Yurii Horblianskyi

Why is bitcoin so bad for the environment?

Bitcoin mining has more of an energy consumption each year than Malaysia or Sweden, according to the Bitcoin Electricity Consumption Index, run by Cambridge University’s Centre for Alternative Finance.

Campaigners claim that the impact is exacerbated by the fact that most of the mining takes place in China, which is heavily reliant on coal power.

Bitcoin has been on a rollercoaster ride over the past 14 months or so. Its price soared during the pandemic; it had gone from about $6,500 in March 2020 to as high as $64,000 before abruptly losing half its value.It crashed back to earth amid a crackdown in China and amid the fears over its carbon footprint.

If the bitcoin price soars again so too will the amount of fossil fuel involved in the process.

Earlier this year, Tesla announced that it had purchased $1.5bn (£1.1bn) worth of bitcoin.

Musk has since confirmed he will not be selling his investment in the world’s biggest cryptocurrency and will instead wait until a more sustainable method of mining has been found.When Tesla chief Elon Musk said that the electric carmaker will no longer accept bitcoin as payment for vehicles, its value plummeted.

Musk said he was concerned over the impact that cryptocurrency is having on the environment. But are there any eco-friendly alternatives?

Why is cryptocurrency bad for the environment?

It is the level of computer processing power required to mine cryptocurrency that is worrying environmentalists.

The mining process uses:

High-powered computers which compete to verify transactions in return for coins

Vast amounts of electricity to power complex algorithms

Non-renewable energy sources such as coal, the dirtiest fossil fuel

Six environmentally friendly crypto currencies

Environmentalists and Musk agree that the “mining” of bitcoin uses a worrying amount of fossil fuels.

However, there are alternative, eco-friendly cryptocurrencies that inflict less damage on the planet.

These could potentially allay concerns surrounding cryptocurrency and the environment.

Smaller currencies may often appear to have a lower carbon footprint, but that may simply be because there are fewer transactions. However, there are digital assets that are more energy efficient – which means their environmental impact is reduced.

These cryptocurrencies seem to be the most efficient in terms of their energy requirements, according to research from TRG Datacenters:

IOTA (0.00011kWh)

XRP (0.0079 kWh)

Chia (0.023kWh)

Here we outline six cryptocurrencies that are more environmentally friendly than bitcoin:

1. Chia

TRG Datacenters says chia is a good example of a sustainable cryptocurrency that has been designed to be less energy intensive.The “farming” process used by chia employs hard drives – a concept known as proof of space – rather than the mining, proof-of-work approach used by bitcoin, which relies on computer processors.

Important points about chia:

Chia coins can be farmed on the hard drives of laptop or desktop computers – and unused space can be utilised for “plots”.

Once the software is fully downloaded, your computer does the plotting for you and starts farming chia. This approach makes it easier for home users to farm chia, because it doesn’t rely on such huge amounts of electricity as mined cryptocurrencies.

However, some critics still claim that chia isn’t as eco-friendly as it claims because it has led to a significant surge in demand for computer hardware and growing levels of e-waste.

2. IOTA

IOTA uses the “Tangle”, an alternative form of technology that does not require miners.

It is maintained by smaller devices and, as such, has lower energy requirements.

3. Cardano

Unlike cryptocurrencies such as bitcoin, cardano uses a proof-of-stake system called Ouroboros. This requires users to purchase tokens in order to join the network, saving significant amounts of energy.

points about Cardano:

Deeloped by Charles Hoskinson – co-founder of ethereum, the second-largest cryptocurrency after bitcoin – it can achieve 1,000 transactions a second compared to up to seven with bitcoin.

Ouroboros is the first peer-reviewed blockchain based protocol, which means, it is claimed by cardano, that it can be scaled to global requirements without sacrificing sustainability or security.

Cardano is arguably the most well known of the green cryptocurrencies and at the time of writing was the fifth-largest cryptocurrency.

According to TRG Datacenters’ analysis, its energy use is 0.5479 kWh.

4. Nano

TRG Datacenters also highlighted nano, even if it was not included in the energy-use listings.

Important points about nano:

While the digital currency runs on a proof-of-work basis, like bitcoin, it strives to reduce the waste that is often associated with crypto transactions.

It uses an Open Representative Voting protocol to reduce energy use and increase efficiency.

In addition to its eco-credentials, nano transfers are instant and it is free to trade.

5. Solarcoin

This is a global and independent sustainable cryptocurrency designed to promote the creation of solar energy by rewarding generators with solar coins.

Generators can claim one coin for every megawatt hour created by solar technology.

6. Bitgreen

This eco-friendly cryptocurrency was launched as a green alternative to bitcoin.

