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All you Need to Know about Cryptocurrencies in 2021

Everything you need to know about Cryptocurrencies, Blockchain Technology and Bitcoin in 2021. Trading strategies and Platforms. Do's and Don'ts and how to mitigate risk

Are you curious about trading crypto currencies like Ethereum or Bitcoin? If so, before picking an exchange or trading site, it’s a smart idea to find as much digital currency details as you can.

This guide discusses what determines digital asset prices and how to start trading cryptocurrencies. We will also send you our tips on where to buy and sell digital coins.

WHAT IS CRYPTOCURRENCY?

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Cryptocurrencies are currencies that are digital. They are developed to process transactions and generate new “coins” using digital cryptography.

Since they are decentralized, crypto-currencies like Bitcoin are common. In other words, access to the money isn’t regulated by banks and governments. In comparison, states and banks are more readily manipulated by fiat currencies.

There are thousands of alternatives to Bitcoin called Altcoins. Cryptocurrencies such as Ethereum and Ripple have improved on the initial model of Bitcoin or created differences to promote niche applications of their currencies. 

OVERALL CRYTPOCURRENCY CONCEPT

A cryptocurrency is a cryptography-secured digital or virtual currency, which makes it virtually difficult to clone or double-spend. Most cryptocurrencies are decentralized networks built on a public database enforced by a disparate computing network based on blockchain technologies. A distinguishing trait of cryptocurrencies is that every central authority normally does not issue them, making them potentially immune to political intervention or exploitation.

Cryptocurrencies are platforms that allow encrypted online payments that are denominated in terms of virtual “tokens,” which are represented within the system by ledger entries. “Crypto” refers to the numerous encryption algorithms and cryptographic methods, such as elliptical curve encryption, public-private key pairs, and hashing functions, which secure these entries.

BLOCKCHAIN TECHNOLOGY

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Blockchain is a data recording mechanism that makes it hard or difficult to alter, hack, or cheat the system.

It seems difficult to use Blockchain, and it can certainly be, but its basic principle is actually very plain. A blockchain is a database form. It helps to first understand what a ledger really is in order to be able to understand the blockchain.

A database is a compilation of information which is stored on a computer server electronically. Data, or data, is usually arranged in table format in databases to make it easy to search and filter for relevant information

WHAT IS THE DIFFERENCE WITH ANYONE USING A SPREADSHEET RATHER THAN A DATABASE TO STORE INFORMATION?

Spreadsheets are structured to store and view restricted volumes of information for one person, or a specific number of individuals. A database, on the other hand, is structured to hold considerably greater volumes of information that any number of people can view, filter, and manipulate efficiently and conveniently at once.

Through housing data on servers that are constructed of powerful processors, massive databases accomplish this. In order to provide the processing power and storage space required for multiple people to access the database concurrently, these servers may often be created using hundreds or thousands of machines. Although any number of entities can access a spreadsheet or directory, it is mostly controlled by a corporation and operated by an appointed person who has full control over how it operates and the data inside it.

WHY IS THERE SO MUCH HYPE AROUND BLOCKCHAIN TECHNOLOGY?

In the past, there were several attempts to raise digital capital, but they have all failed.

Trust is the prevailing issue. When someone makes a new currency called the X dollar, how do we believe they’re not going to send a million X dollars to themselves, or take the X dollars for themselves?

By using a special kind of database called a blockchain, Bitcoin was developed to solve this issue. Most normal databases have someone in control, such as a SQL database, who can alter the entries (e.g. giving themselves a million X dollars). Blockchain is distinct since no one is in charge; it is managed by the individuals who use it. Moreover, bitcoins can not be faked, hacked or double spent, meaning that persons who own this money can expect it to have some value.

TYPE OF CRYPTOCURRENCIES

Bitcoin, which now remains the most popular and most expensive, was the first blockchain-based cryptocurrency. Currently, with diverse functions and configurations, there are thousands of alternative cryptocurrencies. Some of these are Bitcoin clones or forks, and others are new currencies that have been constructed from scratch.

In 2009, Bitcoin was introduced by a person or collective known by the username “Satoshi Nakamoto.” As of Nov. 2019, with a combined market cap of approximately $146 billion, there were over 18 million bitcoins in circulation. Litecoin, Peercoin, and Namecoin, as well as Ethereum, Cardano, and EOS, include some of the rival cryptocurrencies spawned by the rise of Bitcoin, recognized as ‘altcoins.’ Today, the combined valuation of all existing cryptocurrencies is reportedly around $214 billion, reflecting more than 68 percent of the overall value of Bitcoin.

