Cryptocurrency is a digital asset or form of payment without being centrally regulated like a bank or government entity. Instead, it uses a decentralized system to verify and record the payments. Cryptocurrency or crypto-currency or crypto is a peer-to-peer system that allows one-on-one transactions between individuals from anywhere in the world.
Transactions in cryptocurrencies are recorded and verified with the help of cryptography, a computer science technology used to secure communications and transactions using rule-based mathematical calculations. This process of securing end-to-end communications is called encryption.
It is a widely used investment medium around the globe and is also being used as a mode of payment to buy goods and services. In short, cryptocurrency is a “digital asset” that you can buy, invest and use just like any other currency. Cryptocurrency transactions are recorded under a public ledger, and as it’s completely digital, you will need a digital wallet to store them.
Cryptocurrency operates on a publicly distributed open ledger and uses blockchain technology to transfer ‘units’ from one individual to another. These units are created using a process called mining. Cryptocurrency mining uses computer systems and energy to make “coins,” “tokens,” or “units.”
Anyone with proper knowledge and computer resources can mine cryptocurrency tokens, which can then be transferred, stored, or used as a mode of payment if acceptable by the receiver. You can also buy cryptocurrencies from a broker or a crypto exchange company.
There are several ways in which cryptocurrencies can be used as a mode of earning without mining it yourself:
- Investing – Buying and holding cryptocurrencies just like the stocks of a company and earning profit in terms of returns when the price goes up is one of the most common ways of earning income using cryptocurrencies. The world’s biggest cryptocurrency, “Bitcoin,” in terms of market capitalization, hit a historical $65000 price in 2021, where it was just $1200 in May 2017. There are many bitcoin billionaires and millionaires around the globe; just like bitcoin, there are other cryptocurrencies like Ethereum, which are also in the cryptocurrency rally!
- Trading – The cryptocurrency market is volatile, and trading in this kind of open system and volatile market can be tough, but proper knowledge and experience can make it happen. Trading in cryptocurrencies is another way to make money in it.
- Staking and Yield Farming – Like a bank rewards you with interest on the money in your account, cryptocurrency can also be staked at various decentralized finance platforms and then earn various tokens in return. Yield farming is the technical name for this process of staking and earning cryptocurrency.
These are the most common ways of earning money in cryptocurrency.
Different types of cryptocurrencies and their importance
There are two types of cryptocurrencies that are important and used worldwide.
- Coins: Cryptocurrencies that are based on their blockchain are termed coins. Bitcoin, Ethereum, etc., are all examples of cryptocurrency coins. All crypto coins other than bitcoin are also called Altcoins.
- Tokens: Tokens are not based on their blockchain; rather, they use the blockchain of a cryptocurrency coin and mostly serve as a programmable asset rather than currency.
Importance of cryptocurrency
Like any currency or asset, digital currency or cryptocurrency is also very important; the following are some of the important reasons why cryptocurrency is important in today’s world.
1 Investing :Trading and investing in equity is very important for any business; digital businesses or traders today are using cryptocurrency as a mainstream source. Investing in future technologies is one of the surest paths to good returns, and cryptocurrency is the future! But, future-based investments are never good for the short term, so if you are planning to invest in cryptocurrencies, you must consider it a long-term goal.
2 Economy: All of the major countries and banks are adopting paperless transactions, and digital payments are now an integral part of our lifestyle. Eventually, the world economy will convert into a digital ecosystem. One of the most common uses of cryptocurrency is to provide seamless inter-border transactions to reduce transaction costs. Making transactions cheaper and smooth has boosted the world economy with more money flowing inside and out.
Mainstream Ways to Make Money from Cryptocurrencies
There are technically 3 ways in which cryptocurrencies can be used to make money, mining, investing and free airdrops are the top 3 ways; let’s discuss what these terms mean and how to start.
1.Crypto Mining: Mining cryptocurrencies is not just a simple process of creating new cryptocurrency coins; it also includes validating a cryptocurrency transaction using a blockchain network and recording the transaction in the public ledger. Therefore, making money by mining cryptocurrency takes a lot more than just mining and making easy money.
