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Cryptocurrency mining – the power behind our decentralized currencies – has reached a fork in the road of its young life. Giga Watt filed for bankruptcy in late November this year, Genesis Mining is facing hard times, and Bitmain’s future is in limbo.
But despite massive depreciation, and miners leaving the cryptocurrency space en masse, it’s not all doom and gloom for cryptocurrency as a whole. Institutional investors are coming into the crypto space, and the recent decline in mining could be good for persistent miners, mining farms and pools worldwide.
How Centralized Mining Failed
If there’s one lesson for miners to learn from in this bear market, it is keeping down the cost of mining, with emphasis on efficiency over scaling up. Over the course of the year, mining has been increasingly unprofitable even for some enterprise miners. There are a number of compounding factors for the dry spell such as:
recent decline in the cryptocurrency market
strict regulations and increased power rates for cryptocurrency mining
rapid increase in mining difficulty – faster than market demand and cryptocurrency adoption
cost of outlays in running the business increase with size (e.g. bigger facilities, cooling systems, power consumption, hiring more employees for maintenance and upkeep)
Diminishing returns over a period of time (e.g., Bitcoin rewards halve every four years) coupled with volatility in the cryptocurrency markets makes it very risky for miners to scale up beyond a certain threshold. In many cases, mining profitability is only as good as the market conditions. The recent turn of events with the price of cryptocurrency, and the equivalent of approximately 1.3 million Antminer S9 units turning off as of late proves how large-scale miners have become so dependent on cryptocurrency markets in terms of mining profitability.
The arms race towards bigger mining facilities and acquiring more efficient but expensive mining hardware also tends to backfire for some mining businesses who are now struggling to pay off their debts. State regulations have also put a lot of strain to the mining industry by imposing higher rates for cryptocurrency mining. This, along with rapid increase in network hash rate/difficulty, and a long drawn-out bear market spells disaster for many businesses in the cryptocurrency mining industry, particularly those who have overspent with expectation of higher returns through market demand and cryptocurrency adoption.
Enterprise-level miners might have increased their mining power with a large share of the network hash rate which might have previously worked but because of the way proof-of-work cryptocurrencies such as Bitcoin are built large-scale miners are running into difficulties. Miners are finding with increased network hash rate there will come a point where mining and maintenance costs start to eat up their gains unless they find access to abundant or much cheaper energy source as soon as possible, or if cryptocurrency continues to gain widespread adoption. (Imagine if every miner in the world does the same thing and Bitcoin suddenly drops to $1,000. How long can these enterprise miners hold on until Bitcoin goes back up again to $20,000 or until mining difficulty drops significantly lower?)
Lastly, centralized mining puts a lot of strain to the power grid that governments won’t have much of a choice but impose exorbitant rates for mining operations in order to “force” miners to slow down, or run the risk of overloading the grid, severely affecting all other industries in the country. The only option for large-scale miners at this point is scaling down and help redistribute hash power to the cryptocurrency network, e.g. shipping their mining rigs to places with abundant and more affordable energy source. (In Venezuela, it only costs $531 to mine Bitcoin).
Why Decentralized Mining Is Crucial for the Cryptocurrency Space
More secure compared to centralized mining. Centralization of mining power misses the whole point of having a decentralized cryptocurrency such as Bitcoin. Cryptocurrency mining was never meant to be a centralized endeavor, but a shared obligation to secure the network where one’s willingness to share computing power to mine transactions and prevent double spend attacks is rewarded with cryptocurrency. Centralization creates weaknesses to an inherently secure decentralized network by establishing a single point of failure and opens up the possibility of double spends and censoring transactions. (This inevitably results in weaker adoption and/or the cryptocurrency’s demise.)
Distributes risks and rewards to miners. Higher hash rates do make a difference who gets the mining reward. But at the end of the day, it all boils down to probability. Suppose every miner in the world mines at exactly the same hash rate. The way Bitcoin’s algorithm was designed meant that there is no particular way to tell who will be the first to find the next hash since they would all be making random guesses at a given rate. Higher hash rates increases the likelihood of being the first to make the right guess, but so is the risk (power consumption = money lost). A better alternative to mining centralization is by using mining pools or by having small mining farms spread out to places where cost of running the mining the business is much cheaper.
