5 mistakes in options and cryptocurrency trading that traders allow

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5 Common Mistakes to Avoid When Trading in Cryptocurrencies

Apart from mining, trading in cryptocurrencies is another way to make money from digital currencies such as Bitcoin and Ethereum. Unlike in the past, there are hundreds of exchange platforms that allow investors to trade their existing cryptocurrencies for fiat currency or other digital currencies.

However, it is of paramount importance to be careful how you trade to avoid incurring losses. Here are 5 common mistakes that you should avoid when trading in cryptocurrencies.

Applying Any Strategy

The cryptocurrency industry is very volatile and unpredictable. As a result, you will find countless strategies from the so-called gurus online. Do not fall for them; instead do your own research to find accurate information about the market trends and the prices offered by various exchange platforms. The bottom line is that cryptocurrency trading is not easy or straightforward, you need to do your research and use strategies that are less risky.

Trading Too Often

Trading in cryptocurrency has gained massive traction online as it is one of the ways people are making money from this new financial industry. Most people are lured to trade too often in a bid to make more profit within a short span of time.

Professional traders can attest to the fact that to earn significant profits from cryptocurrency trading takes time and research. Trading too often will not result in more profit; instead, you will be exposing yourself to more risks that will eventually lead to losses.

Following Other Decisions

The first thing to note is that cryptocurrency trading is a fairly new way of earning money. Due to the lack of sufficient information on the best trading strategies, most investors opt to rely on other traders who have more hands-on experience. They tend to follow what they are doing instead of relying on real market data and facts to make decisions. As a result, they end up losing a huge chunk of their digital assets.

Not Relying on Crypto Trading Tools

Trading in cryptocurrency requires one to carry out vast research and a deep understanding of market trends. Luckily, there are a number of tools that one can use to do the research and predict the market. Not using these crypto-trading tools always leads to wrong decisions. Some of the best tools that you can leverage include Gunbot, Bittrex bot, and Cryptohopper.

Emotional Trading

One of the mistakes that professional sports bettors never make is using emotions to place bets on teams. The same case applies to trading in cryptocurrencies. Considering your emotions will eventually lead to losses. You will ignore the important market data and use your emotions and perception on the cryptocurrency. Keep your emotions in control when trading if you want to become a professional cryptocurrency trader.

These are the five most common mistakes people make when trading in cryptocurrencies. Feel free to share your experience in crypto trading through the comment section. Be sure to check out our daily cryptocurrency news here.

10 Tips For Cryptocurrency Trading You Probably Knew Nothing About

Every day we listen to reports on various news platforms about this or that with regard to cryptocurrencies and, with the recent market correction, the market has been in a state of confusion. Some, like ABC News as can seen in the video below, reported that there is a possible bubble in market prices months ago.

But that’s exactly the issue; everyone seems to be pointing out the problem, but no one actually seems to be keen on providing solutions. And those that care enough to guide others, do so at a fee in the form of online courses, paid seminars, and more.

This is why I saw the need to put up this post and provide some useful tips to guide your trading in a time when the market seems to be bullish. Other than the tips, I will also share with some of the most volatile cryptocurrencies you need to watch out for and the best one among them for day trading.

These tips are more of safety rules; and as the soldiers would have it, such rules are written in blood.

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Even though we’re not talking about risking human lives here, losing your coins due to trading without a proper guideline isn’t a fun moment.

So, how can we avoid making costly mistakes? How can we ensure that we always remain on the green side?

First of all, you need to understand that profitable trading requires a lot of attentiveness; it isn’t a gamble and nor should it ever be one. Other than the following 10 tips, ensure that you pay close attention to the market forces of demand and supply to be able to know when this or that tip applies. It is paramount to internalize every tip in this guide and to understand the reasoning behind it.

With that, let’s begin!

Tips for Cryptocurrency Trading

Tip#1. Have a motive for entering each trade

Now, I know this may sound obvious but it’s important for you to have a clear purpose for getting into cryptocurrency trade. Whether your purpose is to day trade or to scalp, you need to have a purpose for starting to trade cryptos. Trading digital currencies is a zero-sum game; you need to realize that for every win, there is a corresponding loss:. Someone wins; someone else loses.

