Crypto Currencies

Crypto trading pairs are required for trading on crypto exchanges such as Coinbase, Binance, and KuCoin. They allow users to exchange one cryptocurrency for another without first trading either coin for fiat currency. 
Bitcoin (BTC), the cryptocurrency with the biggest market capitalization, and tether (USDT), the largest stablecoin linked to the U.S. dollar, are widely traded crypto pairings. Depending on the exchange, the pair will be shown as BTC/USDT or BTC-USDT.

Understanding Crypto Trading Pairs

Each asset in a cryptocurrency pair can be valued without using fiat currency. Trading pairs in cryptocurrencies are essential to the crypto economy and liquidity.

Consider a real-world example of a currency pair encountered by many tourists. Let’s imagine that on May 12, 2022, an American visitor was bound for France. The traveller would investigate the euro-to-dollar exchange rate in order to budget the trip and comprehend the cost of goods in France. On May 12, 2022, the foreign currency rate for the EUR/USD pair would have been approximately $1.04 per euro. So, to get 1 euro, it would require $1.04.

Similarly to foreign exchange (forex), crypto platforms offer a number of trading pairs so that customers can quickly trade one cryptocurrency for another. Because there is so much demand, crypto exchanges now offer as many pairs of cryptocurrencies as they can.

Crypto trading pairs are also utilised to reduce trading fees. If the trading pair didn’t exist, you would have to use at least two other pairs to get the cryptocurrency you wanted. This would cost you more in trading fees because you would be making two trades instead of one.

Here’s one instance: A trader wishes to exchange Dogecoin (DOGE) for Shiba Inu coins (SHIB) and searches a decentralised exchange for the DOGE/SHIBA combination (DEX). The DEX did not offer this trading pair, though.

As an intermediary, the trader might use a more common trading pair to trade DOGE/SHIBA. In this instance, the trader can choose to exchange DOGE/USDT. The trader can acquire USDT through the sale of DOGE. The trader can then use the SHIB/USDT trading pair to purchase SHIB coins.

You can see how much easier it would be to locate and use a SHIB/DOGE pair as opposed to a SHIB/DOGE pair.

To return to our global travel example, a traveller going from the United States to France and then to England does not need to exchange euros back into U.S. dollars since he or she can use the EUR/GBP trading pair to reduce transaction fees.

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How to Interpret Crypto Trading Pairs

There are only two components to a crypto trading pair: the base currency and the quote currency.

Most cryptocurrency trading pairs are made up of three letters separated by a backslash, like AAA/BBB.

The base currency in a crypto trading pair is always the first cryptocurrency. The base currency is the currency against which the other currency is compared; in our EUR/USD example, the base currency is the euro (EUR). BTC serves as the base currency for BTC/USDT. In crypto, the ticker preceding the “/” is always the base currency. ETH/BTC is another example, with ETH serving as the base currency.

The quote currency is the second component. It is the value of the base currency expressed in terms of the quote currency. The quoted currency follows the “/” character. For the trading pair BTC/USDT, the quote currency is USDT. Referring back to the EUR/USD example, the quote currency is the U.S. dollar (USD).

Together, the pairs indicate how much of the quote currency is required to equal 1 unit of the base currency.

On May 12, 2022, ETH/BTC was trading at around 0.0695 in the real world. Since the quoted currency for ether is bitcoin, a trader could get 1 ether for about 0.0695 bitcoin.

Crypto Trading Pairs with Stablecoins

Numerous crypto trading pairs are linked to stablecoins on global crypto exchanges. Stablecoins play a crucial part in crypto trading pairs on major exchanges like Binance and KuCoin.

The most popular and liquid trading pairings typically involve stablecoins backed by fiat currency, such as tether (USDT), USD coin (USDC), and Binance USD (BUSD). This is another reason why these stablecoins have a huge market cap.

Here are some examples of popular crypto-currency pairs related to stablecoins:

BTC/USDT

ETH/BUSD

ADA/USDC

The top three stablecoins by market capitalization are tied to the U.S. dollar, which makes it easy for investors to calculate the value in fiat money while using stablecoins. There are also a lot of stablecoin pairs available on exchanges, making it easy for traders to buy other cryptocurrencies. 

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If you follow cryptocurrency at all, it won’t be long before you hear about coin burning, a strategy that gained popularity in 2017 for reducing a coin’s supply.

There have been reports that developers have destroyed millions, billions, or even trillions of tokens. This article explains precisely what cryptocurrency burning is and why developers engage in it.

What is coin burning? 

A cryptocurrency token gets burned when it is purposely delivered to an unworkable wallet address in order to remove it from circulation. The address, known as a burn address or eater address, is inaccessible and cannot be assigned to anyone. When a token is transferred to a burn address, it is destroyed permanently.

Burning a cryptocurrency is possible for everyone who owns one, but it’s not something you’d want to do for no reason because you’d essentially be throwing money away.

Typically, the developers of a cryptocurrency decide to burn a particular quantity. Coin burning reduces the supply of a cryptocurrency, making its tokens scarcer. This scarcity can result in a price increase that benefits investors.

Several exceptions must be made to coin burning. It is not guaranteed to raise the value of the cryptocurrency. In fact, many see little to no value in it.

The destruction of cryptocurrency coins can be exploited to deceive investors. Developers can declare that they are burning tokens while actually sending them to a wallet they control. To avoid this, it’s essential to conduct research on the cryptocurrency you’re investing in or to stick to more secure cryptocurrency stocks.

Developers may potentially destroy tokens to conceal the identities of wealthy cryptocurrency holders known as “whales.” Suppose a developer releases a cryptocurrency with 1 billion tokens, retains 100 million, and promptly burns 600 million. Because the initial supply was 1 billion, it will appear as if the developer owns 10% of the supply. But the developer owns 25% of the rest of the 400 million tokens, which is obviously a much larger amount.

How did coin burning begin?

The concept of coin burning predates Bitcoin by a significant margin. It is quite similar to stock buybacks and was likely inspired by them.

A stock buyback occurs when the firm that issued the stock repurchases the shares at market price and reabsorbs them, thereby lowering the total number of shares on the market. Although buybacks and coin burning are not identical concepts, they might serve the same purpose.

In 2017 and 2018, many cryptocurrencies, including Binance Coin (CRYPTO: BNB), Bitcoin Cash (CRYPTO: BCH), and Stellar (CRYPTO: XLM), burned tokens in an effort to reduce supply and increase prices. Recently, it has become a regular practice for emerging cryptocurrencies to launch with a huge token supply.

One of the primary reasons coin burning has gained popularity recently is that it allows cryptocurrencies to begin trading at low rates and then artificially raises their value once individuals invest. Due to the cheap price, a new cryptocurrency can begin with 1 trillion tokens worth a fraction of a cent and attract investors. The developers can later burn billions of tokens to increase the price.

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What is evidence of burn?

Proof of burn is a consensus algorithm used to validate and add transactions to blockchains. It is employed to prevent fraud and ensure that only legitimate transactions are processed.

The consensus algorithm is the method by which a blockchain verifies transactions. Proof of work and proof of stake are the two most used consensus algorithms; proof of burn is a more recent option.

Proof of burn requires cryptocurrency miners to burn their own tokens in order to mine new blocks of transactions. They can mine more resources, the more tokens they use. Participants are rewarded with the coin they are mining.

Some proof-of-burn cryptocurrencies mandate that miners burn the same cryptocurrency they are mining. Some also allow miners to burn other forms of cryptocurrency.

Proof of burn is a good way to verify transactions because it works quickly and doesn’t use as much energy as the proof-of-work model.

Is burning cryptocurrency beneficial or detrimental? 

Burning cryptocurrency removes tokens from circulation. Similar to corporate stock buy-backs, it can be advantageous or detrimental to cryptocurrencies, depending on investor and user sentiments and how the new supply and demand dynamics affect prices.

How Are Cryptocurrency Tokens Burned? 

Tokens are destroyed by sending them to a wallet address that cannot send tokens but can only receive them. This “burns” or removes them from circulation.

Why Do Businesses Destroy Cryptocurrency? 

In general, tokens are burned by developers. This theoretically increases the currency’s price and benefits investors by reducing the supply.

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Do you know about crypto exchange and have heard of cryptocurrencies? Especially after the incredible market growth, it has caused globally over the past few years and the constant news coverage it has received. Regardless of the cryptocurrency, everyone’s primary objective is to acquire knowledge and ownership.

If you want to buy cryptocurrency, begin your investment journey utilizing the cryptocurrency exchange platform. Exchanges for cryptocurrencies are online marketplaces for buying and selling cryptocurrencies.

When entering a new field, there is much to learn. However, it is best, to begin with, an essential piece of advice. Never invest money you cannot afford to lose. It’s easy to get swept away by the earning potential – rapid returns and quick profits – but it only takes a few seconds. Never borrow money to invest in cryptocurrencies, and only take on as much risk as you can stomach without destroying your finances.

You have that tip to remember as we move on to learn everything about crypto exchanges!

A cryptocurrency exchange plays a crucial role in the world of cryptocurrencies. They facilitate the buying, selling, and trading crypto assets for their subscribers. However, are they the ideal way to store crypto?

Concise Description of Crypto Exchanges

Cryptocurrency exchanges are pillars of the cryptocurrency ecosystem. They are the most prevalent marketplaces for buying and selling cryptocurrency. Most newcomers likely entered the fascinating world of cryptocurrencies through one of these exchanges. Many prominent cryptocurrency organizations are exchange platforms, including Coinbase, Binance, Changelly, Bittrex, and Kraken.

In addition to buying and selling cryptocurrencies, exchanges are frequently used to store freshly acquired crypto assets and trade one digital asset for another. Let’s take a closer look at each service.

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Services Offered by a Cryptocurrency Exchange

Buying Cryptocurrencies:

Most cryptocurrency exchanges provide global services for acquiring a vast array of digital assets. It frequently supports the most prominent cryptocurrencies, such as Bitcoin, Ethereum, and XRP. These platforms are a popular destination for folks wishing to acquire their first crypto assets. You may purchase Bitcoins using US Dollars, Euros, and other fiat currencies using a credit card, PayPal, or bank wire transfer.

Selling Cryptocurrencies:

Using crypto exchanges, you may convert numerous cryptocurrencies back into Euros, Yen, or US Dollars. That’d be done through a bank transfer, meaning you’ll receive your money directly in your bank account.

Storing your Crypto Assets:

Once you have purchased Bitcoin on an exchange, the exchange will store your freshly acquired Bitcoin on their platform. Your portfolio is typically presented in an accessible and user-friendly manner. It is rather convenient for consumers to store their cryptocurrency on these platforms since they are simple to access and need a few steps to send cryptocurrency. However, this comes with significant hazards and restrictions; more later.

Trading Crypto Assets:

Numerous experienced traders use exchange platforms to profit from cryptocurrency prices’ volatility. Websites like Coinmarketcap can also be useful for this purpose, as they display price movements, a cryptocurrency’s rank and overall market capitalization.

Getting Started

Using an exchange to begin your crypto adventure is typically straightforward, allowing anyone to board the “crypto train.” Let’s go over the steps.

Step 1: Account Creation

Before you can begin trading on an exchange, you must register an account with your chosen exchange. Typically, this involves providing your email address and establishing a password, though some exchanges also accept your phone number. You must provide personal information such as your first and last name, date of birth, etc.

Step 2: Validating Your Account

Your account has been established, but you cannot make any purchases or trades now. Act 2 of account creation involves account validation. You will likely be required to submit to a Know Your Customer (KYC) procedure in which you provide personal information, including a photo of your passport or ID. The cryptocurrency exchange will then validate your identity.

Step 3: Buy Cryptocurrency

Your account has been successfully confirmed. You can now embark on your crypto adventure by purchasing the cryptocurrency you wish using a credit card or wire transfer. You can also send transactions to the wallet addresses provided by your exchange to begin trading or selling cryptocurrencies.