Distributes power consumption. With less centralization in mining power, miners will be able to utilize cheaper electricity instead of relying solely on the power grid. It would also encourage miners to be more creative and explore ways to make cryptocurrency mining a lot greener, or, as mentioned earlier, find places with abundant supply of energy source (e.g. hydroelectric, geothermal, solar, etc.)
The 2018 bear market has been an eye-opener for all of us, not only in terms of volatility and value of cryptocurrency, but also the dangers and consequences of going beyond what is intended for in cryptocurrency mining – decentralized and cost-effective. Bitcoin was just as secure back when people mined them in their PCs and laptops as it is today with more powerful ASIC miners and GPUs. It’s just a matter of perspective. Hopefully, this year has brought us some important lessons to help us with our journey in cryptocurrency for the year 2019.
Markets crash every so often, whether it’s stock, commodity, or cryptocurrency. Just recently, Amazon stock has lost 25% of its value in a span of 3 months. Nearly 40% of Facebook’s share value has been wiped out since July; Google lost 19%. Apple is down by 26% since October. By and large, 2018 has been particularly bearish, not just for cryptocurrencies, but tech stocks as well – quite the opposite of what we’ve seen last year.
“What Goes Up Must Come Down”
Market cycles are normal with any type of investment vehicle. The price crash on both cryptocurrency and stock in Q4 strongly suggests that we are indeed going through a market downturn or a bear market. In other words, the fact that both cryptocurrency and investment funds are down suggests there isn’t anything wrong with cryptocurrency but instead it’s just a natural market fluctuation.
Bitcoin, has lost around 75% of its market price from its all-time high of $19,309 in December 2017. Speculation for Bitcoin’s price is considered as one of the main reasons for the run-up resulting in a price crash after further gains became unattainable.
Making the Most from a Price Crash
Market volatile in cryptocurrency is something experienced traders and investors have all been accustomed to. Truth is, what we’re seeing right now with Bitcoin and other cryptocurrencies is just one of the many examples of a price downturn in recent years. Here are some ways we can get by in a cryptocurrency bear market. As always, please note that this is not investment advice and is written solely for informative purposes.
HODL. Hodling is another one of those internet sensations that came about because of the immediacy of Twitter. For the unaware, it is essentially a “buy and hold” strategy used by cryptocurrency users and investors. Hodling can take a lot of patience, and mental resolve, with an almost stoical attitude towards cryptocurrency investment. In other words, they’re not into crypto just for the short-term gain, but look forward to using it more as it slowly reaches worldwide adoption.
Dollar Cost Averaging (DCA). Regarded as one of the most conservative and safer approach to cryptocurrency investing, which allows investors to accumulate crypto-assets over time. Similar to hodling, DCA requires discipline, and the ability to stick to the plan regardless of price actions in the market. It usually involves a fixed amount spread over a period of weeks or months. DCA can be considered as a “contrarian” approach to investing because investors can have more during a bear market and buy less during a bull market – the opposite of what most people tend to do which is giving in to fear of missing out (FOMO) and herd mentality.
Entry and Exit Strategies. A lot of cryptocurrency traders have an exit strategy such as placing stop loss orders below their entry points in order to minimize potential losses. Here’s an example of how an entry and exit strategy can be used during a bear market. Unfortunately, there is no guarantee that investors would be able to recoup their losses since it would all depend on future price actions. We’ll be using Bitcoin in this particular scenario.
From this hypothetical situation, it is entirely possible for traders and investors to recoup or even take some profit off of the bear market. However, it’s also possible for Bitcoin markets to go much deeper, exacerbating one’s losses and making it more difficult to recover. We don’t recommend this method unless you truly understand the cryptocurrency market and are quite familiar working with exchanges. Also, please bear in mind that selling cryptocurrencies for profit is a taxable event under state laws regarding cryptocurrencies.