The cryptocurrency market is controlled by the large ‘whales’, pretty much like the ones that place thousands of Bitcoins in the market order books. And can you guess what these whales do best? They have patience; they wait for innocent traders like you and me to make a single mistake that lands our money to their hands due to avoidable mistakes.

Whether you are a day trader or scalper, sometimes you’re better off not gaining anything on a certain trade than rushing your way into losses. From our years of market analysis, we can comfortably tell you that on certain day or periods, you can only stay profitable by keeping off some trades.

Tip#2. Set profit targets and make use of stop losses

If you’ve not heard of the term stop loss in trading, check out this link to help you understand what it’s all about.

Every trade we get into requires us to know when to get out, whether we’re making a profit or not. Establishing a clear stop loss level can help you cut your losses; a skill that’s very rare in most traders.

Choosing a stop loss is not a random activity, and perhaps the most important thing to note here is that you shouldn’t be carried away by your emotions – a great point to set your stop loss is at the cost of your coin. If, for instance, you acquired a coin at $1,000, set that as the minimum point you’re willing to trade your coin. This will ensure that if the worst comes to pass, you can walk away with what you invested in the first place.

The same applies to profit levels if you target to get out of the market after hitting a certain minimum profit; stick to that. Don’t be greedy; it’s never a nice color on anyone!

Tip#3. Welcome to FOMO!

FOMO is an abbreviation for the fear of missing out . This is one of the most notorious reasons as to why many traders fail in the art. From an outside point of view, it is never a good scene seeing people make massive profits within minutes from pumped-up coins. Honestly, I never like such situations any more than you do.

But I’ll tell you one thing that’s for sure…

Beware of that moment when the green candles seem to be screaming at you and telling to you to jump in. It is at this point that the whales I mentioned earlier will be smiling and watching you buy the coins they bought earlier at very low prices. Guess what normally follows? These coins usually end up in the hands of small traders and the next thing that happens is for the red candles to start popping up due to an oversupply and, voila, losses start trickling in.

Tip#4. Manage Your Risks

Little pigs eat a lot, but big ones get eaten. This is especially true of market profits when trading cryptocurrencies. Wise traders never run in the direction of massive profits; nope , they don’t!

They would rather stay put and gather small but sure profits from regular trades.

Consider investing less of your portfolio in a market that is less liquid. Such high trades require more tolerance, while the stop loss and profit target points will be allocated further from the buying level.

Tip#5. Underlying Assets Create Volatile Market Conditions

The prices of most altcoins depend on the current market price of Bitcoin. It is vital to understand that Bitcoin is relative to fiat currencies and is quite volatile.

The simpler version of this is that when the value of Bitcoin goes up, the value of altcoins goes down and vice versa.

The market is normally foggy when the Bitcoin price is volatile and, as you would imagine, this prevents most traders from gaining a clear understanding of what goes on in the market. At this point, it is advisable to either have close targets for our trades or simply not trade at all.

Tip#6. Don’t Buy Simply Because the Price is Low

Most beginners make one common mistake: buying a coin because it’s price seems to be low or what they consider affordable. Take, for example, someone who goes for Ripple instead of Ethereum simply because the latter is much cheaper.

The decision to invest in a coin should have very little to do with its affordability but a lot to do with its market cap.

Just like the conventional stocks are gauged by their market caps, which is evaluated using the formula Current Market Price X Total Number of Outstanding Shares, the same applies to cryptocurrencies.

There is no difference between having a coin priced at $10 per coin with a total number of 1 million shares in the market and the same coin being priced at $100 with 100,000 shares in the market. For this reason, it is more justifiable to use a coin’s market cap to decide whether or not to invest in it than using its price. The higher a coin’s market cap, the more suitable it is for investment.

Tip#7. A Tip About Crowd-Sales/ICOs

During an ICO (Initial Coin Offering), startups offer the general public an early chance to invest in their idea through a crowded sale. In return, these investors are allocated tokens at a lower price with a promise to sell them at a much higher price when listed on an exchange.

Time has proven that ICOs can quite successful with records showing that some tokens ended up more than ten times the value of the projected returns.

