TL;DR

Peer-to-peer (P2P) trading is becoming increasingly popular among crypto traders but like any type of trading, it comes with potential risks. Being aware of these risks allows traders to protect themselves from potential losses and better understand the process. There are numerous precautions they can take — read on to find out what they are, as well as how and when to apply them.

Introduction

Peer-to-peer (P2P) cryptocurrency trading entails buying and selling digital currencies without needing a third-party intermediary. P2P trading allows buyers and sellers to set their prices, select their trading partners, and decide when to transact. It also enables diligent and experienced traders to look for and take advantage of favorable trading conditions to suit their needs.

Crypto P2P marketplaces facilitate the direct exchange of cryptocurrencies between individual users. There is no central authority or third-party intermediary, thereby giving users more control over their funds and allowing them to protect their identity during transactions. 

Despite these benefits, there are also risks involved in P2P trading every user should be keenly aware of before they decide to try their hand at it. Among the common risks traders face are fake proof of payment, chargeback fraud, wrong transfer, man-in-the-middle attacks, triangulation scams, and phishing.

Is P2P Trading Safe?

As with any type of trading, P2P trading has its fair share of risks, which vary depending on the exchange and its safety measures. While older exchanges faced a higher risk of theft and scams, many newer P2P trading platforms have significantly improved their security measures.

A leading P2P exchange today, for instance, typically has an escrow service, regular security updates, and a stringent identity verification process (among other measures) to keep users safe. 

However, even with the appropriate safeguards, all trading activity comes with risks — and P2P trading is no exception.

What Are Some Common P2P Scams?

Fake proof of payment or SMS

Scammers may digitally alter receipts to convince you they have sent payment and trick you into releasing crypto to them. One example is the SMS scam where criminals forge a text message to notify the victim that they have received a payment. 

How to avoid this scam: As a seller, you should only approve the transaction after checking if the payment is already in your wallet or bank account.

Chargeback fraud

A bad actor may use a chargeback feature on their chosen payment platform to reverse their payment upon receiving your assets. In many cases, they try to pay via a third-party account. Some payment methods like checks and online wallets allow for easier chargeback requests.

How to avoid this scam: Do not accept payments from third-party accounts. If it happens, raise an appeal to the platform and initiate a refund to the buyer’s account.

Wrong transfer

As with chargeback fraud, a scammer may attempt to steal your assets by contacting their bank to report an erroneous transaction and requesting that it be reversed. Some scammers may even pressure you into not reporting the incident by using scare tactics, like warning you that selling cryptocurrency is illegal.

How to avoid this scam: Don’t be intimidated by scare tactics. Systematically gather evidence, such as screenshots, of your correspondence and transaction with the criminal. 

Man-in-the-middle attacks

In a man-in-the-middle attack, a bad actor inserts themself between a user and an application, organization, or another individual and communicates on behalf of that counterparty in order to steal assets or sensitive information like private keys. The three main categories of man-in-the-middle attacks include romance, investment, and e-commerce scams.

Romance scam. In this scenario, a scammer pretends to forge an online relationship with their victim. Once they’ve gained the victim’s trust, they manipulate them into helping him with his financial issues, sending some money or crypto or sharing sensitive information like private keys, only to cut off all contact when they’ve achieved their malicious goals.

Investment scam. An investment scam involves a criminal approaching and successfully convincing their victim to invest in a certain enterprise. Being the “man in the middle” between the victim and the investment opportunity, the scammer can direct the user’s funds wherever they wish under the guise of “investing” them.

E-commerce scam. An e-commerce scam entails a scammer pretending to be an online seller offering desirable items at discounted prices. They insist that their victims make payment in cryptocurrency to their wallets and once this is done, they disappear without providing the products they had promised.

How to avoid this scam: Don't respond to trading requests on any social networking platform. Limit your communication with your counterparty to the official platform before and during a transaction.

Triangulation scams

A triangulation or triangle scam involves two bad actors taking two orders from the same seller almost simultaneously, ultimately confusing a seller into releasing more crypto than has been paid.

For example, Buyer A takes an order for 5,000 BUSD worth of crypto (Order A), while Buyer B takes an order for the equivalent of 6,000 BUSD (Order B).

Buyer B then transfers 5,000 BUSD to the seller, while Buyer A marks Order A as paid. The seller then releases the crypto to Buyer A, thus completing Order A for 5,000 BUSD. Buyer B sends another 1,000 BUSD to the seller, provides payment proof for the 5,000 BUSD they received from Buyer A plus 1,000 BUSD, and forces the seller to release digital assets under Order B.

When the dust settles, it turns out that the seller has released 5,000 + 6,000 = 11,000 BUSD worth of crypto but has been paid only 6,000 BUSD.

How to avoid this scam: Always make sure to check your bank account or wallet to confirm that you have received the full payments for all pending P2P transactions. 

Phishing

Phishing is a type of malicious attack where a scammer uses a fake profile to deceive users into sending assets or information to them. For example, a bad actor may impersonate a P2P platform’s customer service representative to gain access to private information or crypto accounts. 

How to avoid this scam: Some scammers may send fake security alerts regarding your account via email or text message. When checking messages, do not click on unknown links before you have verified the source. You should also only seek assistance from the official P2P exchange. 

How To Identify Risks

Before trading

Check P2P advertising profiles. Screen potential trading candidates before you enter a trade with any of them. Some things to note while looking at a P2P profile are:

Number of trades: Low numbers aren’t necessarily bad, but a high number of completed transactions may be a sign of a reliable P2P party.

Completion rate: Reconsider if it’s below 80% as this may indicate the trader has a habit of backing out of transactions.

Merchant or user feedback: Very few positive comments or many negative comments can indicate higher trading risk.

Check advertisements carefully. Evaluate each P2P advertisement to determine if it meets your needs and goals. Consider the price, quantity, accepted payment methods, restrictions (like trading limits), and other terms and conditions. For instance, too large a disparity between the P2P price and the market price on other trading platforms is suspicious.

When trading

Stay alert when interacting with a P2P buyer. Red flags include:

The buyer pushing you to release the crypto.

The buyer requests unnecessary information.

The buyer becoming unresponsive.

The buyer asking you for a loan.

The buyer paying less than the amount agreed upon in the order.

The buyer paying more than the amount agreed upon in the order.

The buyer asking to communicate outside the P2P platform. 

The buyer asking to pay through a third party.

Stay alert when interacting with a P2P seller. Red flags include:

The seller asking you to cancel the order after you’ve already paid.

The seller asking to communicate outside the P2P platform. 

The seller asking you to trade outside the P2P platform.

The seller asking you to pay an additional commission.

After trading

When interacting with a P2P buyer, red flags include:

Not yet receiving the asset you paid for.

Receiving a check from a buyer that bounces.

Your bank account being blocked after receiving payment from a buyer.

The buyer initiating a chargeback via their bank after you’ve transferred your cryptocurrency to them.

General Tips to Protect Yourself Against Scams

Trade on reputable platforms

Choose leading P2P platforms that offer their users robust safety features. Common features include:

Risk management features. A platform that enforces specific requirements before buying or selling can help reduce inactive, unreliable, or low-quality advertisements. Better yet, there should be a sophisticated order-matching logic to match users with trusted traders and verified merchants only, as well as risk management algorithms to monitor suspicious activity.

Some algorithms are even optimized to limit the trading activities of potential bad actors. In addition, withdrawal limits or delays can help to protect user funds.

Know Your Customer (KYC) protocols. P2P platforms with KYC protocols can help beginners find reliable trading partners by enforcing user identity verification. This allows beginners to conduct trades with verified merchants with a proven track record and reliable sources of funds.

Escrow services. Escrow services provide a safe way for buyers and sellers to exchange goods or assets. A trusted third party — typically the P2P platform — handles the exchange of funds between transacting parties to uphold safety and fair trading.

Customer support. While P2P trading usually functions with no middlemen, a P2P platform’s customer support team can intervene if a user faces problems with a trade.

Automated payment. New automated payment methods enable P2P platforms to automatically process the release of crypto held in escrow without manual intervention. Buyers can receive their newly purchased assets instantly and sellers don’t have to check each order payment or release assets manually.

Block feature. The block feature allows you to block suspicious users — if you’ve had an unpleasant experience with someone, you can block that user and prevent them from trading with you again.

Communicate on the platform only

Avoid contacting potential trading counterparties on dubious websites and stay alert to prices that sound too good to be true. Also, communicating using outside channels will make it easier for a scammer to raise a false dispute against you and deny the transaction ever happened.

Double-check your transactions

Remember to verify all information from the counterparty when transacting with a peer. Scrutinize all receipts and transactions to ensure that nothing has been digitally altered. Here are some tips to identify a fake proof of payment:

Overlapping text

Different colors

Different typography 

Difference in sizes

You can also use a free image forensics tool online. Search for “fake image detector” or “doctored image forensics tool” to get an idea of what’s available.

Take screenshots

Keep records of all proofs of communication and transactions in case you need to file an appeal. 

Have targeted advertisements 

If you have an established crypto network, ensure that your advertisement only reaches people with whom you want to trade. Hide your ad and share it only with specific people — this could be people you know and trust or users you’ve dealt with successfully before. Hiding advertisements can be useful as well if you want to do a large trade. 

Block suspicious parties

Proactively block users with whom you’ve had sub-optimal trades to protect yourself from fraud or other behavior that may disrupt your trading experience.

Make an appeal

If you encounter an issue, seek customer support and open an appeal. Remember to provide all relevant evidence regarding your transaction so that customer support can better assist you.

Conclusion

To protect your assets, staying alert to the potential risks associated with P2P transactions is essential. This includes understanding any agreement's terms and conditions, remaining vigilant about red flags, and using platforms with robust safety features.

Be cautious when engaging in any P2P transaction, and contact customer support should you have any concerns. By being mindful and taking the necessary precautions, you can fully enjoy the benefits of P2P transactions.

Further Reading

What Is Peer-To-Peer Trading and How Do People Use It?

Peer-to-Peer Networks Explained | Binance Academy

Why and How to Do Your Own Research (DYOR) When Investing in Crypto

Five Risk Management Strategies


Disclaimer and Risk Warning: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer here for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

Bitcoin may be one of the most popular coins to invest in, but it’s not the only one. Altcoins provide a great alternative when buying crypto that can increase the diversity of your portfolio.

Your choice of crypto should also take into account whether you are investing or trading, as well as your risk profile and the type of analysis you want to make. You could choose fundamental or technical analysis or even a mixture of both. With all this in mind, you’ll be ready to start investing or trading on Binance.

Introduction

Investing in Bitcoin and other cryptocurrencies is a great way to diversify your investments, but it also involves high risk. So before you jump in, it’s essential to understand some basic concepts and principles. There’s more to it than just buying some crypto and hoping for the best. 

An informed investment decision involves careful research and analysis. Ideally, you should have a strategy based on your risk profile, and you should never invest more than you can afford to lose.

Bitcoin or altcoins?

For newcomers to crypto, Bitcoin is usually the first stop when it comes to investing. It’s the most famous blockchain project and the largest cryptocurrency by market capitalization.

However, there are thousands of different cryptocurrencies (altcoins) out there. Some altcoins have their own blockchain, while others use a pre-existing network (such as BNB Smart Chain or Ethereum). Every project has a different proposal, each with its own potential risks and benefits. 

Whether you want to invest in BTC only or multiple cryptoassets is totally up to you. Some prefer to stick to BTC; others prefer to diversify their holdings with altcoins.

On the one hand, asset diversification removes the risks of investing in only one project. If you have multiple assets, you are less likely to lose significant amounts if one of them fails. On the other hand, altcoin investments can be risky and, unfortunately, there are many scams around. So it’s very important to do your own research before taking risks.

Should I trade or invest?

A decision on what to buy also needs to take into account if you are investing or trading. The two are easily confused, but there’s a difference. Put simply, investing involves picking assets that you believe in and holding over a longer time. Such a strategy involves a less active time commitment and usually carries much less risk.

In contrast, trading aims to make short or medium-term gains through regular buying and selling. Becoming a good trader takes a lot of time and practice. A trader needs to develop more complex strategies, dedicate more time to analyzing markets and trading platforms, and handle more risk. They also need to consider the money spent on trading and transaction fees.

Keep in mind that cryptocurrency markets tend to present more volatility than traditional ones. While traders need volatility to make profits, high levels of volatility may also bring high risk.

For beginners, investing is by far the easiest and safest option. Investors are usually thinking in terms of years, so short-term price changes aren’t that important. A decision to invest is based more on the fundamentals of a coin (how solid is the project and how likely it is to succeed in the long run).

Some prefer to invest and not worry about short-term fluctuations. Others prefer to trade often in an attempt to maximize profits. Some even do both at the same time. It all depends on your strategy, profile, and risk tolerance. Again, the decision is yours, but you should never invest or trade with funds that you cannot afford to lose.

With all that said, if you want to learn more about crypto day trading and swing trading, you can find more information in our Complete Guide to Cryptocurrency Trading for Beginners.

Fundamental analysis vs. technical analysis

Deciding on what will make a good investment needs some analysis work. The type of analysis will depend primarily on investing or trading, but both fundamental and technical analyses can be useful.

As mentioned, short to medium-term price changes aren’t so important when investing (or HODLing). In general, long-term investment is more concerned with the intrinsic value of a coin or project, which relates to fundamental analysis (FA).

Fundamental analysis involves assessing the potential of an asset based on the project as a whole, including its utility, team, whitepaper, development, marketing, management, reputation, long-term goals, and other factors.

In contrast, technical analysis (TA) considers previous price action and volume data to try and predict future price movements. The technique usually involves candlestick charts and TA indicators, such as moving averages and trend lines.

Buying your first bitcoin on Binance

You can easily buy bitcoin and altcoins on the Binance crypto exchange.

1. Create an account by heading to the Binance homepage and clicking [Register] at the top right corner.

2. Next, you will have to verify your Binance account. This KYC process helps us make sure you are who you claim to be and fulfill our legal requirements.

3. The easiest method to buy some crypto is to use your credit card or debit card with the Buy Crypto feature. Log in to your Binance app, and go to Binance Pro. Tap [Add Funds], then [Buy with]. Here, we use EUR as an example. You can change the fiat currency using the menu at the top right corner.

4. Set the amount and payment method, then click [Buy] to confirm. 

You can also transfer fiat currency from your bank account to buy digital assets with the Binance Spot trading interface. See the Binance Beginner's Guide for more information.

Binance P2P

Alternatively, you can use Binance P2P, an industry-leading peer-to-peer marketplace. Trade with freedom to choose the best price, payment method, and trading partners, all secured by Binance's escrow service.

1. For App users, start by clicking [Add funds] on the homepage, select [P2P Trading], choose your currency and payment method from over 700 options.

2. For speed and simplicity, use the Express version, and we'll recommend a verified counterparty. For detailed instructions, check out our P2P guide or refer to the FAQ page.

Buying your first altcoin on Binance

You can begin diversifying your portfolio by buying an altcoin like BNB, which is a utility token with many use cases. 

1. Log in to your Binance app, and go to Binance Pro. Tap [Add Funds] - [Buy with]. Here, we use EUR as an example. You can change the fiat currency using the menu at the top right.

2. Next, you’ll be able to choose from a variety of cryptocurrencies. Make sure to select the correct fiat currency as well. In this example, we chose to buy BNB with EUR.

3. Fill in your card details to finalize the purchase and wait for the crypto to be credited to your account.

You can also buy altcoins with various payment methods using your local currency on Binance P2P or the Buy Crypto page.