Educate Yourself about Cryptocurrency. Spending some time learning about this emerging technology could be one of your most valuable investments in this day and age. Cryptocurrency will continue to evolve and will be more accessible to millions of users in years to come. Read books about cryptocurrency, enroll in blockchain and cryptocurrency courses, and steer clear from get-rich-quick schemes and cryptocurrency scams. Having a better grasp of cryptocurrency and its underlying technology (blockchain) helps clear out all the noise and drama surrounding cryptocurrency and allows you to make wise investment decisions.
**Please note that this is not investment advice and should no way be treated as such. It is for informational purposes only. Before you make any trade or investment you should consult a licensed financial advisor who is familiar with your current situation.
Many cryptocurrency critics believe that blockchain transactions are far too slow to be ever applicable for mass adoption within banking and financial institutions, failing to understand blockchain and cryptocurrency technology is still in its infancy. In this post, we’re going to look at the pros and cons of each system and explore the future of payment systems.
Banks and payment systems look in some ways more efficient than blockchain transactions, but in many cases, they’re actually more involved. In fact, as soon as they’re being used to make cross-border payments and settlements, they start to reveal some flaws. They, too, can become slow, expensive, or worse – they can lock people out through no fault of their own, and for no apparent reason.
Bank-to-bank transactions through SWIFT network take three to five working days to reach its destination, which is extremely slow by cryptocurrency standards. In contrast, an average person with no connection to a bank or money transfer service can securely send and receive Bitcoin anywhere around the world with just a smartphone and a stable Internet connection in as short as ten to fifteen minutes without the risk of being censored out by the system.
Wire transfers cost somewhere between $10 to $30, plus 6% spread on foreign exchanges. In other words, if you’re sending $5,000 from Australia to Canada, you’ll pay as much as $330 on that single transaction. This doesn’t account for differences in rates from country to country (fees for sending money from US to Africa can be as high as 15%).
Bitcoin’s transaction fees peak at around $55 in December 2017 during a massive buying spree. But most of the time, sending Bitcoin to someone anywhere around the world will only cost a fraction of a dollar, to as high as $10 depending on priority and network load. And since it’s considered a borderless, global currency, users can forget about foreign exchange rates.
Companies like Abra have been using Bitcoin as a cheaper alternative to international settlement systems. Interestingly, certain banks like the ones in the Philippines allow remittances using Bitcoin, and recipients can take their pesos straight out of the ATM without an ATM card or a bank account.
Within the cryptocurrency ecosystem, on-chain and off-chain implementations can have a significant impact both on energy consumption and transaction throughputs. As a general rule, the more it shifts toward decentralization, the more challenges it needs to deal with scaling; but as more features become centralized, the more scalable it becomes. How these challenges will be overcome in the next couple of decades is anybody’s guess.
Some of the proposed on-chain solutions is the move towards proof-of-stake consensus algorithm (e.g., Ethereum Casper), and delegated proof-of-stake (e.g. EOS and Cardano). Off-chain solution include Lightning Network (e.g. Bitcoin), and side-chains. Improving the blockchain’s inner workings not only helps with efficiency, but also makes energy consumption more manageable.
Cryptocurrency might not be as nimble as people would expect from banks when it comes to local micro-transactions. However, we’ve seen some progress lately, with SegWit adoption being used in 40% of all Bitcoin transactions, enabling shorter confirmation times, significantly lower fees, and Lightning Network integration. Users can start experimenting with Lightning wallets in their beta version (Eclair, Zap, RawTX, etc.), and buy small stuff from online stores like the ones made by Blockstream specifically for that purpose.
Cryptocurrency will only get better as time goes by, and we’ve already seen some progress from greener solutions, to mining hardware, and software development. There’s no limit to the number of ways cryptocurrency can solve many of its challenges. All it takes is an open mind and a little bit of creativity.
There’s been a change in the outlook for cryptocurrency during the past few months. People seldom talk about the markets or the price of Bitcoin. Volatility has been causing a lot of uncertainty, and mainstream adoption came to a virtual standstill.
