What exactly is a stablecoin? How should I top it up? Which exchange is better and how to calculate the handling fee? Hi, everyone, I am Lao Zhong, and I will accompany you to learn about the cryptocurrency world. Today I will share with you 10 things you must know about cryptocurrency, so that you can learn more about it and avoid unnecessary mistakes on the road of investment.
First, virtual currency exchanges. Before you use virtual currency for consumption or investment, you must first buy cryptocurrency. An exchange can be simply understood as a platform opened by a private institution to provide cryptocurrency trading. Generally, it is necessary to go through an identity verification procedure, and once the review is passed, the fiat currency can be entered into the platform and converted into virtual currency for trading. There are two types of exchanges, those that support fiat currency and those that do not. For example, exchanges that support fiat currency are more convenient, and can be purchased directly with a credit card. On the contrary, exchanges that do not support fiat currency are generally called coin-to-coin exchanges. As for how to choose an exchange, you still have to consider regulatory factors and handling fees, because this will directly affect your experience in the circle later. At the same time, you can also consider the choice of currency, security, and interest. The more mainstream and famous exchanges currently include Binance, OKX, Coinbase, Huobi, Kraken, and Bitfinex, etc. Everyone can choose according to their own needs. Binance is strongly recommended here. As the leader of exchanges, Binance is unmatched by other exchanges in any aspect.
Second, the platform of the virtual currency exchange will provide the buying and selling exchange rate or price, and users can exchange directly. Just like going to a bank pawn shop or a money changer in Malaysia to exchange currency, you can exchange legal currency such as Taiwan dollars, Malaysian ringgit, or Hong Kong dollars into virtual currency according to the exchange rate, and then you can also convert your virtual currency into local legal currency. Compared with the exchange, its advantage is that it is easier to understand and operate, and there are rarely regulatory issues because they can only be established in accordance with local regulations. The disadvantage is that they may have fewer currency options, and most exchange houses do not have the function of obtaining interest, etc.
Third, wallets. If you don't invest in an exchange or other platforms, it is recommended that you transfer your wealth to your private wallet, after all, this is completely decentralized. There are many cryptocurrency wallet applications and types at present. Which one is suitable for you? You need to slowly understand it later. Here I will briefly introduce the two major types of wallets, namely cold wallets and hot wallets. Hot wallets are simply wallets on the Internet, usually operated by computers or mobile phone APPs. Because there is no need to purchase additional equipment, they are very practical and are loved by novice investors. But at the same time, the probability of private keys being stolen on the Internet is relatively high, so the security is relatively low. Generally, we often have hot wallets on trading platforms or investment platforms, or hot wallets installed on mobile phones and computers, such as Trust Walter or MetaMask.
Next is the cold wallet, also known as an offline wallet. Usually in the form of a USB device, the wallet is usually offline and only connected to the network when it needs to be traded, so it is difficult to be hacked, so the security is relatively high. The more representative cold wallets include Ledger Nano X. When you buy a cold wallet, please make sure that the merchant is trustworthy, and it is best to buy it directly from the official. It is not recommended to buy the second-hand ones seen on this e-commerce platform or used by others. There is a high possibility of the risk of private key leakage. If you don’t have a lot of cryptocurrency, it is not recommended to use it because it is really not cheap.
Fourth, KYC certification. Hey, didn’t we agree to decentralize? Why do you still need to know my identity? KYC real-name authentication, in English, is called know your customer. Simply put, for financial security, anti-fraud, anti-money laundering mechanism and combating the financing of terrorism, the platform requires customers to provide relevant information, usually requiring customers to provide identity proof and permanent address. Of course, the reason why the platform does this now is to meet the government’s regulatory conditions. You can also call it a reference point. If you use a platform that seriously implements KYC, then the risk of him running away with the money or being blocked by the government will be greatly reduced.
Fifth, stablecoins. If you want to invest in cryptocurrencies, you must understand stablecoins, because they are the entry ticket to the cryptocurrency circle. Stablecoins are cryptocurrencies anchored to fiat currencies, and their main functions are used for value measurement, storage, and convenient investment. Because Bitcoin's ups and downs every day can make people feel uneasy, but if you have a stablecoin, it is a stable dollar, for example, one dollar is equal to one USDT stablecoin. When Bitcoin plummets and you want to buy the bottom, you can immediately use this stablecoin to buy Bitcoin to buy the bottom. Then when you think that Bitcoin is already very high and you want to cash it out, you can immediately convert it into this USDT stablecoin to avoid the problem of not being able to cash out. The more mainstream stablecoins currently include USDT and USDC. You can think of it as the US dollar in virtual currency. They are all pegged to the US dollar, so the price has been at one dollar since its issuance. USDT is the oldest stablecoin and the most circulated and highest-valued stablecoin on the market. It is issued by Tether, but it changes offices every few years and its asset allocation is relatively opaque, so it is regarded as an underground stablecoin. USDC is the second largest stablecoin, invented by exchange giants Coinbase and Circle. It insists on having a legal license in the United States and arranges the top five accounting firms in the United States to publicly provide an asset verification report every month. Compared with Tether, whose office is unknown and whose founder and chief financial officer have always remained mysterious, USTC is generally considered to be a more transparent and safer choice. Dai is issued by the user himself with ETh collateral contracts, which is similar to the operation of a vending machine. It is relatively complicated and is not very useful for hoarding coins and investing. I will not elaborate on it here. In short, everyone is using USDT and USDC, and it is safer to hold USDT.