Like solarcoin, it seeks to encourage positive environmental behaviour by rewarding users for actions including drinking sustainable coffee, car-pooling and volunteering. It can be traded on exchanges or spent with bitgreen’s partners.

New eco-friendly cryptocurrencies on the horizon

As concerns mount over the levels of energy used in the mining of cryptocurrencies, new initiatives are constantly emerging to improve the sector’s environmental credentials.

These include increased use of renewable energy, more energy-efficient protocols and carbon footprint offsetting.

TRG Datacenters says it expects to see the creation of new, more sustainable, eco-friendly cryptocurrencies, as well as big changes in the practices of existing currencies.

The company identifies nano, IOTA and chia as pioneers in eco-friendly cryptocurrency, with a commitment to reducing the environmental impact of transactions.

More than 45 companies and individuals in the crypto, finance, energy and technology sectors have also signed up to the Crypto Climate Accord, which seeks to decarbonise the industry and achieve net-zero emissions from the electricity consumption associated with cryptocurrencies by 2030.

How bad is dogecoin for the environment?

TRG Datacenters in Texas has analysed a range of cryptocurrencies and ranked them according to the amount of energy required to power each transaction.

Dogecoin used 0.12kilowatts of energy per hour (kWh) per transaction, well ahead of bitcoin, which was at the bottom of the table, using 707kWh.

Dogecoin certainly appeared to be the preferred sustainable cryptocurrency for Musk at the time of writing. The entrepreneur regularly promoted it on social media posts and plugging it on TV appearances.

However, critics claim its true environmental impact is difficult to assess because of the complexity of its mining system.

Bitcoin seemed to be on a roll. El Salvador in early September declared the cryptocurrency to be legal tender, allowing it to be used for payments. There is talk of Bitcoin becoming a medium of exchange in Afghanistan, enabling financial transactions in a society where the issuance of conventional money has broken down. The cryptocurrency is even entering mainstream finance with this week’s introduction of a Bitcoin exchange traded fund on the New York Stock Exchange, allowing U.S. investors to speculate on Bitcoin prices without actually owning it. And of course early investors in Bitcoin have minted fortunes.

Amid all this hype, financial regulators in Washington have started to express increasing concerns about Bitcoin and other cryptocurrencies. Then last month, China brought down the hammer—banning all cryptocurrencies.

As Bitcoin continues to elicit both enthusiastic and fearful responses, does the cryptocurrency have a future? The answer is complicated. Bitcoin will hardly topple the dollar or other major central bank-issued currencies, but its technology will change how we conduct payments, banking and other financial transactions. These changes will bring many benefits although there are significant downsides as well. Governments will have to play a key role in getting this balance right.

Bitcoin’s main attraction was that it would enable users to conduct financial transactions using only their digital identities, and to complete those transactions without using fiat currency issued by a national central bank or relying on a trusted intermediary such as a commercial bank or credit card provider. The technology that enables this feat, called blockchain, is truly innovative. All transaction information and Bitcoin digital account balances are recorded on public digital ledgers, visible to anyone with an internet connection, that are maintained on multiple computers worldwide. Remarkably, it is this extreme transparency that makes the blockchain secure and tamper-proof.

Read more: El Salvador Is Betting on Bitcoin to Rebrand the Country — and Strengthen the President’s Grip

For all its technological razzle dazzle, however, Bitcoin suffers from fundamental weaknesses that stand in its way of becoming a viable medium of exchange for financial transactions.

Bitcoin transactions are slow and expensive, and its network cannot process large transaction volumes. A bigger problem for an aspiring medium of exchange is unstable value. Bitcoin’s wild price fluctuations, from month to month and even from day to day, make it unreliable for day-to-day transactions.

In its early days, Bitcoin acquired an unsavory reputation for facilitating illicit commerce. It has been used recently by hackers who demanded ransomware payments in bitcoins but criminals have mostly moved on to other cryptocurrencies that offer stronger anonymity than Bitcoin. Still, governments look askance at all such cryptocurrencies for fear that they can facilitate illegal activities such as money laundering, drug trafficking and terrorism financing.

That is not all. Because there is no centralized authority that manages Bitcoin, transactions cannot be reversed and mistakes cannot be rectified. Bitcoin balances that are stored in digital wallets can be lost forever if users forget or misplace their passwords. Moreover, the process by which transactions on the Bitcoin blockchain are validated requires enormous computing power and energy, with terrible environmental consequences.

Oddly, even while it has largely failed in its original purpose of facilitating transactions, Bitcoin has become a financial asset. Many investors seem to believe that it is a secure investment because of its scarcity. Unlike fiat currencies such as the dollar that can be printed at will by central banks, the computer algorithm that manages Bitcoin limits its total issuance to 21 million bitcoins (about 18.5 million have been created so far). To base the value of an asset, which has no intrinsic use, just on scarcity seems a dubious proposition. But that has not stopped investors from pouring money in, creating a massive speculative bubble. The total market value of all cryptocurrencies is now a stunning $2 trillion.

