Abgabe: 03.07.2023
Disclaimer None of the following information is financial advice. Please inform yourself before investing.
Table of contents
1. What are Cryptocurrencies and Tokens ? 1.1 Typical attributes of cryptocurrencies Fully digital Usable worldwide Encrypted using cryptography (Blockchain technology) Decentralized (Not true for every cryptocurrency) Non-Inflationary (Not true for every cryptocurrency) 1.2 Most popular cryptocurrencies First cryptocurrency (Exists since 2009) Consensus mechanism: Proof-of-work Maximum supply: 21.000.000 Inflationary (due to mining) VIDEO
Consensus mechanism: Proof-of-stake No maximum supply Deflationary (due to burning mechanism) Monetary information on ETH: ultrasound.money VIDEO
1.3 Other types of cryptocurrencies To improve 1st-layer crypto-currencies like Bitcoin or Ethereum Popular example: Polygon Bridging gap between fiat and crypto Minimizing price volatility Popular example: Tether
Meme-inspired highly volatile tokens Most often without a usecase Popular example: Dogecoin
2. How can I specifically invest in cryptocurrencies and tokens? 2.1 Cryptocurrency exchanges Beginner-friendly High liquidity —> transactions always work Only trustworthy currencies are listed Higher transaction costs Dependent on a third party Company has custody over your coins Hacking risk Cheaper, direct peer-to-peer transactions You have custody over your coins Full selection of coins More complex —> Not beginner-friendly Low liquidity —> transactions do not always work No fiat payments
2.2 Dangers of cryptocurrencies Inner dangers: Fear of missing out (FOMO) Greed Panic Scams Always double-check projects before investing! Phishing Do not give everyone your sensitive data! Hacking attacks Especially dangerous for centralized exchanges & low security networks Bankruptcies Especially crypto-assets on centralized exchanges are endangered by this
3. What investment opportunities are there? 3.1 Investment opportunities Established cryptocurrencies E.g. Bitcoin, Ethereum and value-backed Stablecoins Still risky, but the most secure option within the crypto-market Discussed in “Passive income possibilities” All alternative coins to Bitcoin Over 23777 Altcoins (May 2023) Many non-trustworthy coins & tokens Lend to earn interest Borrow to trade with leverage (very high risk!) Non-fungible tokens (NFTs) Digital item with unique properties Owner is publicly stated on the blockchain Enable real possession in the digital world Yield Farming, Leverage trading, ICOs & Token sales Very advanced investment strategies Extremely risky, not for beginners! 3.2 Passive income possibilities Offering your computation power to ensure the network Possible for proof-of-work blockchains (e.g. Bitcoin) Reward: Mining rewards “Locking” your coins to secure the network Possible for proof-of-stake blockchains (e.g. Ethereum) Reward: Staking rewards Lend your money to other network participants Possible on different (de)centralized platforms Reward: Interest payments 3.3 How to store your cryptos safely After investing, it is important to store your cryptocurrencies securely.
Storage type:
Exchange
Online wallet
Hardware wallet
Connection:
Online
Online
Offline
Safety:
Low safety
Medium safety
High safety
Risks:
•Insolvency
•Hacking
•Hacking
•Loss/Defect of hardware ledger
Price:
Free
Free
79€ (or more)
3.4 How to start : A concrete plan Learn about crypto For example via www.coinmarketcap.com or app.intotheblock.com . Through Crypto-whitepapers Reliable experts & podcasts Start by investing in a centralized exchange Start with small amounts Learn moving funds to another wallet Try more advanced steps Try out staking and lending You can even use your cryptocurrencies for payments (e.g. with the Nexo card: nexo.com
4. Sources Altcoin Daily. (2020, 16 June). LIVE: Anthony Pompliano Reveals His Cryptocurrency Investment Strategy for 2020 | Bitcoin Podcast [Video].https://www.youtube.com/watch?v=gnOM35x_NCM Bos, W. (2019, March 13). Why are cryptocurrencies like Bitcoin valuable? Medium. https://medium.com/@wesleybos/why-are-cryptocurrencies-like-bitcoin-valuable-2fea255b1bc4 Chang, C. (2020, June 19). How to Invest in Crypto For Beginner's (2020 Step-by-Step Guide) [Video]. YouTube. https://www.youtube.com/watch?v=FRSIXQv7Y7g CoinMarketCap. (n.d.). Today's Cryptocurrency Prices by Market Cap. (Accessed July 3, 2023). https://coinmarketcap.com John, K., O'Hara, M., & Saleh, F. (2022). Bitcoin and Beyond. Annual Reviews of Financial Economics. Nomad Capitalist. (2020, May 11). How to Get Started Investing in Cryptocurrency. https://www.youtube.com/watch?v=ddcNbBDIHwA Loo, A. (2020, December 21). Cryptocurrency Exchanges. CFI.https://corporatefinanceinstitute.com/resources/cryptocurrency/cryptocurrency-exchanges/ Pompliano, A. (2020, 28 July). What Is Bitcoin and Why Is It Important? [Video]. YouTube. https://www.youtube.com/watch?v=7SIcS5hJHx0 Selene, A. (2018, February 15). Crypto Wallets 101: How To Store Cryptocurrency. Crypto Briefing. https://cryptobriefing.com/crypto-wallets-101-how-to-store-cryptocurrency/ Steiner, M. (2021, January 17). Episode 36 – Bitcoin aufbewahren & vererben [Podcast]. bitcoin verstehen. https://t.co/5GQedavk2S?amp=1 Tredinnick, L. (2019). Cryptocurrencies and the blockchain. Business Information Review. SAGE Journals. The Rich Dad Channel. (2020, July 8). Crypto Expert Predicts Bitcoin Will Hit 100k - Robert Kiyosaki & Anthony Pompliano [Video]. YouTube. https://www.youtube.com/watch?v=c-G99P0K_r4 Wade, J. (2022, August 31). Crypto Lending. Investopedia. https://www.investopedia.com/crypto-lending-5443191