Most exchanges charge a fee for each of these three services, meaning they will take a cut of every buy, sell, and trade order you execute on their site. These fees are one of their primary profit generators.

Before selecting your favorite exchange, it is essential to conduct adequate research. Choosing a cryptocurrency exchange with a solid reputation and high liquidity is recommended.

Crypto Exchanges are Convenient but Limit your Freedom

Exchanges give quite a few essential functions on their site, which are typically user-friendly. It is not surprising that many users store their cherished crypto assets on an exchange, given that their interfaces are user-friendly and convenient. Possession of cryptocurrencies through exchanges is rather simple.

Remember how the exchange facilitates your cryptocurrency storage? The fact is that you are not responsible for it. You do not have complete ownership over your cryptocurrency, nor are you free to do whatever you want with it – the exchange does.

It is why the exchange can limit your cryptocurrency transactions. For instance, they can establish minimum and maximum withdrawal limits. It also implies that you will be unable to access your crypto assets in case of a service interruption.

It is because you lack possession of your private key. This key holder has complete control over the cash associated with the address it links to. When you purchase cryptocurrencies through online exchanges, they possess your private key. It is the origin of the famous cryptographic statement Not your Keys, not your Coins.

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Do you know about the crypto wallet? Keeping your private keys, which are the passwords that allow you to access your cryptocurrencies, in a crypto wallet ensures that they are both secure and easy to access. It makes it possible for you to transfer and receive cryptocurrencies such as Bitcoin and Ethereum.

A crypto wallet is the digital analog of a traditional wallet, the kind of thing you keep in your pocket. A cryptocurrency wallet keeps the information to access digital assets. A conventional wallet would house physical currency and credit cards.

Instead of actual cryptocurrency, the digital wallet stores two strings of random letters and numbers. These can be either alphanumeric or letter and number combinations. The first thing you need is a public wallet address, which may be anywhere from 30 to 50 characters long and is what other people will use to transfer your cryptocurrency or another digital asset.

The second type of private key is significantly longer than the first. This type of key is a huge number that possesses specific mathematical features and is required to access the assets stored in your crypto wallet.

Why Are Cryptocurrency Wallets so Essential?

On the other hand, crypto wallets do not officially store any of your cryptocurrency, in contrast to traditional wallets, which can hold physical cash. Your keys serve two purposes: they demonstrate that you are the rightful owner of your digital money and enable you to conduct transactions. If you misplace your private keys, you will no longer have access to your funds. Because of this, it is essential to maintain your hardware wallet’s security or utilize a reputable wallet service.

How Can One Make Use of a Cryptocurrency Wallet?

Apps that are easy to use sit alongside more involved security solutions on the spectrum of crypto wallets. The following are the primary categories of wallets from which you can select:

Paper wallets:

The keys are typically written down on tangible media such as paper and then hidden away in a secure location. Because cryptocurrency is a digital currency, it can only spend online. Consequently, this makes it more difficult to use your cryptocurrency.

Hardware wallets:

When you wish to use your crypto, you will have to connect a thumb drive to a computer, but you will keep the industry in a secure location so that no one can get their hands on it. The goal is to find a happy medium between ease of use and feel safe.

Online wallets:

The keys are typically in some software or application; therefore, you should search for one that utilizes a two-step encryption system. Transferring, receiving, and utilizing your cryptocurrency is reduced to the same difficulty as using any online bank account, payment system, or brokerage.

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Pros and Cons

Every type has advantages and disadvantages. Because they are stored offline, paper and hardware wallets are less likely to be accessed by hostile users. The easiest way to get started with cryptocurrency is by using an online wallet provided by a large exchange.

These wallets offer a good blend of security and ease of access to one’s cryptocurrency holdings. (Because your private information is stored online, your protection against cybercriminals is only as good as the security offered by your wallet provider. Because of this, you must search for features such as two-factor verification.

Do I Need Crypto Wallet?