The Top 10 crypto currencies and their current prices are as follows:

IS BLOCKCHAIN SECURE?

The encryption and confidence problems are compensated for by Blockchain technologies in many respects. Next, there is still linear and chronological placement of new blocks. That is, they are often attached to the blockchain’s’ top’. “When you look at the blockchain of Bitcoin, you can find that each block has a location on the chain, called a “height.” As of November 2020, the height of the block has so far reached 656,197 blocks.

It is very unlikely to go back and modify the contents of the block after a block has been added to the end of the blockchain, until the majority has formed an agreement to do so. That’s because, along with the hash of the block before it, as well as the previously stated time stamp, each block contains its own hash. A math feature that transforms digital knowledge into a string of numbers and letters produces hash codes. The hash code also adjusts whether the information is edited in some way.

This is why protection is critical. Let’s presume a hacker tries to change the blockchain and snatch everyone else’s Bitcoin. It would no longer comply with someone else’s copy if they were to change their own single copy. They will see this particular copy stand out as everyone else cross-references their copies to each other, and that the hacker’s version of the chain would be thrown aside as unconstitutional.

To succeed in such a hack, it would enable the hacker to manipulate and change 51 percent of the blockchain copies concurrently so that their current copy becomes the majority copy and thus the agreed-upon chain. Such an attack would also take a large amount of capital and effort, since all the blocks would have to be redone because they would now have separate timestamps and hash codes.

The expense of pulling off such a task will obviously be insurmountable because of the scale of Bitcoin’s network and how quickly it is increasing. This will not only be incredibly costly, but it would definitely be fruitless as well. It would not go unnoticed to do such a thing, as network members would see such dramatic changes to the blockchain. Then the participants of the network will fork over to a different iteration of the chain that was not affected.

This will cause the targeted Bitcoin version to fall in value, rendering the attack essentially futile as a meaningless commodity is owned by the bad actor. If a malicious actor were to target the latest Bitcoin fork, the same will happen. It is designed this way so that it is much more politically incentivized to engage in the network than to strike it.

BITCOIN VERSUS BLOCKCHAIN

The purpose of the blockchain is to allow, but not edit, the storage and dissemination of digital content. Stuart Haber and W. first outlined blockchain technology in 1991. Scott Stornetta, two researchers who decided to introduce a method where it was not possible to tamper with paper timestamps. But it wasn’t until almost two decades later, in January 2009, when Bitcoin was introduced, that the blockchain saw the first real-world use.

There are already a broad number of blockchain-based initiatives aiming to incorporate blockchain in areas other than simply tracking transactions to support society. One clear example is that blockchain is being used in democratic elections as a means to vote. The existence of the immutability of the blockchain suggests that it would be much more difficult to generate illegal voting.

A voting scheme, for instance, might function so that a single cryptocurrency or token would be given to each resident of a country. A special wallet address would then be given to each candidate, and the electors would transfer their token or crypto to the address of whichever candidate they wish to vote for. The open and traceable design of the blockchain would reduce the need for the counting of human votes and the potential of bad actors to alter physical ballots.

HOW TO TRADE IN CRYPTOCURRENCIES - PAXFUL.COM

The best platform to trade in cryptocurrencies is Paxful.com. Paxful is a forum designed to provide a stable and easy trading system for cryptocurrencies. It serves as a peer-to-peer resource that is close to how trading is supported by Ebay. So, you can shop something more exciting than daily items here. Hey! Bitcoins!

Paxful is based in the USA and was founded in 2015. This marketplace’s concept was to allow sellers and buyers to connect easily after finding trade offers. Paxful, in a nutshell, is an intermediary between merchants and a room where individuals can connect.

HOW PAXFUL WORKS?

Paxful has a straightforward website which provides customers with a broad range of trading and payment options. Credit-debit cards, MoneyGram, PayPal, and Skrill are among those choices. With the help of gift cards such as iTunes or Amazon, users are also welcome to make purchases.

It’s so easy to use Paxful that it won’t make you any issues. Just open their website, pick the number of coins you want to get, and mention your local currency, all you need. Build your personal account and you will have a chance to browse for sellers that are available. Quest types cover ways of payment and currency number. Users can pick the most lucrative orders, display the sellers available, payment methods approved, order numbers, and rates. Before finding your order, don’t forget to verify the seller’s reviews to ensure that he is accurate enough.
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Only press the “Buy” button when you have found a successful choice for you. Pick the number of coins you would like to buy and make an order. You should take advantage of an escrow service and a chat option from this to meet your seller face to face and negotiate the offer in depth.