What should I do with my cryptocurrency?

Buying, selling, and holding crypto are some of the strategies you can use when investing or trading crypto. When it comes to long-term holding, you can choose to keep your cryptocurrencies in your Binance account or transfer them to an external cryptocurrency wallet. 

If you opt to keep your crypto in your Binance account, you may consider exploring the many options provided by Binance Earn. You can think of it as a savings account that allows you to earn passive income while holding your crypto.

Closing thoughts

It takes some time to learn how to invest or trade cryptocurrencies. Improving your knowledge is a good way of reducing your overall investment risk, leading to more informed decisions. It's easy to panic-sell an asset based on emotion, but the chances of this happening are much lower when you study up on investment and trading. For more on this, check out The Psychology of Market Cycles.

TL;DR
Cryptocurrency trading, or the buying and selling of digital assets like Bitcoin and Ethereum, has emerged as a dynamic and potentially lucrative endeavor.For beginners, it’s essential to understand what makes cryptocurrency unique, familiarize yourself with common trading concepts such as order books, trading pairs, and order types, and become comfortable with technical analysis charts and tools.This comprehensive guide will teach beginners all this foundational knowledge and prepare you to embark on your crypto trading journey. 
What Is Cryptocurrency Trading?  
Cryptocurrency trading, or the buying and selling of digital assets like Bitcoin (BTC) and Ethereum (ETH), has emerged as a dynamic and potentially lucrative endeavor. As cryptocurrencies continue to captivate global interest and more institutional investors join the sector, cryptocurrency trading is gaining increasing popularity.
Cryptocurrency trading often aims to capitalize on price fluctuations. Traders aim to buy these cryptocurrencies when prices are low and sell when prices surge, effectively profiting from the market's volatility. This fast-paced landscape presents both opportunities and challenges for beginners.
For those intrigued by the prospect of engaging in cryptocurrency trading, a comprehensive understanding of the market's intricacies is paramount. This guide aims to equip beginners with the foundational knowledge necessary to navigate this potentially rewarding landscape.
What Are Cryptocurrencies? 
Cryptocurrencies have taken the financial world by storm, redefining how we perceive money and transactions. 
Cryptocurrencies, like Bitcoin and Ethereum, are digital currencies that employ an innovative technology known as blockchain to ensure their security and integrity.
Unlike regular money from banks, cryptocurrencies aren't controlled by any one big company or government. Instead, cryptocurrencies are like public digital record books that anyone around the world can see and keep a copy of. 
As a result, cryptocurrencies are global, secure, and transparent. You can generally send and receive these coins to anyone in the world, at a faster speed without extra fees or paperwork required by banks. 
People often say that cryptocurrencies are decentralized, which is another way of saying that they are not controlled by a centralized entity. Essentially, you own your own digital wallet that gives you more freedom and control over your money. 
How to Start Trading Cryptocurrency 
Getting started with cryptocurrency trading requires a thoughtful approach and careful preparation. 
Before diving into the world of cryptocurrency trading, it's crucial to invest time in learning. You can rely on Binance Academy’s educational courses to understand the basic trading concepts and specific cryptocurrencies you're interested in trading. 
Selecting a reliable cryptocurrency exchange is critical. A good guideline is to opt for an exchange with a proven long-term track record, an excellent reputation, strong security protocols, and responsive customer support.
For newcomers, beginning with a centralized exchange is recommended. As you gain more experience in cryptocurrency trading, you can explore decentralized exchanges at a later stage."
Once you've chosen an exchange, the next step is to create your account. This usually involves providing your email, setting a password, and agreeing to terms. Sometimes, exchanges require identity verification to comply with regulatory standards. You would need to submit a government-issued ID, proof of residence, and any other documents to complete setting up your account. 
A Beginner's Guide to Cryptocurrency Trading
After you create an account, you can deposit fiat currency into your account. Most centralized exchanges allow users to deposit fiat via bank transfers, bank wires, or other common money transfer methods. 
If you happen to own some crypto already, you can deposit it into your exchange account. Remember to always send your coins to the associated address: send Bitcoin to your Bitcoin address, ether to your Ethereum address, and so on. Sending crypto to the wrong addresses could result in losses.
Now you’re set up for trading crypto, let’s quickly go through a few essential trading concepts for beginners. 
1. Trading pairs 
There are two main types of trading pairs: crypto-to-crypto trading pairs and crypto-to-fiat trading pairs. 
Crypto-to-crypto trading pairs involve two different cryptocurrencies, such as the ETH/BTC trading pair. If the current value of one Ethereum (ETH) is 0.05 Bitcoin (BTC), this means you would need to exchange 0.05 BTC to acquire one ETH. The value of ETH is expressed in terms of BTC in this pairing.
Crypto-to-fiat trading pairs involve a cryptocurrency and a traditional fiat currency, such as the BTC/USD trading pair.  If the current value of one Bitcoin (BTC) is $40,000 in US dollars (USD), this indicates that one Bitcoin is equivalent to $40,000. 
2. Order books 
An order book is a real-time, dynamic list of buy and sell orders placed by traders on a cryptocurrency exchange. It provides a snapshot of the supply and demand for a specific cryptocurrency at different price levels. 
An order book is split into two main sections: the buy orders (bids) and the sell orders (asks). Buy orders list the orders from traders who want to buy the cryptocurrency at a certain price, organized from the highest bid price to the lowest. 
Sell orders display the orders from traders who want to sell the cryptocurrency at a particular price, organized from the lowest ask price to the highest.
3. Market orders 
A market order is the simplest type of order, in which you buy or sell crypto immediately at the best available price in the market. Let's say the current highest bid, or buy order, for one bitcoin is 35,000 dollars, while the lowest ask, or sell order, is 35,010 dollars in the order book. If you place a market order to buy bitcoins, your order would be matched with the lowest ask, which is 35,010 dollars. If you place a market order to sell bitcoin, your order would be matched with the highest bid at 35,000 dollars.
4. Limit orders 
A limit order is an order to buy or sell a crypto at a specific price or better. For example, if you want to buy one bitcoin for $35,000 or less, you can set a buy limit order at $35,000. If the price drops to $35,000 or less, your limit order will be executed and you'll purchase bitcoin at that price. But if the price never drops to $35,000, your order won't be executed.
How To Use Crypto Wallets
A cryptocurrency wallet is a digital tool that enables you to store, send, and receive digital assets. 
For beginners, a software wallet, often referred to as a hot wallet, is generally recommended. This type of wallet is user-friendly and easily accessible through desktop or mobile applications. It also offers a familiar and convenient user experience, and usually comes with customer support. 
