Cryptocurrency exchange tokens have seen major gains, but has this changed their original use case to become a good investment for hodlers?

Native exchange tokens have exploded in value in recent months, alongside the wider cryptocurrency markets, changing the narrative for what these tokens were originally meant for.

Bitcoin (BTC), Ether (ETH) and other cryptocurrencies have seen exponential growth over the past six months. In part, this is due to major institutional investors finally entering the markets in a meaningful way. Grayscale Investments, MicroStrategy and Tesla have been some of the biggest names to make major acquisitions of Bitcoin and other cryptocurrencies, leading to new all-time highs in values.

This has had a knock-on effect for various tokens that either power cryptocurrency exchanges, or — like Ethereum’s gas charges for processing transactions — act as the fuel for the underlying blockchain.

Exchanges that use their own tokens to power their ecosystems have also seen their native cryptocurrencies boom in value. Two prime examples of this are Binance’s native Binance Coin (BNB) token and decentralized finance platform Uniswap’s UNI token and OKEx exchange token, the OKB.

BNB saw a rise in value from $38 per token on Jan. 1 to an all-time high of $335 on Feb. 19. Likewise, UNI went from $4.90 per token on Jan. 1 to just over $35 on March 22, also an all-time high. Meanwhile, since the start of the year, OKB tripled in valuation from around $7 to over $21 by Feb. 22.

Before delving further into the price appreciation of these cryptocurrencies though, let’s revisit the basics of exchange tokens.

What is an exchange token?

Cryptocurrency exchange tokens fulfill a variety of important roles for the platforms they operate on.

For one, they can increase both liquidity and trading activity. Liquidity on an exchange refers to the ability of a token to be converted to another cryptocurrency or fiat currency. Native exchange tokens can be used as an incentive to increase liquidity on the exchange by allocating rewards for trading volumes, or for users that stake tokens.

Exchange tokens are also used to provide fee discounts for traders and users. Typically, this involves users receiving discounts when paying fees using the cryptocurrency, whether on a centralized or decentralized exchange.

Some cryptocurrencies act as the fuel that powers the exchange, by allowing users to participate in governance mechanisms (like voting) or by offering exclusive benefits to holders.

Take BNB, for example. It is the means for transactions on Binance Chain, while also being used to pay transaction fees on the exchange.

Have exchange tokens become a good investment?

Though they serve a variety of purposes on their respective platforms, their rapid rise in value across the ecosystem begs the question of whether exchange tokens are now becoming a viable investment for users.

The nature of a given token and the role it plays within its exchange ecosystem also have an influence on its value and its potential to appreciate over time. Todd Crosland, founder and CEO of cryptocurrency exchange CoinZoom, told Cointelegraph, “There has been a graduation of sorts from using exchange tokens solely for trading fee discounts and other benefits, to the tangible value.”

Added benefits have also increased the value of these various tokens through rewards, discounts and other incentives, as Crosland explained in his correspondence with Cointelegraph.

According to Jonathan Leong, CEO of cryptocurrency exchange BTSE, the utility of exchange tokens like BNB and UNI is a driving force behind their appreciation in value. In the case of BNB, Leong highlighted the fact that the exchange token also became a utility token with the launch of Binance Chain. Essentially, this turned BNB tokens into the equivalent of Ethereum’s ETH tokens that are used to pay for gas fees.

While there seems to be a growing sentiment that prominent exchange tokens could become viable long-term investments, these tokens are also subject to the same volatility that the likes of Bitcoin and other prominent cryptocurrencies have become notorious for. As Leong highlighted in his comments to Cointelegraph:

“The volatility can be explained because things are really mainstreaming and the utility of DeFi is really coming into its own and people are seeing the possibilities with things like Uniswap, Curve, Aave and Saffron and all these other things. I think that’s why there’s a big surge, there’s a lot of money coming in — it’s the bull cycle. This is a highly speculative new technology which also can explain the volatility.”

A spokesperson from Binance outlined the exchange’s belief that the value of BNB will continue to grow as more applications and projects begin running on the Binance Smart Chain: “BNB’s use cases have expanded to hundreds of applications on numerous platforms and projects within the crypto ecosystem.” The exchange representative added further:

“BNB is utilized to pay transaction fees on Binance.com, Binance DEX, Binance Chain and the community-driven BSC. BNB is also used on multiple DeFi platforms built on BSC that provide financial payments solutions. The more people use BSC, the more utility BNB will have, and hence more value BNB will have.”

The Binance spokesperson however declined to comment on whether the firm feels that the rise in value of BNB tokens has exceeded expectations.

As cryptocurrency markets continue to hold the gains that have been realized in recent months, exchange tokens are also allowing users to hold value on these platforms, evident by their market capitalization. BNB’s market cap sits at just under $40 billion, which leaves it almost on par with the total capitalization of the Tether (USDT) token.

