Tag: cryptocurrency

Your Ultimate Guide to Cryptocurrency Wallets

Introduction to Cryptocurrency wallet

Introduction to Crypto Wallets

A crypto wallet serves the same purpose as a physical wallet because it stores your valuable assets. You can put your cash in your wallet or your cards if you are the type who is very savvy, or both if you don’t like surprises. The same is true with a cryptocurrency wallet—you store your tokens in them so as to keep them easily accessible on the go. 

In the early days of cryptocurrency, sending tokens was a very tedious process. One would need to deliver long keys to whoever one wished to send them to. The case is different today, as recent wallets have made the Blockchain much more accessible and user-friendly. 

What is a Crypto Wallet 

A cryptocurrency wallet is any device, software, or material that holds and protects your private keys and allows you to access your coins.

A cryptocurrency wallet stores your cryptocurrency assets. However, it has a twist in that instead of storing your tokens directly, it keeps the private keys you use to authenticate your crypto transactions and provides an interface for transacting with your coins. 

This is because your cryptocurrency is always on the blockchain but is not accessible without a private key that validates that it belongs to you. It is also important to note that keeping your private keys is necessary because anyone with them can make fraudulent transactions using your address.

It is impossible to access your tokens without a private key and software that allows you to access the Blockchain. 

Categories of cryptocurrency wallets

There are two main categories of wallets: custodial wallets and non-custodial wallets.

  1. Custodial Wallet: Custodial wallets are wallets in which the owner does not bear the responsibility of protecting the private keys themselves. A third-party organization keeps the users’ private keys and protects them at all costs. 
  2. Non-custodial Wallet: These wallets require the user to take responsibility for securing their private keys. Hardware wallets, which typically fall into this category, are a typical example. 

These wallets can be further divided into two subcategories: Hot and Cold wallets. A Hot wallet connects to the Internet or is linked to a device with an Internet connection, while a Cold wallet does not. 

Types of cryptocurrency wallets

If you like simplicity or you are the type who likes complex, cryptocurrency wallets could range from easy-to-use applications to high-end solutions like hardware wallets.

You can choose from any of the three main types of wallets: 

  1. Paper Wallets: This is the most common way we store all our very important information. Writing them on a physical medium like a private journal or a piece of paper stored somewhere is the most reliable way to keep your private keys safe from fraudsters since it’s not in any way connected to the internet. However, the drawback of paper wallets is that the paper deteriorates with time, so you need to check them out constantly. In the case where this paper is missing, the individual who pwns the tokens will no longer be able to access them.
  2. Hardware wallets: These devices look similar to USB drives, and they usually cost between a hundred and two hundred dollars. These hardware devices are plugged into the computer or any other device to perform your cryptocurrency transaction without needing to enter any keys. This circumvents the ability of a hacker to gain access to the private keys. A few examples of hardware wallets are Ledger and Trezor

Hardware wallets - Cryptocurrency wallet
Image Source_ cryptocurrency.org.nz

  1. Software wallets: These are also regarded as online wallets. Private keys are kept safe in an app, making cryptocurrency transactions seamless and effective. Software wallets like Coinbase wallet, Trustwallet, Exodus, Electrum, Metamask and Mycelium are very effective and offer a blend of an easy user experience and security.

An effective software wallet will manage all cryptocurrency in a single, secure place. Many software wallets have added a feature that allows you to make payments by scanning a code. You can pay on the go by selecting the amount, authenticating with your private key, and sending it. The software wallet then deducts a very low transaction fee.

How to secure your crypto wallet

Crypto wallet security is important because cryptocurrencies are very valuable, and anyone with access to your private keys can make a successful transaction on your cryptocurrency account. 

A major security measure for software wallets, in addition to choosing a very strong password, is to use two-factor authentication for transacting and ensure that you don’t store large amounts of cryptocurrency online. 

Choosing the best Crypto wallet

The best wallet to use is the one you have researched properly. This means that you should take reviews from others seriously and be certain about your needs before choosing the type of wallet that can secure your keys.

It is important to note that nothing beats an offline wallet—a wallet without any connection to the internet. A good wallet will not stop you from accessing your funds because of any issue the custodian is facing. 

Why do some cryptocurrency wallets use seed words? 

