What is cryptocurrency and blockchain technology? Why is it so hard to invest? How to trade cryptocurrency with ease? Find the answers to these questions below, based on this week’s RoundTable Talk on the decentralized exchange (DEX) and tokens.
WHAT IS CRYPTO AND HOW TO USE IT?
During Tuesday's OneCoWork’s RoundTable Talk, Emily de Dios, Consul and Local Ambassador of WAVES, shared some information on the new functions of their cryptocurrency investment platform. Emily started by asking what was keeping people from investing in cryptocurrency. “Lack of knowledge,” most responded. There are more than 1500 cryptocurrencies in the market at the moment and each one of them has its own value. It is nearly impossible to understand all of them and find room to profit from the exchange. Emily cleared the air by explaining what cryptocurrency is, and how we can profit from it as investors and business owners.
CRYPTOCURRENCY, BLOCKCHAIN, TOKENS AND DEX
Traditionally, we use a centralized banking system and handle transactions through a bank. If we disagree on whether the transaction is completed or not, the bank acts as a third party to judge if it actually happened. However, this system is vulnerable. If the bank cannot be trusted (e.g. it is constantly robbed), the system fails.
A decentralized exchange system (DEX) handles transactions from peer to peer (P2P). Imagine a network of 4 computers (A, B, C, & D). When A trades with B, all four computers receive information about the transaction and then validates it. If all the computers “agree” to the transaction, then it is processed and confirmed. To confirm a transaction, the computers in the network compete with each other to decode a cryptographic puzzle. This action is called mining. In the above example, say C is the most powerful computer in the network and is the first to “mine the block”. It becomes the miner and is rewarded with tokens of cryptocurrencies. After that, the computers record the transaction on their blockchains. Blockchains are like ledgers that record transactions, but what is written on blockchains is irreversible and secured by mathematical algorithms.
HOW TO MAKE MONEY FROM CRYPTOCURRENCY?
To exchange cryptocurrency one must first find an exchange, which is like a platform or a market to buy or sell coins, and a wallet to store the coins. There are also some platforms, such as WAVES, that offer buying, selling, and storage simultaneously. You then need a private key, which is the encryption code of everything in your wallet. Once you have all these, you can start trading with coins of your choice or even launch your own tokens.
The key to buying the correct cryptocurrency is to understand the developers. Cryptocurrencies like Bitcoins are generating revenue due to the high demand. Look for user-friendly, bug-free, and well-completed sites. Look for promising teams and developers that propose innovative ideas to improve their services. For example, WAVES offers leasing and fiat exchange. Leasing is an automatic blockchain trading system, like putting your money in the bank to generate interest. On the other hand, Fiat exchange is the use of cryptocurrency to trade for fiat currencies (e.g. USD, GBP, EUR…etc.). If you find their services appealing, you may want to consider making an investment.
HOW CAN I UTILIZE CRYPTOCURRENCIES AS A BUSINESS OWNER?
Ethereum created something called Smart Contract, which allows investors to create and spread tokens for crowdfunding. If you are a business owner and you are looking to invest and expand, you may want to try initial coin offerings (ICO). Investors can buy a token with a specified cryptocurrency. The token represents an amount of return which you offer if your business expansion is successful. Remember to set a time and cap amount for your ICO and most importantly, beware of hacks! Also, most investors are very cautious when it comes to ICO because of past scam cases. Be sure to offer a promising whitepaper along with clearly stating what you want to do with your ICO and how it benefits your investors. Consider not only how many funds you want to raise but also how to build trust with your investors.
The Roundtable Talk at OneCoWork with Emily certainly provided some food for thought. Everyone that attended learned practical tips and insights regarding cryptocurrencies and where the industry stands today. For more related topics and upcoming Roundtable Talks, head over to our events page.
If you would like to learn more about cryptocurrencies, DEX, tokens, and WAVES, check out these links below: