Get the weekly summary of crypto market analysis, news, and forecasts! This Week’s Summary The Crypto Market ends the week at a total market capitalization of $1,071 trillion. Bitcoin is up by over 3% after a successful week. Ethereum decreased by almost 2% over the past seven days. XRP gained nearly 2% in value this week. Almost all altcoins are trading in the green, with very few exceptions. The DeFi sector decreased the total value of protocols (TVL) to around…
What are Cold Wallets?
A cold wallet is a type of cryptocurrency wallet that is not connected to the internet. Because it is offline, a cold wallet is considered more secure than a hot wallet connected to the internet. As a result, cold wallets are often used to store large amounts of cryptocurrency for long periods, as they are less vulnerable to hacking and other forms of online attacks. Cold wallets can take the form of a physical device, such as a USB drive or a hardware wallet, or they can be paper wallets, simply printouts of a public and private key.
Cold Wallets Benefits
There are several benefits to using a cold wallet:
- Increased security: Because a cold wallet is not connected to the internet, it is much less vulnerable to hacking and other online attacks. This makes it a good option for storing large amounts of cryptocurrency.
- Offline storage: Cold wallets offer offline storage for your cryptocurrency, which can be convenient if you want to store your assets for a long period.
- Greater control: With a cold wallet, you have complete control over your private keys, as they are stored locally on the wallet itself. This means you control your assets without relying on a third party to manage them.
- Easy to use: Cold wallets are generally very easy to use and do not require technical knowledge.
- Affordable: Cold wallets are often more affordable than hot wallets, as they do not require an internet connection or ongoing maintenance (done by hot wallet service providers).
Cold Wallet Risks
There are also some risks to using a cold wallet:
- Loss or damage: If your cold wallet is lost or damaged, you may not be able to access your cryptocurrency. It is important to keep a backup of your cold wallet in a safe place in case the original is lost or damaged.
- Limited accessibility: Because a cold wallet is not connected to the internet, it can be less convenient to use than a hot wallet. You must connect it to a computer or device to access your cryptocurrency.
- Limited functionality: Cold wallets often have limited functionality compared to hot wallets. For example, you may not be able to easily view your transaction history or make transactions with a cold wallet.
- Potential for human error: Cold wallets rely on manual processes, which means there is a greater potential for human error. It is important to carefully follow the instructions for using a cold wallet to avoid making mistakes that could result in losing your cryptocurrency.
What Are DeFi Lending Platforms?
Decentralized finance (DeFi) lending platforms are decentralized applications (dApps) built on blockchain technology that enable users to borrow and lend cryptocurrency. These platforms use smart contracts to automate the lending process, eliminating the need for intermediaries such as banks. Here's an example of how a DeFi lending platform might work: Alice wants to borrow 100 ETH, so she goes to a DeFi lending platform and posts a request for a loan. Bob, who has 100 ETH to lend, sees Alice's…
What is The Capital Gains Tax in Crypto?
Cryptocurrency capital gains tax is the tax imposed on the profit made from the sale or exchange of a cryptocurrency. The tax rate for capital gains can vary depending on the country or jurisdiction. Still, in the United States, it is typically calculated as the difference between the cryptocurrency's purchase price (or cost basis) and the sale price multiplied by the individual's marginal tax rate. In some countries like the US, you only need to pay the capital gains tax…
Cryptocurrency vs. FIAT Money
Cryptocurrency is a digital or virtual currency that uses cryptography for security. It operates independently of a central bank or government. Bitcoin, the first and most widely used cryptocurrency, was created in 2009. FIAT money, on the other hand, is a currency a government has declared legal tender, but a physical commodity (such as gold) does not back it. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material…
Short-Term vs. Long-Term Crypto Investors
Short-term crypto investors typically buy and sell digital assets within a short time, often within a few hours or days. They are often driven by market fluctuations and aim to make quick profits. Long-term crypto investors hold onto their assets for longer, often for several months or years. As a result, they often believe in the technology and potential of the digital asset they are investing in and need to be more focused on short-term market movements. Short-Term vs. Long-Term…
What Are Bitcoin Maximalists?
Bitcoin Maximalists believe that Bitcoin is the only true cryptocurrency and that all other cryptocurrencies are inferior or unnecessary. Therefore, they often advocate for using and adopting only Bitcoin and reject the idea of diversifying one's cryptocurrency portfolio with other coins or tokens. Bitcoin Maximalists are known for their strong belief in the value and potential of Bitcoin as a decentralized and scarce digital asset. They often view it as a store of value or hedge against traditional fiat currencies…
Coins vs. Tokens: What Are the Differences and Similarities?
Crypto coins and tokens are digital assets that use blockchain technology, but they have some key differences. A crypto coin, like Bitcoin or Litecoin, is a standalone digital currency used to buy goods and services or traded on cryptocurrency exchanges. Coins have their blockchain and can be mined (created by solving complex mathematical equations) or minted through staking. On the other hand, a token is a digital asset built on top of an existing blockchain, like Ethereum or BNB Chain.…
What Are Overbought and Oversold Conditions in Crypto Trading?
Overbought and oversold conditions in crypto trading refer to situations where the price of a cryptocurrency has moved to an extreme level in one direction or the other. An overbought condition occurs when the price of a cryptocurrency has risen significantly and is considered too high relative to its recent trading history. This can indicate that the market is becoming too bullish and that the price may soon experience a correction. An oversold condition occurs when the price of a…
What is Crypto Tokenomics?
Crypto tokenomics refers to the economic principles and mechanisms that govern the creation, distribution, and use of tokens within a blockchain-based network. A token is a digital asset that can be traded on blockchain platforms and represents a certain value or utility within a specific ecosystem. For example, consider a decentralized application (dApp) built on the Ethereum blockchain. The dApp might issue its token, let's call it "APP," which can be used to access certain features or services within the…
What Are Gold-Backed Tokens?
Gold-backed tokens are digital assets backed by a physical asset, in this case, gold. They are typically issued by a company that holds a certain amount of gold in reserve. The company will issue certain tokens representing a specific amount of gold. For example, one token might represent one gram of gold. These tokens can be bought and sold on various cryptocurrency exchanges, similar to how other cryptocurrencies, such as Bitcoin, can be traded. The token's value is tied to…