novices will ignore the key points at the beginning, resulting in a large loss in handling fees before investing. This mainly happens when we deposit money into a fiat currency platform or exchange with a credit card. The interface usually only displays the handling fee, but the real devil is hidden in the exchange difference. So you can first choose several deposit methods on the platform and see how much fiat currency the deposit is displayed on the interface and how much cryptocurrency it can be exchanged for. Then you can go to Google based on this standard to find out the total amount of the exchange. At this time, you can know whether it is worth investing in this way. Usually the platform's handling fees range from 3-10%. You can try the conversion yourself to see. In the end, after using it so much, I found that it is actually the most worthwhile way to deposit money if you choose a licensed cryptocurrency exchange in your own country. It is also more convenient to withdraw money and exchange coins. This is in the second point, virtual currency. It was mentioned at the exchange office. You can go back to that section for reference.
Eighth, white paper. Suppose a friend introduces you to a certain currency or platform. How do you confirm its reliability and understand its future potential? White papers are your best entry point. I usually look at this white paper with four key points. The first is the project concept. What does it do and what are its functions? I'll focus on what's innovative about it and how it replaces and improves existing functionality. Next is the team. Currently, cryptocurrency is a bit rampant. Anyone can create their own currency, so the experience of the founding team members is very important. In addition to having strong technology to ensure its smooth operation, the members are also very famous. is important because it can make project promotion more efficient. The next step is to look at the token distribution mechanism. You can look at the total issuance of the project, the amount of currency, and the proportion held by the private equity team. For example, if the team owns more than 20% of the coins, and the lockout period for holding the coins is less than one year, something is wrong. Usually, as a team or a private equity institution, you can acquire tokens that are lower than the market price, which will give you a relative advantage. If you hold a large number of tokens, you can control the currency price, so the risk of investors becoming leek will be relatively high. There is also a relatively simple and crude way, that is, you can treat it as if your students are handing in homework and see if it is very short, has multiple languages, and whether there are a lot of typos in it, etc. If he doesn't do his homework seriously, then there will actually be suspicion of fraud.
Ninth, defi is the abbreviation of decentralized finance. Simply put, it is like a bank in cryptocurrency events. You can carry out various financial activities on it, such as deposits, loans, investment financing pledges, and insurance purchases. Wait. That's because the smart contract technology of the blockchain is used to achieve automation, which greatly reduces various costs and avoids black box transactions to a large extent. Investing in haircuts is like investing in banking stocks. It will earn you dividends. The bank uses your money to do various financial activities, and then distributes some of it to you after making money. And it has been found that it is relatively hot recently, so it is given to users. This recovery is also very high, as high as 30-70%.
No. 10. Liquidity mining. This is different from the mining we often hear, which means that investors provide liquidity to the platform in order to obtain the cryptocurrency issued by the platform as a reward. As for the defi investment just mentioned, this is because traditional transactions in the past used a matching system, and users were often unable to complete transactions due to different buying and selling prices. On the contrary, if you lend the platform a large amount of funds, they can directly conduct transactions with users, make the transaction complete, and improve the user experience. Of course, they will also distribute the handling fees received to you as a reward. Simply put, if you provide users with their own funds, the platform will give you corresponding bonuses. Then if you see staking, defi investment or dual-currency pairing, they are actually a type of liquidity mining. Then the biggest risk is that the platform’s liquidity suddenly becomes insufficient, or it is hacked, so liquidity mining There will still be certain risks.
Okay, I’ll finish today’s article here. Thank you everyone for reading. I hope that today’s article on the top ten cryptocurrencies can help you understand the world of cryptocurrency in a simpler way, and you will not be disappointed when investing. You will be confused. In the end, the same sentence remains: investment is risky, so be cautious on the road. Thank you for watching, see you in the next article! #BTC #ETH
