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What Is a Blockchain?

Blockchains are made up of a series of individual blocks. Each block contains information about transactions conducted within a given time period. They also contain a unique identifier to differentiate them from every other block in the chain. Blocks are created by solving cryptographic problems. The process of solving these problems is known as mining. Mining a block on the blockchain attracts a reward. For example, at the inception of the Bitcoin blockchain, miners solving the cryptographic hashing problem required to add a new block to the blockchain were rewarded with 50 BTC. Blockchains are decentralized records. Instead of being stored in one central location, the blockchain is stored on the computers of every user of that given blockchain. 
Meanwhile, the unique block identifier — known as the hash — is derived from the information contained in every previous block in the blockchain. This means that, in order to falsify any record on the blockchain, a nefarious actor would have to change every block on every instance of the blockchain. As a result, blockchains are considered to be virtually unfalsifiable and are thought of as immutable records of transactions. Today, most blockchains are public. This includes prominent cryptocurrencies such as Bitcoin and Ethereum. Anybody can view records of transactions conducted on a given blockchain, using a tool called a block explorer. Theoretically, however, blockchains afford a high level of anonymity to users. 

While public blockchains are the norm, private versions are also being explored as a solution for many business and government use cases.

What Is a Wallet?

A crypto wallet is a digital wallet that allows users to store, send and receive digital currencies such as Bitcoin and Ethereum. They are similar to traditional bank accounts in that they enable users to store and manage their money, but they differ in that they are not controlled by a centralized authority, such as a bank or government. Crypto wallets are secured with private keys and passwords, which are used to prove ownership of the digital assets within the wallet. The private keys and passwords must be kept safe and secure, as they are the only way to access the wallet and its contained funds.

Crypto wallets are used to store, receive and send digital currencies. As a result, they are an essential part of the cryptocurrency ecosystem. For example, users can use crypto wallets to purchase goods and services, as well as to store their funds securely.

Types of Crypto Wallets

Crypto wallets come in all shapes and sizes. Where some can only support one digital asset, such as Bitcoin, others allow you to store multiple coins.

Cold Wallets

Cold wallets are physical hardware wallets that are stored offline and are considered the most secure type of crypto wallet. Examples of cold storage wallets include Trezor and Ledger. 

Hot Wallets

Hot wallets are digital wallets connected to the internet, such as mobile or web wallets. They are considered less secure than cold wallets because they are connected to the internet and are vulnerable to hacking attacks. Examples of hot storage wallets include Coinbase Wallet and MetaMask.

Desktop Wallets

Desktop wallets are software applications installed on a computer that allows users to store and manage their cryptocurrencies. They are considered more secure than hot storage wallets but less secure than cold storage wallets. Examples of desktop wallets include Exodus and Electrum. 

Paper Wallets

Paper wallets are physical documents containing a public address and private key for a cryptocurrency. They are considered one of the most secure types of wallets as the private key is stored offline and is not vulnerable to online attacks. 

Mobile Wallets

Mobile wallets are digital wallets installed on mobile devices such as smartphones or tablets. They allow users to store, send and receive cryptocurrencies from any location.

What Is a Cryptocurrency Airdrop?

A cryptocurrency airdrop is a marketing strategy that distributes free tokens or coins to existing holders of a particular coin or token. Airdrops are typically used to create awareness of a new cryptocurrency or blockchain project. They can also be used to reward existing holders of a blockchain currency for their loyalty. 
The airdrop is typically conducted by a blockchain platform or project to incentivize users by distributing free tokens to their wallets. In some cases, users may be required to complete certain tasks, such as joining a Telegram group or retweeting a post, in order to qualify for an airdrop. By distributing tokens to existing holders, projects are able to create a larger and more engaged community for their product. This helps create a larger user base and drive up the token’s value. Airdrops may also be used to encourage user adoption of a new feature or service by providing free tokens as a reward for usage.
Airdrops usually work by requiring users to hold a certain amount of tokens in a publicly discoverable wallet at a predetermined time (snapshot time). The token project conducting the airdrop would then use the snapshot to distribute the airdrop tokens accordingly.

What Are the Types of Crypto Airdrops?

There are several types of typical crypto airdrop campaigns:

  1. Token airdrops involve the distribution of new tokens on a blockchain network. Token airdrops are typically used to promote a new cryptocurrency project and can be used to distribute tokens to investors, the community or other stakeholders.
  2. Loyalty airdrops involve the distribution of tokens or coins in exchange for a user’s loyalty to a particular DApp and encourage them to continue to use it.
  3. Bounty airdrops involve the distribution of tokens in exchange for completing specific tasks. Bounty airdrops are typically used to incentivize individuals to complete tasks such as bug testing, app development or content creation.

Crypto Airdrop Process

When a cryptocurrency project announces its airdrop campaign, it usually provides instructions on how to participate. This includes creating an account on the project’s website, verifying a wallet address and other information, and completing other activities such as following the project’s social media accounts. When users have completed the campaign’s requirements, they are eligible to have tokens airdropped to their wallets.

Crypto Airdrop Scams

Crypto airdrop scams are a type of scam that involves a malicious actor sending out fake offers of free cryptocurrency to victims. The scammer will typically use a combination of social media, emails and web-based campaigns to spread the offer. The offer includes a link to a website where users can enter their personal information, such as an email address, to receive the free coins. However, when the user enters their information, the scammer steals their personal information, such as their wallet address or even their private keys, and then uses it to steal their coins.  

Pros and Cons of Crypto Airdrops

Pros

  1. Crypto airdrops provide a low-cost, easy way to get new users interested in a particular project, cryptocurrency or platform.

  2. Airdrops can help increase the user base of a project, as well as create more liquidity in the market overall.

  3. They can also be used to reward existing users for their loyalty or participation.

  4. Airdrops can help create hype and buzz around a project, which can lead to a higher market valuation over time.  

Cons

  1. Airdrops can be used to manipulate the market and create artificial demand for a particular asset.

  2. There is a risk of scams associated with airdrops, as some projects have been known to promise large airdrops and then not follow through on them. 

  3. Airdrops can lead to market volatility as users often sell the newly acquired coins quickly, leading to quick price fluctuations.

  4. Crypto airdrops can be taxed as income, so users should be aware of their local tax laws before participating in an airdrop.

Liquidity pools are crypto assets that are kept to facilitate the trading of trading pairs on decentralized exchanges.
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What is DYOR?

Do Your Own Research (DYOR) is regarded as one of the most important aspects of being a cryptocurrency investor.
The term first became popular during a wave of ICO projects that flooded into the cryptocurrency space between 2016 and 2018. Many investors were left duped or out of pocket by a host of scams entering the market as potential get-rich-quick crowdfunding schemes.

As a way of combatting fraud, people were urged to ‘DYOR’ and investigate any potential investment fully before committing money to any project.

The phrase has now permeated into popular culture, and is widely used to encourage amateur investors in any arena to navigate a minefield of misinformation.

It is also often used as a kind of disclaimer by some cryptocurrency figures when they post about projects or analysis on social media platforms.

How To Do Your Own Research (DYOR)?

CoinMarketCap provides users with the necessary tools to DYOR. As the leading platform for cryptocurrency prices, ranking, market intelligence and research, it provides transparent details regarding coin rankings, token rankings, market capitalization, trading volumes and more. The full methodology used by CoinMarketCap to list and rank crypto tokens can be found here. These are the four initial pillars to focus on, as they often help you compare currencies to one another.
After the foundation has been established, you can click on the coins that stand out to you to obtain more information. That includes the circulating supply and total supply figures, a list of exchanges where the asset is traded, the fully diluted valuation (FDV), etc. All of these details provide tremendous insights and intelligence on individual coins and tokens.
Other research tools on CoinMarketCap include the price charts — to gauge volatility, support and resistance levels used in technical analysis — and the website and social links of individual projects. Additionally, you can find audits — if provided — along with GitHub activity, social follower counts, a list of wallets supporting the asset, and more. 
The historical data tab, such as for Bitcoin, offers some valuable information. It depicts the recent price momentum for coins and tokens and a historical overview of the price on this day in the past few years. Cryptocurrencies are bought or traded by investors and speculators, and everything needs to be put in the correct perspective. 
Other tools on CoinMarketCap platform to explore include the educational platform Alexandria, the listing of exchanges, NFTs, and the Gravity feature. Although Gravity is still in beta, it offers a constantly updating feed of project news, articles, and user sentiment. There is also a handy list of accounts you may be interested in following to stay up-to-date on those projects.
Furthermore, the platform provides various products to help you DYOR, including a learn and earn section, an ICO calendar, an events calendar and more. All of these tools help you do your own research across various industry verticals and aspects. 

What Is a Memecoin?

Memecoin is the crypto analog of memes and came into being as a cheaper Bitcoin substitute. The first memecoin, named Dogecoin, was based on the famous Shiba Inu meme. Apart from Dogecoin, some of the most popular memecoins include Dogelon Mars, Shiba Inu, Floki Inu, and Samoyedcoin.

The Memecoin Boom

Similar to its theme, memecoins used to be taken as a joke in the world of crypto trading. However, endorsement by Elon Musk gave it an unanticipated boost. The value of Dogecoin shot up overnight when Musk started tweeting about the crypto asset.

Besides Musk, Snoop Dogg and Mark Cuban have also expressed interest in the memecoin, making it popular among the community. 

Within a few months, the memecoin secured its place in the top 10 cryptocurrencies by market cap. By the end of 2021, Shiba Inu, another popular memecoin made its way to the top 10 list. Chief Revenue Officer of Zeb Pay commented on the growing memecoin status:

“The surge in volumes that the token [Shiba Inu] has been witnessing can also be attributed to the FOMO that typically arises as interest peaks, and traders rush to take part in the rally as a means to book profits.’’

Just at the culmination of the GameStop frenzy, traders were eager to find a new obsession. Reddit started booming with memecoin discussions, especially as endorsements from billionaires started coming in. Since its inception in 2013, Dogecoin aimed at dethroning Bitcoin by being less expensive and greater in circulation, having a supply of around a quadrillion coins! 

The deVere Group’s CEO, Nigel Green, said:

“In the same way that the GameStop frenzy was pitched as a battle-play of ‘Wall Street versus The Little Guy’, Dogecoin is being pitched as a battle-play against the well-established crypto giants like Bitcoin.”

Another aspect of the memecoin boom is that it is seen as an opportunity by retail investors to make the most out of their small investments because Bitcoin is a bit far-fetched for small investors and many new traders, given its ever-growing value. Memecoins’ faster minting and limitless coin acquisition continue to attract more traders. Earlier this year, Dogecoin surpassed giants such as eBay, Kraft Heinz, and many more in market value. 

Most Popular Memecoins as of 2021

At the time of writing, the top memecoins include:

  1. Dogecoin

  2. Shiba Inu 

  3. Dogelon Mars

  4. Samoyedcoin

  5. HogeFinance

You may check the complete list of top memecoins on CoinMarketCap.

What Do Memecoins Offer?

As per Nasdaq, memecoins are just a means of making some money but the currency is yet to offer a real-world utility like Ethereum and Bitcoin. If the current endorsement of memecoins by Musk and other influencers continues, the surge may still be able to benefit traders in the short term. While the popularity of the currency continues to increase, memecoins are still a more feasible option for new investors to make small gains. 

What Are Non-Fungible Tokens?

Traditionally, cryptocurrencies like Bitcoin are fungible, meaning that every one unit of BTC is exactly the same as another unit of BTC and they can be exchanged for one another with no further considerations. Fungibility is one of the fundamental properties of traditional currencies too, like the USD. But in some use cases, tokens might be non-fungible, most commonly when they are used as digital proof-of-ownership of underlying assets.

For example, NFTs can be used to represent digital art: at one point, an extremely popular Ethereum-based blockchain game CryptoKitties associated its tokens with unique images of cartoon cats and allowed users to trade those cats by exchanging the corresponding tokens.

Another prominent example is the tokenization of real-world assets like equity or commodities to make them tradable digitally — in this case, tokens represent unique assets and are thus non-fungible.

More rarely, a token may become non-fungible by losing its fungibility property as a result of known past activity. For example, if a certain amount of Bitcoin — fungible by default — is used to pay for illegal goods or fund illegal activities and the overall network becomes aware of it, that Bitcoin becomes less- or non-fungible, as it is unlikely to be accepted by exchanges and other service providers.

What Is P2P Trading?

Peer-to-peer (P2P) trading involves decentralized transactions where two users swap cryptocurrencies directly with each other. Both buyers and sellers interact without the involvement of a third party.

P2P trading is based on the concept of previous generations of P2P networking. For example, digital file-sharing is a popular P2P technology. With file-sharing networks, users create digital copies of files, with each user keeping their copy as files get duplicated.

Today, peer-to-peer goes beyond this simplified origin and expands into a sharing economy where users can transact with each other. P2P trading consists of a transfer of digital data (minus any transaction fees) from one user to another. It also prevents the duplication of data.

One type of such trading platform is a P2P decentralized exchange (DEX), such as AtomicDEX, in which users can trade cryptocurrencies like ETH for BTC (or vice versa). NFT marketplaces, like OpenSea, are another type of P2P trading platform where a seller sells a piece of unique digital data (i.e. a piece of artwork) to a buyer who pays an agreed-upon amount of a specific cryptocurrency (i.e. ETH).
While one might think that all DEXs are P2P, most of them actually use a different technology called automated market makers (AMMs). 
With AMM DEXs, liquidity providers (market makers) collectively supply funds to smart contracts, called liquidity pools. Each trader (market taker) taps into the liquidity pool to fill their orders. AMM DEXs are permissionless, meaning anyone can become a liquidity provider or trader without having to go through an approval process. However, their biggest disadvantage is that they rely on complex smart contracts which hackers may exploit to steal funds from liquidity providers.
In contrast, P2P DEXs, like AtomicDEX, use atomic swaps — a type of trading technology in which each order is a direct wallet-to-wallet transfer between two users. Because P2P DEXs don’t have centralized liquidity pools, they generally are more trustless and have fewer attack vectors compared to AMM DEXs.
P2P trading also enables users to trade cryptocurrencies across multiple blockchain networks — making it a key technology that supports efforts to expand trustless blockchain interoperability. 

Author: Kadan Stadelmann, CTO of Komodo, a leader in blockchain interoperability and atomic swap technology.

Kadan Stadelmann is a blockchain developer, operations security expert, and Chief Technology Officer of Komodo, an open-source technology provider that offers all-in-one blockchain solutions for developers and businesses. Komodo works closely with organizations that want to launch their own custom decentralized exchanges, DeFi platforms, and independent blockchains. Its flagship technology and end-user application is AtomicDEX – a mobile and web-compatible non-custodial multi-coin wallet and atomic swap-powered DEX rolled into one dApp. Kadan strongly identifies with Komodo’s open-source vision and ideology. His dedication to the Komodo project is founded on an unwavering desire to make the world a better place. In addition to cryptography, blockchain technology, and development, Kadan is interested in literature, mathematics, astrophysics, and traveling.

What Is a Seed Phrase?

The seed phrase (also known as seed recovery phrase, backup seed phrase or mnemonic phrase) refers to a generated list of 12 to 24 words, in a specific order, used by crypto wallet users to regain access and control of their funds on-chain. This also means that any third party who knows your recovery seed can potentially move your funds to another wallet address.
The seed phrase is a randomly-generated string of words cryptographically derived from the wallet’s private key and paired with 12,18 or 24 words (as per the user’s discretion) from a list of 2,048 English words called the BIP39 Wordlist. This sequence can also be converted to a corresponding series of mapped numbers that provide the user access to his wallet and its public-private key pair. 
A crypto wallet’s software is designed to generate these phrases, which users are then tasked to keep. This ensures that even if the hardware malfunctions or gets lost or stolen, they can always download the wallet software again and use the seed phrases to restore access to their assets back.

Keeping a copy of the seed phrase offline is advisable because it makes it invulnerable to hacking. Seed phrases stored on devices connected to the internet are considered unsafe and are not recommended.

The recommended method of keeping a copy of a seed phrase is to write it down and store it somewhere secure like a vault or a safe box. Do not leave a copy of your seed phrase in any format, not even a print file or photo. 

Hardware (cold) wallets can securely store private keys without the security risks that come with online wallets. However, the security of your wallet is only as strong as the method that you use to hide your recovery seed.

What Is Tokenomics?

Tokenomics, short for ‘token economics’ is an umbrella term used by cryptocurrency enthusiasts to describe how a token is used inside the project ecosystem, or how the token will follow a monetary policy as the project grows over time. As a result, the word tokenomics encompasses a wide range of activities and notions, some of which are hard-coded into the protocol of a blockchain and others that are more speculative in nature.
Tokenomics covers every important aspect of a digital token. The three main roles of tokenomics are as follows:

Fundraising

The tokenomics of a project determine how many funds it would raise when it is launched for the general public, the type of currency used for funding, and the schedule of distribution of tokens to the initial investors. This is also where an understanding of Initial Coin Offerings (ICOs) becomes important, where a project provides its initial tokens on specific criteria to a set number of investors to gain early capital at lower rates. 

Determining the Level of Governance of Holders

Governance comes under the tokenomics section, as the holders of the project tokens on the blockchain have voting powers which they can use to voice their opinions about the digital token project. Important decisions can be made by token holders, such as project features, direction, and token economy changes, among other things. All of these decisions are outlined in the tokenomics section of a project.

Ownership of the Digital Asset   

Digital assets are used to signify the ownership of a crypto project. It is a common practice for many crypto projects to announce the allocation of their token supply in their official whitepaper. 

Tokenomics allow holders and potential investors to understand the distribution standards of a token and judge the potential of an increase in the token’s price in the long run.

The main difference between a traditional economy and tokenomics is that the latter is designed for the world of decentralized cryptocurrencies, while conventional economics is built on multiple events of history and human behavior of a particular country. While many centralized institutions control the traditional economy, tokenomics gives the power back to the people, as they decide how a cryptocurrency project should be governed. 
A major example of tokenomics is Bitcoin (BTC). The world’s largest cryptocurrency is designed to mint only 21 million bitcoins in total. After regular intervals, miners are rewarded for their efforts accordingly. However, the number of rewarded Bitcoins has significantly reduced over the years, and this is exactly where tokenomics come into play, as they are designed to create scarcity and promote the price appreciation of a digital currency.
Tokenomics should be considered when investing in any cryptocurrency as they control the demand and supply of a token, which directly impacts the price.
Liquidity pools are crypto assets that are kept to facilitate the trading of trading pairs on decentralized exchanges.
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What Is Liquidity?

In its simplest form, liquidity indicates how easy it is to quickly convert a cryptocurrency into cash — and whether this can be achieved without the asset’s value suffering.

Bitcoin, the world’s first and most actively-traded digital asset, is often recognized as the most liquid virtual currency. 
Liquidity can also be used when weighing exchanges that enable trades between fiat and crypto to be completed instantly without price slippage. The levels of liquidity will often depend on how many users that particular platform has. In a perfectly competitive market, liquidity will erode the ability to charge a discounted price or a premium. This is because active trading of a cryptocurrency or any asset class helps avoid price distortions. 

A cryptocurrency that is liquid typically trades around its market price. The most liquid market in the world is the forex market. On average, it recorded $6.6 trillion in daily transactions a day as of April 2019, according to the Bank for International Settlements. On the other hand, the real estate market is typically considered to be illiquid. This is because properties are often not easily sold, and can involve a long chain, a lot of paperwork as well as be subject to other variables. 

Liquid markets are typically preferred by traders. An illiquid market makes it very difficult for participants to enter and exit positions. 

Trading volumes for Bitcoin are now comfortably in the tens of billions on a daily basis and have grown substantially since 2014. This is not to say that the bellwether currency has never experienced bouts of illiquidity. Once BTC prices crashed in 2018, volumes plummeted to around $5 billion per day. 

The liquidity of cryptocurrencies is likely to increase further if adoption rises and virtual assets become more widely accepted as mediums of exchange. 

What Is Mining?

Cryptocurrency mining is a process where blocks are added to a blockchain, verifying transactions. It is also the process through which new Bitcoin and *some* altcoins are created. Mining new Bitcoin requires miners to solve a cryptographic puzzle called the hash function. The first miner to do this successfully wins a reward called the mining reward and can add transactions into a new block on the blockchain. 

How Does Bitcoin Mining Work?

Bitcoin miners need to solve a complex mathematical problem to be eligible to add a block to the blockchain. This requires enormous amounts of computing power and electricity. That is why Bitcoins are mined on mining farms, where computing power is combined to give miners a competitive advantage. Miners can successfully mine a block by correctly guessing a hash, which they can only do through brute force and computations. The hardware miners used for this purpose are Application-specific integrated circuits (ASICs). These special-purpose machines are specifically built for Bitcoin mining and need to be constantly renewed. 
Once a miner has correctly guessed the hash, they receive the block reward. This block rewards halves every four years in a process that is commonly known as “Bitcoin halving.” 

Is Bitcoin Mining Profitable?

Bitcoin mining is not profitable for retail miners that want to mine Bitcoin from their homes. The mining landscape has become too competitive, and it is too hardware-intensive for mining from home to be profitable. However, for institutional miners that can leverage economies of scale, mining can be highly profitable. Miners spend on ASICs and electricity and receive revenue from selling Bitcoin. Thus, the higher the price of BTC, the more profitable mining becomes. The lower the price of BTC, the more likely miners are to mine close to or below their break-even point. 

Miner capitulation is the process when miners have to close their businesses due to low prices.

How Do You Start Bitcoin Mining?

In theory, anyone can start mining Bitcoin with the following equipment:

  • A Bitcoin wallet

  • Mining software

  • ASICs

  • Preferably cheap electricity 

However, the fewer ASICs a miner has and the higher the electricity costs are, the less profitable the mining business will be. 

Risks of Bitcoin Mining

Bitcoin mining can also be risky. For example, miners have enormous capital expenditures before starting a mining business due to the amount of hardware they have to acquire. This makes it only viable if a miner has a long-term competitive advantage. Furthermore, it is heavily regulated in many jurisdictions, making compliance with local laws another hoop miners have to jump through. Finally, the volatility of Bitcoin can force even well-capitalized miners into capitulation if they have to mine at a loss for too long. 

What Is a Liquidity Pool?

Liquidity pools are pools of tokens locked in smart contracts that provide liquidity in decentralized exchanges in an attempt to attenuate the problems caused by the illiquidity typical of such systems. Liquidity pools are also the name given to the intersection of orders which create price levels that — once reached — see the asset decide whether to continue to move in uptrend or downtrend.

The decentralized exchanges that leverage liquidity pools are the same that make use of automated market maker-based systems. On such trading platforms, the traditional order book is replaced by pre-funded on-chain liquidity pools for both the assets of the trading pair.

The advantage of using liquidity pools is that it does not require a buyer and a seller to decide to exchange two assets for a given price, and instead leverages a pre-funded liquidity pool. This allows for trades to happen with limited slippage even for the most illiquid trading pairs, as long as there is a big enough liquidity pool.

The funds held in the liquidity pools are provided by other users who also earn passive income on their deposit through trading fees based on the percentage of the liquidity pool that they provide. 

One of the first decentralized exchanges to introduce such a system was Ethereum-based trading system Bancor, but was widely adopted in the space after Uniswap popularized them.

What Is a Liquidity Provider?

A liquidity provider is a user who funds a liquidity pool with crypto assets she owns to facilitate trading on the platform and earn passive income on her deposit.

Liquidity pools are leveraged by the decentralized exchanges that use automated market maker-based systems to allow trading of illiquid trading pairs with limited slippage. Instead of using traditional order book-based trading systems, such exchanges use funds that are held for every asset in every trading pair to allow trades to be executed.

While trading illiquid trading pairs on order book-based exchanges could lead to suffering from great slippage and the inability to execute trades, the advantage of liquidity providers is that trades can always be executed as long as the liquidity pools are big enough. For this reason, liquidity providers are seen as trade facilitators and paid with the transaction fees paid for the trades that they enabled.

How much liquidity providers are paid is based on the percentage of the liquidity pool that they provide. When funding the pool, they are usually required to fund two different assets to enable traders to switch between one to the other by trading them in pairs.

For instance, a liquidity provider may provide a liquidity pool with $5,000 worth of Ether and $5,000 of USD-pegged decentralized stablecoin DAI to allow trading back and forth between the two. This way, every time a trade on the ETH/DAI is executed, the liquidity provider in question would receive compensation for having funded the pool in question.

What Is a Micro Cap?

A micro-cap stock is a publicly listed corporation with a market capitalization of $50 million to $300 million. Micro-cap equities are more volatile than large cap companies, making them intrinsically riskier than mid or large caps. 
Micro-cap businesses have a higher market valuation than nano-cap companies, but they have a lower market capitalization than small, mid, large, and mega-cap companies. Stock prices for businesses with bigger market capitalizations are not always higher than for companies with lower market caps.
These organizations are popular for their extreme volatility, and they are sometimes seen as riskier than corporations with bigger market capitalizations. The market capitalization of a firm is computed by multiplying the stock price by the total number of shares outstanding.
They are known for being high-risk because many of them have untested goods, no firm history, assets, revenue, or operations. They are also vulnerable to huge price shocks due to a lack of liquidity and a tiny shareholder base.
In the world of cryptocurrencies, the volume of circulating coins available to the public multiplied by the price per coin determines the market capitalization, or overall value, of a cryptocurrency asset and its underlying blockchain firm. There is no particular market cap barrier that indicates that an asset is a large-cap coin as a subjective phrase.
Micro-cap altcoins are similar to penny stocks in that they have a small market capitalization. They have the potential for large payouts, however, there is a risk of losing more than the average coin out there. Because of the extreme volatility, some may consider micro caps to be riskier than penny stocks; nevertheless, if you know how to choose the proper chart (which is more than half the effort), the risk is pretty minimal.
Micro cap crypto ventures frequently try to provide value to their consumers by developing services that are in demand. When you engage in these projects’ tokens, you may expect to get a significant return on your investment. They are, however, extremely dangerous investment options.
A disadvantage of microcaps is that while analyzing smaller firms, investors must consider liquidity. There is also less liquidity in the micro-cap markets than in larger-cap equities due to the lack of regular analyst coverage and institutional buying.
Micro-cap coins have the advantage of allowing you to make a lot of money in a short amount of time. If you buy into a micro-cap in its early stage of development, you have the opportunity to earn enormous returns on your initial investment. Being an early investor also implies that you don’t have to put a lot of money into a project to make a lot of money.
If you are in it for the long term, investing in micro-cap coins puts you at a larger risk of getting scammed. Also, if you don’t complete your due diligence on your favorite currency, you risk losing all of your money if the crypto firm decides to depart the market, taking all of your investment cash with it – also known as a rug pull. 