A number of factors indicate that the present is a beneficial time for eToro to go public, according to the company’s CEO.

Over the course of 2020, eToro sized up significantly, as Assia explained: “We’ve grown more than 147% year-over-year revenues,” he noted. This year rolled in with mainstream and crypto bull markets in full swing, in tandem with “the biggest discussion we’ve seen in human history around the intersection of social media and investment platforms” — all bubbling together to form what Assia labeled as “a perfect storm.” He added:

“We’re seeing an immense interest all around the world from people who want to participate in the global markets, which was our original vision from 2017 when we started our business of opening the global markets for everyone to trade and invest in a simple and transparent way.”

Bitcoin (BTC), as well as the rest of the crypto market, posted a standout year in 2020 after quickly recovering from a significant price decline around the same time as rising COVID-19 concerns in March 2020. Mainstream markets also rallied in 2020, but Bitcoin picked up steam late in the year, breaking its 2017 record high in December before continuing significantly higher. So far, 2021 has seen a continuation of the mainstream and crypto bull markets.

On March 16, eToro announced plans for taking its operation public on the Nasdaq through a special-purpose acquisition company, or SPAC. Essentially, this is a type of merger in which a private company combines with a specific, already-public company (a SPAC company), turning public in a less direct manner than an initial public offering.

“When your business grows faster than your expectations, it is always the right thing to do to make sure that you’re fully prepared to take the next stage of growth as a bigger company, as a public markets company,” Assia said. “We’re very excited about this next step of growth.”

Crypto exchange Coinbase plans on taking its business public through a direct listing on the Nasdaq stock exchange in April 2021. Alternatively, Diginex, a digital asset-centered entity, went public on the Nasdaq in October 2020 via a SPAC.

EToro has publicized its intent to buy and merge with a SPAC called Fintech V, Assia noted. “We will merge with that company, actually buying that company, and become the listed eToro,” he said. Formally known as Fintech Acquisition Corp V, the SPAC company currently trades on the Nasdaq under the ticker FTCV.

“When SPACs announce business combination agreements signed, the SPACs are already trading, so retail investors have the opportunity to invest in SPACs post-announcement under the SPAC ticker,” Assia said.

Essentially, this route of going public gives interested parties the chance to indirectly invest in a private company right away after it announces its intent to go public, even though it is not technically officially listed as a stock yet, based on Assia’s explanation. The investor would buy the involved SPAC’s stock, which would eventually become the stock of the private company. Generally speaking, if a company went public through an IPO, investors would have to wait for the private company’s stock to list and then buy its stock when it lists.

Related: Catalytic event or unbridled optimism? Coinbase approaches public listing

“During the next couple of months, as we go through the process of completing the merger agreement, we will basically become the listed company on Nasdaq,” Assia explained. Although Assia said his company did not yet have a new ticker name finalized at the time of the interview, eToro will not keep FTCV as its ticker. “We haven’t decided on it frankly,” he said. “We can’t share what we haven’t decided on it yet, like when you’re pregnant with a kid,” he explained with a laugh.

What will going public change for eToro compared to current operations? “I think for the majority of our day-to-day work will stay very much the same,” Assia said, noting customers, persistent technological advancement and products as areas on which eToro will maintain its attention. He added:

“As we conclude the deal, and we bring in the $650-million PIPE [private investment in public equity], as well as a $250-million SPAC into the company’s balance sheet at most, we’ll have a very strong balance sheet to consider potential acquisitions, a more aggressive geographical expansion — whether it’s expanding aggressively in the U.S., or in other markets.”

He concluded that going public while having a balance sheet of over $1 billion “will enable us to be even more aggressive as we think of the growth of eToro.”

In recent months, talk of crypto companies going public has made a number of headlines. Crypto and financial asset trading platform eToro is one of the latest crypto-involved companies looking to go public. The outfit’s CEO, Yoni Assia, recently explained eToro’s rationale behind the move in an interview with Cointelegraph. 

Is Bitcoin’s macro upward journey over? PlanB says no.

Bitcoin’s price seems to have stalled below $60,000 after attaining new all-time highs earlier in March. PlanB, a crypto analyst active on Twitter, thinks Bitcoin (BTC) may still have a lot of room to gallup however. 

“IMO we are only ~4 months into the bull market and nowhere near the end of it,” PlanB tweeted on Friday. “Bitcoin is just getting started,” he added, showing Bitcoin’s current path on one of his Stock-to-Flow charts. Multiple Stock-to-Flow models exist for Bitcoin which show Bitcoin’s price path in line with its halving events and supply over time.

YouTuber and derivatives trader Tone Vays also carries a bullish macro view, although he thinks a dip lower for Bitcoin is not out of the question.