Nonetheless, the cryptocurrency space showed remarkable resilience as blockchain projects continue to expand its borders with more lateral thinking and “out-of-the-box” blockchain solutions. We’ll explore some of their use-cases and find out whether these currencies and platforms are the next big thing.
Why People Invest in These Projects
Despite the recent lull in cryptocurrency trading and mining, blockchain projects and ICOs are very much in the business for 2018. Investors and tech companies remain optimistic about the future of the cryptocurrency space amidst tightening restrictions and negativity. In fact, according to Coindesk, the amount of money raised in ICOs in the first quarter alone exceeded the total amount last year.
Most ICOs and blockchain projects didn’t end up well for a lot of investors (more than 90% failed to deliver). However, there are a few examples like Binance and EOS which turned out as good investments. Binance became one of the leading cryptocurrency exchanges with a BNB market cap of over $1 billion – the second most valuable token on Coinmarketcap. EOS, on the other hand had a successful, albeit controversial mainnet launch, and is now a full-fledged decentralized application platform second only to Ethereum.
Smart investors consider the current state of affairs as a golden opportunity to hunt for new projects with the greatest potential, particularly in their early stages when they are mostly undervalued. Investing early on has the advantage of maximum gains with the least amount of exposure. For instance, a hundred dollars’ worth of investments at ten cents per token won’t break the bank if things go south. But if it turns out to be a real investment, gains will be exponential (e.g., BNB and EOS tokens are worth a hundred times more than their initial price in 2017)
Blockchain Projects to Watch for in 2018
Finding a good investment can be a real challenge since we’re dealing with dozens of new blockchain projects and ICOs every month. If you’re lucky enough, you might be able to land on some big winners from a list of projects. But before anything else, please bear in mind that this is not investment advice, and you are solely responsible for any gains or losses. That said, here are five of the most talked-about blockchain projects in 2018.
Zilliqa (ZIL). Launched in January, the project puts a lot of work in building a highly scalable decentralized platform using a method known as “sharding.” Unlike in Bitcoin, each node will be working in parallel within a group of nodes called “shard,” verifying a subset of all the transactions occurring at the same time (also called parallel processing). Sharding works perfectly in many centralized systems (Ultima Online, Google, etc.). However, it presents an immense technical challenge when applied on a decentralized environment. Ethereum has been working hard on it as part of its on-chain scaling solution in hopes of solving the security/scalability/decentralization trilemma. Zilliqa’s entry into the whole sharding scene threatens to steal the thunder from Ethereum by becoming the first to come up with a workable solution. Some estimates it to be around January 2019. Key features include:
faster transaction throughputs (speed improves as the network grows)
employs practical Byzantine Fault Tolerance as a consensus mechanism
reduced energy consumption (mining is spaced a hundred blocks apart)
maintains a decentralized network structure (a new shard is created for every 600 nodes)
Basic Attention Token (BAT). Cutting the middleman goes beyond peer-to-peer transactions to include decentralized, blockchain-based digital advertising in the form of an open-source, ad-free browser with its own currency. Brave Browser is one of today’s hottest Internet browsing software because it allows users to block ads and trackers completely free. In fact, as many as 3 million people have already been using Brave, becoming one of Google Play’s top ten in the Android browser category. The project is moving towards the creation a decentralized advertising platform using its own currency – Basic Attention Token – to incentivize both content creation and user attention. It works in some ways like Google Ads but in a more transparent and decentralized manner. The key advantages of BAT from an investor’s point of view include:
good potential for adoption (sold out BAT worth $35 million in 30 seconds)
strong support from the community (Brave browsing experience receive a lot of positive feedback from users)
Kin (KIN). Canadian messaging app company Kik Interactive is making headway into cryptocurrency adoption with the launching of Kinecosystem. The company hopes to build a community of users and developers sharing resources, and making digital goods and services. However, unlike most blockchain startups with no real users, Kin’s integration into the Kik Messenger meant its value could potentially rise with over 300 million active users. The company is now moving towards the next phase, inviting all developers and content creators in building the ecosystem for large KIN payouts. Gains will take time, but you might want to consider its advantages, namely:
KIN’s practical use-case as a digital currency on an existing application (Kik has been in use since 2010)
user base is mostly made up of digital-natives (teens, millennials, and active mobile users)
Kik’s emphasis on anonymity
DeepBrain Chain (DBC). Blockchain companies like DeepBrain Chain sees decentralization as the future of the AI industry. Development of AI applications use up a huge amount of computing power. DeepBrain Chain works by utilizing computational resources across millions of nodes on the neural network in building AI applications which are then published onto the blockchain. Nodes that successfully deploy mirror images will receive payouts in DBC. It plans on migrating out of NEO to its own mainnet in Q4, with its own consensus algorithm (proof of importance and delegated proof of stake). The goal is to become the deep learning machine for the AI industry. Successful adoption is achievable through:
growth in people’s interest in the AI industry
reduced computational cost of AI companies through resource-sharing
secure, decentralized method of storing AI information.