You can use hot wallets from crypto exchanges or download popular ones in the market, such as MetaMask. A hot wallet offers numerous benefits compared to your exchange account, including being able to do peer-to-peer transactions (without relying on an exchange) and exploring various decentralized finance (DeFi) services. 
When using crypto wallets, it's essential to follow good security practices such as enabling two-factor authentication (2FA), using strong and unique passwords, and keeping backups of your recovery seed or private keys in a safe place. 
As you become more comfortable with cryptocurrency, you can explore cold wallets that offer a different set of advantages and limitations. 
Which Cryptocurrency You Should Buy?
As a beginner in the world of cryptocurrency trading, deciding which cryptocurrencies to buy can be daunting. Here are some tips. 
Most people start with well-known and established cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). These have a proven track record and are less risky options for beginners. 
If you're considering exploring lesser-known cryptocurrencies, it's crucial to fully comprehend the associated risks, including the possibility of losing your entire investment. 
Keep in mind that in the world of investing, risks and potential returns often go hand in hand. Taking on higher risks might lead to greater potential returns, although it also raises the likelihood of losing your invested capital.
Starting small is good for beginners, as this allows you to learn and gain experience without risking too much capital. 
Lastly, a common mistake beginners should avoid is FOMO (Fear of Missing Out): Don’t rush into buying a cryptocurrency just because it's surging in price. 
Different Types of Cryptocurrency Trading
There are many crypto trading strategies that you can employ, each with its own set of risks and rewards. Let’s go through some of the most popular crypto trading approaches. 
Day trading
Day trading is a strategy that involves entering and exiting positions within the same day. Because cryptocurrency markets are open 24/7, day trading in cryptocurrency tends to refer to a trading style where the trader enters and exits positions within 24 hours.
In day trading, you’ll often rely on technical analysis to determine which assets to trade. Because profits in such a short period can be minimal, you may opt to trade across a wide range of assets to try and maximize your returns. That said, some might exclusively trade the same pair for years.
This style is a very active trading strategy. It can be highly profitable, but it carries with it a significant amount of risk. 
Swing trading
In swing trading, you’re still trying to profit off market trends, but the time horizon is longer – positions are typically held anywhere from a couple of days to a couple of months. 
Your goal will be to identify an asset that looks undervalued and is likely to increase in value. You would purchase this asset, then sell it when the price rises to generate a profit. Or you can try to find overvalued assets that are likely to decrease in value. Then, you could sell some of them at a high price, hoping to buy them back for a lower price.
Swing trading tends to be a more beginner-friendly strategy, mainly because it doesn’t come with the stress of fast-paced day trading. 
Position trading (trend trading)
Position trading is a long-term strategy. Traders purchase assets to hold for extended periods (generally measured in months). Their goal is to make a profit by selling those assets at a higher price in the future.
Position traders are concerned with trends that can be observed over extended periods – they’ll try to profit from the overall market direction. Swing traders, on the other hand, typically seek to predict “swings” in the market that don’t necessarily correlate with the broader trend.
Like swing trading, position trading is an ideal strategy for beginners. Once again, the long time horizon gives them ample opportunity to deliberate on their decisions.
Scalping
Of all of the trading strategies discussed so far, scalping takes place across the smallest time frames. Scalpers attempt to game small fluctuations in price, often entering and exiting positions within minutes (or even seconds). 
In most cases, they’ll use technical analysis to try and predict price movements and exploit bid-ask spreads or other inefficiencies to make a profit. Due to the short time frames, scalping usually has thin profit margins. Scalpers generally trade large amounts of assets in order to achieve sizable profits.  
Scalping is generally more suitable for experienced traders. For beginner traders who know what they’re doing, however, identifying the right patterns and taking advantage of short-term fluctuations can be highly profitable.
HODLing 
Long-term investors, also known as "HODLers," aim to benefit from the overall growth of the cryptocurrency market. They buy and hold cryptocurrencies for an extended period, often months or years. 
HODLing is ideal for those who believe in the long-term potential of specific cryptocurrencies such as Bitcoin or Ethereum and are willing to weather short-term price fluctuations. While this strategy requires patience, it may provide substantial returns over time. 
Technical Analysis and Chart Reading in Cryptocurrency Trading
Technical analysis is the art of interpreting price charts, recognizing patterns, and harnessing indicators to anticipate potential price movements. They are useful analytical tools that can greatly enhance your ability to make well-informed trading decisions.
1. What is a candlestick chart?
A candlestick chart is a graphical representation of the price of an asset for a given timeframe. It’s made up of candlesticks, each representing the same amount of time. 
For example, a 1-hour chart shows candlesticks that each represent a period of one hour. A 1-day chart shows candlesticks that each represent a period of one day, and so on.
Daily chart of Bitcoin. Each candlestick represents one day of trading.
A candlestick is made up of four data points: the Open, High, Low, and Close (also referred to as the OHLC values). The Open and Close are the first and last recorded price for the given timeframe, while the Low and High are the lowest and highest recorded price, respectively. 
2. What is a candlestick chart pattern?
A candlestick chart pattern is a visual representation of price movements in the form of candlesticks. It provides insights into the open, close, high, and low prices of a cryptocurrency or financial asset over a specific time period. 
A candlestick consists of two main parts: the body and the wicks (also known as shadows). The body represents the price range between the opening and closing prices of the trading session. 
If the closing price is higher than the opening price, the body is typically filled or colored in, often with green or white, to indicate a bullish session. Conversely, if the opening price is higher than the closing price, the body is empty or colored in red or black, signaling a bearish session.
The wicks, which extend from the top and bottom of the body, represent the price range between the highest and lowest prices reached during the trading session. The upper wick extends from the top of the body and indicates the session's highest price, while the lower wick extends from the bottom of the body and signifies the lowest price.
Candlestick charts offer valuable insights into market sentiment and price trends. Traders use patterns formed by multiple candlesticks to identify potential trend reversals or continuations. Common patterns include "Doji," "Hammer," "Shooting Star," and "Engulfing," each with its own implications for price movements.
3. What is a trend line?
Trend lines are a widely used tool by both traders and technical analysts. They are lines that connect certain data points on a chart. 
The main idea behind drawing trend lines is to visualize certain aspects of the price action. This way, traders can identify the overall trend and market structure.

