This article goes over everything you need to know about crypto in 2020.
Cryptocurrency is a set of different projects like Bitcoin or Ethereum that are decentralized and have billions of dollars tied up in them. They are wildly volatile speculative assets that’s valuation will swing wildly from one moment to the next. However, This article isn’t about how much its worth or how much it will be worth. This is about it’s practical application and how it will change the world we live in. Just by having this knowledge you will be able to profit and be ready for that future.
Practical application of crypto is all over our society today. Many banks are using it, and wealthy individuals are utilizing it. Here are the ways it is used today:
There are two ways of thinking about storing crypto. You can either hold it all yourself or you can use a custodian where you rely on a company to hold it for you, much like a bank. Let’s address both ways:
There are digital wallets where you can safely store your crypto and access it. They come in two types with different pros and cons.
Hot wallets refer to software that runs on your computer with a password that protects the crypto.
Cold wallets refer to hardware that hides the keys so the computer never sees them, but you authorize transactions on the device itself.
These are companies that you are sending your money to for safe keeping, much like a bank. They can be insured, but none of them are federally insured like a traditional bank account. I lump these companies into three categories, on and off ramps, exchanges, and yield farmers. Here are my take and recommendations on each of these. Note: I like to use companies in my local country for regulatory reasons and safety
Companies like Coinbase or Gemini are the two I use often. These companies are based in the United States and you can link your bank account to them to transfer Crypto to Dollar directly into your checking account. The fees are high and they should only be used for the purpose. While they do offer other services, it will be at a premium. Please Note: DO NOT use credit cards to purchase crypto! You will have exorbitant fees and it is NOT worth it!
I don’t recommend storing money here, but they do have a good track record. If you only want to hold crypto and do nothing with it, then it is relatively safe with these institutions.
These companies are all over the place. The two I like the most are Bittrex(US) and Binance(Japan). They are the juggernauts in the space and when making crypto to crypto transfers they have the most options with the lowest fees. Many exchanges have been hacked over the years, so I don’t store any money here, but use it to exchange crypto. A good example is using Bittrex to transfer LBC tokens to ETH or BTC.
You don’t have to use a company to exchange crypto, as you can use a decentralized exchange like Uniswap, but the fees are typically more. However, the convenience of not having to register with a form of ID is nice. Other exchange services like Uniswap exist but are centralized, examples are Simpleswap and Shapeshift, but they are starting to require ID (KYC Compliance) as well.
TLDR: Don’t store money here, but use it to exchange out one currency for another
Bittrex Referral Code: 4KR-KYJ-BQG
For any assets held here you gain interest or “Yield” much like an APY % from a traditional saving account. However, they gain at much higher rates, from 2% to 20%. There are three large companies in this space, crypto.com, Blockfi, and Celsius.network. These companies are less proven, but do give you return for holding your crypto with them.
BlockFi Referral Link: https://christitus.com/blockfi My personal recommendation Celsius No Longer Recommended (No Web App and Poor Customer Service)
This is where all the recent activity has been in the crypto space. I’m a bit skeptical about the longevity of many of these projects. I highly recommend not investing much money in this sector as I think it is a bubble that will pop. That said, there are some bright spots here that could definitely change the world we live in. While the practical application of these aren’t quite as refined as I like it is still worth paying attention to. The concepts here are revolutionary, but I expect some bumps in the road along the way.
Almost all these DeFi projects are causing massive amount of Ethereum transactions which in turn is causing high transaction fees. Solo yield farming requires you to be making $1000+ transactions so your profits don’t get eaten by fees.
With the DeFi explosion and transaction fees going sky high we can make a profile with a good graphics card. Ethereum will be transitioning to Proof of Stake which means mining it with a graphics card will not be feasible sometime in 2021. However, until that time if interest stay the same or increases, mining will be profitable. Here is how I recommend mining during this time with just a single or small graphics card setup.
Basic Mining Process:
I highly recommend https://minerstat.com for using a dedicated machine for mining. This will ensure maximum uptime and reliability.