The 7 Best Risk-Free Cryptocurrency Trading Simulators

Bitcoin Trading Simulators

Did you ride the peaks of the bitcoin wave, or did you wait for the trough to hit the shore? When bitcoin was touching $20,000 per coin, everyone was an expert or potential investor. Prices are now more unpredictable, making it harder for would-be investors to make a profit. Given cryptocurrencies straddle the median between currency and commodity, there is money to be made—but only if you know what you are doing. Check out these risk-free cryptocurrency market simulators before splashing your cash on the real deal. 1. Bitcoin Mining Profit Calculator The Bitcoin Mining Profit Calculator (BMPC) is a…

Read the full article: The 7 Best Risk-Free Cryptocurrency Trading Simulators

Bitcoin Trading Simulators

Did you ride the peaks of the bitcoin wave, or did you wait for the trough to hit the shore? When bitcoin was touching $20,000 per coin, everyone was an expert or potential investor. Prices are now more unpredictable, making it harder for would-be investors to make a profit.

Given cryptocurrencies straddle the median between currency and commodity, there is money to be made—but only if you know what you are doing. Check out these risk-free cryptocurrency market simulators before splashing your cash on the real deal.

1. Bitcoin Mining Profit Calculator

bitcoin mining profit calculator practice trading crypto

The Bitcoin Mining Profit Calculator (BMPC) is a great starting point if you are completely new to bitcoin and cryptocurrency. It’s a lot more than a simple trading simulator since it includes a full introduction to bitcoin too.

The website works like an interactive fiction-come-idle clicker game. BMPC updates with new tabs and explanations as you click different prompts on the screen, thus making different choices. Don’t worry, you won’t miss out on any pertinent information, but it will make you aware of the kind of news that affects bitcoin’s prices as well as the inner workings of the bitcoin community.

BMPC is nothing great to look at and plays like a text adventure, but there’s nothing wrong with that. This is meant to be an educational game rather than an entertaining one.

2. Bitcoin Hero

bitcoin cryptocurrency trading simulators

For those who don’t need a tutorial in what cryptocurrency is and want to jump right in, Bitcoin Hero is excellent. The web app works fine on mobile screens as well, so you can enjoy the game without ever installing it, but there is an Android app.

While it isn’t necessary to install Bitcoin Hero, you’ll want to create an account to track your progress over multiple sessions. You start with $10,000 in your wallet, and you can buy and sell four cryptocurrencies: Bitcoin, Ethereum, Litecoin, and Dash. The cryptocurrency prices come straight from the real world, so its akin to the real thing.

3. Altcoin Fantasy

altcoin fantasy dashboard crypto trading practice

Altcoin Fantasy (ACF) steps up where Bitcoin Hero ends. Unlike Bitcoin Hero, Altcoin Fantasy lets you trade against other people, in competition, for a range of real-life prizes. For instance, a prize in a recent ACF contest was $100 worth of Bitcoin!

Competing also earns in-game currency, ACF Points, which you can trade in for real-life prizes, like a CryptoKitty or a 12-month subscription to TradingView. There’s also a daily sign-in bonus and a free spin-wheel for more points!

ACF ramps up the realism by using real-world market from a range of exchanges, differing between competitions. There’s usually a healthy amount of competition too, so you will need to sharpen your crypto market analysis skills to hit the head of the pack. Starting out with $10,000, you have a decent bank account to make a profit from.

Another thing I like about Altcoin Fantasy is its Private Contest mode. You can set up a 14-day contest for you and your buddies to see who has the best crypto-trading chops—and then brag about it when you win, of course. You can even set an entry fee.

4. eToro

eToro crypto trading list

eToro is a social trading app that has captured the imagination of regular investors and professionals alike. You find profitable investors that match your level of risk, and then copy their trades as they execute them. There are thousands of profitable traders and decent money to be made.

However, if you don’t want to risk your money and want to learn before opening your wallet, sign up for an eToro practice account here. Your free account comes with up to $100,000 for trading so you can really go to town with your practice trades.

5. CoinMarketGame

bitcoin cryptocurrency trading simulators

For a full-fledged simulator consisting of all major cryptocurrencies, you can’t do much better than CoinMarketGame. It does all the basics right to deliver an accurate experience of what it’s like to be a trader in this market.

Sign up for an account to receive a $20,000 starting pot. Spend it wisely by building a diverse portfolio, investing in both popular and less-known altcoins with high growth potential. You can check the leaderboard out and see what your competitors are trading, then head back to the markets to see how they maximize their crypto trading profits.

6. Spark Profit

bitcoin cryptocurrency trading simulators

Spark Profit is a crypto prediction game for Android, iOS, and your browser. You use historical crypto data to predict the position of Bitcoin, Ethereum, and Litecoin, as well as several international stock markets.  Spark Profit is basically about taking a long or short position on the future of the market. Your goal is to win points with accurate predictions. If the market touches your profit price, you win points. If it hits your loss point, you lose them. Simple, right?

Your goal is to win points. Estimate and set a profit price that you think the market will hit. Also, set a loss price while you’re at it. If the market touches the profit price, you will win points, but touching the loss price will make you lose points. Simple, right?

Spark Profit is a lot tougher than it sounds, and the much-needed reality check that early investors need. Before you invest a single dollar in cryptocurrencies, play this game and see how well you do. If you end up bankrupt, you’re better off putting your money back in your wallet.

7. Bitmex

bitmex testnet crypto leverage site free account

Think you’re getting the hang of Spark Profit? Why not step up to the next level with a Bitmex Testnet account? Bitmex is one of the most popular crypto exchanges. Here, you take a long or short position on where one of the listed cryptocurrencies will be in a certain time frame. Then, you apply leverage. Leverage can boost your potential profits (or losses) by up to 100 percent.

You will need to grab some Testnet Bitcoin from a faucet (follow the Bitmex tutorial to find out how), but then you can begin trading using the Bitmex Testnet. It’s valuable education before attempting to trade crypto futures!

What’s the Best Bitcoin Beginner’s Tip?

Education. All the way. If you don’t educate yourself before opening your wallet, you’re best off heading to the nearest bathroom and flushing your dollars straight away. Save yourself the time.

Trying out cryptocurrency trading in a mock market is a great first step. Reading articles, blog posts, and more helps, too. But at some point, you’re going to have to take the first step. Start small, and most of all, move slowly.

Read the full article: The 7 Best Risk-Free Cryptocurrency Trading Simulators

When Is the Safest Time to Invest in Cryptocurrency?

invest-bitcoin-ethereum

Never. There will always be a measure of risk when “investing” in Bitcoin, Ethereum, or any other cryptocurrency. However, that risk can be managed. In this article, we’ll cover the fundamental points you need to know to make a risk-managed investment in cryptocurrency. But a word of warning: do NOT mistake “risk-managed” for “safe” because they are NOT the same thing. Keep reading to find out why. How Cryptocurrency Investments Work As with all things traded, digital coins are subject to supply and demand. At any given moment, there are people who have coins and want to sell them (supply)…

Read the full article: When Is the Safest Time to Invest in Cryptocurrency?