For all Bitcoin’s flaws, the blockchain technology itself is maturing. Some new cryptocurrencies, called stablecoins, have better potential to serve as mediums of exchange. They have stable value because they are backed by stores of fiat currencies. With this modification, the technology has the potential to make low-cost digital payments widely accessible. Many low-income households, including in the U.S. lack access to digital payments because they do not have a credit card or bank account. International payments, which are beset by even more impediments, could also be made cheaper, quicker, and easier to track. These changes will be a boon to consumers, businesses, as well as exporters and importers.

Blockchain-based finance, which sidesteps conventional financial institutions, is viewed by proponents as a way to democratize finance, enabling broader and easier access to a wide array of financial products and services. For instance, variants of the original technology are making it easier to connect savers and borrowers directly, bypassing banks. The prospect of easy access to digital payments and basic banking products for savings and credit is one that could be beneficial not just in developing countries but even in a rich country like the U.S., where about 5% of the adult population is cut out of the formal financial system.

But technology cannot solve all problems and even creates new ones. Financial regulators face particular challenges in updating rules to cover cryptocurrencies and related financial products that often fall between the regulatory cracks. Investor protection is a serious concern as naïve, retail investors might end up taking on more risk than they realize when they get dazzled by the promise of a quick pathway to riches from the new technologies.

Facebook plans to issue its own stablecoin, raising questions about privacy and how such corporations will exploit users’ data and, perhaps one day, their power to issue their own currencies that directly compete with fiat money. Here, too, the government has to play a role in setting up guardrails for the use of consumer data and to avoid the use of such unregulated cryptocurrencies for illicit commerce.

Finally, there is the unsettling prospect that, rather than the new technologies leading to a more equal society, inequities in digital access and financial literacy could end up worsening socioeconomic disparities. The proliferation of digital finance could disenfranchise households that lack reliable digital connectivity. Moreover, the risks embedded in crypto assets might end up largely falling in the laps of uneducated investors who get swept up at the tail end of speculative frenzies.

The future promised by the technological revolution Bitcoin has spawned is a bright one. While embracing the transformative potential of blockchain technology to benefit their citizens, governments will still have to play an active role in managing the technological, financial and social risks.

Remember, Aladdin’s magic lamp, the one that had the power to make anyone wealthy. Well, today we call that thing crypto, and it does quite the same thing. Right investment and patience can actually deliver extraordinary benefits and make you super rich in the long run.

And Bitcoin is the perfect example to prove it.

We know that what has happened with Bitcoin is something that happens very rarely in history.

A person who invested $19,000 in Bitcoins – right at the peak of the 2017 bull run – found their investments dip by around 75-80%. But, patience sure pays and he earned 300% more after a gap of three years.

Since then, lots of people are showing their interest in the crypto market and investing. According to Cryptominati Capital “Crypto space is attracting investors, entrepreneurs, and individuals to invest and make new projects”.

But, things are not like that. It is not as easy as it used to be now, but patience and an analytical approach will yield good returns. The crypto market has now turned into a fierce Wild West to get into the market with unpredictable components.

In this blog, you will read what cryptocurrencies are and the easiest way to make money with cryptocurrencies with less risk than complex strategies.

What is Crypto and How does it Work?

A cryptocurrency is a decentralized payment method that you can use to trade online. However, the market is flooded with the best cryptocurrencies to invest, from the popular Bitcoin, Ethereum, and Litecoin to the Dogecoin meme currency.

Cryptocurrency operates on a blockchain, the digital ledger of cryptocurrency transactions, ensuring that the same coin is never used twice. Transactions are processed on a blockchain network made up of thousands of machines, and in return for the efforts of these machines, owners can earn cryptocurrencies.

New coins are ‘mined’ (that is, minted or created) as computers interpret complex mathematical intricacies to define the legitimacy of a transaction on the blockchain.

While many people pay for their purchases in cryptocurrency, it is more broadly an investment form that drives entire sites that track the value of one Bitcoin.

Using exchange or bitcoin wallet apps like Crypto.com, Coinbase, Coinmarketcap, and BlockFi, users convert dollars into crypto and rely on an increase in the value of their investment, just like stocks.

The capital gains tax you pay on Bitcoin cash or other cryptocurrency income will vary depending on your income for that tax year. If you earn less than $40,000 per year, you won’t owe any taxes on crypto income. According to guidelines, income up to $441,150 is taxed at 15%, and higher income is taxed at 20%.