What Is a Moving Average (MA)?

The Moving Average (MA) indicator helps traders in smoothing out price fluctuations and determining the actual trend. The basic idea behind the moving average is to take the average price for an X amount of periods of an asset. 
Moving averages help traders with price analysis. It also helps them in determining their next potential move in the markets.

The graph of a Moving Average (MA) usually consists of two lines:

The gap between the yellow and purple lines indicates high amounts of volume. Whenever the yellow line crosses the purple line from above the price of the asset decreases. This is also known as a death cross. In the graph above you can see a major drop in volume as the yellow line creates a death cross with the purple line after dissecting it from above. On the other hand, when the yellow line crosses the purple line from below a golden cross is formed, as seen at the right-hand side of the graph. 
Note: A significant gap between the yellow and purple lines signifies a large amount of volume. If the yellow line is above the purple line and the gap between them is significant then the price of an asset is experiencing a bullish run. The opposite is true in the case of a bearish trend where the purple line has crossed the yellow one from below and there is a huge gap that represents a volume difference between the two lines.

Why Is Moving Average (MA) Used?

The moving average is used by market analysts to determine the support and resistance of an asset by evaluating its movements in the market. The moving average paints a clear picture of the price action which can be used by investors to determine a potential bullish or bearish run.

What Is the Best Setting for Moving Average (MA)? 

The ideal settings for Moving Average (MA) are the following: 

  • MA1: 50
  • MA2: 200

Types of Moving Averages

In general, there are four types of moving averages. Simple or Arithmetic, Smoothed, Exponential, and Weighted. The most popular ones in the financial markets are two: Simple Moving Average (SMA) and Exponential Moving Average (EMA).

Simple Moving Average (SMA)

A Simple Moving Average (SMA) is calculated by taking a sum of all the data points in a given time period and then dividing it by the total number of time periods.

Here’s how you can calculate the Simple Moving Average (SMA):

Where:

n = Total number of time periods

A = Average in a period ‘n’ 

Exponential Moving Average (EMA)

Exponential Moving Average (EMA) is usually preferred by traders more than the Simple Moving Average (SMA). The reason behind this is that EMA focuses more on the recent price data and also keeps the older price observation in place for the traders to analyze and make an accurate investment decision.

Here’s how you can calculate the Exponential Moving Average (EMA):

Where EMA = Exponential Moving Average

Smoothing = 2

You can increase the smoothing factor if you want the recent price observations to have a greater influence on the EMA technical indicator.
Moving Average (MA) is a great indicator that is used by a lot of traders, however, a combination of multiple technical indicators is preferred for determining the direction of the market accurately. Other commonly used technical indicators (TA’s) include relative strength index (RSI), Moving Average Convergence Divergence (MACD), on-balance volume (OBV), Aroon indicator, and the stochastic oscillator. All of these indicators have their specific benefits as they allow a trader to view an asset’s chart from multiple angles and come up with a better investment decision.

What Is a Smart Contract?

A smart contract is a self-executing computer program with the terms of the buyer’s and seller’s agreement directly embedded into lines of code. The program, along with the agreement it contains, is distributed across a decentralized blockchain network such as Ethereum or Ontology. A smart contract is automatically executed when certain conditions are met. Once the code is executed, it is virtually impossible to reverse or alter.
Smart contracts enable transactions and agreements to be anonymously executed among two or more parties that do not trust each other, without the need for a third-party authority, justice system or another external mechanism.

A smart contract is analogous to a vending machine, as opposed to a store where you have to pay a merchant to buy. With a vending machine, you don’t have to deal directly with the merchant (vending machine owner) since you can simply transact automatically by inserting coins in the machine and your chosen soda will drop. This direct way of transacting without the need to know or trust who you’re dealing with is what makes a smart contract favorable. In fact, businesses have already started implementing smart contracts in their systems as they provide better protection from losses, as well as make customers feel safe.

What Is Staking?