Never.

There will always be a measure of risk when “investing” in Bitcoin, Ethereum, or any other cryptocurrency. However, that risk can be managed.

In this article, we’ll cover the fundamental points you need to know to make a risk-managed investment in cryptocurrency. But a word of warning: do NOT mistake “risk-managed” for “safe” because they are NOT the same thing. Keep reading to find out why.

How Cryptocurrency Investments Work

As with all things traded, digital coins are subject to supply and demand. At any given moment, there are people who have coins and want to sell them (supply) and there are people who want coins and are willing to buy them (demand). Combined, they comprise the coin market.

But not everyone agrees on the value of a coin. Every seller has a minimum price at which they’re willing to sell, and every buyer has a maximum price at which they’re willing to buy.

Crypto market order books

Sellers put their coins on the market at their willing prices, and prospective buyers buy them if the prices are low enough. As lower-priced coins are bought up, only the higher-priced coins remain on the market. As the price goes up, the number of willing buyers diminishes—and if buyers run out, sellers may need to start selling at lower prices. Thus, the price of a coin goes up and down as buyers and sellers enter and leave the market.

The current market price of a specific cryptocurrency is the price of the most recently sold coin.

So how do people make money with cryptocurrency? They buy in at a certain price, wait for the market price to rise, then sell for a profit. However, if the market price never rises above their buy-in price, then selling at a loss is the only option.

In this way, coin investing is similar to stock trading: each coin of a cryptocurrency is like a share in a publicly-traded company, and both coin prices and stock prices are determined by what buyers are willing to spend.

Why Cryptocurrency Investments Are Risky

A coin’s value is tied to how much faith people have in it.

If people really believe that a given crypto project is the future, then they’ll jump aboard the wagon: former non-buyers become buyers, and current buyers become willing to spend more to acquire coins. Sellers become emboldened to hold for the future and become less willing to sell at lower prices. The coin’s price shoots up.

Conversely, if people lose faith and stop believing in the longevity of a coin, then buyers back out and disappear. Sellers lose hope that their coins will be worth anything in the future, so they decide to dump—but they aren’t the only ones. Everyone ends up undercutting each other to offload their coins as fast as possible. The coin’s price plummets.

The problem is, increasing faith in a cryptocurrency is extremely difficult, and even hard-earned faith can evaporate overnight.

BTC all time chart

ETH all time chart

You’ve probably heard that you “need” to invest in cryptocurrencies “while you still can.” Buy now while the price is low so that you can sell when the price shoots back up! And based on the above price-over-time charts, you might be tempted to sink your savings into them. After all, look at those spikes!

If you had invested $1,000 into Bitcoin in January 2017, it would’ve been worth $18,000 in January 2018. If you had invested that same $1,000 into Ethereum in January 2017, it would’ve been worth a whopping $100,000. In just one year! You won’t find that kind of annual return anywhere else.

But high returns come with high risks.

January 2018 saw a huge price rally for nearly every cryptocurrency. If you bought in at these highs, you would have had a very worrying 2018, as the prices subsequently plummeted.

Spikes like this are common in the cryptocurrency world. As of this writing, CoinMarketCap shows over 1,900 different actively-traded cryptocurrencies, many of which experienced their own big spikes similar to what Bitcoin and Ethereum have gone through.

How did these cryptocurrencies fare?

PPC all time chart

Peercoin became big around the end of 2013, skyrocketing in price through the first quarter of 2014 before users lost faith. The price dwindled down and down, with a few hopeful spikes along the way. The price spiked again in January 2018, when the whole market rocketed, but Peercoin failed to sustain this momentum and dwindled once again.

STEEM all time chart

Steem is a younger cryptocurrency, just over two years old as of this writing, that exhibits much of the same patterns as older cryptocurrencies: the price sits stagnant for a quite, a spike comes along, users jump on the wagon, realize the hype wave is over, then sell out before the price plummets. Spikes happened in 2017 and 2018, but none have had a lasting impact on the price.

DOGE all time chart

The same thing happened with Dogecoin, which was once the third-largest cryptocurrency in 2014 but is now barely hanging on in the Top 20. Dogecoin is one of the rare examples of a cryptocurrency that spiked to a higher price later in its life, but note how quickly that spike dissipates: it plummets, spikes again, then loses most of its gains within two months.

And that’s the big risk with cryptocurrency investments: you can get rich overnight, but you can also lose it all overnight. Don’t think of it as an investment—it’s a gamble.

Cryptocurrency investment is a game of spikes. You need to already be in the game by the time a spike arrives in order to ride it up for profits. At the same time, you need to get off that ride before everyone else does, otherwise they’ll run away with the profits and leave you empty-handed.

How is crypto investment different from the stock market?

The main issue is a lack of historical data. Cryptocurrencies debuted with Bitcoin in 2009, which means the crypto market hasn’t even been around for a decade. Enthusiasts look at the 2017 spike in crypto interest as a sign of a healthy future, but there’s just no way to know for sure.

FTSE all time chart

When you look at the US stock market’s history (as shown above), you see all kinds of peaks and valleys, but you also see an upward trend over the long term. We can’t say the same for cryptocurrencies.

Could the US stock market crash and never recover? Sure. It happened to Japan in 1990. But the historical data shows that it’s unlikely. When there’s a crash, you can reasonably hope for a recovery.

There’s no basis for such a hope in cryptocurrency. Could Bitcoin, Ethereum, or any other cryptocurrency soar to higher heights over the next five years? Of course. But could the whole industry collapse and disappear? Absolutely. We simply don’t have enough historical data to do more than guess. It’s still too young and there’s too much uncertainty.

My rule of thumb: if you see a spike in cryptocurrencies, you’ve already missed the hype train. Wait for it to drop, buy in, and hold for another spike—but with the understanding that another spike may never come.

Managing Risk When Investing in Crypto

I’m not saying you shouldn’t invest in cryptocurrencies, but it’s clear that the market is alive and people can still walk away with a killing if they play their cards right.

That being said, here are a few tips to lessen your risk of a total loss:

Don’t put all your eggs in one basket. Don’t stick your entire life savings in cryptocurrency. Unless you’re willing to gamble, crypto shouldn’t be more than 5 percent of your total investment portfolio. And when you do invest in crypto, don’t dump it all into one coin. Diversify between coins that have different missions and different underlying technologies.

Only “invest” money you can afford to lose. Again, cryptocurrencies aren’t really investments—they’re speculations. It’s literally a gamble right now. Expect to lose everything and consider it a bonus if you don’t.

Sell your profits. If you make gains, don’t get greedy. Sell a portion of it to realize profit immediately, then see how the remainder performs. If it goes up again, sell another portion. Don’t “wait for the peak” before you sell—a plunge to zero could wipe you out overnight.