People love to invest in crypto because of the ease of buying, selling, and trading online.

Cryptocurrencies can gain value when large corporations announce that they will accept them as a payment method, when mining processes change, or when celebrities like Elon Musk promote certain crypto assets. It can also increase in value when demand increases and supply is limited. For example, when 21 million bitcoins are in circulation, no more mining takes place.

Cryptocurrencies can lose value if companies no longer accept them as a payment method or if many people try to sell them all at once.

Here Are Some Outlines To Better Understand Dollars And Cryptocurrency Market

Storing cryptocurrencies in a software wallet is like carrying cash in an actual wallet. Available and waiting to be used.

Putting cryptocurrency in a savings protocol is similar to depositing money in a savings account. The Savings Protocol pays you interest on the use of the service, in the same way, banks pay interest on some savings accounts.

Storing cryptocurrency and borrowing from yourself is like putting money into a retirement account or getting a loan from it.

Trading tokens on a cryptocurrency exchange is similar to trading shares on a stock exchange. Tokens represent blockchains, and stock-like protocols represent businesses.

Get A Crypto Wallet For Buying, Trading, And Storing

You will require a place to store your crypto – a wallet. You can pick a software wallet – like an app or a hardware wallet – an offline sort of device like a flash drive.

Most software wallets, also known as Hot Wallets, are easy to recover if you lose your phone

Most hardware wallets, also known as Cold Wallet, ain’t easy to recover if you lose them

Since software wallets are online, it’s faster and easier to trade or spend crypto. But vulnerable to online attacks that could lead to stolen funds. Hardware wallets are offline and impossible to hack, but the risk of getting lost or stolen is always there, like in any other real wallet.

You can skip these steps by installing an exchange app like Coinbase, Coinmarketcap, etc. Below are the steps that you need to follow to set up your account-

Download a wallet app

Create your account

Get swift verification

Transfer or deposit funds from the bank account to the crypto wallet

This is the fastest way to start buying and trading cryptocurrencies. Your assets are stored in an exchange-managed wallet, which adds some risk. Think about it. You are a hacker trying to steal millions of dollars. It’s a good idea to spend time hacking major exchanges to gain access to thousands of wallets. Hacking a software wallet is probably a waste of time.

Tips From Experts: How To Invest In Crypto Currency Safely

Investments are always risky. Experts say cryptocurrency is one of the riskier investment choices in the market. However, digital currency is also the hottest asset.

Currently, the global cryptocurrency market cap is $2.66T and it is expected to rise impeccably. If you’re willing to invest in digital currencies, the following tips will help you make educated choices.

Research Exchanges

Learn about cryptocurrency exchanges before investing a dollar. These platforms provide a medium to buy and sell cryptocurrencies. According to Bitcoin.com, more than 500 exchanges are available to choose from. Do your research, read reviews, and speak to an experienced investor before proceeding. Various telegram communities are there guiding & sharing their personal experiences. Crypto Gaming Bulls is one of them.

Know-How to Store Your Virtual Currency

When you purchase crypto coins, you need to store them. You can choose a crypto wallet to stock up on an exchange or in a digital “wallet” (one of the cryptocurrency wallets described in the blog). While there are several types of wallets, each has its advantages, technical and security requirements. As for trading, you should research your hosting options before investing.

Diversify Your Investments

Diversification is at the heart of any correct investment strategy, and the same is true when investing in cryptocurrencies. For instance, you should not invest all your money in the Bitcoin network only because you know the name. There are thousands of options, and it is best to split your investment into multiple digital currencies.

Prepare for Volatility

The crypto market is always volatile, so be prepared for some ups and downs. You will see the price fluctuate wildly. If your portfolio or mental well-being is beyond your control, cryptocurrencies may not be your best bet.

Cryptocurrency is trending right now, but remember, it is still in its infancy. Investing in something new can be difficult, so be prepared. If you’re considering joining, start by doing your research and investing strategy conservatively.

7 Strategies To Make Money With Cryptocurrencies

Lending/Borrowing

Earn extra money from your crypto investments by starting crypto lending. Cryptocurrency lending involves the participation of borrowers and lenders and agreements between them. Several crypto exchanges support crypto lending, including Nexo, SALT Lending, BlockFi, Oasis, and Celsius.

Specifically, cryptocurrency loans include contracts in which borrowers pledge their holdings of cryptocurrency as collateral, lenders accept terms and offer cash or other cryptocurrencies, and borrowers agree to pay interest to lenders.

Typically, in a cryptocurrency loan agreement, the borrower and borrower are individuals, not organizations such as banks. The bottom line is that cryptocurrencies are at the heart of loans that are used as collateral or as the primary source of borrowed value.