But what’s the catch in this, you might ask…

ICOs have attracted a large number of investors clearly due to their high returns; however, another large number of ICOs have turned out to be total scams. People have lost millions worth of investments.

There’s a need for one to be more than cautious when looking to invest in any ICO. Knowing when to or not to invest in an ICO is not about science; rather, it’s about paying close attention to those details that most people seem to overlook while only focusing on the promised returns.

Conduct a background check on the team behind the project and analyze their ability to deliver on their promise. In addition, you should also look at the viability of the idea behind the ICO, poke holes in the project’s white paper and seek answers where necessary.

That will ensure that no stone is left unturned and, if by the end of it you still have doubts about the project, you’re better of passing than chance it investing in that ICO.

Tip#8. A Quick One for Altcoin Investors

A lot of Altcoins end up losing value over a certain period of time, sometimes in an unusually short period of time. It is, therefore, paramount to understand that whenever you hold an altcoin for the long term, be careful not to hold on to them for too long.

One of the best measures of coins that are perfect for long-term investments is the daily trading volumes. The higher the daily trading volume, the more suitable an asset is for long-term investments.

If you’re thinking of going long term with cryptocurrencies, consider investing in some of the following coins: Ethereum (ETH), Factor (FCT), Monero (XRM), and Dash. These have decent trading volumes on various exchanges around the world.

Be sure to also observe the charts of these coins and take note of the various price spikes – the patterns can help you know the periods are to sell or buy a coin.

Tip#9. Diversify, Diversify, and Diversify!

Investments are unpredictable; even those that seem to offer infinite positive returns can come crumbling down under certain economic condition. Cryptocurrencies are even more unpredictable.

As much as you can reap profits in thousands in a day or less, the opposite is also true. You can lose everything you invest in digital assets in a flash of a second. So, the best way to get past such uncertainties is through diversification.

Like I mentioned earlier, the value of all other coins is affected by the value of Bitcoin against the USD. When BTC loses value against the dollar, all other coins lose value and vice versa. From that, you can clearly see that diversifying your portfolio among various coins may not be enough to cushion you against bullish markets.

Do you remember when Bitcoin was at its all-time high in late 2020/early 2020? Everyone knew the way to go was to buy as many digital currencies as possible to gain more value over the dollar.

But having a volatile base asset like Bitcoin comes with its challenges as you may have noticed in the second half of 2020. Bitcoin made a lot of people rich in the shortest time than in the history of any known investment. The truth is, billionaires were made; and what most people never seem to understand is that a lot of people also lost money.

And in the midst of all this, the currency managed to grow its market cap by over thirty times more in the past year alone.

This means that it is okay for traders to keep Bitcoin as their base asset, but they also need to realize the value of the dollar cannot be overlooked. You need to diversify away from the same type of asset to different areas so as to spread your risk.

There are other equally viable investments that are not as risky as compared to cryptos; these include real estate, mutual funds, stocks, and more.

Tip#10. Super Tip!

This final tip will offer you practical steps to start implementing immediately in your trading.

Make use of the goal setting feature by placing sell orders: Make sure that you set your revenue targets by placing sell orders in the order books. You never know when your order price will be met, earning you exactly what you needed. Besides, sell orders attract fewer transaction fees since they are the market “makers”.

Take it easy while trading: They say the best traders mastered the art of maintaining their cool even when things seem to be out of hand. Yup, I know how insane that sounds but you’ve got to develop the skill of not trading emotionally, but objectively.

My two cents? Don’t start trading until you’re sure you can be decisive in terms of getting in and out of a trade. Emotional trades have been known to be losing ones; keep calm and watch out for the next opportunity. There’s always a better one to come.

For those who digest content better when in video form, don’t worry; below are some useful tips to help you trade like a pro:

I would be unfair to you if I only gave you tips for trading and not recommend assets to help you get started. In the next section of this guide, I will be taking you through some of the time-tested coins that you can start trading today.

5 Best Coins To Trade Today

1. Ethereum

Ethereum has been around for three years now, and within that time, it has managed to qualify as the second largest traded coin around the world after Bitcoin. It is both a decentralized platform and a coin, and more recently, they launched a token as well; it is known as ERC-20.