Never store your coins on an exchange. Another Mt. Gox controversy could be right around the corner. Have money on an exchange? Spend it or pull it out. Have coins on an exchange? Transfer them to a cold wallet for secure storage.

Read the full article: When Is the Safest Time to Invest in Cryptocurrency?

8 Risks to Consider Before Investing in Cryptocurrencies

cryptocurrency-risks

Wildly fluctuating prices, a lack of consumer protection, and a never-ending conveyor belt of scams. For first-time investors, the crypto market is full of risk. But it doesn’t have to be that way. Spend some time educating yourself, and you can significantly diminish the chances of something going wrong. Here are the top risks you need to be aware of before you invest in cryptocurrency. 1. Market Volatility The sharp decline in the value of cryptocurrencies in 2018 is well documented. The MVIS CryptoCompare Index has lost 80 percent of its value since January. That’s worse than the dot-com crash…

Read the full article: 8 Risks to Consider Before Investing in Cryptocurrencies

cryptocurrency-risks

Wildly fluctuating prices, a lack of consumer protection, and a never-ending conveyor belt of scams. For first-time investors, the crypto market is full of risk.

But it doesn’t have to be that way. Spend some time educating yourself, and you can significantly diminish the chances of something going wrong.

Here are the top risks you need to be aware of before you invest in cryptocurrency.

1. Market Volatility

bitcoin crash 2018 vs dotcom crash 2000

The sharp decline in the value of cryptocurrencies in 2018 is well documented. The MVIS CryptoCompare Index has lost 80 percent of its value since January. That’s worse than the dot-com crash (78 percent) back in 2000.

Bitcoin—which peaked at $20,089 on December 16, 2017—has barely broken $7,000 since April 2018. It’s a similar story across all other mainstream altcoins.

But that only tells half the story. Volatility in the crypto markets has always existed. We’ve seen plenty of other similar crashes before:

  • 2011: The first Mt. Gox hack resulted in a 95 percent loss.
  • 2013: A possible banking issue in Cyprus saw 52 percent wiped off the value.
  • 2014: The second Mt. Gox hack led to a 63 percent loss.

Ultimately, buying cryptocurrencies could result in losing everything you invested in them. You should never invest more than you can afford to lose.

2. Regulatory Issues

Regulatory and legal issues are two of the big obstacles facing the crypto sector in 2018.

Because the asset class is so new, governments and banks have not yet formed a coherent fiscal policy for them. Therefore, there’s always a risk that their taxation status, trading rules, or even outright legality, could change overnight.

Once again, these uncertainties mean money you’ve invested in crypto carries more risk than your capital in established asset classes.

3. Longevity

The ballooning number of altcoins represents a risk to an investor. It’s impossible to put an exact figure on it, but it’s thought there are between 1,600 and 2,000 in existence.

And it’s incredibly difficult to know which of those coins have realistic, mainstream, long-term potential. Remember, there are still very few real-world examples of blockchain and cryptocurrency adoption. The price of the coins is predominantly being driven by speculation.

However, despite the lack of real-world adoption, there is still a considerable amount of capital invested in altcoins. According to CoinMarketCap, 15 have a market cap of more than $1 billion and 57 have a market cap of more than $100 million.

Even if you’ve read the associated whitepaper and performed extensive due diligence, you still might find that the coin you backed doesn’t amount to anything and the value drops to zero. The more coins that are in existence and competing against each other, the greater the risk of this happening.

4. Consumer Protection

Unlike traditional banks, cryptocurrency doesn’t have any official safeguards or insurances.

For example, whereas the Federal Deposit Insurance Corporation underwrites depositors’ savings to the value of $250,000 each in both banks and brokerages, crypto exchanges are not part of the program. If your exchange becomes insolvent, you will lose everything.

Similarly, exchanges get hacked on a worryingly frequent basis, often resulting in a considerable loss of money. Whether or not you get any rebate on your lost wealth depends entirely on the exchange; you are at their whim. If something similar happened at your bank, brokerage, or credit card, you’d get your money back swiftly.

Note: To reduce the risk of losing your money in a hack, use a secure wallet to keep your crypto safe.

5. Market Manipulation

Although it’s never been conclusively proved, it’s widely assumed that insider trading, collusion, and market manipulation is rife across the crypto sector.

Indeed, experts now believe that the huge crypto rally in the second half of 2017 was primarily driven by a small group of people with vast crypto assets working in tandem.

Even on a day-by-day basis, there’s plenty of evidence that points to manipulation. Coins shoot up by dozens of percentage points over the space of a few hours, only to dramatically fall back to their previous levels the following day. These incidents are referred to as “pump and dump” schemes and take advantage of people’s fear of missing out.

Sell walls (accumulating coins cheaply ahead of positive news) and dark pools (anonymous trading away from exchanges’ eyes) are other common market manipulation tactics.

Because crypto is so unregulated, all these morally-questionable schemes are harder to prevent. Nonetheless, they create a considerable amount of risk, especially for novice investors who are not familiar with the underlying market mechanics. If you fall into one of the manipulators’ well-laid traps, you could take a substantial financial hit.

6. Exiting the Markets

binfinex minimum withdrawal 10000

There may come a time when you want to sell your crypto assets and hold your wealth in fiat currency instead.

Unfortunately, the crypto market’s “off ramps” are troublesome for a lot of investors. Yes, the situation is improving, but it’s far from ideal.

There are a few factors which contribute to the complexity:

  • Many crypto exchanges only allow withdrawals in USD. Some also allow GBP, EUR, and JPY, but the choice is minimal.
  • Exchanges frequently require high minimum withdrawals with withdrawing to fiat.
  • Lots of exchanges that support fiat withdrawals only accept a few highly mainstream cryptocurrencies. For example, Coinbase—one of the most popular ways to buy crypto in Europe and North America—only supports Bitcoin, Ether, Litecoin, and Bitcoin Cash.
  • In order to withdraw fiat money, you typically need to go through the utterly tedious verification process. It can take months.
  • Some exchanges have been accused of withholding funds for vague and nondescript reasons. Lawyers sometimes have to get involved.

So, what does that mean for you?

At best, you might be exposed to multiple exchange rates to withdraw your funds into your domestic bank account (for example, IOTA > Bitcoin > USD > GBP), thus introducing uncertainty into the value of your assets and increasing risk. At worst, your crypto assets might not be available if/when you need them.

7. Cryptocurrency Scams

Unfortunately, cryptocurrency scams are widespread. For a new investor, it’s easy to get sucked in. Statistics show more than $2 million was lost to scams in the second quarter of 2018 alone.

The two most commonplace scams are fake ICOs and Twitter bots.

ICOs are the crypto version of stock market IPOs. And like an IPO, they require considerable due diligence from a would-be investor. Sadly, many people don’t perform sufficient research. Scammers have been quick to respond. They create hype around a fake IPO, but once you transfer your cash, you will never hear from them again.