The price of Bitcoin touching a trend line multiple times, indicating an uptrend.
Some traders may only use trend lines to get a better understanding of the market structure. Others may use them to create actionable trade ideas based on how the trend lines interact with the price.
Trend lines can be applied to a chart showing virtually any time frame. However, as with any other market analysis tool, trend lines on higher time frames tend to be more reliable than trend lines on lower time frames. 
Another aspect to consider here is the strength of a trend line. The conventional definition of a trend line defines that it has to touch the price at least two or three times to become valid. Typically, the more times the price has touched (tested) a trend line, the more reliable it may be considered.
4. What are support and resistance?
Support means a level where the price finds a “floor.” In other words, a support level is an area of significant demand, where buyers step in and push the price up.
Resistance means a level where the price finds a “ceiling.” A resistance level is an area of significant supply, where sellers step in and push the price down.

Support level (red) is tested and broken, turning into resistance.
Technical indicators, such as trend lines, moving averages, Bollinger Bands, Ichimoku Clouds, and Fibonacci Retracement can also suggest potential support and resistance levels. 
Fundamental Analysis: Determining Intrinsic Value of Cryptocurrencies  
Fundamental analysis involves a deep dive into the intrinsic value of a cryptocurrency project, examining its technology, team, adoption potential, and overall viability. 
Generally, you should try to understand the underlying technology of a cryptocurrency project. Delve into its blockchain architecture, consensus mechanism, and scalability. A robust and innovative technology can indicate a project's ability to solve real-world problems and gain adoption.
You should also research the team behind the cryptocurrency project. Evaluate their expertise, experience, and track record. A talented and experienced team increases the likelihood of successful project execution.
A cryptocurrency’s tokenomics are of paramount importance, as they determine the cryptocurrency’s total supply, distribution, and its incentive mechanisms. These are factors that often have a direct impact on the cryptocurrency’s price movements. 
Fundamental analysts also look into the project's adoption potential in the real world. Factors such as partnerships, use cases, community engagement, and market demand could also influence prices. 
Fundamental analysis equips yourself with the tools to assess a cryptocurrency project's underlying value. This strategic approach enables you to navigate the complex cryptocurrency landscape with a long-term perspective, making trading decisions that align with a project's viability and potential.
Risk Management in Cryptocurrency Trading
Effective risk management is essential for your crypto trading success. 
Risk management refers to predicting and identifying the financial risks involved with your investments, and minimizing them by employing a set of strategies. 
There are numerous risks in cryptocurrency trading, including regulatory risk, market risk, operational risk, liquidity risk, and security risk. Fortunately, there are risk management strategies you can employ to help keep your risk exposure at a reasonable level. Let’s look at a few popular strategies.  
1. Diversification
Diversifying your portfolio is one of the most popular fundamental tools to reduce your overall investment risk. You can hold a variety of different coins and tokens, keep each position at an appropriate size and constantly rebalance the portfolio, so you won't be too heavily invested in any one asset. This can minimize the chance of oversized losses. 
2. Hedging 
You can also hedge your holdings, which means taking a position in a related asset that is expected to move in the opposite direction of the primary position. The purpose is to offset potential losses. 
If you own $10,000 worth of Bitcoin and want to hedge against a possible decrease in its price, you could buy a put option for a premium of $500 that gives you the right to sell bitcoin at $50,000 at a future date. If Bitcoin's price falls to $40,000, you can exercise your option and sell your bitcoin for $50,000, significantly reducing your losses. 
3. Use advanced order types 
You can utilize advanced order types to lock in profits or protect yourself from losses. For instance, stop-loss orders allow traders to limit losses when a trade goes wrong. Take-profit orders ensure that you lock in profits when a trade goes well. 
4. Follow the 1% rule
Another strategy you can follow is the 1% rule, where you don’t risk any amount more than 1% of your total capital on a single position. For instance, if you have $10,000 to invest and want to adhere to the 1% rule, you could buy $10,000 of Bitcoin and set a stop-loss order to sell at $9,900. This way, you would limit your losses to 1% of your total investment capital.
5. Have an exit strategy
It’s always a good idea to plan for the worst. So having an exit strategy is an essential way to manage your risks. It's easy for us to get caught up in a bull market and its euphoria, but having a plan to exit your position can help lock in gains. 
One way is to use limit orders to take profit or place a floor on maximum loss that you can stand. As a general rule of thumb, once you have your exit plan, you should stick to it. 
6. Do Your Own Research (DYOR) 
It's essential to emphasize the importance of "Do Your Own Research!" This principle is so vital within the crypto community that it's commonly referred to by its acronym, D-Y-O-R. Before investing in a token, coin, project, or other asset, you must do your due diligence. It's key that you assess essential information about an asset to fully understand its risks. If you want to invest in an ICO, ensure you read the white paper and understand the tokenomics, roadmap, and communities before you make the jump!
In summary, investing in crypto can be risky, but there are many ways you can manage those risks effectively. 

Closing Thoughts 
Congratulations on completing this comprehensive guide to cryptocurrency trading for beginners! You should be better prepared to begin your crypto trading journey, equipped with essential knowledge and tools to navigate this exciting landscape.
As you venture into the realm of cryptocurrency trading, remember that learning is an ongoing process. Markets can be unpredictable, and cryptocurrency markets are particularly volatile. With continued learning, however, you are well on your way to become a better crypto trader with each practical trading experience you gain. 
Always prioritize research, education, and risk management in your trading journey. Stay informed about the latest developments in the crypto space, continue refining your skills, and adapt your strategies as needed. 

Disclaimer and Risk Warning: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer here for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

AI agents are self-operating programs that are able to analyze information, learn from their own experiences, and execute tasks on behalf of users.

AI agents differ from regular bots due to their increased capacity to operate and improve with little human intervention. AI agents are also able to interact with other agents and applications.

AI agents have various use cases. For example, they can help improve crypto by automating trades, managing risks, making NFTs more interactive, and simplifying blockchain, making Web3 easier to use.

Introduction

Artificial intelligence (AI) is transforming the way we live, work, and interact with technology. In the cryptocurrency space, AI agents represent a key innovation that is creating smarter systems that can be used in a variety of use cases, from trading to creating art.

What Are AI Agents?

We can think of AI agents as autonomous programs capable of making decisions, learning from their experiences, and taking action based on the tasks they’re given. For example, a good AI agent should be able to:

Manage a crypto investment portfolio.

Automate customer service by handling user queries.

Execute complex processes like smart contract audits or blockchain-based trades.

What makes these agents unique is their ability to continuously improve using machine learning. They’re designed to analyze data, predict outcomes, and adapt their behavior (all without a human hovering over them). Such properties make AI agents significantly different from regular bots.

How Do AI Agents Work?

At their core, AI agents rely on three main pillars:

Observation: They gather data from their environment. This could include real-time market data, user input, or blockchain transactions.

Processing: Using advanced algorithms and machine learning, AI agents can analyze a dataset and decide the best course of action. For example, a trading AI agent might use data to find potentially profitable entry points for crypto trades.

Action: They execute tasks based on their analysis, like buying crypto, sending a notification, or creating a digital asset.

These agents often incorporate natural language processing (NLP) to communicate with users in an intuitive way, making them more accessible to non-technical individuals. Large language models (LLMs) like GPT-4 enable them to understand and respond to complex queries, making blockchain and crypto feel less intimidating to newcomers.

AI Agents and Crypto

The cryptocurrency ecosystem thrives on automation, transparency, and decentralization—qualities that align perfectly with what AI agents bring to the table. Here’s how AI Agents are reshaping the blockchain industry:

1. Smarter DeFi tools

In decentralized finance (DeFi), managing trades, optimizing yields, or even understanding risk can be overwhelming. AI agents can handle these tasks more efficiently than humans. For instance:

Automated trading: AI-powered agents can monitor markets and execute trades in real time, capitalizing on opportunities far faster than a person could.

Risk management: They can assess potential vulnerabilities in a portfolio or smart contract, helping users avoid losses.

2. Generative art and NFTs

AI agents can also be used with NFTs (non-fungible tokens). They can create unique digital art pieces or intelligent NFTs (iNFTs) that interact with users. For example:

A collector could own an iNFT that evolves its personality based on interactions, making it not just a static image but an interactive experience.

Tools like Binance’s Bixel let users create AI-generated art and mint it directly on the blockchain.

3. Simplifying blockchain interactions

Blockchain technology can feel complex, especially for beginners. AI agents can simplify things by automating processes like crypto wallet management, transaction approvals, or even interacting with smart contracts. They can make crypto more approachable, which helps accelerate adoption.

AI agents can also act as delegates in decentralized autonomous organizations (DAOs), managing voting, proposing strategies, or automating operations based on the interests of token holders.

4. Making payments easier

Traditional systems like credit cards or payment processors aren’t well-suited for handling micropayments or frequent transactions. Cryptocurrencies solve this with low fees and fast transactions. 

AI agents can leverage crypto payment systems to enable pay-per-request models and seamless transfers:

Pay-per-request models: For example, an agent could pay small amounts to access real-time weather data or news on behalf of a user.

Seamless transfers: Agents can manage payments between parties instantly and without human intervention.

Challenges Faced by AI Agents in the Crypto Space

Of course, integrating AI into crypto isn’t all smooth sailing. There are still some major hurdles to overcome:

Scalability issues: Most blockchains weren’t designed for the rapid, real-time interactions required by AI agents. Although there are many scaling solutions in place, scaling these systems for seamless global use is still a work in progress.

Accuracy problems: AI agents aren’t perfect. Even small errors can lead to big problems, especially in tasks like trading or managing smart contracts. Developers are working on solutions like Retrieval-Augmented Generation (RAG) to reduce errors and make these systems more reliable.

Trust and transparency: Blockchain helps by creating transparent records of AI agent activity, but building decentralized trust systems for millions of autonomous agents remains a challenge. Data privacy, misuse, and the unintended consequences of AI agents require regulatory and ethical oversight.

The Future of AI Agents in Crypto

While we’re still in the early days, the potential of AI agents in blockchain is enormous. Here are a few possibilities that could shape the future:

Decentralized AI economies: Imagine a network of AI agents interacting with each other, each performing specialized tasks. Together, they could form a self-sustaining economy where agents trade services and manage resources autonomously.

Widespread Web3 adoption: By automating and simplifying blockchain interactions, AI agents could make Web3 technologies accessible to everyone, from tech enthusiasts to casual users.

Advanced DeFi applications: As AI tools improve, they might unlock new strategies for yield optimization, risk management, and even collaborative investing.