Click on “Mark as paid” until the sale is completed and payment is made, and wait for a while before the seller sends coins to your personal wallet.

Pros

  • At Paxful, an incredibly large variety of payment methods are available.
  • 2-factor authentication safeguards wallets and guarantees your protection.
  • Sellers are all available to view credibility scores depending on their activity, trading experience and customer feedback.
  • An escrow service retains funds until both sides agree that a contract is completed. This protects cheaters from dealers and customers and keeps the purchases seamless.
  • Paxful’s customer service is swift and reacts via a number of choices, including email, web, message system, and social media.

Cons

  • There are concerns that anyone may seek to trick you, including the fact that Paxful functions as a peer-to-peer network. Be careful and never contact with distributors through email, SMS or any other means. Paxful’s website only covers you when, via the message box, you contact other people.
  • Before you confirm the offer, make sure to review the price and commission. Depending on the payment method you use, rates can differ significantly.

Paxful is an easy and common way for cryptocurrency community members to exchange bitcoins and remains a lucrative choice. For new and seasoned buyers, this could be a successful choice, as it makes the process quick and clear. The platform thus serves as a mediator between sellers and buyers, but before making an offer, you need to be attentive and review sellers.

CRYPTO TRADING STRATEGIES

Step #1: Overlay the Bitcoin chart with the Ethereum chart and the OVB indicator.
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Basically, the map configuration should have 3 screens. One for the map of Bitcoin and the second one for the chart of Ethereum. Last but not least, build one OVB indicator window.

Step #2: Look for Smart Money Divergence between Bitcoin price and Ethereum price.
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With this, what do we mean?

Simply put, we’re going to look for price differences in the price of Bitcoin and Ethereum. If one cryptocurrency fails to validate the other cryptocurrency’s behavior, smart cash divergence exists.

For instance, we have smart money divergence if Ethereum price breaks above a big resistance or a swing high and Bitcoin fail to do the same. It means that “lying” is one of the two cryptocurrencies. This is the key reason why we have used this technique for trading cryptocurrencies. And even the Ethereum trading technique.

The explanation why the idea of smart money divergence works is that when we’re on a trend, the cryptocurrency industry as a whole should shift in the same direction. For decades, the same rules have been applicable for all the other big asset groups. It’s also true for the exchange policy of cryptocurrencies.

We need confirmation from the OBV predictor before purchasing. This takes us to the next level on the right technique for Bitcoin investing.

Step #3: Look for the OVB to increase in the direction of the trend.
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If Bitcoin lags behind the Ethereum price, it suggests that Bitcoin can obey Ethereum sooner or later and break above the resistance.

Still, how are we going to know that?

The OBV is, to put it simply, a remarkable scientific predictor. It will show us whether real money actually buys Bitcoin or sells it. What we want to see when Bitcoin is struggling to break over a resistance level or a swing high, and the Ethereum already split, is for the OBV to rise in the direction of the trend. We still want it to go above the level it was when Bitcoin traded at this resistance level earlier. Here is how the right swing can be found to raise your benefit. Now, all it remains for us to do is to position our buy limit order, which takes us to the next phase of the right Bitcoin trading strategy.

Step #4: Place A Buy Limit Order at the resistance level in an attempt to catch the possible breakout.
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Once we are given the green signal by the OBV indicator, all we have to do is place a purchasing cap order. Place the order in expectation of the potential breakout at the resistance stage.

It’s no surprise to see this exchange sparked and to break higher than expected for the price of Bitcoin. We told you, after all, that the OBV is an awesome predictor.

Now, what we need to decide is where to put our defensive stop loss for the right Bitcoin trading plan and when to take money.

Step #5: Place your SL below the breakout candle and take profit once the OBV reaches 105,000.
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It is a good way to trade to put the stop loss below the breakout candle. In our most recent article here: Breakout Trading Technique Used by Experienced Traders, we have written more about the reasons for covering your SL above/ below the breakout candle.

Typically an OBV reading above 105,000 is an intense reading that indicates at least a pause in the pattern when it comes to our taking benefit. This is where we expect money to be made.

WAYS TO ENHANCE THIS BITCOIN DAY TRADING STRATEGY

Though Bitcoin trading day has certain risks, there are several ways to reduce these risks.

