What is the term Crypto? What is the potential of Crypto? The article helps readers, especially beginners, understand Crypto in the simplest way.
What is Crypto?
Crypto (Cryptocurrency) is a type of cryptocurrency issued by a project on the blockchain. Crypto uses cryptography technology to secure and verify transactions.
Crypto will have many different functions, used as a means of storing value, payment & transaction or have other applications such as rewards for miners, participating in project activities.
Crypto Classification in the Market.
Crypto is divided into many types and has many different names such as altcoin, meme coin, large cap coin, mid cap coin, low cap coin, stablecoin, shitcoin...
In the framework of the article, we will mention 2 main types:
- Coin: Coin is a type of money issued, developed on a separate blockchain and operates independently.
- Token: Token is a coin issued on a blockchain, but it does not have its own blockchain, but is issued on another blockchain.
Each type of asset is issued for its own purposes. Therefore, users need to have a basic understanding of them in order to understand the project’s tokenomics design and participate in investing.
Is Crypto Safe?
The crypto market is inherently a free market, not strictly controlled by the government, so the market has many bad entities.
But on the contrary, this is where many creative ideas exist, attracting cash flow and creating many opportunities.
User Risk
A key difference between crypto and traditional finance is that a transaction cannot be reversed or reversed once it has been made. This means that losing your passphrase and private key or sending funds to the wrong address can result in the loss of your assets.
Regulatory Risk
The regulation of cryptocurrencies is still unclear, with some governments attempting to classify them as securities, currencies, or both. Sudden regulatory scrutiny could make it difficult to trade cryptocurrencies or cause a marketwide crash.
Regulatory Risk
The lack of regulatory clarity has created an environment that lacks protection against fraudulent or unethical practices. Many investors have suffered significant losses due to management teams failing to deliver on their commitments.
Third-Party Risk
Many investors rely on exchanges or other custodians to store their assets. Theft or loss from a third party can result in the loss of all assets.
Programming Risks
Many platforms use smart contracts to control the transfer of user deposits. Investors must accept the risk that a system failure or vulnerability could result in a loss.
Market Manipulation Risks
Market manipulation remains a major issue in cryptocurrencies, with individuals, organizations, and exchanges able to manipulate prices.
Despite these risks, cryptocurrencies have seen a huge jump in value, with the total market capitalization surpassing the $1 trillion mark.
Advantages and Disadvantages of Crypto
Crypto is seen as a revolution in the financial market. And obviously, there are trade-offs.
At the current stage, there are many differences between the ideal of a decentralized economy and the reality of its implementation.
Advantages of Crypto
- Easy, fast and unlimited transactions globally: Crypto allows users anywhere to easily transfer money directly, eliminating the need for third parties.
- Security and safety: Developed on blockchain technology, crypto is guaranteed to be anonymous and have a high level of information security through cryptography.
- Decentralized, immutable and transparent: The entire system operates completely transparently and decentralized, sharing available data to all users participating in the network.
Disadvantages.
- Mass adoption: Crypto needs to be widely accepted to thrive. However, crypto has not been able to do this yet because blockchain technology is too complex and has many limitations such as high fees, high latency, etc.
- High risk: As mentioned above, crypto has many risks that users must be aware of when participating in the market.
- Another barrier is that only a small part of the crypto market retains the intrinsic value of the project, in addition, many projects only exist for a period of time, springing up according to the market cycle and also disappearing when the market enters a gloomy period.
Buy and Sell Crypto.
Buy and Sell Crypto
Users can buy and sell cryptocurrencies on exchanges. In crypto, there are 2 main types of exchanges:
- Centralized Exchanges (CEX): Binance, Huobi, Coinbase, OKX, Bybit… These are exchanges controlled by companies. To trade on CEX, users need to trade P2P or transfer assets to the exchange.
- Decentralized Exchanges (DEX): Uniswap, Pancakeswap, dYdX, Curve… To trade on these exchanges, users need to use a decentralized wallet (non-custodial wallet), the exchange will not hold your assets after the transaction.
Crypto Storage.
To store crypto assets, users need to use a crypto wallet. Crypto wallets are highly secure thanks to the use of cryptographic technology to encrypt information and do not identify the wallet owner.
There are many types of crypto wallets:
- Centralized Wallet – Centralized Wallet.
- Decentralized Wallet – Decentralized Wallet: Hot wallet, cold wallet.
Things to know when participating in Crypto.
Information channels.
Like all other industries, the amount of knowledge in crypto is "huge". Users need to follow and refer to knowledge from large and reputable websites to be able to update information daily, suitable for the purpose of being in the market.
- Fastest updated social networks: Twitter, Telegram…
- Websites that update information quickly: CoinDesk, CoinGecKo, CoinMarketCap…
- In-depth research websites: Binance Research, Messari…
- Websites that provide DeFi data: DefiLlama, DeFi Pulse, Dune Analytics…
Portfolio Management.
To invest in the crypto market, users can start with a very low capital of 50 USD to millions of USD. Many investors have entered the market with 0 VND capital, then built up a significant amount of assets thanks to professional participation.
However, each capital market will have different investment methods and capital allocation. This greatly affects the final results of the investor. Therefore, users need to clearly understand the mistakes to avoid when investing in crypto and learn how to manage their investment portfolio to improve the efficiency of capital use.
Asset Security.
There are countless forms of scams in crypto, some of the most common ones mentioned are:
- Giving away free tokens/coins then asking for wallet signature to transfer money in the wallet.
- DNS hack, invisible users are redirected to a scam page because the server is hacked.
- Email spoofing (Phishing attack).
- Impersonating the project team, blending into general chat groups, support chat groups.
Making money in the market is difficult, but keeping it is not easier. Therefore, users need to be extremely careful with their assets.
Ways to Make Money in the Crypto Market
There are many different ways to make money in the crypto market. Here are some popular ways:
- Buy, sell, hold.
- Airdrop and Retroactive.
- Mining coins.
- Participate in DeFi activities such as staking, farming, lending, borrowing…
Besides, to make money in the crypto market, users do not necessarily have to participate in the above forms.
The crypto market is similar to many other markets, there are many jobs that can be done such as design, blockchain engineering, market research…