Wormhole. Bitcoin Cash might soon be able to run smart contracts through its proposed protocol layer known as Wormhole. Developers plan on forking the Omni Layer to create a platform for smart contracts on top of Bitcoin Cash. Much of it is still in the works as of this moment, but news is, they’re going to issue a token named “Wormhole Cash.” Investors and crypto-enthusiasts are keeping track of its progress since it is expected to have a very high demand upon release.
The cryptocurrency space has been constantly evolving even as the noise and the hype surrounding cryptocurrency have mostly faded. Cryptocurrency is here to stay, and we’ll be seeing more projects in the near future that will bridge the gap between the average user and blockchain technology.
There are currently three ways a person can buy cryptocurrency: mining, buying from online wallets and exchanges, and buying or receiving from others.
In this article, we’ll be focusing about the ins and outs of buying cryptocurrencies from online wallets, exchanges, selling online, and walk you through the whole process with a step-by-step illustrative guide on some of the most popular online wallets, exchanges, and marketplace.
Cryptocurrencies vs. Fiat
Cryptocurrencies have unique properties which make them a lot different from our fiat currencies. They exhibit both properties as a medium of exchange for paying goods and services and as a commodity like gold and other precious metals that have intrinsic value.
It takes hours and huge amounts of computing power minting (or ‘mining’ in cryptocurrency parlance) these digital currencies, the same way gold is mined with hundreds of man-hours using expensive tools and equipment.
In comparison, fiat currencies use very little resources, if at all. Banks don’t even have to print or stamp paper bills and metal coins these days; they simply type in an arbitrary number on their computers to create more money.
Why People Buy Cryptocurrencies
In some countries where inflation has severely diminished the purchasing power of fiat currency, people turned to cryptocurrency and mining as their sole refuge against the rising prices of commodities and the unrestrained creation of money by banks and financial institutions.
Others view cryptocurrency as an opportunity for investment, particularly Bitcoin and other major currencies like Ethereum. Bitcoin’s value has been going up unabated for nearly a year, and more people are starting to look into it as a result of its rising demand, popularity, and to some extent, the use and promotion of cryptocurrency education.
For some users, they see it as a more affordable and secure way to send and receive money without going through any bank or financial institution. It’s almost like sending an email from one person to another where information is shared only between the sender and recipient.
Whatever your purpose is, you can always have an edge if you know the different methods of buying cryptocurrencies and how to take advantage of the differences in pricing, volatility, wallet features, and other factors.
Factors Affecting a Cryptocurrency’s Price
A casual visitor at coinmarketcap.com will quickly notice how fast the price of a certain currency changes – in a matter of seconds! (Check out the site and reload the page once every 5 minutes and see for yourself.)
This rapid movement in price is attributed to the cryptocurrency’s volatility. The fewer there are in circulation, the more volatile a certain currency is. Conversely, as a currency gains widespread adoption due to its abundant supply, price starts to become more stable.
Supply and demand also determines the current price of a particular currency.
In some instances, the relationship between supply and demand and the current price is a direct result of fear of missing out (FOMO). This is the typical bandwagon mentality people get into when something new or ‘trending’ comes along. Bitcoin is not a new thing, except for the vast majority who never heard of it. But towards the middle of 2017 when everything people talked about is Bitcoin, suddenly, everyone is dipping their hands into it.