In the early days of crypto mining, it was a great business opportunity for small-time entrepreneurs. But soon, with the rising popularity of coins like Bitcoin, the crypto mining industry became more competitive as miners or mining organizations bought powerful computers with great hardware and scaled up their operations to stay profitable. Basic monetization in this entire process is receiving rewards in return for the computational efforts and resource utilization.
2.Crypto Trading: Crypto investments(for long-term goals) and crypto trading for the utilization of short-term opportunities in the cryptocurrency market and fulfill your short-term goals like your next vehicle update. In contrast, crypto investments are made to fulfill the long-term goals of life, like your retirement.
Cryptocurrency trading is not easy; it’s more complex than company stock trading as company stock price depends on the business, market valuation, and equity distribution. But in cryptocurrency, identifying a legitimate project and understanding the basics of the project is also important.
Remember, the Crypto market is highly volatile, and THIS MAKES IT AN AMAZING OPPORTUNITY FOR TRADERS TO MAKE MONEY using their trading skills.
*It’s not financial advice; you should always understand the risks involved in a volatile market*
3. Free Airdrops : Free cryptocurrency airdrops are exactly what their name seems like. IT’S FREE MONEY!!
Cryptocurrency airdrop distributes free coins or tokens to the users for promotion, reward, or any other purpose. Often a new cryptocurrency offers free airdrops for promotional purposes and to develop a community of holders that can invest in the other use cases of the project.
Airdropping can also be used to introduce a new token of the project or encourage users to try the new use cases like yield farming, LP staking, games, etc.
How to buy and sell cryptocurrencies
As discussed earlier in this blog, cryptocurrency is a digital asset, and it needs a digital wallet to be stored.
So let’s assume you now have a digital wallet configured. Every digital wallet is identified by a unique and encrypted address which is generally a string like “1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2” is completely anonymous to maintain the security aspect of cryptocurrencies
Using this wallet address, you can receive cryptocurrency tokens and coins sent by others, and the same process applies to selling. This peer-to-peer transaction can be carried out to buy from an individual broker and is equally risky. This can be carried out using a peer-to-peer crypto exchange.
Another simple way of buying or selling cryptocurrency is using a trusted exchange like Binance, coinDCX, etc. Cryptocurrency exchanges are the marketplace of cryptocurrencies, and they come with an inbuilt wallet to hold your investments. Following are the best reasons why using a cryptocurrency exchange is a good idea:
1. Safe and Authentic: As crypto is a completely anonymous system of transactions, using a trusted crypto exchange like Binance or Coinbase is considered the safest mode of buying and selling cryptocurrencies.
2. In-built Wallets: Crypto exchanges have an in-built crypto wallet to keep your crypto investments safe from cyber theft. These wallets are secured with the help of encryption and the communications are done in binary encryption which is the most secured form of communication available.
3. Extra Earning Options: Cryptocurrency exchanges are evolving, and it’s not just about trading in cryptocurrency anymore. These exchanges also have options to stake your investments and earn interest on them, put your cryptocurrency in pools and farms to earn yield by contributing to the equity.
4. Automation and Alerts: World’s best cryptocurrency exchanges provide a feature to automate your trading and provide price alerts. So, no more sticking to the computer screen all the time and waiting for the right time to get in and out of the market or expand your portfolio.
5. Regulating the Unregulated: Cryptocurrency is an unregulated industry that increases the risk factors involved in an already risky profession of trading. Crypto exchanges use an authority guideline process to list projects or cryptocurrencies on their platform, which helps investors identify authentic cryptocurrencies and invest in them.
For example, a coin listed on ‘Binance’ will be considered more authentic than a one that is not yet listed. So crypto exchanges are indirectly regulating the unregulated cryptocurrency industry with a process of moderating and approving the cryptocurrencies for listing on their platform, which washes out a large number of fake projects. As they allow peer-to-peer transactions, crypto exchanges also prevent the investors from wash trading, fake trading, or other market manipulation techniques.
6. User-Friendly – As cryptocurrency is a digitally created and managed currency, it might be tough for a digitally or technically disabled individual to understand the real phenomenon behind it. Best cryptocurrency exchange platforms make it easier by providing an user-friendly platform to buy, trade or stake cryptocurrencies. They are super easy to use, and many of them also come with multilingual versions, which can be helpful for technically disabled and local language users.