“Bitcoin is consolidating but I remain bullish in this market,” Vays told Cointelegraph. “While it is still possible for bitcoin to make a lower low for the month in the $48k range, I believe we will go up to above $70k before June,” he added.

After trading past $61,000 this month, Bitcoin retraced down near $50,000. For the most part, the drop occurred over roughly two weeks, with some relief bounces mixed in, rather than in a straight, single-day $10,000 shot downward. Based on TradingView data, BTC holds a price of $54,550 at time of publication, looking back on a day of overall upward price action.

Meanwhile, other crypto assets continue to make headlines in the price category as well.

A Stake.com review shows that quite a number of Bitcoin betters are using their games and books to make a decent amount of winnings — but what about taxes on such things? If you’re a Bitcoin better, do you need to worry about taxes?

Like most things regarding taxes and financial transactions, it all depends on the country you live in. It may even come down to which city and local government you live in. 

This article will give a general overview of taxes on cryptocurrency gains in each country. It’ll give you a jumping board for further research.

The European Union

The EU is one of the more complicated places, so we’ll start there. 

The reason it’s complicated is that the EU has left Bitcoin taxation on winnings from gambling, trading, and transacting up to each individual country within the union. 

There are a few countries of note, however, that — if you’re an E.U. citizen — you could consider moving to if their BTC tax treatment will make a significant impact on your life. 

Three that sound out the most are:

Portugal

This small country on the westernmost coast of the EU has some of the most attractive Bitcoin tax policies in the EU

“In 2016, the Portuguese Tax Authority (PTA) ruled that all crypto transactions will be free from capital gains and income tax.”

It doesn’t get much clearer than that.

Switzerland

The country has become known for its blockchain-friendly stance. After all, it’s home to the crypto foundations of Ethereum, Tezos, and more. 

That’s because, “in Switzerland, the exchange of cryptocurrencies is considered the same as traditional payment transactions. According to the Swiss Federal Tax Administration, all profits and losses from crypto transactions made by individuals are exempt from tax reporting.”

Granted, profits made by businesses in the crypto sphere are taxed under Swiss regulations. However, that doesn’t apply to people making money from winnings from crypto gambling sites. 

Germany

Another country for simple regulations on your Bitcoin winnings is the home of the Oktoberfest (a good enough reason to live there all by itself). 

In Germany, “Bitcoin has been considered a type of private money since 2013. Although Bitcoin is subject to capital gains tax of 25% in Germany, such a tax is levied only if the profits on Bitcoin are acquired within one year after the receipt of Bitcoin.”

So if you won crypto, traded it, or another type of activity and then held it for more than a year afterward, you might not be subject to taxes. Though, perhaps the taxes on winnings from gambling might be a different subject — but it’s difficult to find specific information on gambling and cryptocurrency payouts. 

Other EU Countries

There are 28 countries in the EU, each with its own treatment. 

For example, in Poland, not only would you need to pay a 19% capital gains tax, but you would also need to pay an extra 4% “solidarity tax” if your crypto income is over one million PLN (Polish fiat). 

Clearly, there are certain countries to consider living in over others if you are an EU citizen or considering becoming one. 

Countries Around the World

If the EU is not a place you want to consider living in, then there are plenty of other beautiful Bitcoin tax havens in the world to consider. 

Japan

In Japan, “Bitcoin is officially recognized as a payment method. The sale of Bitcoin is exempted from consumption tax as of 1st of July 2017. Virtual currencies are treated as “asset-like values” that “can be used in making payments and can be transferred digitally”. Thus, in Japan, profits gained from Bitcoin trading are considered to be business income and treated accordingly for income and capital gains tax purposes.”

Australia

The land down under is a bit more complicated, but its sunshine and outdoor adventures are legendary. 

In Australia, the gain and sale of Bitcoin (probably through betting as well) is subject to laws surrounding barter arrangements. 

It’s a tough concept to wrap your head around because the Australian tax authorities don’t consider Bitcoin as either money or foreign currency. Instead, BTC is an asset for capital gains purposes, and businesses (like gambling establishments) must consider payments in and out of Bitcoin as needed to be declared with their value in AUD as ordinary income.

Thankfully, Bitcoin transactions for personal purposes are exempt. Then again, those transactions must meet two conditions, 

(1) The Bitcoin must have been used as payment for goods and services for personal use

(2) the value of the transaction is lower than AUD 10.000. 

The United States of America

The U.S. Internal Revenue Service (IRS) is the central tax authority in the US. They have established rules and laws treating Bitcoin as property. So your Bitcoin betting winnings are not a currency, but property, and should be reported as such. 

If you win $10,000, for example, in the US and then the value of BTC rises so by the time you cash out, you take $20,000 out — then unfortunately your winnings will incur capital gains tax. 

So if you’re a big player in online bitcoin gambling sites, it’s worth considering how much winnings you cash out, when, and where — or else your winnings may be diminished quite a bit by the taxes of the country you live in. 