The Ethereum platform makes it possible for developers to create smart contracts and Decentralized Applications (DApps). These features protect cryptocurrency users from fraud, downtime, as well as enhance the privacy of transactions.

Ether is the platform’s token and the tool used by investors to make purchases of other currencies or to trade on exchanges.

Prior to its launch, Ethereum issued a pre-sale for its token and the response was overwhelming, ushering in an era of ICOs.

The Ethereum platform remains pivotal in the cryptocurrency operations; according to them, their platform can be used to codify, decentralize, secure, and trade just about anything. As at the time of writing this post, the platform’s market cap stands at $21.4 billion, while its coins trade at $207.95.

2. Bitcoin

Bitcoin trading isn’t big simply because it was the first currency to be established; contrary to that, the coin is quite volatile, making it suitable for day trading as well as long-term trades.

Volatile currencies enable traders to reap maximum yields when experiencing price spikes. This is the main reason why many traders prefer trading Bitcoin: it offers loads of profitable opportunities due to its volatility.

The volatility of Bitcoin is affected by a number of factors including changes in tech, news, and more. Whenever such triggers occur, the coin’s prices shift accordingly and traders cash in on the profits thereof. Be sure to watch out for both positive and negative developments relating to blockchain to prevent you from getting in and out of the market early or late.

3. Litecoin

Having been launched in 2020, this is one of the oldest coins in the crypto space. The currency was developed by Charlie Lee, an MIT graduate and former engineer at Google. LTC operates on an open source network around the world that is not centrally regulated, and it uses “script”, a password key generation function.

Despite drawing a lot of its features from Bitcoin, Litecoin has a faster block generation speed, making it more efficient in terms of transaction processing.

Litecoin is widely accepted by several merchants globally and currently boasts a market cap of $2.9 billion, and its coins trade at $50.56 as at today.

4. Ripple

Ripple is a decentralized payment system that operates globally and most recently got a few endorsements from key financial institutions. Ripple offers an instant and safe payment system for its users around the world.

The platform was established in 2020 and with an aim of enabling banks to settle cross-border payments on a real-time basis.

Ripple’s coin, XRP, is one of the most unique coins since it cannot be mined unlike most other coins like Ethereum, Bitcoin, and Litecoin.

Ripple is premised on the belief that distributing value is a powerful way of bringing out certain values in people and organizations. This is why they are keen on distributing XRP to those who offer rigid payment methods and those interested in making faster and safer payments internationally.

Ripple is one of the most successful coins in existence today and commands a market cap of $21 billion and a coin market price of $0.524308.

5. Zcash

This is another great cryptocurrency launched in 2020. At the time of this writing, Zcash had a market capitalization of $679 million and a coin price of $130. Zcash is a promising asset that offers privacy and transparency of user transactions.

Zcash boasts more security to its user transactions even after records of user operations are recorded on the blockchain. The platform ensures that information such as the sender, recipient, and amount remain out of the eyes of the public.

Users of the platform get to have “shielded” transactions, which allow their transactions to be encrypted using a cryptographic technique called ZK-Snark.

These coins can be traded in many exchanges; however, we recommend using a trusted one with high liquidity for their assets as well as well-secured accounts. Here are a few exchanges to help you get started .

We’ve seen some of the best coins to trade in today, but which are the most volatile? Volatile coins are not necessarily the common coins that you and I know.

Some of them might be new to you, but they offer the highest volatilities. While on this, I’d like to mention that there are no permanently volatile coins, so in case you read this article days, weeks, or months later, our choice of volatile assets might not be a representative of the true picture on the ground.

With that, let’s get right into it!

5 Volatile Cryptocurrencies to Watch Out For

Are you a day trader or leaning towards that mode of trading? Well, this might be the most important section for you in this guide.

If daily profits in the cryptocurrency markets matter to you, you might want to watch out for the volatile five coins we’ve listed below.

But before that, let’s briefly look at two key features that make these coins highly attractive to day traders and anyone looking for small but consistent profits from the market.