Twitter bots are designed to look like official accounts. They typically promise to pay you a fixed amount of a particular coin in a few days in exchange for a small deposit today. They are all scams—avoid at all costs.

You also need to keep an eye for Ponzi schemes branded as altcoins. Some of the most famous include Bitconnect, OneCoin, and Plexcoin.

8. Human Error

Human error is a risk in any walk of life. But in crypto, it’s much easier to make mistakes, and the risks are magnified.

For example, if you have no experience of trading, investing, or FOREX, then crypto exchanges can be an immensely confusing place.

Sure, services like Coinbase are designed for a layman. However, if you want to diversify and buy some altcoins, you’ll need to hop onto a service like Bitfinex (or one of the other leading crypto exchanges). And they are a different kettle of fish.

It’s all too easy to accidentally place an incorrect order, send your coins to the wrong wallet, or even lock yourself out of your account entirely. Some trading facilities built on the blockchain don’t even have a password reset function.

Of course, you’re also at risk of human error when managing your crypto storage. If you lose your private keys, you might be unable to access or use your assets. And even if you use a secure cold wallet, like a Ledger Nano S, misplacing it remains a real possibility if you don’t exercise caution.

Ledger Nano S Cryptocurrency Hardware Wallet Ledger Nano S Cryptocurrency Hardware Wallet Buy Now At Amazon $73.23

Although we think these issues are the most pertinent risks facing first-time cryptocurrency investors, there are always more issues you need to watch out for.

Above all, be vigilant and make sure you fully research any coin, exchange, or company before handing over your assets to anyone.

Read the full article: 8 Risks to Consider Before Investing in Cryptocurrencies

Bitmain IPO concerns: the crypto giant recorded a big loss in Q2 2018

Bitmain’s IPO is the big news in the crypto world this week. The company just filed its IPO prospectus and the numbers are impressive, particularly the year-on-year growth between the first six months of 2018 and a year prior, which saw a near-10x jump in revenue and 7x growth in profit. Nevertheless, that aggregated six-month number may be […]

Bitmain’s IPO is the big news in the crypto world this week. The company just filed its IPO prospectus and the numbers are impressive, particularly the year-on-year growth between the first six months of 2018 and a year prior, which saw a near-10x jump in revenue and 7x growth in profit. Nevertheless, that aggregated six-month number may be masking what was a poor quarter of business for Bitmain.

Bitmain didn’t break out its revenue for Q1 and Q2 2018 in its prospectus, instead it blended them together with a nice looking figure for the first six months of the year, H1 2018. But we can crunch some numbers to give an idea of what it might be.

TechCrunch previously reported through sources that the company’s Q1 2018 revenue hit approximately $2 billion. Additionally, Fortune previously reported that the company carded a $1.1 billion profit during the same quarter, a number that’s in line with these revenue figures given that the prospectus reports a net margin of around 50 percent. For comparison, popular cryptocurrency wallet Coinbase made $1 billion in revenue in 2017.

But if we combine the aforementioned data points with the figures that were just reported, the Q2 numbers don’t look pretty. Specificifically, if combined H1 revenue was $2.9 billion with a $1.1 billion profit, then Q2 saw revenue sink to around $800 million with a loss of $400 million. That would be Bitmain’s worse quarter yet and not the kind of momentum that you want going into a listing.

My colleague Jon Russell earlier observed a number of potential risk signs in stated numbers: margins overall have come down. Gross margin in the first six months was 36 percent, down from 48 percent in 2017 and 54 percent in 2016. Contributing to that, the cost of sale percentage in the first half of 2018 rose to 64 percent from 51 and 52 percent in 2017 and 2016, respectively. Additionally, he detailed how the company over-estimated demand in 2018, and, as a result, its inventory ballooned by $1 billion. That unsold product is another indicator that Q2 did not go as planned.

Wu Jihan, co-founder of Bitmain Technologies Ltd., speaks during the Coingeek Conference in Hong Kong, China, on Friday, May 18, 2018. The conference runs through today. Photographer: Anthony Kwan/Bloomberg via Getty Images

We can also examine the financials from a holistic perspective. Adjusted return-on-asset (ROA) and return-on-equity (ROE) are indicators of how profitable a company is relative to its total assets and equity, respectively. Both numbers almost halved in 2018 vs 2017. So even though Bitmain was able to grow its top and bottom line, its overall operating efficiency has declined significantly, from 60.9 percent to 31.4 percent in adjusted ROA and 112.3 percent to 58.9 percent in adjusted ROE.

Where that operating efficiency level could stabilize will likely be a focus for public equity investors. With 94 percent of 2018 revenue coming from mining rigs, up from 80 percent from 2017, Bitmain is increasingly looking like a pure chips company, subject to cryptocurrency market conditions. As a reference, hardware company Nvidia, a company based out of California that also makes computer chips, generated revenues of $9.7 billion in its 2018 fiscal year (2017 calendar year). It’s been operating for 19 years as a public company and its ROA was around 27 percent and adjusted ROE was around 40 percent in calendar year 2017. Nvidia told investors last month that revenue from crypto-related sales had substantially declined, another factor that indicates Bitmain’s Q2 was a tough one.

More generally, Bitmain currently has 11 mining farms in China, including Sichuan and Inner Mongolia. It’s looking to build out 3 new mining farms in the U.S. in Washington, Texas and Tennessee, while it is also contemplating a mining farm in Quebec. This indicates that the team is cognizant of their concentration in revenue from mining rigs and is attempting to diversify into other businesses.

TechCrunch looked at the top equity holders closely and it appears a total of ~60 percent is owned by the top 5 founding individuals. We know of co-CEOs Wu Jihan and Micree Zhang that own majority of the portion, but there is also Zhao Zhaofeng, Ge Yuesheng, and Song Wenbao. The next largest shareholder is Sequoia, which owned the investment through another entity called SCC Venture VI. Sequoia owns over 2 percent of Bitmain shares through its various funds. Coatue also owns 0.14 percent. The employee’s pool in aggregate was about 18.5 percent.

Aside from Q2 numbers and potentially a hit in Q3 from the ongoing market downtrend, there are few other investor concerns that may surface. For one, Taiwan Semiconductor Manufacturing Company (TSMC) is Bitmain’s single largest supplier, accounting for 59.2 percent of total supply in the first half of 2018, and generally hovering over 58 percent in the last 2.5 years, leading to concentrated supplier risk.

Another issue is that for the cryptocurrencies that Bitmain owns — that is, Bitcoin, Bitcoin Cash, Ether, Litecoin and Dash. Bitmain accounted for these cryptocurrencies at cost, which means that the value of these cryptocurrencies is priced at the time of acquisition, not at the current market value. A decent portion could have been acquired during the bull market last year, this may be perceived as overly bullish or unrealistic by public investors, especially by those who have yet to be bought into the value of cryptocurrency, or already find it extremely risky as an asset class.