As the cryptocurrency market matures, investors are seeking out new ways to invest in Bitcoin and cryptocurrency. Contracts for Difference (CFDs) provide one option.

What Is Bitcoin?

Bitcoin is a cryptocurrency—a digital currency powered by a decentralized network of node operators. It was invented in 2008 by Satoshi Nakamoto, and over the past decade, countless other cryptocurrencies have been created.

Cryptocurrency is promising because it has no central point of control. Banks and governments cannot shut it down, and wallet holders have direct access to their Bitcoin balance. Though exchanges that buy and sell Bitcoin can control some cryptocurrency transactions, Bitcoin itself can be transacted freely across borders and can change hands without interference.

Bitcoin has attracted attention within mainstream circles thanks to several big events. Tesla purchased $1.5 billion worth of BTC earlier this year, while PayPal decided to introduce support for Bitcoin buying and selling in late 2020. Facebook’s decision to create a coalition-based Bitcoin competitor, Diem, is also generating attention.

Though Bitcoin is intended for use in real-world spending, it is also popular among speculative investors due to its rapidly changing price. In March 2020, the price of Bitcoin fell below $6,000, giving new investors a chance to purchase Bitcoin inexpensively. But this year, Bitcoin’s price reached an all-time high of $60,000 and achieved a market cap above $1.1 trillion.

Despite its widespread appeal, Bitcoin is not necessarily an appropriate investment for those who prefer more traditional means of investment. That’s where CFDs come in.

Why Should You Trade Bitcoin CFDs?

Crypto Contracts for Difference (CFDs) provide a way to invest in Bitcoin through contracts that are tied to the market value of the cryptocurrency.

Whereas traditional Bitcoin wallets leave you to manage your own security, CFDs do not require you to manage your own Bitcoin wallet or private keys. This difference means that CFDs are ideal for those who are familiar with banks and trading services, which employ more traditional security and custody measures.

Related to this, CFD trades are executed on a trading company’s own systems, meaning that trades are not limited by the speed of the Bitcoin blockchain. Though Bitcoin is designed to be efficient, it often sees congestion and high transaction fees, and derivatives help investors avoid that problem.

Finally, CFDs have stood the test of time. Bitcoin has only existed since 2008, and crypto exchanges did not begin to operate until a few years later. CFDs have been available for significantly longer: they originated in the early 1990s, meaning the investment vehicle has nearly three decades of history.

More Considerations for CFD Investors

CFDs are also notable because they take advantage of Bitcoin’s fluctuating value. If you buy Bitcoin itself, you can only profit if your investment gains value. But because CFDs track differences, you can profit even if Bitcoin’s value falls.

Additionally, CFDs introduce the possibility of leveraged trading and other advanced trading options. This means that you can borrow funds in order to earn higher profits. This investment technique is widely considered a high-risk strategy, but it is viable for knowledgeable traders.

It must also be noted that CFDS are only useful if you are investing in Bitcoin speculatively. They are not ideal if you want to spend your Bitcoin, send it to friends and family, or swap it for other cryptocurrencies. However, it is always possible to close your CFD and invest your money in Bitcoin directly.

Where Can I Invest In CFDs?

One platform where you can create a Bitcoin CFD is Axi, an Australia-based trading platform.

Axi is fully regulated by the Australian Securities and Investments Commission (ASIC) and the U.K. Financial Conduct Authority and is involved in dispute resolution within the financial services industry and forex markets.

They also offer customer support around the clock (24 hours a day, 5 days a week) and provide insurance coverage (CMI) to protect your funds.

In addition to crypto CFD trading, they offer CFDs tied to forex, trading indices, commodities, and precious metals. Over 130 products are available for trading on their site.

BTC

 

Bitcoin continued its rebound from the pullback into March as the coin traded above the $60,000 level for the first time. Bitcoin got a further boost last week after the US government finally approved the second stimulus package. The move will see $1,400 stimulus checks being sent out to the public and traders expect much of this to end up in stocks and cryptocurrencies.

The market has been waiting on this second stimulus bill since before the election in November. Last year’s stimulus bill was the start of the summer rally that took BTC from around $9,000 to its current levels.

Despite a two-day pullback in Bitcoin, the market cap still trades above the $1 trillion level. The next path for the market could be driven by the Federal Reserve this week. The Fed Chairman Jerome Powell’s press conference on Wednesday will likely see a commitment to stay patient on policy measures, despite the economy improving. Yields on 10-year Treasury bonds moved higher again on Friday, to the highest levels in about a year and a dovish Fed may rattle markets once more. 

There was some negative news on Monday with Reuters reporting that India may be about to introduce a ban on cryptocurrency. The rules, “would criminalize possession, issuance, mining, trading and transferring crypto-assets”, according to a government official.