If you are familiar with modern software wallets, you will notice that most use twelve unique seed words. These twelve random words link to the keys in the wallet. This phrase is important for restoring your wallet if you lose your phone or tablet or it develops a fault. That’s why storing these words in a safe place is very important. Anyone with access to them will also be able to access your cryptocurrency.

Final words on crypto wallets

  • Cryptocurrency wallets are tools that store private and public keys for managing and transacting with cryptocurrency assets. 
  • Private keys are important for safe blockchain transactions. 
  • Wallets are classified into two types: custodial (maintained by a third party) and non-custodial (controlled by the user). Non-custodial wallets can be hot (online) or cold (offline).
  • Paper wallets (safe but require maintenance), hardware wallets (physical devices for enhanced security), and software wallets (convenient, frequently with two-factor verification) are examples of wallet types. 
  • The best wallet depends on your demands; however, offline wallets are the safest. Some wallets employ seed words for wallet recovery. 
  • Strong passwords and keeping low quantities of tokens online are two security considerations.

NOTABLE CRYPTOCURRENCIES: Revolutionary Impact, Pros and Cons. 

REVOLUTIONARY IMPACT OF NOTABLE CRYPTOCURRENCIES

Introduction 

According to CoinMarketCap, there are at least 2.4 million crypto-currencies and 735 exchanges, and the cryptocurrency market has an estimated market valuation of $2.4 trillion. This data changes almost constantly, but one thing is constant: the valuation of most notable cryptocurrencies has only grown higher and higher since its inception, and it does not plan to take a downward turn. 

Notable cryptocurrencies range from Bitcoin to Litecoin, Tether, SOL, and Ethereum; amidst an enormous number of cryptocurrencies available, one could find it challenging to decide whether to leap into the crypto world. A list of notable cryptocurrencies might be a great place to start because of the security they offer and their popularity. However, a fundamental knowledge of the working principle behind these notable cryptocurrencies will be able to give you an idea of what to expect and also look out for when divining into the world of the unknown in cryptocurrency. Let us take a look at a few of them. 

Notable Cryptocurrencies, working system and revolutionary Impact

  1. Bitcoin (BTC)

Bitcoin (BTC) is a revolutionary cryptocurrency with a market value of over $1.3 trillion. Satoshi Nakamoto, an unknown creator, introduced it in 2009, and since then, Bitcoin has grown in fame, use and worldwide acceptance.

In its inception, Bitcoin had no recorded cost price because no one was willing to place a premium on it. However, the first-ever sale of Bitcoin was on October 12, 2009, when a Finnish developer, Martti Malmi, who worked on the project, sold 5050 BTC for $5.02, making a single unit worth $0.0009. 

In May 2016, a single Bitcoin sold for around $500. As of the first quarter of 2024, one bitcoin is worth between 65,000 and 70,000 in dollars, depending on the volume of the trade in the day. 

Blockchain Technology

BTC, as well as many cryptocurrencies, are based on blockchain technology, a ledger that records transactions over a network of several thousand computers. Bitcoin remains intact and secure from scammers because updates to distributed ledgers must be proven using a cryptographic technique, a process that is called proof of work. Blockchain transactions create a link connected (chained) to several blocks of existing transactions. This concept forms the basis for the word blockchain. It is such that when miners create a new block, the information on the old block links cryptographically to the new block, so it is impossible to alter the new block because of the chain connection between all these blocks.

BITCOIN - NOTABLE CRYPTOCURRENCY

Revolutionary Impact and Transitions of Bitcoin

The world’s first real-life BTC transaction was on May 22nd, 2010, when Laszloy Hanyeez ordered two pizzas for 10,000 BTC, the equivalent of 25 dollars at retail. Many nations and organizations have publicly endorsed this revolutionary cryptocurrency, while others still find its adoption very challenging.

El Salvador adopted Bitcoin as a legal tender in 2021. Ukraine has also used this opportunity to raise funds amidst its crisis, raising more than ten million dollars to fund the needs of its distressed citizens and military personnel. All of this took place within the first week of posting the country’s crypto wallets. Iran has also been able to make successful cryptocurrency transactions worth billions of dollars using BTC to bypass financial sanctions placed upon the country by the US government.

  1. Ethereum (ETH)

History of Ethereum

Vitalik Buterin, a 19-year-old computer programmer and Bitcoin Magazine co-founder released a whitepaper in 2013 proposing a highly flexible blockchain that could support virtually any transaction. In 2014, Vitalik worked with Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joseph Lubin, who co-founded the company with him. 