Thus, lenders can borrow crypto assets or holdings and benefit from interest payments in the form of additional crypto assets. Of course, this is not without risks, and finding platforms that connect potential borrowers and lenders can take some time. But again, if you are looking for a way to make your cryptocurrency work and earn extra money, lending it is one of the possible ways worth exploring.

Traditional Buy and Hold

The method of making money from crypto is preferable for people who are ready to take risks. It means getting crypto assets of your choice from a crypto exchange and purchasing more when prices drop – traditionally called “Buying the dip”.

After months or years, at a significant overall profit, the asset might be sold compared to the purchased price.

Well-established crypto coins like Bitcoin, Ethereum, and Litecoin rise and fall daily, but if we look at the chart, we find these coins have maintained an upward trend across the year. New coins like Chia are more likely to debut at a higher price due to the hype. Later, it loses value and requires a long time to recover. Sometimes they are likely to disappear if there are not enough buyers in the market or the utility of the function performed is insufficient.

It is vital to read the whitepaper for that coin before deciding which cryptocurrency to use as a long-term investment. It will give you a fair idea of the origins and purpose that it serves and provide enough data to allow it to stand the test of time.

Trading

Investing is a long-term venture based on a buy-and-hold strategy, but the trading is utilizing short-term opportunities.

The crypto market is unpredictable. In a simple term, prices of assets can rise or fall in price dramatically over a short span.

You require proper technical and analytical skills to be a successful trader. You will need to analyze the market chart of the performance of the listed assets. So, you can make an accurate prediction of the price rise and fall.

While trading crypto, you can buy or sell, depending on whether you expect the asset’s price to rise or fall. This means you can make a profit whether the price goes up or down.

Ways to enhance your trading strategy

Various ways are there to minimize the risks involved in trading crypto. Here are some of the top ways to enhance your trading strategy.

Diversify your trade – Combining various currencies will help to minimize the daily risk associated with a specific coin.

Minimize trading cost – Choose a trustworthy exchange that has low fees to reduce the cost of trading.

Watch trading time – Plan the trading time that matches your schedule.

Follow crypto news – Get updated on crypto news and stories to stay ahead of the market.

Use technical analysis – Practice technical indicators. This will help you to justify each of your trades.

Use stop losses – Set stop-loss orders on every trade. Begin with a profit loss rate of 2:1.

Staking

Since the energy required to run a PoW blockchain is extremely high, some blockchains have developed a seemingly better validation algorithm called Proof of Stake (PoS). Instead of using energy and hardware to execute complex cryptographic puzzles, the PoS algorithm forces users to block (stake) their tokens to verify crypto.

Staking is the action of blocking digital assets that act as a validator in a decentralized cryptographic network to ensure network integrity, security, and continuity. Stakeholders secure their assets to serve as nodes and validator blocks. Stakeholders are paid with the newly created cryptocurrency as an incentive to help secure the network.

Pros: A cheaper approach to obtain money from cryptocurrencies

Cons: Price fluctuation is the largest danger.

Airdrops

Of all the ways to get free cryptocurrency, airdrops offer the highest risk. It’s more than you think worthwhile for most investors. Developers perform airdrops when they want support for new cryptocurrencies. In a nutshell, they give the free coin to try to adopt.

You can check on the Internet when the airdrop project is in progress. They are often promoted by users on the company’s website, social media, and other crypto news platforms.

It is crucial to be careful with any new crypto project. Fake Airdrop and ICO (Initial Coin Offering) are common scams used by hackers. In reality, many coins issued in the form of air bubbles are not very valuable investment stores. Experts recommend sticking with the more well-known cryptocurrencies, Bitcoin and Ethereum, especially for newbies. If you follow these recommendations, switch to airdrops.

All cryptocurrencies obtained through airdrops are also taxable income. According to the IRS, you must report based on the fair market value of the date of registration on the distributed ledger (in most cases when receiving airdrops from digital wallets).

Mining

Mining is an important part of the Proof of Work (PoW) consensus mechanism and is one of the oldest ways to earn money with cryptocurrencies. This is the process of validating transactions and securing a PoW network. To perform these functions, miners receive new coins in the form of block rewards. In the early days of Bitcoin, mining was possible on a desktop computer, but today, specialized mining hardware is required.

When it comes to network maintenance, starting a master node is also profitable. A master node is a wallet that hosts a copy of the entire network.

These two methods require a substantial amount of initial and ongoing investment backed with technical expertise.

Dividends

Another method to get money with your crypto assets is to earn dividends. If you’re familiar with investing in stocks or bonds, you’re probably at least aware of what dividends are. To elaborate in simple language, dividends are small cash payments made to shareholders. If a company makes profits for a quarter (or a year, that depends on sole proprietorship), it splits those profits and returns them to the ownership of the company (shareholders).