The move comes after a January government plan that called for a ban on private virtual currencies, while they build a framework for an official digital currency. Investors had hoped that they would be more lenient, but if the bill passes the Narendra Modi government then investors could have six months to liquidate or face penalties. 

BTC could pull back this week on the news and it will likely do that if it can’t get back above $60k. 

BCH

Bitcoin Cash has drifted out of the top ten list of coins in recent weeks as newcomers see their valuations growing.  

The coin has been left behind in the recent rally with the coin’s market cap peaking at a record above $60 billion, but now trades around the $10 billion level. BCH never really recovered from the hard fork and acrimonious split with BSV and the recent news from India highlights what I said a long time ago- that governments won’t allow a private currency to disrupt their power structure.

The coin was also hit at the start of the month as OK Coin de-listed both coins over what the CEO Hong Fang called a “malicious misinformation war” which was being driven by high-profile heads of both projects. 

She was talking largely about Craig Wright who has long claimed to be the creator of Bitcoin. A recent attempt to copyright the Bitcoin white paper drove Fang to take action and “protect the open-source community.”

BCH did get some potential market cap-boosting news over the course of the BTC rally as it was added to PayPal’s recent dive into cryptocurrency, while Japanese retail giant Rakuten also added the coin. The Rakuten payments app is supported by over 50,000 retailers, including McDonald’s, and 7-Eleven.

The addition to the platforms failed to spur BCH and it now sits in a lonely space, with the door closing to large-scale payments and investment flows going to other areas of the ecosystem. The only thing that the creators will take heart from is that the coin is still 3x the size of BSV with a price of $530.

MANA

Decentraland’s MANA coin has seen a meteoric rise in the last few months as the NFT art craze took hold.  

The platform started life in 2017 as a virtual role-playing blockchain game where users could buy land with MANA tokens. The coin started the year at the $0.08c level and has since moved to $1 per coin for a return of 1150%.

Big money is being spent in the NFT art marketplace, while the Dallas Mavericks basketball team announced that they would be using Dogecoin for merchandise and ticket purchases. 

Recently the company saw games company Atari leasing a piece of land within the Decentraland world in order to build a cryptocurrency casino in “Vegas City,” which is one of the districts in the Ethereum-based world. 

The launch of the casino is set for April and will feature prizes in the form of NFTs, ATRI, and DG. Atari is partnering with Decentral Games for the casino, which will use their $DG currency. 

WAX

Wax is another token that has been rising on the back of the NFT art craze as the project releases digital collectibles from names such as Garbage Pail Kids and Streetfighter, alongside fan-created collections. 

Wax is short for The Worldwide Asset eXchange™ and is billed as, “the world’s leading decentralized video game and entertainment network.” The Wax network also houses Atari collectibles. 

The boom in digital Non-Fungible Token (NFT) art culminated recently with a private auction of a piece by digital creator Beeple selling for $69 million. Beeple is an American digital artist from South Carolina who has been creating digital artworks for 13 years.

As the popularity, and rewards, grew in NFTs, coins such as WAX and ENJ have risen from their platform solutions in the space. 

WAX now has a project valuation of $1 billion at number 117 in the list of coins with a coin price of $0.27. 

Before you start buying bitcoin, you will need a place in which to store them. In other words, you will need a bitcoin wallet. Generally speaking, there are three main types of wallets: electronic wallets (software-, online- or cloud-based), hardware wallets and paper wallets. Keep in mind that your bitcoin wallet only holds your private key (or more private keys) which allows access to your bitcoins, but it will not hold the coins themselves. This makes bitcoin storage more secure. When talking about blockchain technology and cryptocurrency storage, safety is one of the most important issues. Therefore, in this article, we’ll show you some of the best ways to store bitcoins.

So, are bitcoin wallets safe?

Blockchain technology provides data protection against hacking attacks and any other fraudulent activities. However, safety often depends on the version and format of the cryptocurrency wallet you have chosen and the way you use them.

The safest option to store bitcoins is to get yourself a hardware wallet. This type of wallet is always offline, meaning it’s not exposed in any way. That way, there is no risk of hacking or stealing private keys. Online wallets are the most insecure storage technique, as private keys are held by a third party.

Experienced bitcoin investors use combined storage techniques. They hold a part of the assets (long-term bitcoin assets) offline and a part of the assets (for liquidity purposes) online. Of course, you will choose your storage technique according to your needs. Whichever option you go for, be careful. Back up everything and only tell the persons of your greatest confidence where you stored your backups.

Basic ways to store bitcoins

These will protect against the majority of hacking attacks (and they don’t require any special cryptography knowledge), so it’s worth to put a little effort into how you manage your cryptocurrency. The following tips are a great start when constructing your cryptocurrency security system.