They crowdfunded the development of the Ethereum protocol after a sale of $18 million in pre-launch tokens. Ethereum was announced at the North American Bitcoin Conference in Miami in January 2014. In 2015, the first public version of the Ethereum blockchain launched in July, and smart contract functionality began to roll out on the Ethereum blockchain.

ETHEREUM BLOCKCHAIN - NOTABLE CRYPTOCURRENCY

Market Cap and Capacity of Ethereum

Ethereum is a cryptocurrency that sits next to Bitcoin, with a market valuation of approximately 430 billion dollars and over 120 million ETH tokens in circulation. Ethereum is well-known for its digital currency, ether (ETH), which uses blockchain technology to create reliable public digital ledgers. 

Although Bitcoin and Ethereum have similar features, they have distinct long-term objectives and limits. Ethereum operates a decentralised computing strategy that can host several independent applications. Its open-source programming facility allows it to exist in a way that is not owned or operated by a single individual. Notably, in September 2022, Ethereum switched from proof of work to proof of stake

As a cornerstone, Ethereum serves as the foundation for a wide range of emerging technical innovations based on blockchain technology. Ethereum allows users to deploy their creations of permanent and unbreakable decentralised applications onto it, with which they can interact. Ethereum has the unique ability to build and execute smart contracts, which enable a vast ecosystem of applications on Ethereum, such as stablecoins (currencies pegged to the dollar by smart contracts), decentralised finance (DeFi) apps, and other decentralised apps (Dapps).

Future of Ethereum 

Ethereum has a very great future because of the future of cryptocurrency. It also has factors that have given it an edge over many others, including its constant upgrading and its open-source facility, which allows others to suggest improvements to its network. Ethereum shows excellent potential in the world of finance (be it personal or corporate) and even in many aspects of our evolving world.

How to buy Ethereum 

Investors or traders can buy ETH on almost any cryptocurrency exchange platform, making it easy for anyone to acquire a portion of the world’s second-biggest cryptocurrency. Numerous cryptocurrency exchanges support Ethereum, including Coinbase, Kraken, Gemini, Binance, and many others.

  1. Litecoin 

Litecoin was made public in 2011 by Charlie Lee, a former Google Engineer. In his exposition, Litecoin is considered the silver of Bitcoin’s gold, more like a twin pack of Gold and silver. Litecoin is a popular investment opportunity for many investors, not because of its complex functionality but because it is considered a long-term investment, just like every viable investment.

It features many similar functions, just like Bitcoin, although it has its own designated algorithm. Its mission is to hold a place in the day-to-day transactions of many, and this is proven true with its faster processing time compared with Bitcoin.

With a market cap of over 6.3 billion dollars and a daily trading volume of over 600 million dollars in the first quarter of 2024, you can buy or sell your Litecoin on any of the recognised exchange platforms in your region. However, there are a number of US-registered exchange platforms, such as Coinbase, Binance, Gemini, etc. 

  1. Dogecoin 

Dogecoin experienced a boom in 2017 and surpassed a $1 billion market cap in 2017 when crypto experienced a bull run. In 2019, the news of Dogecoin’s listing on the Binance exchange platform split the faces of its enthusiasts. In that same year, controversial Tesla owner Elon Musk publicly endorsed Dogecoin when he tweeted that he had been working alongside Dogecoin developers to speed up transaction speed and reliability. 

Moving to the first quarter of 2024, Dogecoin’s market valuation is approximately 22 billion dollars, and you can get your share of this meme coin by creating an account on any of the A-list crypto exchange platforms like Coinbase, Binance, or Robinhood brokerage

  1. Solana

Solana has outperformed many notable cryptocurrencies in the first quarter of 2024, ranking as the fourth most notable cryptocurrency. Meme coins emerged as a significant trend in the first quarter of 2024, and the Solana ecosystem is taking the lead in this buzz because of its user-friendly open-source technology that allows other developers to build their projects using the codes easily.   

Solana was founded in 2020 by Solana Labs, a company owned by Anatoly Yakovenko and Raj Gokal. Since its inception, it has witnessed outrageous growth, like its reputable 120-time increase in value in 2021. Solana is reputed for its ability to handle a lot of transactions at a cheaper and faster rate. This makes it a go-to ecosystem for many who cannot afford the gas fee for the Ethereum blockchain. Solana uses an improved version of Proof of Stake called Proof of History, a technology that uses hashed timestamps to validate transactions over the blockchain. 