Similarly, fear, uncertainty, and doubt works in much the same way, but with opposite results. People can succeed in convincing millions to sell their Bitcoin or face massive loss and cause huge price dip as people sell them in panic.
We can infer if a certain news or upcoming event has, or will likely cause fear when it coincides with sustained price drop such as the Bitcoin hard fork of August 1 where Bitcoin price went down unimpeded for 3 days, two weeks prior to the split, and on September 12-15 where Bitcoin came crashing down to USD 2947.69 with China’s ban on Bitcoin exchanges and ICOs a week later.
Price spread which is determined by comparing prices of cryptocurrencies in exchanges all over the Internet can also affect how a particular currency is priced. Exchanges work in some ways like trading where buyers and sellers negotiate on bid and ask price.
Price variance within the exchange itself is often negligible as both sides are given the average price by default (this can be changed by buyers and sellers as they wish). However, when comparing the average price from one exchange to another, we start to see a significant difference in pricing. (Clicking the link under ‘Volume’ at Coinmarketcap allows you to see this in real time.)
Opening/Installing Your Wallet
Your wallet is the key (no pun intended) to the world of cryptocurrency. This software allows you to make transactions with other wallet users and interact with the blockchain ledger using a pair of keys known as the private and public keys. For a detailed discussion about cryptocurrency wallets, go to Everything You Need to Know About Cryptocurrency Wallets.
Creating an Online Wallet Account
Setting up an online wallet is as easy as signing up for an email or social media account. Here are the steps in creating your Coinbase and Blockchain wallet.
To get started with Coinbase, go to their signup page and type in your name, email address, and wallet password. You will be sent a verification email by Coinbase. Go to your email and click Verify Email Address to activate your account.
Coinbase currently supports Bitcoin, Ethereum, and Litecoin. It generates your private and public keys for all three of them when you sign up to their wallet service. However, you don’t have access to your own private keys; only your public keys/wallet address.
You can start sending and receiving Bitcoin, Etherium, and Litecoin with your wallet account. However, if you want to buy cryptocurrency with fiat from Coinbase using your bank account or credit/debit account, you need to go through their payment verification process.
Blockchain.io is a block explorer for Bitcoin which allows everyone to see the status of every Bitcoin transactions ever made and are constantly being made in real time. To provide Bitcoin users, traders, and miners with an online wallet to store their private and public keys, they’ve also introduced their own Blockchain Wallet for Bitcoin.
(Update: as of August 2017, Blockchain began supporting Ethereum.)
Blockchain Wallet generates your private and public keys when you sign up to their online wallet service. However, unlike Coinbase, Blockchain allows users to export/import their private keys.
To create your online Bitcoin wallet account, go their signup page and type in your email address and a strong wallet password. A popup notification will inform you that your wallet and wallet ID has been created, followed by a welcome message.
(Note: your wallet ID is different from your wallet address/public key. This is just a series of numbers and letters that you’ll use every time you log in to your Blockchain Wallet account.)
Check your email and click ‘YES THIS IS MY EMAIL’ to complete the setup.
Installing a Desktop or Mobile Wallet
Desktop and mobile wallets require you to download and install the app on your device. They are considered more secure than online wallets because your private keys are stored within the device and have backup features.
Some desktop and mobile wallets are ‘open source’ which means tech-savvy wallet users can see exactly how the wallet works under the hood. Depending on how you look at it, open sourcing a wallet can be good or bad (e.g., transparency vs. phising/hacking, etc.).
Here are the steps on how to install an Exodus desktop wallet and Jaxx mobile wallet.
Exodus is one of the popular multi-currency, desktop wallets available online. It’s compatible with Windows (64-bit), Mac, and Linux, has backup features.
Download and install the app to your computer. Read the onscreen popups and click OK. You can start using your wallet to send and receive currencies. To buy cryptocurrency with fiat, you may open an online wallet account like Coinbase, or an exchange account like GDAX or Poloniex.