Here are some of the top ways to boost your trading plan for Bitcoin.

Know that:

Diversify the purchases. It would help decrease the everyday risk associated with a single coin by integrating Bitcoin, Ripple, Litecoin, Ethereum, and other cryptocurrencies.

Minimize expenditures for trading. Every day, opening multiple places impacts the daily ROI. Choose a reputable exchange that has low fees to minimize the risk of trading.

Watch Times Dealing. Map ahead hours for trading that are consistent with your timetable. 24 hours a day, Bitcoin trades. It’s different from the NYSE 9-5s.

Track the news on Bitcoin. To remain ahead of the market, pay heed to crypto-currency news reports. Configure warnings and other message forms.

Apply technological research. Using powerful technological metrics such as OBV. This will encourage you to justify each of your purchases.

Usage Failure Pause. Set orders for stop-loss on any trade. Begin with a 2:1 income loss ratio.

LEGALITY VIEW

In the U.S., Japan, the U.K., and several other developing nations, Bitcoin was legal as of February 2020. The legal status of Bitcoin has started to vary significantly in developing markets. Although explicitly criminalizing the possession of bitcoins, China heavily restricted Bitcoin. India banned banks from blockchain trade and left uncertain the ultimate legal status of cryptocurrencies. In addition, Bitcoin regulations in individual countries need to be looked at.

And if Bitcoin is legitimate, Bitcoin is still subject to most of the laws that apply to other properties. The area where more persons are expected to get into trouble is tax laws. Bitcoins are generally regarded as property rather than currencies for tax purposes. Generally, Bitcoin is not considered legal tender.

In a deregulated marketplace, Bitcoin exists, but there is no centralized issuing authority. Bitcoin addresses in the United States do not require social security numbers (SSNs) or other personal records, such as regular bank accounts. That raised questions initially about the use of bitcoins for illicit activity.

The assumed anonymity of Bitcoin contributed to numerous illicit applications in its early years. Drug traffickers were known to use it, with the Silk Road market being the best-known example. It was a part of the so-called dark web that allowed users to purchase illegal drugs. Bitcoins are used in all purchases on the Silk Road. In October 2013, it was finally shut down by the FBI.

And those wanting anonymity, though, Bitcoin have some serious weaknesses. Bitcoin establishes, in particular, a permanent digital archive of all transactions. When a person is connected to an account, it is possible to connect that individual to other transactions using that address. Cryptocurrencies such as Monero and Zcash, which are competing, also have much greater privacy security. Unlawful behavior is shifting away from Bitcoin, given this scenario.

MOVEMENT IN CRYPTO PRICES (2019-2021)

The price of bitcoin started to climb in the fall of 2017. The price rose by $5,000 in October of that year and doubled to $10,000 again in November. Then, the price of one bitcoin hit $19,783 on December 17. This was dubbed a price bubble by many pundits and analysts, several of whom made parallels to 17th century Dutch Tulipmania. Indeed, the price of bitcoin plunged quickly only a few weeks back, falling all the way down to $7,000 by April 2018 and below $3,500 by November 2018.
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In 2019, bitcoin saw a fresh price and volume revival, rising to about $10,000 by June in fits and bursts. Since history appears to repeat itself, by the end of the year, the price of bitcoin dropped back down to around $7,000.

In 2020, that changed. Renewed interest was piqued among investors, as described above. The number of persons carrying more than 1,000 coins has actually jumped. Prices have risen gradually through the year, beginning on January 1 at $7,200 and ending on November 23 at $18,353. That’s an approximately 155% rise. Bitcoin then took off ever further when, after the rapidly rising inflation of the dollar from COVID-19 stimulus spending, institutions started to accept it as a store of wealth. In Dec. 2020, the price of Bitcoin hit a high of just under $24,000, giving it a 224 per cent year-to-date rise and an almost 500,000 per cent year-to-date increase on the Bitstamp market.
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The performance of Bitcoin especially in 2021 has been nothing short of a dream run. With the prices in December being at USD $29,000, the price soared to a lift time high of USD $41,940 on January 9th, 2021. The bitcoin valuation then dipped about 20% from all time highs to come back and stabilise around the USD $32,000 mark. The month of january has proven the theory of many experts who believe that the valuation of a bitcoin will reach USD $1,00,000 by October 2023.

We advise you to invest in the same and contact us if you need advisory services for bitcoin or intend to trade in the cryptocurrencies.

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