Top 6 Cryptocurrency Exchanges To Buy And Sell
There are currently 300+ cryptocurrency exchanges listed on coinmarketcap, choosing a perfect one might be a critical task. To ease it up, we have used 6 criteria to compile a list of the best cryptocurrency exchanges to use in 2022 and make money in cryptocurrency trading.
Following are the criteria we have used:
- Liquidity- Ability of a coin to be converted into cash or other currencies.
- Trading Volume – is the total volume or sum of all trades taking place on the platform
- Options – Number of currencies available on the platform
- Extra Options – These are the options that you can use to make money without trading your crypto assets
- Traffic – Total number of active traders
- User-friendly – Ease of use of the platform
According to the analysis of the above given 6 matrices, following are the top cryptocurrency exchanges in the world, these exchanges are not just exchanges, but a lot more than that. Wondering how? Find out below:
1. Binance : Binance is the world’s largest crypto exchange when it comes to trade volumes, as Binance is not just a crypto exchange, it’s an entire decentralized blockchain ecosystem to make wealth in cryptocurrency. From beginners to experts, binance is known to almost every type of crypto investor today Its ecosystem includes:
● Binance Academy – An open-source learning platform for cryptocurrency enthusiasts.
● Charity – A non-profit organization, promoting blockchain-enabled projects with an aim for global sustainable development in blockchain technology.
● Info: Binance Information Center is a crypto-encyclopedia, a community-driven aggregation-based project to share and gain cryptocurrency knowledge through blogs, and forums.
● Labs: Binance Labs empower blockchain projects and help them grow by investing and providing them with proper resources
● Binance Launchpad: It is a tailor-made token launch platform for entrepreneurs, where they can launch their cryptocurrency token project on the world’s most populous cryptocurrency ecosystem, which not only opens the gate for the token holders but also for the investors to invest in the cause.
● Binance Research: Services to provide analytics and data reports to crypto investors.
● Digital Wallet: “Trust Wallet” is the official digital wallet of Binance and is one of the most authentic and safe digital wallets available in this space.
● Decentralized Finance: Binance also provides a blockchain software system called ‘Binance Chain’ and decentralized exchange based on this blockchain called “Binance DEX.”
Daily Trade Volume: 2.0 bn
Average Transactions per Seconds:140000+
Official Currency: BNB
Huobi Group was founded in the year 2012 by a Tsinghua University alumni, Mr. Lion Li, aiming to integrate blockchain technology with other technologies to provide safe Internet of Value(IoV) services and create digital assets, blockchain software, public chain, digital wallet, and research academy.
Though Houbi serves users from about 100 countries and regions, its popularity is greater in China, Japan, and South Korea.
Following the cryptocurrency ban in China in 2017, Huobi, founded in China, continues to function as a blockchain software research and consulting agency. Huobi now has offices in the USA, Hong Kong, Japan, and South Korea.
Huobi’s services and the product line includes:
● Huobi Wallet – A safe and secure digital wallet to trade cryptocurrencies.
● Huobi Earn – A platform to earn cryptocurrency by staking and contributing to liquidity.
● Huobi Loans – An initiative to provide a credit on cryptocurrency
● Huobi Exchange – A cryptocurrency exchange and marketplace
● Huobi Trading Bot – A bot developed to automate trading and investments.
● Huobi Token – Huobi’s official cryptocurrency token
Huobi Global Summary:
Daily Trade Volume: 1.7 mn
Average Transactions per Seconds:110000+
Official Currency: Huobi Token (HT)
3. OKEX :
Okex is a cryptocurrency exchange based in Seychelles founded by Mr. Jay Hao. Besides being a cryptocurrency exchange, Okex also provides advanced financial services to grow the cryptocurrency portfolio. With users from around 100 countries, Okex is one of the leading cryptocurrency exchanges with over 1.5bn BTC futures daily trading volume.
Okex services and products include:
● Okex Earn: A platform to earn interest in the cryptocurrency you are holding. You can save, stake, and farm your cryptocurrency to earn rewards in the form of yield and interest.
● Okex Loans: Okex lending and loan services are for the users planning to take loans on their cryptocurrency as a collateral
● Okex Jumpstart: A blockchain and cryptocurrency launching platform.