Closing Thoughts

By automating tasks, enabling smarter decision-making, and simplifying complex systems, AI agents are helping to push the boundaries of what’s possible in the digital economy. While challenges remain, the synergy between AI and blockchain has the potential to redefine industries far beyond cryptocurrency.

Further Reading

Top 5 Artificial Intelligence (AI) Cryptocurrencies

The Relationship Between Blockchain and AI

What Is NEAR Protocol (NEAR)?

Binance Research: Exploring the Future of AI Agents in Crypto

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer here for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

BFUSD is a special asset on Binance designed for Futures traders. It works as collateral for trades while offering daily USDT rewards.

By holding BFUSD, users can earn daily rewards in USDT, with additional rewards available for those actively trading USDⓈ-M Futures using BFUSD as collateral. These rewards are powered by Binance’s strategies like delta-neutral hedging and Ethereum staking.

To ensure stability during tough market conditions, a Reserve Fund—initially funded with 1 million USDT—supports BFUSD’s hedging mechanism, offering protection against negative funding rates.

What Is BFUSD?

BFUSD is a reward-earning asset designed exclusively for Binance Futures users. It’s a special tool that allows traders to earn extra rewards when using it as margin for futures trading. But what exactly is BFUSD and how does it work?

How Does BFUSD Work?

Binance Futures users can buy BFUSD to boost their trading power and earn passive income. In other words, when you buy BFUSD, you’re essentially converting your USDT into an asset that works as trading collateral while also generating rewards. 

Users can qualify for daily USDT rewards by simply holding BFUSD in their Binance USDⓈ-M Futures wallet. In addition, if they use BFUSD for futures trading, they can get even higher USDT rewards.

BFUSD Rewards

BFUSD rewards are based on Binance’s investment and hedging strategies, which consist mostly of delta hedging and ether (ETH) staking.

Delta hedging is a strategy that involves hedging ETH and other cryptocurrencies between the spot and futures markets. The idea is to collect funding fees by opening trading positions that offset each other and greatly reduce risks.

The ETH staking strategy involves using the funds collected from BFUSD sales to buy and stake ETH. The staking rewards are then used to fund the rewards given to BFUSD holders.

The Daily Reward Rates are calculated daily, but the exact rate varies depending on how much Binance earns from its hedging and staking activities.

Base Rate and Boosted Rate

Binance splits rewards into two categories:

Base Rate: USDT rewards for simply holding BFUSD in your Binance USDⓈ-M Futures wallet.

Boosted Rate: Higher reward rate for those who actively trade using BFUSD as collateral.

Reserve Fund

The BFUSD Reserve Fund is a special fund created by Binance to protect users from the potential impact of negative funding rates. The fund started with 1 million USDT, but it has grown over time as a portion of the income generated by Binance’s investment and hedging strategies are allocated to it.

How to Use BFUSD

BFUSD can be used as margin in Binance Futures markets, enabling traders to increase their leverage and trading power. You can start using BFUSD in a few simple steps:

Log in to your Binance account.

Navigate to the Futures page and find the BFUSD section.

Click [Buy] BFUSD, enter the amount of USDT you want to convert and click [Confirm].

Enable Multi-Asset Mode: This allows BFUSD to be used as margin in your trades.

Start earning: You can hold your BFUSD for passive earnings or boost your rewards by using BFUSD as margin when trading futures.

Redeeming BFUSD

If you decide you no longer want to hold BFUSD, you can redeem it back into USDT at a 1:1 ratio. Follow these steps to redeem your BFUSD:

Go to your Binance account, navigate to the Futures page, and find the BFUSD section.

Click [Redeem].

Enter the amount of BFUSD you want to convert and confirm.

Keep in mind, there are small fees for both buying and redeeming BFUSD. Also, in rare cases of high demand, Binance might delay redemptions for up to seven days.

Why Should You Use BFUSD?

Benefits for Traders

Earn passive rewards: You can earn USDT rewards every day by simply holding BFUSD in your Binance Futures wallet.

Boost your trading: By using BFUSD as margin, you can access more capital for your trades.

Flexibility: You can redeem BFUSD for USDT in just a few simple steps.

Protection from risks: Binance has set up a Reserve Fund to reduce risks and keep rewards relatively stable.

Things to Consider When Using BFUSD

While BFUSD is a great tool for futures traders, there are a few things to keep in mind:

Fees: Each time you buy or redeem BFUSD, there’s a small fee (usually 0.1%).

Market risk: Your rewards depend on market conditions. On bad days, you might earn less than expected.

Redemption delays: If lots of people try to redeem BFUSD at the same time, you might have to wait a few days for Binance to process it.

Closing Thoughts

BFUSD is a great tool for Binance Futures traders who want to maximize their trading potential while earning some extra income. It’s flexible, easy to use, and backed by solid investment strategies. Whether you’re a passive HODLer or an active trader, BFUSD can be a valuable addition to your trading toolkit.

That said, always keep an eye on fees, market risks, and Binance’s terms. If you’re ready to give BFUSD a try, head over to the Binance Futures section and start exploring its benefits today!

Further Reading

Your Guide to Binance Launchpad and Launchpool 

What Is a Stablecoin?

What Is Crypto Staking and How Does It Work? 

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer here for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Disclaimer: This article is for educational purposes only. The information provided through Binance does not constitute advice or recommendation of investment or trading. Binance does not take responsibility for any of your investment decisions. Please seek professional advice before taking financial risks.

Key Takeaways

The Movement Project builds on Ethereum to offer faster, more efficient transactions and advanced security through its MoveVM and Move programming language.

Developers can use Move Rollups to create tailored Layer 2 solutions for various applications like DeFi, gaming, and supply chains.

The MOVE token has multiple use cases, including staking, governance, and cross-chain liquidity.

In December 2024, Binance offered an exclusive MOVE token airdrop as part of Binance’s HODLer Airdrops program.

What Is the Movement Project?

Movement is a blockchain platform that builds on Ethereum’s foundation while adding its own innovations. It’s what’s called a Layer 2 (L2) solution, meaning it operates on top of Ethereum to process transactions faster and more efficiently.

At its core, the Movement Project aims to address challenges related to scalability, transaction speed, interoperability, and security vulnerabilities. The Move programming language was originally developed by Meta (formerly Facebook) for its Diem/Libra blockchain project. 

Move is known for its resource-oriented programming, which enhances security and efficiency in blockchain application development.

Key Features of the Movement Project

Interoperability

Movement connects MoveVM and Ethereum ecosystems, enabling developers to build DApps that operate across multiple blockchains. This composability is a game-changer for blockchain developers.

Security

Move is built with security in mind. It uses formal verification, a rigorous mathematical process that ensures smart contracts behave as intended. This approach reduces common vulnerabilities, like reentrancy attacks or accidental token duplication.

Speed and finality

One of the biggest pain points in blockchain today is waiting for transactions to be finalized. Movement's fast-finality system ensures transactions are confirmed in seconds. This is a massive improvement over traditional systems, where users might wait several minutes or even hours, depending on the type of rollup.

How the Movement Project Works

The Movement Project is built around a few key components:

MoveVM: A virtual machine that supports both Move and Ethereum-compatible code execution.

Decentralized Shared Sequencer (DSS): Ensures fair and censorship-resistant transaction processing.

Move Rollups: App-specific L2 solutions that enable developers to customize transaction settlement, data availability, and more.

MoveVM: the execution core

At the heart of the Movement Project is the MoveVM, a virtual machine that powers the execution of transactions. Unlike many blockchain systems that focus on one type of application or programming environment, the MoveVM is dual-compatible. It works with both:

Move Bytecode: For developers who want to use the cutting-edge features of the Move programming language.

Ethereum Virtual Machine (EVM) Bytecode: This ensures that existing Ethereum-based applications can be easily ported to the Movement ecosystem.

This means developers don’t have to choose between Move and Ethereum. They can use both simultaneously, building applications that take advantage of Ethereum’s large ecosystem while leveraging the advanced security and efficiency of the Move programming language.