You will need a cryptocurrency wallet to acquire and hold cryptocurrencies or another digital asset. If you want to keep your cryptocurrency outside of a big exchange or brokerage, you will need a non-custodial digital wallet. It is prudent for security reasons, as hackers more frequently target wallets hosted by major deals.

If you are starting with cryptocurrency, you may rely on big centralized exchanges to keep your cryptocurrency in a crypto wallet that the business will hold. If you are just getting started with cryptocurrency, you can depend on any large sales.

As a cryptocurrency investor, you must select a crypto wallet solution that corresponds with your technical expertise. Also, keep in mind that if you lose access to the information associated with your wallet or if your wallet gets hacked, it is quite improbable that you will be able to retrieve any lost assets.

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A Cryptocurrency is a new form of money that works differently from regular money. It’s a virtual currency, so there are no tangible coins or notes to carry around.
They are uniquely issued or created. Instead of being produced by a central bank or government, new cryptocurrency units enter circulation through a technological process that involves people utilizing their computers.

Decentralized describes cryptocurrency well. No single entity or government controls or operates cryptocurrencies. Cryptocurrency transactions require a global network of volunteers.

Cryptocurrencies are digital and issued digitally, but there are significant differences.

The global financial system is based on fiat currencies, and most countries have laws and best practices to control their use. Cryptocurrency is mostly unregulated, and regulations differ by jurisdiction.

Cryptocurrency transactions are faster and cheaper than traditional banking. Compared to fiat currency, cryptocurrency transactions are completed in minutes at a fraction of the cost.

Governments and central banks can print money at will during a financial crisis. Algorithms determine the supply of cryptocurrencies. Some coins are coded with a supply limit. Bitcoin, the first and largest cryptocurrency, has a maximum supply of 21 million tokens that are released at a regular rate. Once bitcoin reaches 21 million, the protocol will stop releasing new coins.

Crypto transactions are permanent and final, unlike fiat currency transactions. Once added to the ledger, crypto transactions are unable to be reversed.

What is crypto?

The word “crypto” in cryptocurrency alludes to cryptography, a technology that secures all user transactions. Cryptography allows users to freely transact tokens and currencies without a bank to track each person’s balance and assure the network’s security.

It also solves the double-spend issue, which is used to make banks important.

Cryptocurrencies employ cryptography to encrypt sensitive information, including private keys. Private keys are cryptocurrency passwords. Coins are always blockchain-based and are unable to be stored outside the blockchain. When someone says they own X coins, they mean their password may claim X coins on the blockchain.

Crypto holders store their private keys on wallets, which are specialized software or devices. The related cryptocurrency is lost forever when a crypto possessor loses their private key.

Private keys are encrypted to form wallet addresses, like bank account numbers. Digitally signing transactions requires your private key. It is like telling the network, “I’m sending X coins to this guy.” Wallet addresses represent transaction destinations.

The one-way encryptions prevent deriving private keys from wallet addresses.

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How does cryptocurrency work?

While cryptocurrencies operate as a means for exchanging or storing wealth, they all rely on “blockchain” to retain data and track network activity.

A blockchain is a virtual chain of blocks storing transactions and data. Once a block is added to the chain, its data can’t be modified or withdrawn.

Because cryptocurrencies are handled by a network of volunteer “nodes” and not by a single intermediary, a system must be in place to ensure everyone records and adds new data honestly to the blockchain ledger.

Nodes store all historical transactions and validate new transaction data on the network. Blockchain technology has the following advantages over traditional finance, where a single institution maintains a master copy:

If one node fails, the blockchain ledger remains unaffected.

There’s no corruptible source of truth.

Nodes manage the database and verify new transactions.

Imagine a cluster of computers updating user balance sheets like a bank. Balance sheets aren’t stored on a single server in distributed ledgers. Each node, or computer connected to the network, functions as a separate server for the balance sheets. Even if one of the machines goes offline, it won’t be as damaging as a single server-based database in traditional banking systems.

This infrastructure allows cryptocurrencies to avoid fiat security issues. Attackers must control over 50% of blockchain-connected computers to attack or alter the system. A coordinated attack can be prohibitively expensive, depending on the network’s size. If you compare the cost of attacking established cryptocurrencies like bitcoin versus what the attacker stands to gain, it’s not financially viable.