The questions and doubts from public investors around the unpredictability of the crypto market will be one of the many challenges that crypto companies face if they choose public markets. As we mentioned previously, there are many reasons to stay private as a crypto company, including keeping quarterly financials private as well as dealing with market fluctuations and the ongoing volatility and uncertainty in the cryptocurrency world. However, the con is that early employees may not get liquidity in their stock options.

Wu has said that a Bitmain IPO would be a “landmark” for both the company and the cryptocurrency space. In such a bear market, Bitmain may be taking a risk by going public, but it’s certainly a large step on behalf of the crypto market. When the filings came out, the value of Bitcoin Cash rose by 23.7 percent from the start of the day, reaching a nearly three-week high, and at around 6pm PST it was still up 20 percent.

Several of Bitmain’s competitors have filed for IPO since the beginning of 2018, but most of them are significantly smaller. For example, Hong Kong-based Canaan Creative filed in May, and its latest target is $1 billion to $2 billion in fundraising with 2017 revenue of $204 million. If Bitmain’s Q2 was as poor as the numbers suggest, it may need to revise the target raise for its Hong Kong listing.

What Makes Cryptocurrency Better Than Cash or Credit?

cryptocurrency-better-cash

At some point, cryptocurrency will replace fiat currency. The tides of cryptocurrency may appear to have stalled, but the truth is that we’re still only at the beginning. Like, the very beginning. The astronomical rise of Bitcoin and Ethereum throughout 2017 into early 2018 skewed markets—and as markets plunged south, so did wider public opinion. But that doesn’t change the underlying technology or future prospects of cryptocurrency as a whole. Indeed, cryptocurrencies will soon be ready to take over fiat currency. Here’s why. Cryptocurrency vs. Fiat Currency, Compared Fungible: Each unit of currency must be exactly the same and interchangeable….

Read the full article: What Makes Cryptocurrency Better Than Cash or Credit?

cryptocurrency-better-cash

At some point, cryptocurrency will replace fiat currency. The tides of cryptocurrency may appear to have stalled, but the truth is that we’re still only at the beginning. Like, the very beginning.

The astronomical rise of Bitcoin and Ethereum throughout 2017 into early 2018 skewed markets—and as markets plunged south, so did wider public opinion.

But that doesn’t change the underlying technology or future prospects of cryptocurrency as a whole. Indeed, cryptocurrencies will soon be ready to take over fiat currency. Here’s why.

Cryptocurrency vs. Fiat Currency, Compared

Fungible: Each unit of currency must be exactly the same and interchangeable. A dollar is a dollar, and a cent is a cent. The same applies to Bitcoin, Ethereum, and all other cryptocurrencies.

Durable: Gold would be pointless if it dissolved in the rain or melted at room temperature. Even paper currency is durable to a point, with many countries using or introducing polymer bank notes. Cryptocurrencies are entirely digital, with data stored on a decentralized network. Other than by losing access to your digital wallet, cryptocurrencies are extremely durable.

Scarce: Currency is scarce; rather, it has a limited supply. Following the 2008 global financial crisis, we saw that governments could create more currency whenever they want, but the point still stands. Cryptocurrency, on the other hand, has limitations that differ from coin to coin. There are only 21 million total Bitcoins, for example, while other cryptocurrencies may have an infinite supply.

Divisible: Currencies must break down into smaller units. Dollars into cents. Bitcoins into satoshis. (What is a satoshi?) Theoretically, Bitcoin can break down into infinitely smaller units, depending on the value of a single bitcoin.

Trade: The main purpose of currency is to facilitate the exchange of goods and services. Some cryptocurrencies lag behind fiat currency here because transactions take too long to verify. Regardless, you can use cryptocurrencies to purchase a wide range of goods and services, just as you can with fiat.

Cryptocurrencies tick all the boxes when you compare all the different functions and aspects of fiat currency.

Why Cryptocurrency Will Replace Fiat Currency

1. Decentralized and Fairer Financial Systems

Elite financiers, bankers, business magnates—an elite few directly control the currencies on which the rest of us depend. Regular folks like you and me can’t influence the market, and even when thousands of people band together, nothing really changes.

A core part of that control relates to supply. When the supply increases, money decreases in value, and vice versa. Those in the driving seat can profit from such sudden changes in financial markets. Decentralization takes global financial control from the elite few and restores it to the masses.

It’s important to note that the cryptocurrencies most likely to prosper as fiat replacements have a limited supply. Furthermore, cryptocurrencies that aren’t directly tied to any governments won’t suddenly be devalued because of the actions of one controlling group. (That doesn’t mean cryptocurrencies can’t be devalued through other means.)

Ultimately, decentralization means less manipulation. Not completely eradicated, but definitely reduced to a much smaller level of influence. Cryptocurrencies aren’t subject to inflation, interest rates, cross-border exchange rates, business taxes, and so on.

2. Cryptocurrency Adoption Is on the Rise

It’s impossible to find figures that accurately show how many cryptocurrency users there are. Some people use multiple wallets, across multiple platforms, for a variety of coins. Furthermore, many users and crypto-exchanges use new wallets for each incoming and outgoing transaction, which artificially balloons figures.

However, there are a few charts that track the steady growth of cryptocurrency markets around the globe.

First up, check out Statista’s chart of “Number of Blockchain wallet users worldwide from 1Q 2015 to 2Q 2018.” It shows a steady increase in the number of Blockchain wallet users, reaching over 25 million users in Q2 2018.

Statista chart for blockchain wallet users

For more perspective, here’s a chart that shows the daily number of active Bitcoin addresses over the same period. Understandably, the chart peaks (1.13 million active addresses) at the same time that Bitcoin’s price peaks, but also reflects the overall growth in Blockchain wallet accounts:

chart showing active bitcoin wallet users

In fact, if we look at the comparative chart for Bitcoin, Ethereum, and Litecoin, we a similar story:

chart showing active bitcoin, ethereum, and litecoin wallet users

Chris McCann, founder of the CryptoWeekly newsletter, produced some really interesting charts illustrating cryptocurrency market and user growth in this blog post.

The two standout takeaways are that the crypto market appears to match the internet in its early days—the year 1994, to be specific. Adding to that intrigue are the similarities between the growth of crypto-assets between 2014 to 2017 and the growth in new websites between 1991 to 1995.

So, how many people own cryptocurrency? The truth is, no one knows. Higher estimates put the number at 50 million global users, while the lower bounds stick to around 10 million (which is, in my opinion, way too low given the other evidence we have).

3. More Vendors Now Accept Cryptocurrency

There’s a healthy (and growing) number of online retailers who accept cryptocurrency alongside fiat currency. Prominent examples include:

  • Microsoft
  • Overstock
  • Newegg
  • Expedia
  • DISH Network
  • Etsy (individual sellers)
  • Intuit
  • Private Internet Access
  • Pure VPN

Amazon doesn’t accept cryptocurrencies as yet, but you can use Purse to locate people who are willing to use their Amazon gift cards in exchange for your cryptocurrency. You can even grab a healthy discount on your items this way.