Jaxx is an open source, multi-currency, mobile wallet and is compatible with Android and iOS. It also doubles as desktop wallet when installed in Windows, OS X, and Linux.
Go to Google Play or iTunes on your mobile device and search Jaxx Blockchain Wallet. Download and install the mobile app.
To set up for first use, choose Create Wallet and use the Express Setup. If want to pair this wallet with your laptop or PC, choose Pair/Restore Wallet and enter the 12-word Backup Phrase. You can see your Backup Phrase in Menu>Tools>Backup Wallet>View Backup Phrase.
Caution: view your backup phrase only when necessary and make sure no one else is looking. People can use your backup phrase to re-generate your wallet on their device and have access to all your funds.
Setting up a Hardware Wallet
Hardware wallets like Trezor and Ledger Nano S are considered the most secure of all types (excluding paper wallets). However, they’re not cheap and setting them up are not as easy as as the other types of wallets.
To use your hardware wallet, you need to hook it up to a computer or mobile device using the the USB cable that comes with it.
Here are the steps in setting up your Trezor and Ledger Nano S wallet.
Before setting up any kind of hardware wallet, check for any sign of tampering to make sure it runs completely free of any third party software or hidden app.
Go to wallet.trezor.io on your browser and plug in your Trezor wallet. Type in your Device Label and enter your 4-digit PIN.
To be able to restore your accounts in case of damage, loss, or theft, you’ll be required to write down the 24-word recovery phrase on a piece of paper or the small booklet that comes with it. Enter your PIN to complete the setup.
Trezor currently supports Bitcoin, Ethereum, Ethereum Classic, ZCash, Litecoin, Namecoin, Dogecoin, Dash, and all ERC-20 tokens.
Setting up a Ledger Nano S is a little different from Trezor, but the process is essentially the same.
Here, you’ll be using the two buttons and the LCD screen of the hardware wallet.
Plug in the device on your laptop or PC and choose between configuring a new device or not. Choose yes (P) and type in your new password twice.
Next, you’ll be asked to write down the 24-word recovery phrase to backup your wallet. After scanning and writing down all the words, your device is now ready to use.
To use more features for your Ledger Nano S, connect your hardware wallet to your laptop or PC, go to their download page and choose between wallet apps and management apps for your Ledger Nano S.
It currently supports 18 currencies including Bitcoin, Ethereum, Bitcoin Cash, Ethereum Classic, Dash and Litecoin.
BUYING FROM AN ONLINE WALLET
To get the feel of having your own assets stored in the cryptocurrency network, you need to need to buy them with fiat currency.
For Coinbase, you need to add a payment method by going through their payment verification process, after which you can start buying Bitcoin, Ethereum, and Litecoin using your credit, debit, or bank account.
Buying cryptocurrencies with fiat will incur some fees (4% when using credit/debit account, and around 1.49% with bank accounts).
This feature is available only in 32 countries including Canada, UK, and Australia.
BUYING FROM AN ONLINE EXCHANGE
People can buy cryptocurrency directly from online exchanges. GDAX is an online cryptocurrency exchange run by the same company that operates the Coinbase online wallet.
Buying from GDAX also requires identity and payment verification process via Coinbase. To start buying, you need to fund your GDAX with your account balance from Coinbase, bank account, bank wire, or BTC address.
Some users can get away with paying less (or zero) transaction fees when buying their cryptocurrencies from online exchanges like GDAX. However, it also comes at the expense of speed and convenience.
To keep your currencies safe, you may choose to send them to your desktop, mobile, or hardware wallet after accumulating a substantial amount from exchanges. It’s always risky to keep your currencies in exchanges.
BUYING FROM A MARKETPLACE
Paxful is a popular cryptocurrency market for Bitcoin buyers and sellers online. However, unlike exchanges, buyers and sellers can interact with each other and negotiate with the price and payment methods – it’s basically an online marketplace.
The most commonly used method is through PayPal and uses Escrow for secure transactions. Buyers can narrow down their search when buying a particular amount of Bitcoin.
Interested in mining? Learn the basics of cryptocurrency mining at CryptEdu.com or start hassle-free cloud mining at Cryptmin.com today.