The first and basic rule is not to give anyone access to your private key, obviously. Also, consider carefully where you store your private keys. This is something you absolutely cannot afford to lose because they are the key to your stash of bitcoins. Whoever has them can access them.

Store any asset of significant value in a hardware wallet such as physical device, like a USB drive, that isn’t public, i.e. there is no connection to the internet. Experts strongly recommend not to store bitcoins, especially if you have a lot of them, in any way that makes them connected to the internet. Internet, since it is public, can provide a skilled hacker with plenty of opportunities to attack your wallet, or to get access to them.

One of the secure transaction schemes you can use is the following:

Use a bootable USB flash drive (in our example we’ll use Tails). Make sure it has encrypted storage. The next step is to create passwords for login and for encryption. After this, you need to create a cold wallet and come up with the password to get access to the wallet from any computer in the future.

Select the checkbox next to “View Transaction Before Signing”. Next, make a type of wallet known as a “watch-only wallet”. This can be done by using your public address or public key.

To view the balance of your bitcoins and generate new addresses from public key copy your Bitcoin public address into a text document on a flash drive and shut down the Tails.

For spending your bitcoins run Tails again without using the Internet.

Execute the transfer – you will see a window pop up because of the checkbox next to “View Transaction Before Signing” you clicked earlier. Click “Sign”, type in your password and click “Save”.

Perform all the actions without using the network and Internet. Copy the transaction file to the flash drive.

For sending the signed transaction to the Blockchain follow next steps:

1. Click Start in the main OS
2. Open your wallet
3. Choose e.g. “Load transaction from file” in the menu
4. Load the signed transaction from a flash drive
5. Press “Broadcast” button

Important note: As mistakes occurs, it is recommendable to check address after you have copied it in the field. Go back to the wallet, memorize the first 2 digits and last 2, and then go to back to the form and check are the copied numbers correct. Also, some computer viruses are able to replace the bitcoin address you copied to the clipboard, to another address.

More ways to store bitcoins

It’s also important to remember all the small security measures you can take to protect your general digital life and help defend your cryptocurrency. You can use a password manager, two-factor authentication, enhanced security protocols for your email address, add protection various mechanisms to your phone number etc.

Another useful advice is to use the so-called cold storage method. In other words, you should keep at least some of your bitcoins offline. Methods of cold storage are e.g. USB drive or paper wallet.

Consider your transactions carefully, too. The best way to defend against an intrusion to your assets is simply to watch all transactions carefully and take measures to protect yourself.

And to conclude, to protect and store bitcoins in the best possible way you also need to increase your computer literacy and get all available information about safety measures. We also recommend avoiding any unnecessary actions and to hold strictly to instructions while performing Bitcoin transactions.

So, that’s about it. We haope our tips were helpful for you to find the best possible way to store bitcoins in a safe manner. We have more articles just like this one on this website, so browse around and learn everything about the exciting world of cryptocurrencies.

The post How to store bitcoins? appeared first on Crypto Trading Reviews.

As all of you are probably aware by now, mining is one of the pillars of cryptocurrency trading. You’ve also probably already heard of Bitcoin, the cryptocurrency that introduced blockchain technology and this kind of mining in 2009. It might be the most famous one, but it is certainly not the only cryptocurrency produced and reproduced by mining. Some of them, such as Litecoin, use more sophisticated mining hardware and software that could show more sustainable results. That’s why we decided to write this article, to show you what other coins have to offers. So, if you want to learn more, stay with us and see what the possibilities are.

Alternatives to Bitcoin

The term altcoin is used to signify all other cryptocurrencies (alternatives to Bitcoin) such as Litecoin, Ethereum, Monero, Dash, Siacoin etc. Terms such as altcoin mining calculator and altcoin mining pool signify the tools used by miners to support cryptocurrency exchange and trading within the blockchains. In this article, however, we will be primarily focusing on Litecoin mining.

For those of you who are interested in investing or just collecting information about profitability, we will explain the most important terms such as Litecoin mining pool, Litecoin mining calculator, Litecoin mining rig and cloud by focusing on the practical aspect of mining and by using examples from users’ experience and results of market research.

Transaction speed is the key difference between Bitcoin and Litecoin because the latter processes its transactions much faster. Another difference is the number of coins. While Bitcoin has a limit of 21 million coins, Litecoin’s limit is 84 million coins.
Similar to Bitcoin and other cryptocurrencies, Litecoin also doesn’t have any institutional central issuer and the exchange is controlled by the users in the network. In order to have some influence, users can join Litecoin mining pools. Securing the transfers is the most important role of the network of miners. They assemble transactions into blocks and those blocks build up the blockchain.

Similar to Bitcoin, Litecoin mining software uses proof-of-work exchange mechanism. Transactions are included in the blocks and verified after that. If there are no double payments, a transaction is added to one of the blockchains.

What do you need to do to mine Litecoin?

Litecoin blockchain is stronger than Bitcoin’s because it generates the blocks about four times faster than Bitcoin. The growth rate of the network is good, and the miners are rewarded by 25 new Litecoins per block. There will only ever be 84 million of Litecoins, so you don’t have to worry about decreasing the value based on inflation. This site also offers information about the global network of users, forums, and other social media.

After creating an account with your username and password and before you start mining, you will need to get your wallet. Litecoin mining software secures your wallet by encrypting it, and you will have to enter your user credentials every time you wish to use your coins for payments.

Litecoin mining pool is the name of the platform that gathers users within a certain network.  Technology is comparable to Ethereum smart contracts. The pool waits for the user to find a block. After the block is gathered, the pool distributes the reward within the network. The reward depends on the number of shares that each user submitted.  Share does not have any real value. It is only a trust-building mechanism among the miners. If you are mining on your own (without joining a pool), there is no need to track the number of shares. The hash that has a value is the one that solves the block. Litecoin’s hashing algorithms are different than Bitcoin’s. Bitcoin uses SHA-256 (Secure Hash Algorithm 2) and Litecoin uses memory algorithm called Scrypt.

Litecoin mining software and hardware

In order to start mining, you will have to install the software. CPU miners or GPU miners are your options, but we recommend going with a Litecoin mining GPU. After downloading the version that is designed for your operating system and setting up your Litecoin mining software, you will write a script and supervise your miner by scrolling through the command lines. This is the command line (at cmd.exe:) that will let you start mining:

c:ltcminerminerd -a scrypt -r 1 -t 4 -s 6 -o -O <login>:<password>

Litecoin mining is done by hardware which also plays an important role in securing the network of users and generates new coins to reward the miners. The proof of work function used by Litecoin’s miners is different than the one used for Bitcoin, which means that Bitcoin’s miners cannot mine Litecoins.

Most resources refer to Antminer L3+ as the best Litecoin mining hardware. It mines at 504 MH/s, consumes 1.6 Joules per Megahash (MH/s) and comes with a 180-day warranty. Those specifications make it the most powerful Litecoin miner at the moment.

Other tools

To build up your own Litecoin mining rig, you will need adequate Litecoin mining hardware and software for your operating system. You will also have to work on the mining script and join pools. Another option is to use services provided by a Litecoin cloud mining company. It is a framework that allows you to do the mining supported by the hosting platform after creating a contract.

Litecoin mining calculator is an important tool that lets you calculate the profitability of your transactions. It is updated instantly and follows the estimation based on the networks’ hash rate and exchange rate. If you are new to the cryptocurrency mining, you will find Litecoin mining calculator especially useful.

In case that you have your own Litecoin mining rig, you will put in the hardware costs and electricity (power) costs in different fields in the Litecoin mining calculator. After that, you will click “calculate” and get the profitability rate for your area. If you use services available in Litecoin cloud mining, you will get your calculation after simply entering the cost of the contract.

Conclusion

Litecoin is a decentralized online currency created in 2011 by former Google engineer Charlie Lee. The aim was to create “silver” for Bitcoin’s “gold”, but also to provide improved alternative to Bitcoin by using more effective technology, faster rate of coin production with more sophisticated hashing algorithms. As any other application of the blockchain technology on the cryptocurrency market, Litecoin is open source, global payment network. It doesn’t have any central issuer and it supports multi-purpose global payments. Because of the peer to peer exchange, based on the blockchain verification, transaction fees are considerably less than those made by traditional bank transfers. The popularity of the Litecoin mining pools as platforms for different sorts of payments and investments is constantly rising. It is not difficult to conclude that this cryptocurrency will have important role in the future development of global commerce. If you want to participate, check out our other articles and see where to trade this interesting coin.

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With thousands of bitcoin transactions per day, bitcoin can no longer be unjustly dismissed as a speculative fringe fad which only attracts geeks and gamblers. Considering all the attention this cryptocurrency has been getting from mainstream media and serious investors, it is disconcerting that the majority of these reports don’t contain even the most basic bitcoin transaction chart.  Due to the nature of cryptocurrencies, bitcoin transactions live a life of their own, safe from third party interferences. Still, in order to understand the differences in how bitcoin transactions work, we must first get familiar with the whole notion of transactions in general.

The road to bitcoin transactions

The most basic and oldest transactions are now known as a non-monetary exchange, a barter system and an exchange of goods or objects. The second step was the development of commodity money, i.e. commodities that have intrinsic value but are also used as money because their value is more or less constant and agreed upon. Coinage developed as one form of representative money. Coins made of precious metals also had intrinsic value beyond the assigned value. Banknotes or paper money first developed as receipts or confirmations that a money lender or a merchant (and later bankers) has received a deposit of a certain amount of coins.