High liquidity: This is a key characteristic of currencies that fluctuate in prices within seconds and minutes. Illiquid assets can cripple your entry and exit from a market, meaning your cash can get tied up in an asset whenever you need to bounce back to fiat. If trading larger position sizes, you need a liquid asset to help navigate the various positions that generate profits.

With this category of assets, users can enter and exit a position quickly, as the trading candles keep moving. Illiquid assets, on the other hand, can lead to a slippage, which can cause you to miss out on timely profitable moves. Slippage means that you may be able to buy an asset at a higher price, only to exit the market with a lower rate due to its low liquidity.

Highly Volatile: This is the whole point of day trading – day traders prefer very volatile assets that can scoop profits every once in a while during the day’s trade. However, non-volatile assets can maintain one position for days or weeks, making them unsuitable for day trading.

Preferred day trading assets make between 5% – 10% moves within hours, and lucky for you, the below-listed assets have been known to record moves of between 10 % and 20% in a day or less.

With these two characteristics, you should be able to differentiate between assets that are suitable for day trading, and those that are not.

Without wasting much time, let’s look at the five most volatile coin as at this day!


NEO is among the best day trade cryptocurrencies today. Just like most other cryptocurrencies, Neo’s price stability is dependent on the trend of Bitcoin to either gain or lose value. But despite that, this altcoin has been known to go on big runs on its own, and may sometimes depict relative strength against popular coins in the market, including Bitcoin and Ethereum.

In the last couple of weeks, NEO has been on sharp upward and downward trends and, at the time of writing this post, it was trading at $15.49, a 2.87% drop from the last market update.


Ethereum has a massive trading volume and you would expect it to be less volatile. But this is another coin that encounters a lot of variation in its prices. Traders can easily short sale Ethereum on trading exchanges and earn decent profits when the prices are at a low.

Ethereum has been on a downward trend just like most other cryptos, and this might just be the perfect time to go for a short sale.


EOS has been experiencing a lot of runs since the news broke out of the potential of various applications on its blockchain. The coin has also experienced a few retractions every now and then due to some reported tech issues, but it has managed to portray some good bounce plays that have been profitable to day traders. EOS can be traded on various exchanges including Binance, Kraken, and Bittrex.

Binance Coin

As the name suggests, this is the Binance exchange coin. This is one of the coins has come out strongly in face of price variations by Bitcoin and other major coins.

Binance coin has often set its own patterns in the market; here’s an overview of how it has been doing in the past few months:

Ethereum Classic

Among the above-listed coins, this is perhaps the least volatile at the time but worth mentioning to anyone keen on day trading. The recent inclusion of this coin on one of the major exchanges, Coinbase, has played a big role in boosting its volatility. The coin has displayed a fairly volatile trend in the various markets and is slowly climbing up this list.

There you have it!

So, which is the m ost volatile cryptocurrency among the five listed above?

Well, the most volatile one among the five will be the one with the least market capitalization, and that is Ethereum Classic, followed by NEO, then Binance Coin, and EOS, and lastly Ethereum. The most volatile of them is also the best crypto for day trading.


Now that you’re ten cryptocurrency day trading tips richer and know the coins to start trading with, it is important to proceed to sign up on a reputable exchange that will safeguard your assets, personal data, as well as offer a wide variety of trading pairs.

The next step would be to get a wallet for your coins; it is advisable to go for the hardware ones that offer you an offline storage for your altcoins.

Lastly, do you have any tips for cryptocurrency trading that has worked for you in the past that you wish to share with the other traders? And if you do, which coins work with the tip best?

5 mistakes every crypto trader should avoid

Starting to trade crypto can be a massive learning curve. Whether you’re an experienced trader or a newbie, crypto trading can seem hugely complicated and it’s super easy to mess up in the beginning. Luckily, there’s a lot of information out there that can help you become the crypto trader of your dreams. We’ve compiled a list of the 5 mistakes every crypto trader should avoid, so keep reading to learn the dos and don’ts of crypto trading in 2020.

Your capital is at risk.

  1. Stop loss/take profit placement

If we’ve said this once, we’ve said this a thousand times – never ever enter a position before placing a stop loss and take profit order. Find an exchange that offers leverage trading, and learn how to position your orders.