Sixth, transfer and deposit. This is the key point. This is a mistake that many novices make easily, so be sure to listen carefully. The first is the wallet address. When you create a virtual currency wallet, you will also get a payment address, which is similar to your household account number. If you want to receive payment and are only leaving Beijing, you can transfer the currency to this address. On the contrary, if you want to transfer money today and only deposit it into a certain platform, you need to transfer your funds to the other party's payment address. Different currencies, such as Bitcoin, Ethereum, etc., all rely on different blockchain networks for records. Different networks have different architectures, just like different banks have different account number lengths, and different countries have different address formats, but the meaning is the same, which is to give you payment. The only thing you need to pay attention to is that, for example, when you are transferring USDT, you find that there are several different types of chains for you to choose from, generally ERC 20, TRC 20 and Omni, and most people get stuck here. In fact, to put it simply, they all represent the chain type of a blockchain, so which one should you choose? Generally speaking, the more expensive it is, the safer it is, but if it were me, I would choose the one with the lowest fee, because I think the blockchain technology itself is very transparent, but it should be remembered that they are not interoperable, that is, USDT on Omni cannot be transferred to the other two chains, so when you deposit and withdraw USDT on the exchange, you must pay attention to the type of this address, if you transfer it to the wrong address, you will really lose money. The conversion methods of other currencies are also similar, just follow the instructions.
Seventh, exchange rate and handling fee. This is the key point that many novices will ignore at the beginning, resulting in a large loss of handling fees before investing. This mainly happens when we deposit money into a fiat currency platform or exchange with a credit card. The interface generally only shows how much the handling fee is, but the real devil is hidden in this exchange rate difference. So you can first choose several deposit methods on the platform and see how much fiat currency is deposited and how much cryptocurrency can be exchanged for on the interface. Then you can use this standard to Google the total amount of exchange, and then you can know whether it is worth investing in this way. The handling fee of the platform usually ranges from 3-10%, and you can try to convert it yourself. After using it for so many times, I found that it is actually the most worthwhile way to deposit money if you choose a licensed cryptocurrency exchange in your country, and it is also more convenient to withdraw money and exchange coins. This is mentioned in the second point, the virtual currency exchange, and you can go back to that paragraph for reference.
Eighth, white paper. Suppose a friend introduces you to a certain currency or platform, how do you confirm its reliability and how to understand its future potential? The white paper is your best entry point. I usually look at this white paper with four key points. The first is the concept of the project. What exactly does it do and what are its functions? I will focus on its innovation and how to replace and improve existing functions. Then there is the team. Currently, cryptocurrencies are a bit rampant. Anyone can create their own currency. Then the experience of the founding team members is very important. In addition to having strong technology to ensure its smooth operation, the reputation of the members is also very important because it can make the promotion of the project more efficient. Then look at the token distribution mechanism. You can look at the total issuance of the project party, the currency volume, and the proportion held by the private equity team. For example, if the team holds more than 20% of the currency itself, and the lock-up period of the currency is less than one year, something is wrong. Usually, as a team or a private equity institution, they can acquire tokens that are lower than the market price, and there will be relative advantages. If they hold a large number of tokens, they can manipulate the price of the currency, so the risk of investors becoming leeks will be higher. Another simple and crude way is to treat it as your student's homework and see if it is short, whether it has multiple languages, whether there are a lot of typos, etc. If he does not do this homework seriously, then it is suspected of fraud.
Ninth, defi is the abbreviation of decentralized finance. Simply put, it is like a bank in the cryptocurrency event. You can conduct various financial activities on it, such as deposits, loans, investment financing, pledges, insurance, etc. Because it uses the smart contract technology of the blockchain, it has achieved automation, greatly reduced various costs, and avoided black box transactions to a large extent. Investing in haircuts is like investing in bank stocks, which will earn you dividends. The bank uses your money to do various financial activities, and then gives you some of the profits. It is found that it is relatively hot recently, so the recovery for users is also very high, up to 30-70%.
10. Liquidity mining. This is different from the mining we often hear about. It means that investors provide liquidity to the platform in order to obtain the cryptocurrency issued by the platform as a reward. It is also the defi investment just mentioned. This is because traditional transactions in the past all adopt a matching system, and users often cannot reach a transaction because of different buying and selling prices. In contrast, if you lend a large amount of funds to the platform, they can trade directly with users, make the transaction a reality, and improve the user experience. Of course, they will also give you the handling fees they receive as a reward. In simple terms, if you provide users with their own funds, the platform will give you a corresponding bonus. If you have seen pledge, defi investment or dual-currency pairing, it is actually a kind of liquidity mining. Then the biggest risk is that the platform’s liquidity is suddenly insufficient, or it is hacked, so there is still a certain risk in liquidity mining.
Well, I will stop here for today's article. Thank you for reading. I hope that today's article on the top ten cryptocurrencies can help you understand the world of cryptocurrencies in a simpler way, so that you will not be confused when investing. In the end, there are risks in investing, so be careful on the road. Thank you for reading, and see you in the next article!#币安合约锦标赛