Good afternoon friends! Always in touch with you MediaMetri is and today we will talk about why you won’t earn even a dollar on cryptocurrency if you don’t understand the basic theoretical foundations of blockchain technologies.
It is worth understanding and accepting the fact thatbreak crazy X’s or make money on liabilities without lifting a finger, it’s impossible. It just doesn’t happen, period.
Understand that even the same StepN, although it brings income for the fact that you just walk, fell on your head for a reason. Finding such projects at an early stage requires time and effort, conducting your own research, understanding the tokenomics of the project, taking into account risk management, and much more. In this article, we will not dive into the wilds and give step-by-step instructions for making money, but simply point out the most common mistakes and beginners and what to do to avoid them.
The main mistake of beginners is ignorance of the blockchain structure.
In the chats of novice crypto investors, I often see messages that the user began to delve into, got himself a crypto wallet, decided to transfer the crypto from wallet to wallet, and it just took it and did not come. Evaporated along the way … Friends, this does not happen. Any token can be tracked on the blockchain. You can read more about what blockchain is, mining and where the new crypt comes from. here. The mistake at this stage is most often just the incompetence of a beginner. It is worth remembering once and for all: there is a blockchain network, it is paramount, and a token is already being created on this network. This token (also called the native coin of the network) is used for interaction within the network and most often it has a name similar to the blockchain, as well as its own ticker. In order to carry out any operation or use any application, you must interact with blockchainthat is you need to change its state. So, any change in the state of the blockchain is carried out using transactions that are paid for by the coins of the network. So, for exampleon the Ethereum network, you pay transaction fees in Ether.
It should be understood that each blockchain has its own structure and protocols, ways to ensure consensus or security, interface and many other differences at different levels of functioning. We will not talk about the technical component of all these blockchains, but it is worth understanding that the internal structure and variety of technical solutions affect the principles of operation of applications in a particular network for the end user.
The most famous blockchain networks and their native tokens:
Ethereum — ETH (ERC20);
BNB Chain — BNB (BEP20);
Polygon — Matic и т.д.
At the core of the network Ethereum lies a specially created virtual environment – Ethereum Virtual Machine (EVM). Due to it, or more precisely inside it, interaction between nodes takes place (nods), transaction processing, calling smart contracts, etc. EVM is an infrastructure through which other blockchains can be created.
In addition to its own coin, there are others within each network. Blockchains are also the basis for the creation of various tokens that can be used within a platform or network, on other sites or in other networks. Each network provides such opportunities by creating a certain standard for issuing tokens. So, for example, in the Ethereum network there are a huge number of different tokens of the standard ERC20while online BSC — BEP20and in the network Solana tokens SPL.
Very important, here lies the aforementioned rookie mistake. Using a token of one standard is not possible on another network. Yes, there are already many solutions for transferring assets between networks, like cross-chain bridges or entire blockchains trying to connect multiple networks (like Cosmos or polka dots), but this is a more complex topic, we will talk about it in other articles.
What else prevents beginners from earning?
Now you know how blockchain networks work and you definitely won’t lose your funds foolishly by choosing the wrong network in your wallet. But what else prevents beginners from earning on the crypt?
Correctly. As soon as you have the first free money, there is an irresistible desire to acquire something. you open CoinMarketCap, crypto chats, in which you always met cool ideas, and buy the first asset you like. (As practice shows, a maximum of the third)
This is fundamentally the wrong approach. Before investing in a particular coin, you should always conduct your own research on the coin or project you wish to enter. When analyzing it, you should also take into account your own financial situation, risk management, the fundamental usefulness of the project, its ability to scale and develop.
To successfully select coins for purchase, our team uses both fundamental and technical analysis. Again, we will not go into details and deep subtleties, in a nutshell: fundamental analysis is an approach used by investors to determine the “intrinsic value” of an asset. That is, how much the asset is actually worth, and what is its price at the moment relative to the actual value. The main goal of fundamental analysis is to determine whether an asset is overvalued or undervalued by considering a large number of internal and external factors. We will talk in detail about fundamental analysis and on-chain metrics in our forthcoming series of articles. “Cryptocurrencies from A to Z”.
As for technical analysis, it will also come in handy. I use it very rarely, however, some of the guys on our team use it to draw very non-obvious conclusions regarding the growth or fall of the coin in question. To study technical analysis, our readers are advised to Phemex Cryptocurrency Exchange Academy. There is a whole set of consistent articles about trading. We strongly advise every beginner to familiarize themselves with them.
Buying, selling and storing crypto.
For operations with cryptocurrencies, you will need: cold and hot wallets, accounts on decentralized and centralized exchanges. Here it is worth remembering about diversification in everything. Not only in relation to the assets that you buy, but also in relation to their storage.
We keep our main funds in several cold wallets, for staking and farming we use decentralized protocols such as 1inch, Biswap, PancakeSwap. To access the functionality that is only available on centralized exchanges, we use the exchange as the main one Phemex. Until recently, it was Binance, but you yourself know perfectly well what is happening with it It happened(
Friends, this is far from everything you need to know about the world of cryptocurrencies in order not to lose your funds. Soon we will publish a series of articles “Crypt from A to Z”so put the bell so as not to miss it, there we will tell in more detail for beginners what they will need to successfully trade crypto.
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