4. Blockchain Is Safe and Secure

A few months back, I sent several hundred euro from the UK to a friend in Spain. The payment got lost in the banking system for nearly two weeks. Neither bank could find the transfer until it “popped” back into existence. During that time, it was as if the money never existed, or had decided to slip into the void.

You have to have trust in the banking system because it’s dominant—but banks regularly lose accounts, payments, transfers, and much more. Furthermore, as we see all too frequently, for all their security audits and regulations, banks are still susceptible to massive hacks.

On the other hand, no one has hacked the Bitcoin blockchain (at least since the very early days, when there was a value overflow hack that created 180 billion Bitcoins, but the developers initiated a soft fork to counteract the hack).

The lack of a blockchain hack has even been turned into a joke bounty of sorts, as the first person to hack the blockchain to execute Bitcoin transactions via any address will become an instant billionaire (presuming Bitcoin keeps some of its value after such an attack). Ultimately, until quantum computers can break a blockchain’s encryption, it remains safe from hacks.

5. Bitcoin Wallets Are Private

Your Bitcoin belongs to you. You keep it in a wallet and store it offline (I hope!). Other crypto-users can’t compel you to part with it, nor can Bitcoin or other blockchain developers force it from your wallet. Unfortunately, quite the opposite is true of fiat currency, especially when kept “secure” in a bank account.

Similarly, creating and monitoring bank accounts is tiresome, requires paperwork, and exposes your financial situation to others. You can have as many crypto-wallets as you want, each with different settings, containing different cryptocurrencies, and—best of all—each one instantly accessible from wherever you are in the world.

When Will Cryptocurrency Replace Fiat Currency?

No one knows. Probably not any time soon, though.

Until it does, cryptocurrency will exist alongside fiat currency as an alternative payment method for an ever-expanding range of goods and services. Financial institutions and governments are already exploring cryptocurrency and blockchain applications, and it’s no surprise why.

If there is going to be a global financial system shakeup, your government wants to be leading the revolution. Want to join in on the fun? See our beginner’s guide to buying your first cryptocurrency.

Read the full article: What Makes Cryptocurrency Better Than Cash or Credit?

Crypto mining giant Bitmain reveals heady growth as it files for IPO

After months of speculation, Bitmain — the world’s largest provider of crypto miners — has opened the inner details of its business after it submitted its IPO prospectus with the Stock Exchange of Hong Kong. And some of the growth numbers are insane. The document doesn’t specify how much five-year-old Bitmain is aiming to raise from […]

After months of speculation, Bitmain — the world’s largest provider of crypto miners — has opened the inner details of its business after it submitted its IPO prospectus with the Stock Exchange of Hong Kong. And some of the growth numbers are insane.

The document doesn’t specify how much five-year-old Bitmain is aiming to raise from its listing — that’ll come later — but it does lift the lid on the incredible business growth that the company saw as the crypto market grew massively in 2017. Although that also comes with a question: can that growth continue in this current bear market?

The company grossed more than $2.5 billion in revenue last year, a near-10X leap on the $278 million it claims for 2016. Already, it said revenue for the first six months of this year surpassed $2.8 billion.

Bitmain is best known for its ‘Antminer’ devices — which allow the owner to mine for Bitcoin and other cryptocurrencies — and that accounts for most of its revenue: 77 percent in 2016, 90 percent in 2017, and 94 percent in the first half of 2018. Other income is generated by its mining farms, shared mining pools, AI chips and blockchain services.

The company is fabless, which means it develops its own chip design and works with manufacturing partners who bring them to life as physical chips. Those chips are then used to power mining hardware which lets the owner earn a reward by mining Bitcoin and other cryptocurrencies. Bitmain claims over 80,000 customers with just under half of sales in China and the rest overseas.

The company said it posted $701 million in net profit in 2017, up from $104 million in 2016. For the first half of this year, it is claiming a gross profit of $743 billion. (Operational profit touched $1 billion for that period.)

That’s quite staggering growth, but there are some signs that 2018 comes with more challenges.

Margins are down. Gross margin in the first six months was 36 percent, down from 48 percent in 2017 and 54 percent in 2016. Contributing to that, the cost of sale percentage in the first half of 2018 rose to 64 percent from 51 and 52 percent in 2017 and 2016, respectively.

Interestingly, Bitmain accepts Bitcoin and other cryptocurrencies as payment for its miners, with some 27 percent of purchases last year paid for using crypto. As a result, those payments aren’t included in revenue but do show up as “investing cash inflow” when they are converted to fiat and used in the business. That’s a 2018 accounting problem right there.

As a result, Bitmain has a negative net cash used in operating activities position but those become positive when factoring in the crypto. The company said it received $887 million in crypto in the first half of 2018, $872 million in 2017, $56 million in 2016 and $12 million in 2015 — that’s based on rate at cost. Data appears to show that Bitmain cashed $484 million in crypto in 2017, and in the first half of 2018 that figure was $382 million.

The wild ride of 2017, however, led the company to over-estimated demand and, as a result, its inventory ballooned by $1 billion.

Here’s Bitmain explanation of how it managed to get it so wrong:

In early 2018, we anticipated strong market growth for cryptocurrency mining hardware in 2018 due to the upward trend of cryptocurrencies price in the fourth quarter of 2017, and we placed a large amount of orders with our production partners in response to the anticipated significant sales growth. However, there had been significant market volatility in the market price of cryptocurrencies in the first half of 2018. As a result of such volatility, the expected economic return from cryptocurrency mining had been adversely affected and the sales of our mining hardware slowed down, which in turn caused an increase in our inventories level and a decrease in advances received from our customers in the first half of 2018. Going forward, we will actively balance our business growth strategy, inventories and cryptocurrency asset levels to ensure a sustainable business growth and a healthy cash flow position, and we will adjust our procurement and prediction plan to maintain an appropriate liquidity level.

Despite an extra $1 billion in inventory, Bitmain estimates it has the working capital — including crypto pile and the result of its IPO — to sustain operations for at least another 12 months. That, according to its figures, is around $343 million in cash and cash equivalents but clearly it needs another megahit product or for the market demand to rise again.

Indeed, Bitmain just last week announced its newest mining chip — shrunk down to 7nm — which it believes will offer more power and greater efficiency for miners. That progress coupled with the rising value of crypto — i.e. what owners of Bitmain miners can earn — has helped the company steadily raise the price of its hardware.

Average selling price for its Bitcoin mining machines in 2015 was just $463, but that jumped to $767 in 2016, $1,231 in 2017 and $1,012 in the first half of 2018.

Bitmain co-founder Jihan Wu is the face of the company and one of its largest shareholders with a 20 percent stake

Beyond mining, the company is also developing AI chips, the first of which launched last year. They are used for developing cloud systems, as well as object, image and facial recognition purposes.

Citing third party figures, Bitmain claims to have a dominant 75 percent of the ASIC mining hardware market. It is investing heavily in R&D, which reached $73 million last year and $86 million during the first half of 2018. In addition, around one-third of its 2,594 employees are listed as working in research and development.

It’s likely that Bitmain sees more revenue in crypto than any other company on the planet

Bitmain’s document confirms the company raised some $784 million across Series A, Series B and Series B rounds.

Its investor roster is fairly public thanks to leaks and it includes the likes of IDG, Sequoia China, and Kaifu Lee’s Sinovation fund. However, the prospectus does confirm that shareholders include retailer NewEgg, EDBI — the corporate investment arm of Singapore’s Economic Development Board — and Uber investor Coatue. Founders Ketuan Zhan and Jihan Wu are the largest shareholders and they control 36 and 20 percent, respectively.

We can expect Bitmain to flesh out the prospectus with more juicy information, including a target raise which will also generate its valuation. But for now there are over 400 pages of information to process, you can find them all right here.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

Crypto mining giant Bitmain reveals heady growth as it files for IPO

After months of speculation, Bitmain — the world’s largest provider of crypto miners — has opened the inner details of its business after it submitted its IPO prospectus with the Stock Exchange of Hong Kong. And some of the growth numbers are insane. The document doesn’t specify how much five-year-old Bitmain is aiming to raise from […]

After months of speculation, Bitmain — the world’s largest provider of crypto miners — has opened the inner details of its business after it submitted its IPO prospectus with the Stock Exchange of Hong Kong. And some of the growth numbers are insane.

The document doesn’t specify how much five-year-old Bitmain is aiming to raise from its listing — that’ll come later — but it does lift the lid on the incredible business growth that the company saw as the crypto market grew massively in 2017. Although that also comes with a question: can that growth continue in this current bear market?

The company grossed more than $2.5 billion in revenue last year, a near-10X leap on the $278 million it claims for 2016. Already, it said revenue for the first six months of this year surpassed $2.8 billion.

Bitmain is best known for its ‘Antminer’ devices — which allow the owner to mine for Bitcoin and other cryptocurrencies — and that accounts for most of its revenue: 77 percent in 2016, 90 percent in 2017, and 94 percent in the first half of 2018. Other income is generated by its mining farms, shared mining pools, AI chips and blockchain services.

The company is fabless, which means it develops its own chip design and works with manufacturing partners who bring them to life as physical chips. Those chips are then used to power mining hardware which lets the owner earn a reward by mining Bitcoin and other cryptocurrencies. Bitmain claims over 80,000 customers with just under half of sales in China and the rest overseas.

The company said it posted $701 million in net profit in 2017, up from $104 million in 2016. For the first half of this year, it is claiming a gross profit of $743 billion. (Operational profit touched $1 billion for that period.)

That’s quite staggering growth, but there are some signs that 2018 comes with more challenges.

Margins are down. Gross margin in the first six months was 36 percent, down from 48 percent in 2017 and 54 percent in 2016. Contributing to that, the cost of sale percentage in the first half of 2018 rose to 64 percent from 51 and 52 percent in 2017 and 2016, respectively.

Interestingly, Bitmain accepts Bitcoin and other cryptocurrencies as payment for its miners, with some 27 percent of purchases last year paid for using crypto. As a result, those payments aren’t included in revenue but do show up as “investing cash inflow” when they are converted to fiat and used in the business. That’s a 2018 accounting problem right there.

As a result, Bitmain has a negative net cash used in operating activities position but those become positive when factoring in the crypto. The company said it received $887 million in crypto in the first half of 2018, $872 million in 2017, $56 million in 2016 and $12 million in 2015 — that’s based on rate at cost. Data appears to show that Bitmain cashed $484 million in crypto in 2017, and in the first half of 2018 that figure was $382 million.

The wild ride of 2017, however, led the company to over-estimated demand and, as a result, its inventory ballooned by $1 billion.

Here’s Bitmain explanation of how it managed to get it so wrong:

In early 2018, we anticipated strong market growth for cryptocurrency mining hardware in 2018 due to the upward trend of cryptocurrencies price in the fourth quarter of 2017, and we placed a large amount of orders with our production partners in response to the anticipated significant sales growth. However, there had been significant market volatility in the market price of cryptocurrencies in the first half of 2018. As a result of such volatility, the expected economic return from cryptocurrency mining had been adversely affected and the sales of our mining hardware slowed down, which in turn caused an increase in our inventories level and a decrease in advances received from our customers in the first half of 2018. Going forward, we will actively balance our business growth strategy, inventories and cryptocurrency asset levels to ensure a sustainable business growth and a healthy cash flow position, and we will adjust our procurement and prediction plan to maintain an appropriate liquidity level.

Despite an extra $1 billion in inventory, Bitmain estimates it has the working capital — including crypto pile and the result of its IPO — to sustain operations for at least another 12 months. That, according to its figures, is around $343 million in cash and cash equivalents but clearly it needs another megahit product or for the market demand to rise again.

Indeed, Bitmain just last week announced its newest mining chip — shrunk down to 7nm — which it believes will offer more power and greater efficiency for miners. That progress coupled with the rising value of crypto — i.e. what owners of Bitmain miners can earn — has helped the company steadily raise the price of its hardware.

Average selling price for its Bitcoin mining machines in 2015 was just $463, but that jumped to $767 in 2016, $1,231 in 2017 and $1,012 in the first half of 2018.

Bitmain co-founder Jihan Wu is the face of the company and one of its largest shareholders with a 20 percent stake

Beyond mining, the company is also developing AI chips, the first of which launched last year. They are used for developing cloud systems, as well as object, image and facial recognition purposes.

Citing third party figures, Bitmain claims to have a dominant 75 percent of the ASIC mining hardware market. It is investing heavily in R&D, which reached $73 million last year and $86 million during the first half of 2018. In addition, around one-third of its 2,594 employees are listed as working in research and development.

It’s likely that Bitmain sees more revenue in crypto than any other company on the planet

Bitmain’s document confirms the company raised some $784 million across Series A, Series B and Series B rounds.

Its investor roster is fairly public thanks to leaks and it includes the likes of IDG, Sequoia China, and Kaifu Lee’s Sinovation fund. However, the prospectus does confirm that shareholders include retailer NewEgg, EDBI — the corporate investment arm of Singapore’s Economic Development Board — and Uber investor Coatue. Founders Ketuan Zhan and Jihan Wu are the largest shareholders and they control 36 and 20 percent, respectively.

We can expect Bitmain to flesh out the prospectus with more juicy information, including a target raise which will also generate its valuation. But for now there are over 400 pages of information to process, you can find them all right here.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

It looks like Coinbase is preparing to add a lot more cryptocurrencies

Coinbase aspires to be the New York Stock Exchange of crypto, and it is taking a small — but not insignificant – step to offering a lot more cryptocurrencies after it revamped the process of listing new digital assets. The exchange currently only supports just five cryptocurrencies — Ethereum, Bitcoin, Bitcoin Cash, Ethereum Classic and […]

Coinbase aspires to be the New York Stock Exchange of crypto, and it is taking a small — but not insignificant – step to offering a lot more cryptocurrencies after it revamped the process of listing new digital assets.