While you may not see a tidal wave of dividends hit your crypto account without a large balance, it can be a way to make money with the crypto you already own. However, you need to do some research to see which cryptocurrencies are paying dividends and whether the dividends are worth it.

Some cryptocurrencies that pay dividends in more coins (or tokens) include VeChain, NEO, Reddcoin, NAVCoin, Decred, and their annual dividends broadly. Therefore, cryptocurrency dividends differ from stock dividends in that they pay additional tokens rather than cash.

Long-Term and Short-Term Investment: Which One Is Better?

What is a long-term investment in crypto?

Long-term investing is a method that typically holds an investment for more than one year. Typically, long-term investors are also passive investors. In other words, you don’t buy or sell large quantities in a short period. Long-term investors can invest in stocks that increase in value, or they can invest in funds or ETFs for the long term. But in general, long-term investing is more of a set-and-forget approach.

Strategies for long term investment:

There are a few different strategies, but the overall theme is about ‘Buy and Hold.’ Keeping this in mind, here are some strategies for long-term investors.

Value investing – A strategy where an investor tries to buy a cryptocurrency for lower than its intrinsic value.

Growth investing – Investing in companies that you believe will exceed the overall market cap.

Dividend investing – Investing in firms that pay out dividends.

What is a short-term investment in crypto?

A short-term investment is a method that is usually held for less than one year. Short-term investors are often referred to as active traders or active investors. This means you buy and sell much more often than long-term investors. This can be several times a year, several times a month, or even several times a day. Short-term investors usually want to make a quick profit and don’t plan to put an investment on hold but speculate on the market.

These short-term investors will also have long-term investment portfolios elsewhere. You are probably using it for retirement or for other companies that want to invest in stocks and keep them for the long term.

Strategies for short term investment:

Short-term investors look to buy and sell their holdings quickly to make a profit. So, here are a few common strategies for short term investing:

Scalping – Buying and selling promptly in a day or multiple times within the same trading day.

Day trading – Investing to make those small profits that add up to a fortune.

Swing trading – Investments for a few days or weeks or even for a few months.

How to pick cryptocurrency for long-term and short-term investment

First, fundamental analysis is required. The question is how to do a fundamental analysis? We also need to understand how much we have invested in cryptocurrencies. Top potential cryptocurrencies in the current market for long and short-term investments.

Quarterly fundamental growth analysis. For short-term or daily trading, test support and resistance levels should be understood.

Conclusion: Analyze Market Charts Before Getting Into It

Well, after reading this article you must have got an idea about how to make money with cryptocurrency. To make a safe investment and to gain a profit you must research before investing. Twitter is the best source of information to rely on for the latest updates about the crypto industry, for instance, CyrptoMinati Capital recently tweeted about their opinion on the investment in TheSandBox.

It is vital to know the crypto before investing. You should thoroughly study the ups and downs of the market. One thing you must ensure, have your wallet ready before the journey starts.

Make sure that you make all your strategies before investing. Picking up cryptocurrency is a crucial task that requires all the research and details.

Before picking up the crypto, make sure you watch out for its future in the market. Long-term and short-term are a part of the study. Thus, it sums up to doing a thorough research and watching the past and the present performance of the cryptocurrency you are willing to trade.

What are long and short positions?

These two terms reflect whether a trader believes a cryptocurrency is going to rise or fall in value.

Cryptocurrency traders often use industry-specific jargon that is not fully understood by newcomers. While “longs” and “shorts” are not the most technical terms — in fact, they are at the core of trading — we’ll explain the two concepts, especially for newcomers, who are likely flooding the crypto market amid the devaluation of fiat currencies due to aggressive stimulus backed by governments and central bankers.

In a nutshell, long and short positions reflect the two possible directions of a price required to generate a profit. In a long position, the crypto trader hopes that the price will increase from a given point. In this case, we say that the trader “goes long,” or buys the cryptocurrency. Consequently, in a short position, the crypto trader expects the price to decline from a given point — i.e., the trader “goes short,” or sells the cryptocurrency.

While buying and selling is typical for spot exchanges, you can go long or short on a cryptocurrency without actually buying or selling it. This is possible on derivatives exchanges that offer futures, options, contracts for differences, and other derivatives products. When you trade these derivatives, you get exposure to cryptocurrencies via long and short positions but without “physically” owning or dealing with them.

That being said, you will see more long positions versus shorts in a bullish market, as more traders want to benefit from the price ascension. When the market is bearish, short positions generally exceed the long ones. However, this is only an observation and not a rule to follow. Professional traders and investors usually buy the dips and sell the rips — i.e., they open long positions when the price retreats from recent peaks and sell the cryptocurrency when the price tests resistance levels.

2.

When should a long position be opened?

Traders should go long when they expect the price of a cryptocurrency to increase.

You may be interested in going long when you feel the price of a cryptocurrency is about to go up for a while, depending on the time frame with which you are operating. For example, if you are trading on the daily chart and believe that the price will increase during the following days or even weeks, you can go long. You can either buy the asset on a spot exchange or open a long position via futures, options or other derivatives contracts.

Obviously, your decision must be backed by some kind of fundamental or technical analysis. For example, if you find out that a blockchain project has secured a high-profile partnership or is implementing an important upgrade, you might think about going long on its native token. Generally, you should be very active on social media and read news on a regular basis in order to accurately comprehend the market sentiment. Alternatively, or on top of that, you can look for patterns on the charts and check, for example, whether the price has broken above an important resistance line, which might indicate the extension of an uptrend.

No matter what kind of analysis you rely on, you should be confident that the price will go up if you plan to go long. Otherwise, you will end up going against the market.

Unlike foreign exchange pairs, which have no particular long-term target, cryptocurrencies act like company shares in the sense that they are usually traded against fiat currencies, particularly the U.S. dollar, and they always strive to go higher. This is why you will see many investors who prefer to stick to the “buy and hold” strategy, especially when it comes to Bitcoin.

3.

When should traders go short?

Traders should go short when they expect the price of a cryptocurrency to decline.

You may be interested in going short on a particular cryptocurrency when you expect its price to decline for a while.

As explained above, you should back your decision with solid market analysis. As a rule, short-sellers open their positions when the market has reached an overbought level — i.e., it has increased for a long period and the uptrend might have supersaturated. Also, going short makes sense when the price cannot break a resistance level and starts departing from it.

Since the cryptocurrency market is still at an emerging stage, Bitcoin (BTC) and altcoins can often display sharp fluctuations without any fundamentals backing the moves, which makes the analysis process a bit tricky. However, you should always be aware of all the factors impacting the market before going long or short.

4.

Where can you go long or short?

You can go long or short on any cryptocurrency exchange or trading platform.

You can open long and short positions on any cryptocurrency exchange that provides spot or derivatives trading services.

Traders usually opt for well-established platforms such as Coinbase or Binance, among others. Coinbase is the largest crypto exchange in the United States, while Binance is one of the fastest-growing crypto trading platforms in the world. It offers a wide range of services, including spot, futures, options and over-the-counter trading.

It’s worth mentioning that Coinbase and Binance, as well as other popular exchanges, might seem sophisticated for newcomers. If you are new to crypto trading and are seeking a more straightforward experience, you can look into Changelly PRO. While it offers multiple features, trading on Changelly PRO is simple due to its intuitive dashboards and a terminal. However, it’s not only for beginners — seasoned traders can also open long and short positions on Changelly PRO, as the terminal comes with many different tools and perks, including a multicurrency wallet, security layers and multiple order types, among other features.

5.

How can margin trading amplify the targets of long and short positions?

Margin trading can magnify the potential results of long and short positions thanks to leverage — i.e., borrowed funds.

Going long or short might be lucrative, especially when the cryptocurrency is volatile. Still, professional traders prefer margin trading, as they can amplify potential profits by several times. However, the risks also increase by the same degree, which is why margin trading should be used with caution.

Margin trading involves trading with leverage, and it can be useful for both long and short positions. Margin accounts use funds provided by third parties — e.g., the exchange platform or other traders who are incentivized for contributing their funds. Thus, you can invest greater amounts by leveraging positions and magnify the potential profit by several times.

The required sum that you have to commit as a percentage of the total order amount is called margin, hence the name. As for the leverage, it represents the ratio of the borrowed funds to the margin. For example, if you want to open a long position worth $10,000 with 10-to-one leverage (or 10x leverage), you will have to invest $1,000 of your own money.

Margin trading is a method to boost the potential profits of your long and short positions.

Since late November, some of the world’s savviest cryptocurrency investors have been hooked on a game that has cartoon sheep, cartoon wolves, a digital currency called $wool — and the potential to make real money.

Graham Friedman, a self-described crypto evangelist, is among them. Mr. Friedman put up more than $20,000 of his own money to buy one wolf and one sheep — or, rather, unique digital images of them called nonfungible tokens.

“I’m like, dude, the narrative is so cool,” said Mr. Friedman, a director at Republic Crypto, a digital asset strategy company. “I’m here for the waltz.”