As of the first quarter of 2024, Solana’s lead token SOL has a market cap of approximately 85 billion dollars and a 24-hour volume of 8 billion dollars. This ecosystem has a very bright future and is anticipated to trade its chief token SOL at over 1000 dollars by the end of the year, even though it only trades at approximately 200 dollars as of the first quarter of the year.

The advantages of investing in cryptocurrencies

  • Inflation prevention: Because FIAT currencies are always printed and because of several financial circumstances that surround FIAT money, there is a strong probability that the increase in the supply of FIAT currency will drastically exceed the quantity of cryptocurrency in circulation.  This will result in inflation. However, in the case of a cryptocurrency such as bitcoin, there are around the equivalent of 21 million bitcoins in circulation. Numerous additional cryptocurrencies operate in the same way. This indicates that the value of cryptocurrencies will continue to rise in order to keep up with the market, thereby preventing inflation.
  • Transactional rate: When it comes to moving cash to acquaintances, family members, or business companions in another nation, cryptocurrency transactions are one of the few that move at the rate of light. 
  • A user can complete Crypto transactions in minutes, and I’m guessing that if you live in our ‘get it quick’ environment, you can’t stand any activity that wastes your time without a reason.
  • Decentralisation: The decentralised method in which cryptocurrency operates is the foundation for cryptocurrency’s distinctiveness. It ensures a secure and confidential transaction. 
  • Accessibility: Your crypto transaction can be on the fly with a device such as a laptop or a smartphone and an internet connection. Traditional financial institutions may exhaust you with their time-consuming paperwork process for all types of verification. The ease with which you can transact using cryptocurrency is a significant advantage. 
  • Safe and reliant: You can only access your assets with the secret phrase to your crypto wallet. You can only retrieve your funds if you remember your key. While this may sound frightening for many people who find digital passwords challenging to remember, this demonstrates that cryptocurrency security is more than just a buzzword. What good is security if everyone can get in? Take advantage of the various methods for keeping your private key secure.

Risk involving Crypto-currency

  • Volatility: Crypto investments come with extreme volatility, with extreme highs and lows. A tweet from Elon Musk can lead to a huge drop in the value of your precious asset. 
  • Regulation Uncertainties: Due to cryptocurrency’s decentralised nature, government regulations around the evolving crypto world haven’t been as intricate and will need more reviews as time goes on.
  • Security issues: If you choose to trade unverified cryptocurrency assets, you might fall victim to a scammer. Hence, you must do thorough research before investing in crypto-currency using any exchange platform that verified Investors do not recommend.
  • Technical (retrieval of private key): As long as you can vividly recall your private key, you should be confident that your cryptocurrency is safe. However, if you have an issue keeping tabs on information like your passkeys, then investing in cryptocurrency poses a potential risk. A crash or loss of Your storage system, like your hard drive, where you store your secret phrases, can also lead to a considerable loss. 

However, there are third-party private key custodians like Fidelity Digital Assets that can help you store your private keys so that you don’t lose them even if you forget or crash your hard drive.

Introduction to Cryptocurrency, FIAT money, and stablecoins?

Meaning of the word “currency” 

As you are introduced to the world of cryptocurrencies (FIAT, stablecoins, etc.), it is important to understand the fundamentals of money and how currency works around the world. 

Start your Crypto Journey today leanr about FIAT money and Stablecoins

Money and currency are not the same thing, at least in theory.  Money is not always something you can touch, but currency (FIAT money) is a real thing that can be used to buy things. People think of money as numbers, while coins and bills are called currency. A physical object is presented at the point of transaction. This difference will interest only some people, so it will not be the focus of this blog post. However, for the sake of this blog post, we will consider money and currency to be the same term.

Money is a recognised medium of exchange made with the intention of creating a platform for people to buy or sell their products and services easily. In former centuries, the system used to exchange values was the barter system. A crop farmer may need a tuber of yam; this means he will take a portion of his crop products in exchange for yam from someone who needs the crop products and is willing to give out a tuber of yam. 

The batter system failed to achieve an effective means of exchange because it couldn’t effectively unify the desires of the exchangers. Most exchangers will not find the person who desires their product or service and is willing to provide their exact desire for exchange. This inconsistency led to the invention of currencies, which have evolved over several decades until now. 

