What is Crypto? Basic Crypto knowledge for newbies

What do you need to know about Crypto? Answering what Crypto is and the most basic Crypto knowledge needed and questions for beginners.

Since 2017, Cryptocurrency has been mentioned more through press and media sites. However, most of the content negatively mentions the Crypto market with illegal activities. What is Crypto? Things to know about Crypto!

What is Crypto?

Crypto (or cryptocurrency) is a cryptocurrency issued by a project on the blockchain. Crypto uses cryptography to secure and verify transactions. 

Crypto will have many different functions used as a means of storing value, payment & transactions or have other applications such as rewards for miners, participating in project activities.

What is Crypto?

Is Crypto Safe?

The crypto market is inherently a free market, not strictly controlled by the government, so the market exists many bad entities. But on the contrary, this is where many creative ideas exist, attracting cash flow and creating many opportunities.

Is Crypto Safe?
User Risk

An important difference between cryptocurrency and traditional finance is that a transaction cannot be reversed or canceled once it has been made. This means that losing passphrase/private key or sending funds to the wrong address can result in the loss of assets.

Regulatory risks

The regulations of cryptocurrencies are still unclear, some governments are trying to regulate them as securities, currencies or both. Sudden regulatory clampdowns could make it difficult to sell cryptocurrencies or cause market-wide price drops.

Sec v. Binance and CEO Changpeng Zhao.

For example: The SEC is pushing the entire crypto industry in the US into a dead end

Management risks

The lack of regulatory clarity has created an environment that lacks protection against fraudulent or unethical practices. Many investors have experienced significant losses due to management teams not delivering on their commitments.

Example: Magic Eden and Balloonsville's rug pull

Third party risks

Many investors must rely on exchanges or other custodians to store their assets. Theft or loss from a third party may result in total loss of property.

For example: The rise and fall of FTX - "The Fortune" 32 billion USD "turned into nothing"

FTX's "bloody" days
Programming risks

Many platforms use smart contracts to control the conversion of user deposits. Investors must accept the risk that system failures or vulnerabilities may result in losses.

Example: Detected a bug, Mina upgraded the network within 24 hours

Risk of market manipulation

Market manipulation remains a major problem in cryptocurrency, as there are individuals, organizations, and exchanges that can engage in price manipulation. 

Despite these risks, cryptocurrencies have recorded a huge jump in value, with total market capitalization surpassing the $1 trillion mark.

Pros and cons of cryptocurrency

Crypto is seen as revolutionizing the financial market. And obviously they have trade-offs. At the current stage, there are many differences between the ideal of a decentralized economy and its actual implementation. 

Advantage

• Easy, fast and unlimited transactions globally: crypto allows users anywhere to easily transfer funds directly, eliminating dependence on 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 transparent and decentralized, sharing data available to all users participating in the network. 

Crypto is traded quickly on the blockchain network

Defect

• Mass adoption: If crypto wants to thrive, it needs to be widely accepted. However, crypto currently cannot do this because blockchain technology is too complex and has many limitations such as high fees, high latency... 
• High risk: as mentioned above, crypto has many risks that users must pay attention to when participating in the market. 

Another barrier is that only a small portion of the crypto market retains the intrinsic value of the project, in addition, many projects only exist for a while, spring up according to market cycles and also disappear when the market changes. The school entered a gloomy period. 

Classification of Crypto in the market

Crypto is divided into many types and has many unique names such as coin, token, altcoin, large cap coin, mid cap coin, low cap coin, memecoin, shitcoin, stablecoin...

However, we will cover 2 main types: 

• Coin: Coin is a currency issued, developed on a separate blockchain and operates independently. 
• Token: Token is a currency issued on the blockchain, but it does not have its own blockchain, but is issued on another blockchain. 

Coin Classification & Tokens in Crypto

Each type of asset is issued for its own purposes. Therefore, users need to master basic knowledge about them to be able to understand the project's tokenomics design and participate in investment. 

Read more: How to distinguish Coin and Token

Buy, sell and store Crypto

Buy and sell Crypto

Users can buy and sell cryptocurrencies at exchanges. In crypto there will be 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.

Read more: 3 Steps to Buy and Sell Coins to Invest in Crypto for Beginners

Users can trade crypto on exchanges

Crypto Storage

To store crypto assets, users need to use a crypto wallet. Crypto wallets are highly secure by using 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

Read more: The best cryptocurrency wallets.

Crypto wallet

Things to know when participating in Crypto

Information channels 

Like all other professions, the amount of knowledge in crypto is very "huge". Users need to monitor and consult knowledge from large and reputable websites to be able to update information daily, suitable for their purposes in the market. 

• Social networks with fastest updates: Twitter, Telegram... 
• Websites that update information quickly: CoinDesk, CoinGecKo, CoinMarketCap...
• In-depth research websites: Binance Research, Messari...
• Websites providing DeFi data: DefiLlama, DeFi Pulse, Dune Analytics…

Read more: 19 most reputable Crypto websites for investors

Reputable crypto information channels

Portfolio management

To invest in the crypto market, users can start from very low capital from 50 USD to millions of USD. There have been many investors who entered the market with zero capital, then built up a significant fortune thanks to their professional participation. 

However, each capital market will have different investment and capital allocation methods. This greatly affects the investor's final results. Therefore, users need to clearly understand the mistakes to avoid when investing in crypto and learn how to manage their investment portfolio to be able to improve their investment. efficient use of capital. 

Read more: 03 steps to design an effective Crypto portfolio

Asset security 

In crypto, there are always countless forms of fraud, some of the most common ones mentioned are:

• Give away free tokens/coins then request to sign wallet to transfer money in the wallet.
• DNS hacked, invisible users were redirected to phishing sites because the server was hacked.
• Email spoofing (Phishing attack).
• Impersonate the project team, infiltrate general chat groups, and support chat groups.

Asset Security in Crypto

Making money in the market is difficult, but keeping it is no easier. Therefore, users need to be extremely careful with their assets. 

Reference: 19 forms of fraud in crypto & how to prevent

Forms of making money in the Crypto market

To make money in the crypto market, there are many different ways. Here are some common forms:

• Buy, sell, hold transactions
• Airdrop and Retroactive
• Mining coins
• Participate in DeFi activities such as staking, farming, lending, borrowing... 

Make money in the crypto market

Besides, to make money in the crypto market, users do not necessarily need 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 engineer, market research...

Epilogue

Crypto is a young market but there are a lot of opportunities, no matter who you are you can always participate in crypto. However, with the unique characteristics of the market, each individual participating must always prepare solid knowledge to avoid unnecessary consequences.