Decentralized Shared Sequencer (DSS)

The DSS is like the traffic controller of the Movement ecosystem. It ensures that transactions are processed fairly, quickly, and without censorship. Some of its key benefits include:

Censorship resistance: No single entity can block or prioritize transactions.

Fairness: Protects users from front-running attacks, where someone jumps ahead in the transaction queue to gain an unfair advantage.

Interoperability: Enables seamless cross-chain operations within the Movement ecosystem.

DSS plays an important role in uniting Move-based and Ethereum-based networks, allowing liquidity and assets to flow across chains.

Move Rollups: custom L2 chains

Movement introduces a flexible architecture called Move Rollups, which are L2 solutions tailored for specific applications, such as DeFi, gaming, and supply chains. For example:

Developers can select from different settlement mechanisms like optimistic rollups, ZK-rollups, or Movement’s fast-finality system.

They can choose their preferred data availability services, such as Celestia or Ethereum's EIP-4844 blobs, to ensure their chains operate efficiently.

This modular approach means that whether you're building a DeFi app, a blockchain game, or a supply chain solution, you can tailor your blockchain setup to fit your needs.

The MOVE Token Use Cases

Staking: MOVE tokens can be staked to help secure the network and support decentralized transaction processing through the Decentralized Shared Sequencer (DSS).

Transaction fees: MOVE tokens can be used to pay transaction and smart contract execution fees within the Movement ecosystem.

Governance: MOVE holders can vote on proposals for protocol upgrades, operational changes, and community fund allocations.

Cross-chain liquidity: Facilitates asset transfers between Move-based and Ethereum-based chains, offering more interoperability.

Move Arena participation: MOVE can be used for staking and providing liquidity in the Move Arena, which supports application-specific chains.

Incentives and rewards: Distributed as rewards for developers and users through programs like Binance’s HODLer Airdrops.

Economic security: MOVE, alongside other tokens, is used in the multi-asset staking model to increase network security.

MOVE Airdrop on Binance

The MOVE token is a central part of the Movement project and ecosystem. In December 2024, Binance announced an exclusive MOVE airdrop for BNB HODLers. The airdrop was done through the Binance Airdrop Portal and part of Binance’s HODLer Airdrops program.

Eligibility: Binance users needed to stake their BNB in Simple Earn products. Historical snapshots of balances were used to calculate rewards.

Rewards: BNB holders received free MOVE tokens, which were distributed directly to their Spot Wallets.

Trading launch: MOVE was listed on Binance on December 9, 2024, with multiple trading pairs, such as MOVE/USDT, MOVE/BTC, and MOVE/BNB.

Closing Thoughts

The Movement Project is all about making blockchain faster, more secure, and easier to use. With tools like the Move programming language, MoveVM, and a decentralized sequencer, it connects Ethereum and Move ecosystems, giving developers many options to build cool apps.

Further Reading

What Are Modular Blockchains?

Optimistic vs. Zero-Knowledge Rollups: What’s the Difference? 

What Are Bitcoin Layer 2 Networks?

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer here for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Disclaimer: This article is for educational purposes only. The information provided through Binance does not constitute advice or recommendation of investment or trading. Binance does not take responsibility for any of your investment decisions. Please seek professional advice before taking financial risks.

Key Takeaways

Magic Eden is a marketplace for non-fungible tokens (NFTs) that supports multiple blockchains, including Solana, Ethereum, Polygon, and Bitcoin.

The Magic Eden platform offers a Launchpad for new NFT projects and customizable royalties, making it easier for creators to mint and monetize their work.

The ME token is an important part of the Magic Eden ecosystem. It can be used for governance, trading fee discounts, access to exclusive collections, and more.

In December 2024, Magic Eden announced a large airdrop to active users. In this article, we will go through the details of the airdrop, show you how to check if your wallet is eligible, and how to claim your ME tokens.

What Is Magic Eden?

Magic Eden, often called ME, is a marketplace where you can buy, sell, and even launch NFTs (non-fungible tokens). It started out on the Solana blockchain but has expanded to include Ethereum, Polygon, and Bitcoin. This move to support multiple blockchains makes it easier for a wider range of creators and collectors to get involved while keeping things simple and user-friendly.

What Can You Do on Magic Eden?

Magic Eden is essentially a hub for all things NFT. It’s built to be fast, cost-effective, and easy to navigate. Let’s take a closer look at its major offerings.

Launchpad for new NFT projects

The Launchpad feature is designed for creators who want to mint and promote their NFT projects. It simplifies the process, helping creators reach more people and connect with collectors.

A marketplace for trading

If you’re looking to buy or sell NFTs, Magic Eden has you covered. It’s built to make trading straightforward, whether you’re new to NFTs or a seasoned collector.

Customizable royalties

For creators, Magic Eden lets you set up royalties, which is essentially a percentage you earn every time your NFT is resold. This ensures you keep earning from your work over time.

Multichain compatibility

Magic Eden supports NFTs across multiple blockchains, including Solana, Ethereum, Polygon, and Bitcoin. This means users aren’t limited to a single blockchain and can explore a wider variety of projects.

How Does Magic Eden Work?

Magic Eden leverages the underlying blockchain technology of Solana and other chains to facilitate quick, low-cost transactions. Users interact with the marketplace via crypto wallets, such as Trust Wallet or Phantom. Whether minting a new NFT, purchasing an existing one, or trading across collections, Magic Eden offers an easy and simple way to do it.

The ME Token

Magic Eden’s native cryptocurrency, the ME token, has various use cases within the ecosystem:

Governance: Holders of ME tokens can participate in decisions regarding platform updates or community policies.

Utility: The token can be used for trading fee discounts and exclusive access to specific features or NFT collections.

Rewards: Magic Eden distributes ME tokens as incentives for platform activity, such as trading or campaign engagement.

According to the official channels, ME tokenomics are designed to reward active participation while saving resources for community initiatives and partnerships. The idea is to create a sustainable ecosystem for users and contributors.

Binance listing

On December 10, 2024, Binance listed Magic Eden (ME) with the Seed Tag applied. Binance applies the Seed Tag to projects that are relatively new and may present higher volatility risks when compared to other listed assets. At launch, the spot trading pairs available were ME/BTC, ME/USDT, ME/FDUSD, and ME/TRY.

Magic Eden (ME) Airdrop

Magic Eden has introduced an airdrop campaign to reward its active community members with ME tokens.

The airdrop is designed to distribute ME tokens to users who have contributed to the platform through activities like NFT trading, NFT launchpad minting, cross-chain token swaps, and Runes trading.

Eligible users were defined based on their interaction history with Magic Eden, with higher rewards for those who have been actively involved in the marketplace.

The airdrop is part of Magic Eden's strategy to strengthen its ecosystem. By rewarding active users, their goal is to build loyalty while increasing the adoption of the ME token as a utility and governance asset.

Magic Eden airdrop details

Claim window: December 10, 2024, at 2:00 PM (UTC) to February 1, 2025, at 11:00 PM (UTC).

Official contract address: MEFNBXixkEbait3xn9bkm8WsJzXtVsaJEn4c8Sam21u (Solscan)

Claim page: mefoundation.com. Be careful with fake websites and scams. Make sure to only visit the official pages.

How to claim the Magic Eden airdrop?

To check your eligibility and claim your airdrop, you have to connect all of your eligible wallets to the official page before finishing the process on the Magic Eden mobile app.

If you don’t have the Magic Eden app, you have to download, install it, and import the crypto wallet you used on the Magic Eden platform. If you already have the app, follow these steps:

Go to mefoundation.com and click the [Claim $ME] button. 

Next, click [Check Eligibility].

Scan the QR code using your Magic Eden app and connect your eligible wallets. You can connect multiple wallets.

Check the terms and conditions. If you agree and are not from a restricted country, check the box to continue.