Distributed digital assets are censorship-resistant because they are decentralized. Unlike banks, cryptocurrencies have global databases. When a government takes down one or all of these computers under its jurisdiction, the network will still function because there are potentially thousands of other nodes in other nations.

We’ve explained why cryptocurrencies are secure and censorship-resistant so far. How are crypto transactions vetted?

How are cryptocurrency transactions validated?

Blockchains are distributed databases that record all crypto network transactions. Every block of authenticated transactions is linked chronologically.

Nodes confirm crypto transactions because a central authority or bank can’t administer blockchains (computers connected to a blockchain). How can networks ensure node operators participate in validation?

Incentives are the only way to ensure people always want to validate blockchains.

Validators are encouraged to participate actively and honestly to earn newly minted coins. This incentive scheme determines how validators are chosen to validate the next batch of transactions. It guarantees that validators’ activities fit with network goals. Validator nodes that undermine the crypto network’s validity might be banned from future validations or penalized. Consensus protocols are incentive infrastructures.

Blockchain networks employ many consensus protocols. The two most common ones are:

PoW is a computer-intensive consensus process that requires validators (called miners) to compete using expensive equipment to develop a winning code that earns them the privilege of adding a new block of transactions to the blockchain. Miners receive “block rewards” when they add a new block of transactions to the blockchain. Successful miners also get transaction fees from the new block. Bitcoin, Dogecoin, and Litecoin use PoW.

PoS is less energy-intensive than PoW. Node operators don’t need expensive mining equipment. To indicate their commitment to the network, users only need to deposit (or lock away) currencies on the blockchain. The protocol distributes nodes with staked funds for random tasks. Successful validators are rewarded with crypto tokens. Cardano, Ethereum 2.0, and Polkadot employ this mechanism.

What are tokens?

Blockchain-based decentralized apps issue tokens. These are apps like those on your smartphone, but they’re entirely autonomous. Imagine a free Uber app where drivers and passengers may interact without paying a commission.

Because these apps employ blockchains, token transactions incur a cost in the blockchain’s native coin.

When you send a token, like USDT, on the Ethereum blockchain, you must pay a transaction fee in ETH, the Ethereum ecosystem’s native coin.

What is the difference between cryptocurrency and digital currency?

Blockchains power cryptocurrencies. They’re how decentralized networks and apps transmit value.

Digital currencies include cryptocurrency and bank-backed virtual money.

How are cryptocurrencies valued?

The value of a cryptocurrency usually hinges on its underlying blockchain, although social media excitement and other superficial factors have inflated prices.

Blockchain cryptocurrencies with a wide range of uses are usually more valued. It depends on demand, supply, and if the buyer is ready to pay more than the seller paid.

Cryptocurrencies promote a deflationary structure, where the number of new coins released to the market is predictable and gradually diminishes over time.

The total quantity of coins in various cryptocurrencies is fixed. There will be 21 million bitcoins, and 18 million are already in circulation. This deflationary-based system is the reverse of traditional banking, where governments can print unlimited fiat notes and devalue their currencies.

Types of cryptocurrencies

Bitcoin was the first cryptocurrency. After Bitcoin’s 2009 debut, developers created alternative cryptocurrencies based on its technology. Most cryptocurrencies aim to improve on Bitcoin’s standards. Altcoins are additional cryptocurrencies that came after bitcoin. Example:

Ethereum

Litecoin

Cardano

XRP

Polkadot

EOS

Solana

BCH

Bitcoin’s use case

Initially, cryptocurrency was touted as a portable, censorship-resistant, internationally available, and affordable alternative to fiat currency. Except for digital assets linked to fiat currencies, cryptocurrency values haven’t been stable enough to act as a medium of trade.

Most crypto holders have moved their focus to the investment potential of cryptocurrencies, birthing the speculative crypto market. Investors seem more concerned about the future price of a cryptocurrency than whether they can use it to buy products and services. Therefore crypto is increasingly considered an investment.

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