Staking is locking up crypto assets to earn a return on your principal and help secure the blockchain. The blockchains that support the staking process run on the proof-of-stake consensus mechanism. Nodes with staked cryptocurrency validate new blocks and receive a yield on their investment. Staking is often compared to having a cryptocurrency savings account. 

How Does Staking Work?

Staking cryptocurrency works similar to a regular savings account at a bank. You lock up your cryptocurrency and receive a return on the staked principal. The longer you lock up your coins, the more you receive in return. Your stake secures the blockchain by participating in finding consensus about ongoing transactions. 

There are three main approaches to staking crypto:

  • Staking at a Centralized Exchange: This is the simplest way. Almost all centralized exchanges (CEX) offer staking services, where you stake with the CEX and the exchange does the rest for you. You receive a yield that is slightly lower than if you were running your own node. However, it is far more convenient. 
  • Running Your Own Node: With all proof-of-stake blockchains, you have the option of running your own node. Some blockchains have higher hardware requirements than others to run a full node. In doing so, you directly contribute to the chain’s security and can receive a higher yield. Keep in mind that running your own node can be technically more challenging than delegating your stake to a CEX or another node.
  • Delegating Your Stake: In delegated proof-of-stake, you have the option to stake your coins with a node operator that does the technical work for you. However, you still earn a yield on your staked coins. The added risk factor of this option is to find a node that behaves honestly and will not have your stake slashed (i.e. incur a penalty).

Which Cryptocurrencies Can You Stake?

Most cryptocurrencies run on a proof-of-stake consensus mechanism, which means they can be staked. Some of the most popular examples include:

The two most noteworthy exceptions are Bitcoin and Dogecoin. Both run on proof-of-work and can therefore not be staked.

Can You Lose Crypto by Staking?

There are certain risks to staking. A minor risk is slashing, meaning your stake can get penalized if a node does not validate transactions correctly. This is not a risk factor if you stake with an exchange or correctly run your own node. Moreover, finding an honest node is straightforward, but you should still be aware of the risks.

Another risk factor is that your staked coins can lose value during the staking period. Some cryptocurrencies and staking providers require you to choose a predetermined staking period during which you cannot unstake your coins. Since cryptocurrencies are volatile, you may own more coins at the end of the staking period, but these coins have less worth. Sometimes, there is an option to unstake if you pay a hefty penalty. Thus, it is advised to stake only as much as you do not immediately require for other purposes. 

Which Crypto Is Best for Staking?

There is no one best crypto for staking. Except for proof-of-work coins, almost all other coins can be staked. How profitable staking is depends on factors like:

  • The Lockup Period: The longer you commit your coins, the higher yield you will earn. However, you sacrifice flexibility if you stake your tokens for long.
  • The Amount Invested: The less you stake, the lower the yield will be. However, the higher your staked amount, the higher the nominal returns.
  • The Coin’s Volatility: Some cryptocurrencies are more volatile than others. Predicting a coin’s exact volatility is impossible, so you should choose the coins you feel most comfortable with for staking.

Is Crypto Staking Taxable?

Moving your coins to a staking pool or running your own node is not a taxable event. Whether staking rewards are subject to income tax is unclear. Selling your proceeds from crypto staking is considered a taxable event and will be subject to capital gains taxes. If you want to be on the safe side, you should consider both receiving and selling the staking rewards taxable events and declare them accordingly.

What Are Staking Crypto Pros and Cons?

The benefits of staking crypto are the ease and convenience of acquiring new coins. Here are some pros of crypto staking:

  • Earning New Cryptocurrency: You can earn new crypto with your existing crypto stack, simply by staking it. 
  • Securing the Blockchain: You help secure the blockchain of the coin that you’re staking, which increases its value.
  • Increasing the Token Value: Staked coins are not in circulation and reduce the existing supply. In periods of great demand, this can help push up the price of the cryptocurrency.

The disadvantages of staking crypto are the risk of losing money through volatility and inflexibility. Here are some cons of crypto staking:

  • Staked Crypto Can Lose Value: Since cryptocurrencies are volatile, you can lose money if the value of your staked coins decreases more than the staking rewards you acquire.
  • No Possibility of Unstaking: Even though some coins and providers offer the option to unstake for a penalty, you will often not be able to unstake before a predetermined amount of time. 
  • Crypto Taxes: Staking is subject to taxation, which means your profit margins are slimmer than the advertised staking yield. Keep this in mind when choosing a coin and provider to stake. 
Liquidity pools are crypto assets that are kept to facilitate the trading of trading pairs on decentralized exchanges.
@TBM369