Arguably, the most crucial thing is to learn to spot liquidity pools , so you can identify the resistance and support levels. Only then should you place your orders, just above and below those levels, so you can be sure not to miss out. This is vital to crypto trading to ensure that you don’t get rekt . Seriously, set your stop loss and profit orders.

While it might be super tempting to manually close all of your positions when you see that you’ve made a profit or a loss, the best strategy is always going to be to keep your initial position and place your trust in your stop loss/take profit orders. Don’t check your positions all the time. Trust your strategies to do the work.

Sure diversification is a good thing, but everything in moderation right? The cryptocurrency market is pretty volatile, so be careful spreading yourself too thin over altcoins with small market caps, instead of focusing on a few larger coins. Always do extensive research before trading in any altcoins (if you’re really not sure, top traders recommend sticking to small amounts of Bitcoin, Ethereum, Ripple, and/or Litecoin to start).

  1. Putting too much money in too soon

Most of us start with pretty humble beginnings as traders, and that’s totally fine. However, trading above your means is one of the top rookie errors that a new trader can make. Emptying out your savings, or even taking a loan (Yes, people do this), is just a bad idea. Nobody is immune to making mistakes, and even professional crypto traders can be subject to losses.

Even if you think you’ve done enough research, making too risky moves that could cost you a lot in the early days, is just not a good idea. Rather trade with smaller amounts, build your way up slowly and minimize the consequences.

We think that the top mistake, out of the 5 mistakes that every crypto trader should avoid, is giving into FOMO (the fear of missing out). New crypto traders are particularly susceptible to this, however even the most experienced trader can fall prey to it. Whether it’s in situations where you sell an asset too early because you’re afraid of making a loss, or even buying into sketchy projects just because somebody you know deemed it as the next great project, FOMO is never good.

Luckily, you can resist it. Have patience, follow your strategy, and only trade with coins that you know are reliable, with money that you have.

Your capital is at risk.

The real FOMO will kick in when Bitcoin reaches $10,000.

The key to trading crypto

Now that we’ve had a chance to take a look at the 5 mistakes every crypto trader should avoid, we have to ask ourselves: What exactly is the key to trading crypto?

That’s pretty simple: Patience. Don’t be afraid that you’re going to miss out on the next big thing. The crypto market is constantly growing and changing and there’s more than enough investment and trade to go around for everyone. Don’t invest in altcoins that you aren’t sure about, don’t give into FOMO, and don’t trade above your means.

If you want a fantastic resource for crypto trading, check out eToro . It’s a social trading platform that allows for easy and safe crypto trading.

Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework. Your capital is at risk.

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Five Common Mistakes About Blockchains And Cryptocurrency

Five Common Mistakes About Blockchains And Cryptocurrency

1. There is no such thing as “the blockchain”

There isn’t just one blockchain out there. Each cryptocurrency (like Bitcoin or Ethereum) has its own unique blockchain that lists the valid transactions between users on its network. Different blockchains have different security and fraud-prevention guarantees. Therefore, you can’t just “put” some important data on “the blockchain” and assume you have improved recordkeeping or prevented fraud. Always ask the question, “which blockchain are we even talking about?” That question is especially important because the vague word “blockchain” encompasses two very different technologies: permissioned and permissionless blockchains.

Many private companies have developed database products that they market as blockchain solutions even though they’re nothing like a cryptocurrency blockchain. These enterprise blockchain solutions, and some digital currencies like Facebook’s Libra, use permissioned blockchains, which means that some corporation or association must approve would-be participants before they are allowed to help maintain the blockchain and validate the data being added to the blockchain. These permissioned blockchains will only improve record keeping and prevent fraud if you can trust the corporation or association who grants or denies that permission.

Cryptocurrency blockchains, on the other hand, are permissionless. That means that anyone can download the free software and buy the commodity computing equipment needed to participate in securing the blockchain. Permissionless blockchains are (1) open: anyone around the world who downloads free software on an internet connected computer can instantly help maintain the data; (2) tamper-evident: anyone can check the validity of the data; and, (3) censorship-resistant:no single person or organization can prevent otherwise valid data from being added to the blockchain.