● Okex DOT Slot: An initiative to promote Development on Polkadot.
● Okex Exchange: A cryptocurrency marketplace and exchange.
● OKB: Official cryptocurrency of Okex
Average Daily Trade Volume: 1.5bn
Official Currency: OKB
WazirX is an India-based cryptocurrency exchange backed by Binance. The exchange was founded by Mr. Nishchal Shetty in 2018 and acquired by Binance in 2021. In many terms, WazirX is the Indian branch of Binance.
WazirX launched their official cryptocurrency token based on Binance chain and Ethereum, WRX, in 2020 and is currently the best crypto exchange in India with a crowded marketplace of 100+ coins and tokens.
With Binance’s support, WairX has launched a $50 Million “Blockchain for India” to support and encourage cryptocurrency and blockchain innovations in India. Although WazirX aims to be India’s best, the platform is globally available and accessible, with an option to deposit and withdraw INR instantly.
WazirX Services and Products include:
● WazirX P2P: World’s first Peer-to-Peer matching engine with the largest liquidity.
● WazirX Exchange: Cryptocurrency exchange with INR deposit and withdrawals.
● WazirX NFT: WazirX official marketplace to collect and sell digital NFT(non-fungible token) artworks
● WRX: WazirX official cryptocurrency token.
2021 Trade Volume: $38 Billion
Current Users: 10 Million
Official Currency: WRX
Gate.io is one of the top 10 cryptocurrency exchanges in trading volume. Founded in 201, Gate.io is a secure and authentic marketplace populated with high-quality coins and an ecosystem of financial products and services to grow digital wealth.
Gate is a trading exchange focused on technological innovations like “cross-cryptocurrency address technology,” “Hot and cold wallet storage,” and “Multi-signature security protection,” etc.
Gate.io services include:
● Spot Trading
● Leveraged Trading
● Leveraged ETF
● Futures Trading
● Quantitative Trading
● Hold to Earn
● Secured Loans
● Liquidity Mining
Gate.io product line includes:
● Gate Token: GT is the official cryptocurrency token of Gate.io based on the gatechain mainnet.
● Gate Chain: Interoperable and secure public blockchain
● Gate Labs: Blockchain innovation and support initiative.
● Gate Ventures: It is the official cryptocurrency and blockchain venture capital firm of Gate.io
● HipDefi: Gatechain powered Defi exchange and platform,
● Wallet.io: Official digital wallet of Gate.io
● Block.info: Cryptocurrency knowledge graph portal
● NFT Magic Box: Gate.io official NFT marketplace
No. of Users: 80 Million
Daily Trading Volume: $12 Billion
Number of cryptocurrencies: 1000+
Official Currency: GT
Founded in the year 2012 by Mr. Brian Armstrong, coinbase is a leading cryptocurrency exchange that was started to receive and send bitcoins. But as time and cryptocurrency innovations evolved, coinbase has evolved into a complete cryptocurrency finance ecosystem.
Coinbase products and services include:
● Coinbase Business: Providing services to businesses for sending, receiving crypto payments
● Coinbase Earn: Cryptocurrency learning and earning platform
● Wallet: Official cryptocurrency wallet of coinbase
● Coinbase Loans: Services to let you borrow money using bitcoin as collateral
● Coinbase Analytics: Services to provide analytics to businesses for research
No. of the user: 75 Million
Quarterly Trade Volume: $327 Billion
Cryptocurrencies are the future, and investing in cryptocurrency is a good earning opportunity, but you must counter for some points before investing in cryptocurrencies:
● Practicing a detailed technical and fundamental analysis of tokenomics, roadmap, and market cap about the currency or organization you are planning to invest in is very necessary.
● Always research and analyze the project use cases and growth capabilities before investing
● Never ignore the volatile nature of the crypto market, day-trading is very critical in the cryptocurrency. There can be the presence of whales that can manipulate the prices in the short-term.
● Identifying a good future-oriented project and investing in long term goals is considered to be the best option.
While 2022 is the year of “crypto perseverance,” every individual must go with the wisest investment saying, i.e., “Trend is your Friend.”
Cryptocurrency market is highly volatile, and all investments are subject to market risk; this blog is not financial advice; every investment made should be done with proper research and trusted crypto exchanges only.