On the next screen, you can link multiple wallets to check which ones are eligible for the airdrop.

The final step is to claim your airdrop using the Magic Eden app, which is available for iOS and Android. You will need some SOL in your wallet to pay for gas fees when claiming your airdrop.

Closing Thoughts

Magic Eden is a user-friendly NFT marketplace that supports multiple blockchains like Solana, Ethereum, Polygon, and Bitcoin. It offers features like a Launchpad for new projects, easy trading, customizable royalties, and the ME token for governance and rewards. The platform aims to make NFT buying, selling, and launching simple and accessible for everyone.

Further Reading

How to Set Up a Crypto Wallet

What Is Solana (SOL)?

What Is An NFT?

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer here for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

What is passive income?

Trading or investing in projects is one way to make money in the blockchain industry. However, that typically requires detailed research and a substantial investment of time – but it still won’t guarantee a reliable source of income. 

Even the best investors can experience prolonged periods of loss, and one of the ways to survive them is to have alternative sources of income.

There are other methods than trading or investing that can help you increase your cryptocurrency holdings. These can pay ongoing income similar to earning interest, but only require some effort to set up and little or no effort to maintain.

This way, you can have several streams of income that, in combination with each other, can add up to a significant amount.

This article will go through some of the ways that you can earn a passive income with crypto.


What are the ways you can earn passive income with crypto?

Mining

Mining essentially means using computing power to secure a network to receive a reward. Although it does not require you to have cryptocurrency holdings, it is the oldest method of earning passive income in the cryptocurrency space.

In the early days of Bitcoin, mining on an everyday Central Processing Unit (CPU) was a viable solution. As the network hash rate increased, most of the miners shifted to using more powerful Graphics Processing Units (GPUs). As the competition increased even more, it has almost exclusively become the playing field of Application-Specific Integrated Circuits (ASICs) - electronics that use mining chips tailor-made for this specific purpose.

The ASIC industry is very competitive and dominated by corporations with significant resources available to deploy on research and development. By the time these chips arrive on the retail market, they are likely already outdated and would take a considerable amount of mining time to break-even.

As such, Bitcoin mining has mostly become a corporate business rather than a viable source of passive income for an average individual.

On the other hand, mining lower hash rate Proof of Work coins can still be a profitable venture for some. On these networks, using GPUs can still be viable. Mining lesser-known coins carries a higher potential reward, but comes with higher risk. The mined coins might become worthless overnight, carry little liquidity, experience a bug, or see themselves hindered by many other factors.

It is worth noting that setting up and maintaining mining equipment requires an initial investment and some technical expertise. 


Staking

Staking is essentially a less resource-intensive alternative to mining. It usually involves keeping funds in a suitable wallet and performing various network functions (such as validating transactions) to receive staking rewards. The stake (meaning the token holding) incentivizes the maintenance of the network’s security through ownership.

Staking networks use Proof of Stake as their consensus algorithm. Other versions of it exist, such as Delegated Proof of Stake or Leased Proof of Stake.

Typically, staking involves setting up a staking wallet and simply holding the coins. In some cases, the process involves adding or delegating funds to a staking pool. Some exchanges will do this for you. All you have to do is keep your tokens on the exchange and all the technical requirements will be taken care of.

Staking can be an excellent way to increase your cryptocurrency holdings with minimal effort. However, some staking projects employ tactics that artificially inflate the projected staking returns rate. It is essential to investigate token economics models as they can effectively mitigate promising staking reward projections. 

Binance Staking supports a wide variety of coins that will earn you staking rewards. Simply deposit the coins on Binance and follow the guide to get started.


Lending

Lending is a completely passive way to earn interest in your cryptocurrency holdings. There are many peer-to-peer (P2P) lending platforms that allow you to lock up your funds for a period of time to later collect interest payments. The interest rate can either be fixed (set by the platform) or set by you based on the current market rate.

Some exchanges with margin trading have this feature implemented natively on their platform.

This method is ideal for long-term holders who want to increase their holdings with little effort required. It is worth noting that locking funds in a smart contract always carries the risk of bugs.

Binance Earn offers a variety of options that let you earn interest in your holdings.

 

Running a Lightning node

The Lightning Network is a second-layer protocol that runs on top of a blockchain, such as Bitcoin. It is an off-chain micropayment network, which means that it can be used for fast transactions that aren’t immediately transferred to the underlying blockchain.

Typical transactions on the Bitcoin network are one-directional, meaning that if Alice sends a bitcoin to Bob, Bob cannot use the same payment channel to send that coin back to Alice. The Lightning Network, however, uses bidirectional channels that require the two participants to agree on the terms of the transaction beforehand.

Lightning nodes provide liquidity and increase the capacity of the Lightning Network by locking up bitcoin into payment channels. They then collect the fees of the payments running through their channels.

Running a Lightning node can be a challenge for a non-technical bitcoin holder, and the rewards heavily depend on the overall adoption of the Lightning Network.


Affiliate programs

Some crypto businesses will reward you for getting more users onto their platform. These include affiliate links, referrals, or some other discount offered to new users that are introduced to the platform by you.

If you have a larger social media following, affiliate programs can be an excellent way to earn some side income. However, to avoid spreading the word on low-quality projects, it is always worth doing some research on the services beforehand.

If you are interested in earning passive income with Binance, join the Binance Affiliate Program and get rewarded when you introduce the world to Binance!


Masternodes

In simple terms, a masternode is similar to a server but is one that runs in a decentralized network and has functionality that other nodes on the network do not.

Token projects tend to give out special privileges only to actors who have a high incentive in maintaining network stability. Masternodes typically require a sizable upfront investment and a considerable amount of technical expertise to set up.

For some masternodes, however, the requirement of token holding can be so high that it effectively makes the stake illiquid. Projects with masternodes also tend to inflate the projected return rates, so it is always essential to Do Your Own Research (DYOR) before investing in one.


Forks and airdrops

Taking advantage of a hard fork is a relatively straightforward tactic for investors. It merely requires holding the forked coins at the date of the hard fork (usually determined by block height). If there are two or more competing chains after the fork, the holder will have a token balance on each one.

Airdrops are similar to forks, in that they only require ownership of a wallet address at the time of the airdrop. Some exchanges will do airdrops for their users. Note that receiving an airdrop will never require the sharing of private keys - a condition that is a telltale sign of a scam.


Blockchain-based content creation platforms

The advent of distributed ledger technologies has enabled many new types of content platforms. These allow content creators to monetize their content in several unique ways and without the inclusion of intrusive ads.

In such a system, content creators maintain ownership of their creations and usually monetize attention in some way. This can require a lot of work initially but can provide a steady source of income once a more substantial backlog of content is ready. 


What are the risks of earning passive income with crypto?

Buying a low-quality asset: Artificially inflated or misleading return rates can lure investors into purchasing an asset that otherwise holds very little value. Some staking networks adopt a multi-token system where the rewards are paid in a second token, which creates constant sell pressure for the reward token.

User error: As the blockchain industry is still in its infancy, setting up and maintaining these sources of income requires technical expertise and an investigative mindset. For some holders, it might be best to wait until these services become more user-friendly, or only use ones that require minimal technical competence.

Lockup periods: Some lending or staking methods require you to lock up your funds for a set amount of time. This makes your holdings effectively illiquid for that time, leaving you vulnerable for any event that may negatively impact the price of your asset. 

Risk of bugs: Locking up your tokens in a staking wallet or a smart contract always carries the risk of bugs. Usually, there are multiple choices available with various degrees of quality. It is imperative to research these choices before committing to one. Open-source software might be a good starting point, as those options are at the very least audited by the community.


Closing thoughts

Ways to generate passive income in the blockchain industry are growing and gaining popularity. Blockchain businesses have also been adopting some of these methods, providing services commonly referred to as generalized mining.

As the products are getting more reliable and secure, they might soon become a valid option for a steady source of income.