Five Common Mistakes About Blockchains And Cryptocurrency

2. Blockchains won’t prevent red-wine stains or freshen your breath

Don’t get caught up in false hype. Blockchains solve a limited set of problems. Blockchains are simply a new type of database that’s useful for keeping track of important data that must be widely shared and trusted (like who has paid whom). A regular old database can do that too, and might do it better and more cheaply depending on whether one is willing to trust a database administrator. We might happily trust American Airlines to keep track of who has earned reward miles; after all you already have to trust them to cash those miles in for their flights. But would you want to trust one corporation to keep track of every single payment you’ve ever made or received in your lifetime? If you are not willing to trust an administrator then you might actually need a blockchain rather than a conventional database, specifically a permissionless blockchain, because you want censorship-resistance, tamper-resistance, and open access to data.

3. You can’t have all the benefits of “blockchain” without cryptocurrency

The main benefits of permissionless blockchains (censorship-resistance, tamper-resistance, and open access to data) are not possible if a single person or corporation (or group of persons or corporations) is responsible for maintaining the network. But if there’s no central manager, how do the maintainers of the blockchain get paid for the work that they do? A permissionless blockchain network without any owner or central administrator can’t open a bank account any more than “the internet” could open a bank account, so the network as a whole can’t pay people in dollars for their participation. A permissionless blockchain does, however, have the ability to pay people in cryptocurrency; the blockchain, after all, is the authoritative ledger of everyone’s cryptocurrency holdings. Even without a central manager, the blockchain software can automatically reward people with new cryptocurrency whenever they provide verifiable work that secures the blockchain.

For example, if you dedicate computing power to maintaining the Bitcoin blockchain you can get bitcoins awarded to you on that blockchain. Sometimes we call the people who get these automatic rewards “miners” because, like gold miners, they do difficult work to get scarce commodities. Unlike gold miners, however, Bitcoin or other permissionless blockchain miners are doing something more than just extracting new commodities; they’re also maintaining the blockchain ledger and validating the data on that ledger for the benefit of everyone who relies on that ledger to transact.

4. Cryptocurrency isn’t unregulated

Plenty of people wrongly say that Bitcoin is “unregulated,” or ask, “can we apply regulations to cryptocurrencies?” The fact is that cryptocurrencies like Bitcoin are already regulated and have been for years. Since at least 2020, the SEC, CFTC, IRS, FEC, CFPB, Treasury’s anti-money-laundering regulators, state consumer protection authorities, and many other agencies have explained how their regulations apply to cryptocurrencies.

Regulations apply to trusted persons within cryptocurrency networks—people who help customers buy and sell cryptocurrency or store it for them. These exchanges and custodians are subject to anti-money laundering regulations (they have to know their customers and file suspicious activity reports). They are also subject to consumer protection regulations (they can only operate if the get a license from every state where they have customers and they must maintain adequate capital). Even persons who aren’t trusted to hold customer cryptocurrency on these networks are subject to some laws and regulations. For example, a person who develops and markets cryptocurrency software is still subject to FTC jurisdiction if they release software products that are unfair or deceptive to their users.

5. Cryptocurrencies don’t pose a threat to the dollar

Although cryptocurrencies like Bitcoin are referred to as digital currencies because they exist in discrete units and can be used as money (i.e., traded for goods and services), they actually are more like gold than like traditional currency. Like gold, Bitcoin derives its value from its absolute scarcity (there will only ever be 21 million bitcoins mined). Given a fixed supply, positive demand means it will have value. This is unlike traditional government currencies like the dollar, which are issued by central banks according to a monetary policy typically aimed at meeting the demand for money. While the Bitcoin network may indeed compete with the traditional bank payments system, especially for large international wire transfers, bitcoins do not compete with the dollar anymore than does gold. Like gold, Bitcoin’s lack of a managed monetary policy means its relative price will be volatile and not suitable for widespread, everyday use as current money. Instead, Bitcoin and similar cryptocurrencies can complement traditional currencies because of their unique benefits: gold-like long-term store of value, machine-to-machine payments, micro-payments, and global availability.

Five Common Mistakes About Blockchains And Cryptocurrency – https://coincenter.org
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