Modern money is issued and controlled by national governments. The value of paper money or fiat currencies is based on our faith in the value of the currency and the government’s ability to guarantee for and enforce that value. In today’s world, however, the majority of the money is digital, existing only on electronic bank accounts and even more removed from any tangible value. Economists estimate that only 8 % of all the money in the world actually exists as hard, cold cash. The money is not actually there; it’s just a number confirming it on a screen. There are many inherent dangers of this system, as normalized as it has become. First of all, it places a lot of power in the hands of banks and other financial institutions. Even if we disregard that, what if the bank goes under, what if the data gets compromised?

Bitcoin transactions are the next step in this evolution, the newest development relying on cryptology to prevent any potential tampering, thus increasing both trust and fungibility. And while some may argue that the technology of cryptocurrencies makes bitcoin illegal transactions possible, the security and freedom it offers have not been achieved or rivaled by other currencies up to this moment.

Sending and receiving bitcoin transaction

The way how bitcoin transactions work is crucial in differentiating bitcoin from regular digital money. The most important difference when it comes to bitcoin transactions is that there is no middleman. The network itself oversees and confirms everything. The sender broadcasts signed data to the network. and if the data checks out, it is added to a block in the blockchain. Imagine it as confirmed transactions being collected, confirmed and placed inside a binder (block). The binder is then put on an organized shelf (blockchain) in a way that makes it impossible to change any one entry without changing all other entries. Cryptography ensures the integrity and the order of the entries. But with so many bitcoin transactions per second, who does the organizing? Well, it is a shared communal effort, with members of the community dedicating their time and hardware resources to solve complex equations to sort it all out. They are rewarded for their essentially administrative / cleanup work with small amounts of bitcoin. This process is called bitcoin mining: participants are compensated for their effort by releasing new bitcoins.

Want more details? If you think you can handle it, here’s the nitty-gritty:

1. Both the sender and the receiver need a bitcoin wallet. Installing a bitcoin wallet client on your computer generates a bitcoin address.
2. Bitcoin is sent to an address. A new address is needed for each transaction. An address is not the same as a wallet, but it is linked to a wallet.
3. The bitcoin received always remains classified within the wallet as separate entries based on specific originating transactions. The received amounts of bitcoin, distinct as they are, are called outputs of their transactions.
4. The outputs can be unlocked using a private key. This key is fixed, unlike the address. The key serves as a signature, providing mathematical proof that the transaction found its way to the owner of the wallet.
5. When sending bitcoin, the sender chooses one of the outputs he has received to become an input. The entire amount is used in the process, with the part being sent becoming an output transferred to a new address, while the rest remains as “change”, becoming new output in the sender’s wallet.

The limitations of bitcoin transactions

The biggest potential hurdle of bitcoin transactions is the problem of waiting for confirmation. It takes up to 10 minutes for a new block to be created, confirming the transaction as valid. However, something we can refer to as a bitcoin transaction accelerator actually does exist. It relies on the fact that merchants can allow zero-confirmation transactions, even though the security of such transactions can be brought into question. The most recent innovations make instantaneous transactions infinitely more secure. For example, the Inter-Channel Payments system by Bitpay is an actual bona-fide bitcoin transaction accelerator, with others in the works.

Another issue lies in the so-called bitcoin scalability problem, which limits the number of bitcoin transactions per second. The problem arises due to the fact that the size of blocks in the blockchain is limited to one megabyte. With a block confirmed approximately every 10 minutes, the number of bitcoin transactions per second is currently limited to 3,3 to 7 seconds. The good news is that this only appears to be a temporary bottleneck issue and efforts are underway to further increase the number of bitcoin transactions. For the time being, the bitcoin transactions per day are a much more significant statistic than the bitcoin transactions per second. Bitcoin is not yet as prevalent when it comes to small transactions and buying goods and services online to actually necessitate a higher volume of bitcoin transactions per second.

Legal considerations of bitcoin transactions

You may be wondering is bitcoin legal and can it be used without any fear of authorities. Just looking at a typical bitcoin transaction chart, it is obvious that the information exchanged between the sender and the receiver is very scarce: basically, just the bitcoin address and the amount exchanged. This issue of anonymity raises concerns about potential bitcoin illegal transactions, such as money laundering. When addressing these concerns, however, it is necessary to point out that the legality of a transaction is tied to the two parties participating, not the medium of the exchange. Today, there are third party programs and payment processors which make bitcoin much more user friendly, enabling features such as receipts and web confirmations which make the users much less likely to be accused of bitcoin illegal transactions. Moreover, the receipts should be enough to please even the IRS.

Therefore, you have nothing to worry about when engaging in bitcoin transactions. If you want to buy and sell this cryptocurrency, you are at the right place to get started. Check out our reviews of various exchanges, read our other articles detailing the world of cryptocurrencies, and you will be fully prepared to become a full-fledge trader. Good luck!

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