Wolf Game, as it is called, applies some familiar financial principles to a mysterious digital world. Players can buy sheep from the creator of the game, identified only as “the Shepherd,” and lend them back to “the barn” — essentially a storehouse — to earn interest. The payments are in $wool, a digital token that can be used as a form of payment anywhere on the Ethereum blockchain, on which the game is built. To get a sheep back from the barn, players must pay a 20 percent tax in $wool to those who bought digital images of cartoon wolves.Crypto prices are highly volatile, as this week’s sell-off showed. But die-hard enthusiasts believe prices will keep soaring in a world where traditional notions of value don’t apply.

When Wolf Game’s creator discovered that the game was vulnerable to hackers and shut it down temporarily to fix its code, freezing everyone’s assets, players had little recourse. They simply had to wait and hope that the game would come back online and that they would be able to retrieve their holdings. This spooked some participants, who got out as fast as they could once the game was running again. But others, including Mr. Friedman, kept playing.

“Getting in there when it looked sort of damaged and reputationally unsure turned out to be very smart,” Mr. Friedman said. By essentially buying the dip, he had tripled his investment to $60,000 as of January.

So it goes in the world of cryptocurrency — a market full of faceless users with nonsensical names who are just as likely to post animated pictures of dogs doing backflips on the moon as they are to buy or sell something of enduring value. There’s big money to be made, but a billionaire investor can get swindled just as easily as a newbie buying a tiny sliver of a single Bitcoin.

Got an idea? Issue a digital coin to fund it — all you need are believers.

And it’s getting wilder.

As stocks were sold off early this week, crypto prices also plunged. Bitcoin dropped nearly 13 percent before rebounding along with stocks. Ethereum’s own coin, Ether, was briefly down 15 percent. Their price declines have dragged down other digital asset prices, too. Analysts attribute the decline to investors who are pulling their money out of higher-growth, risky assets — including technology stocks — as interest rates are set to rise. That has put a dent in the argument, promoted by crypto boosters, that digital assets offer a hedge against losses in other markets.

So how does a new investor make sense of crypto and its constantly changing landscape?

The short answer: It’s impossible.

There are so few reliable measures of value that it’s hard to tell whether the excitement around a particular cryptocurrency is justified — or a bubble about to burst. Traditional financial analysis doesn’t apply here. A stock analyst, for instance, determines whether a company’s shares are expensive or cheap by assessing its business model, future prospects and leadership. But few, if any, of those metrics translate to cryptocurrency valuation. Belief alone can drive value.

It’s hard to even know what counts as a “cryptocurrency.” Bitcoin and Ether are widely regarded as currencies because, like the dollar or the pound, they are used to buy and sell many goods and services. Another 11,000 or more digital coins and tokens also exist, many of them vying to gain enough acceptance to become the next Bitcoin or Ether.

(Coins operate on their own digital backbones, called blockchains. Tokens rely on other blockchains to get around in cyberspace. Coins, tokens and other assets are stored in wallets, which are comparable to online bank accounts except that their holdings are visible to all.)

By standard measures of value, the prices of Bitcoin and Ether are understandable. They are priced highly — with market capitalizations on Wednesday of nearly $690 billion and $290 billion — because they are well established and liquid, with broad user bases. Bitcoin is held in nearly nine million wallets, according to Chainalysis, a data provider.

But there are many other coins and tokens whose prices are skyrocketing, giving them market caps above $1 billion even though they have only 100,000 or so users.

Cryptocurrency volatility is nothing new, and you should be comfortable with this if you decide to invest.

Volatility can be attributed to an “immature market,” says Ollie Leech, learn editor at Coindesk, a cryptocurrency news outlet. Anything from a celebrity tweet to new federal regulation can send prices spiraling.

“If Elon Musk puts hashtag Bitcoin in his Twitter bio, it sends Bitcoin up 10%,” says Leech.

This unpredictability is part of the reason why investing experts warn against investing huge amounts of your portfolio into a risky asset like crypto. Many recommend keeping your crypto holdings to less than 5% of your total portfolio.

For new investors, day-to-day swings can seem frightening. But if you’ve invested with a buy-and-hold strategy, dips are nothing to panic about, says Humphrey Yang the personal finance expert behind Humphrey Talks. Yang recommends a simple solution: don’t look at your investment.

“Don’t check on it. That’s the best thing you can do. If you let your emotions get too much into it then you might sell at the wrong time, make the wrong decision,” says Yang.

This is the traditional “set it and forget it” advice that many traditional long-term investors follow. If you can’t get on board, and the extreme dips continue to cause you worry, then you might have too much riding on your cryptocurrency investments.

“The most important thing any investor can do, whether they are investing in Bitcoin or stocks, is not just to have a plan in place, but to also have a plan they can stick with,” says Douglas Boneparth, a CFP and the president of Bone Fide Wealth. “While buying the dip might be attractive, especially with an asset that you really like, it might not always be the best idea at the moment.”