What is FIAT money?

What is FIAT money

Photo Credit – 8photo by Freepik

The term ‘FIAT Money’ sounds very technical; however, there is no need to panic; it just refers to a form of currency the government issues. Every day we buy, sell, or do both with FIAT money, like the USD, Pounds, Euros, and many others. The drawback of FIAT currency is that with it, the central bank has so much power and control over the economy; this is due to the fact that they can control the extent to which FIAT money can be produced. This is what makes FIAT currency different from cryptocurrency.

What is cryptocurrency?

Cryptocurrency, unlike the FIAT money that the central bank issues, is a digital currency. These currencies, as opposed to the common currency (FIAT Money), are not tangible, and the government does not have direct control over them. It’s operation is Internet-based and is not reliant on the authority of the central bank or government agency to regulate it. 

The decentralised nature of crypto-currency

Cryptocurrencies use blockchain technology, an open-source software technology that is operated and facilitated by a vast number of users; these decisions are plainly shown to every user. Because a cryptocurrency’s volatility (rapid change in value) depends on a large number of users, it is impossible for a single person, authority, or group of people—such as the central bank or a taxing body—to cause inflation. 

Using cryptography for crypto-currency security

Cryptocurrency is coined from the two words  ‘cryptography’ and ‘currency’.  Cryptography, which means concealed writing in simple terms, is the study of the encryption (protection) and decryption (retrieval) of information. Even though Cryptography does not limit its use to cryptocurrency, it plays a vital role in ensuring cryptographycy security. 

Cryptocurrency technology 

Prevalent types of cryptocurrencies employ the technology known as public-private key cryptography to ensure that a crypto transaction is secure and takes place directly between the parties involved. When a cryptocurrency transaction takes place, a public key is generated from the private key by a process called ‘hashing‘.

There are various reasons for employing cryptography in cryptocurrencies. However, among these many, three stand out.

  • To ensure the security of cryptocurrency transactions.
  • To regulate the creation of new units of cryptocurrency
  • To guarantee the authenticity of the sending and receiving of assets so as to avoid transacting with duplicate coins. 

Having understood the science of the security behind cryptocurrency, let’s delve in further and learn about some practical Crypto-currency

What are Stable Coins?

Cryptocurrencies whose market worth is pegged to a fiat currency, an asset, or a financial Instrument in order to guarantee the stability of their worth are called stable coins. These coins provide a more reliable exchange than a regular, volatile cryptocurrency. These coins are usually pegged to currencies like the US dollar or even a valuable commodity like gold or silver. 

In April 2021, Bitcoin started to crash until it had plunged to about fifty percent of its worth after experiencing a boom in the month of March just a year before. It rose in value from about five thousand dollars to over sixty thousand dollars in the span of one year. One would not think that a coin as renowned as Bitcoin would experience such volatility, but that’s what even the best regular cryptocurrencies can look like.   

Stablecoins will usually maintain a stable value, and from observation over many years, prominent stable coins have experienced just a little swing.

Types Stablecoins

Photo Credit – AltFi

Categories of Stablecoins

Stablecoins can be categorised into four categories depending on what their value is pegged at: 

  • FIAT-pegged stable coins These are stable coins whose value is backed by the equivalent value of traditional currencies like USD, Euro, and GPBA. FIAT currency specifically backs all FIAT-backed stablecoins. The most popular FIAT currency to use is US dollar. Examples of FIAT-backed stable coins are USD coin-Tether (USDT), DAI, and Binance USD
  • Asset- or commodity-backed stablecoins Commodity-backed stable coins are those that rely on assets like gold, silver, real estate, and other commodities to guarantee their stability. Examples are PAX Gold (PaxG) and Tether Gold (XAUT).
  • Crypto-pegged stable coins These are stable coins that take advantage of one or more cryptocurrencies for the purpose of maintaining their stability. An example of one is Wrapped Bitcoin (WBTC) 
  • Algorithmic Stable Coins These stablecoins rely on algorithms for support. In fact, this algorithm is designed to balance the market itself by releasing more coins when there is an increase in price and selling them off when the price falls, so as to cause stability in the market. An example is Ampleforth (AMPL)

The most prevalent stablecoin by market capitalization is Tether (USDT). This particular stablecoin is pegged to the US dollar at an equivalent price (one ratio one), and it is also backed by Gold assets. 

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