The exchange currently only supports just five cryptocurrencies — Ethereum, Bitcoin, Bitcoin Cash, Ethereum Classic and Litecoin — and the process of adding each one has been gradual. The company would announce plans, and then later announce when listing the asset. The idea being to reduce the potential to send the value of a token skyrocketing. (Since support from Coinbase potentially adds a lot more trading volume.)

That clearly isn’t a sustainable process if Coinbase is to add “hundreds” of tokens, as CEO Brian Amstrong told an audience at TechCrunch Disrupt it eventually plans to.

Regulatory concern is high on the scale when evaluating support for new cryptocurrencies, so now Coinbase is speeding up the process by limiting trading of some tokens to specific locations where necessary.

“Today we’re announcing a new process that will allow us to rapidly list most digital assets that are compliant with local law, by satisfying listing requests in a jurisdiction-by-jurisdiction manner. In practice, this means some new assets listed on our platform may only be available to customers in select jurisdictions for a period of time,” the company said in a blog post.

That’ll mean an end to the double announcement — ‘token X is coming soon’ and ‘token X is now supported’ — and instead a single reveal. That indicates that a large number of new assets may be incoming — for an idea of which ones, Coinbase recently said it is looking over a number of cryptocurrencies.

Interestingly, the company also noted that it may introduce a listing fee — this is common with many other exchanges — in the future in order to cover costs around adding some projects.

“Initially there will be no application fee. Depending on the volume of submissions, we reserve the right to impose an application fee in the future to defray the legal and operational costs associated with evaluating and listing new assets,” it explained.

The company has opened a listing proposal link, here. If similar features from other exchanges are anything to go by, Coinbase’s will be flooded by naive token holders who think they have a shot at getting listed on Coinbase, which will take them to the moon. Good luck maintaining that list, guys.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

How to Keep Your Cryptocurrency Safe: 10 Common Mistakes to Avoid

cryptocurrency-safety

If you own any cryptocurrency, you’ll need to adapt to a new way of keeping your money safe. You can’t just keep your Bitcoins under the bed or deposit your Ether in a bank (at least, not yet). So what are you supposed to do? Here are 10 common security mistakes people make when handling and storing cryptocurrency. Mistake 1: Failing to Back Up Wallet Keys Cryptocurrencies don’t come with online banking and password resets. Instead, you have a set of private keys that allow you to access the funds in your various wallets. You are solely responsible for keeping…

Read the full article: How to Keep Your Cryptocurrency Safe: 10 Common Mistakes to Avoid

cryptocurrency-safety

If you own any cryptocurrency, you’ll need to adapt to a new way of keeping your money safe. You can’t just keep your Bitcoins under the bed or deposit your Ether in a bank (at least, not yet). So what are you supposed to do?

Here are 10 common security mistakes people make when handling and storing cryptocurrency.

Mistake 1: Failing to Back Up Wallet Keys

Cryptocurrencies don’t come with online banking and password resets. Instead, you have a set of private keys that allow you to access the funds in your various wallets.

You are solely responsible for keeping your keys safe. If you lose your only copy—perhaps because someone stole your laptop—you will be locked out of your currency forever.

You should make physical copies of your private keys and store them somewhere safe from fire, water, and other damage.

Mistake 2: Not Using 2FA on Crypto Exchanges

Yes, we know, 2FA is annoying. And if I’m being perfectly honest, I don’t use it myself on services like Facebook and Outlook. For me, it’s more hassle than its worth.

But crypto exchanges are another matter. Given their poor track record when it comes to hacks, you need to take every measure possible to keep your account secure, especially since real money is on the line.

Mistake 3: Blind Loyalty to One Crypto Exchange

The dubious history of insecurity in crypto exchanges means it’s prudent to spread your risk around multiple companies. There are lots of great crypto exchanges you can use, so why stick all of your eggs in one basket?

Not only is it sound advice from an investment standpoint (different exchanges provide access to different altcoins), but it also means you’ll have less exposure in case the exchange is hacked, becomes insolvent, or faces some other disaster.

Note: You should never store lots of crypto in an exchange! See Mistake 5 for more on that.

Mistake 4: Not Verifying Your Exchange Identity

The Patriot Act of 2001 made it a legal requirement for all banks to undergo Know Your Customer verification—and the laws also apply to crypto exchanges in the US. Even non-American exchanges now undertake the process in order to comply with US law for their American clients.

But here’s the catch: some crypto exchanges let you deposit funds and start trading without completing the verification process. They will not, however, allow you to withdraw money until you are verified. Obviously, the verification process also helps prevent fraud from happening on your account.

So, if you want to make sure your crypto assets are available when you need them, make sure you’ve completed the necessary verification steps on your exchanges of choice.

Mistake 5: Storing Cryptocurrency in Hot Wallets

Hot wallets are crypto wallets that are accessible over the internet—and it’s that connectivity that opens them up to considerable risk. We’ve already mentioned exchange hacks, but you’re also at the whim of forced government shutdowns and some of the other pressing issues facing blockchains.

Instead, you should keep as little money in hot wallets as possible. Obviously if you’re going to day trade or swing trade crypto, you’ll need some amount of liquidity. But generally speaking, crypto should be stored in cold wallets for maximum security. We’ve recommended some secure cold wallets to check out if you’re not sure where to start.

Mistake 6: Sending Crypto to the Wrong Wallet

omisego public keys in bitfinex

It’s easy to suffer from wallet overload. You have public keys for your exchanges, for your offline storage, and for all the different coins you own. With so much going on, it’s easy to accidentally send coins to the wrong wallet.

If the crypto you send is not compatible with the wallet you’re sending it to (for example, if you send Bitcoin to an Ethereum wallet), there’s a strong possibility that you’ll irrevocably lose your assets.

Mistake 7: Using Public Wi-Fi Networks

You should never use a public Wi-Fi network (in a school, hotel, airport, or coffee shop) to perform cryptocurrency transactions.

The security flaws in public networks are well-documented. There are lots of ways hackers can use them to steal your data. You need to ensure that you don’t inadvertently reveal your private keys or exchange passwords to a snooper.

Check out MakeUseOf’s article on how to stay safe while using public Wi-Fi to learn more.

Mistake 8: Using Insecure Browser Extensions

As you might be realizing from reading this article, most cryptocurrency security mistakes arise from leaving yourself exposed to an excessive number of vulnerabilities.

One of the most oft-overlooked security vulnerabilities is browser extensions. Some of the extensions have a shockingly large number of permissions. Can you really trust them?

At the very least, you shouldn’t perform crypto transactions using a browser on which you’ve installed untrusted plugins and extensions (such as ones you sideloaded manually). Ideally, you should use one of the best privacy-friendly browsers and use it exclusively for crypto payments.

Mistake 9: Using Weak Passwords

This is an obvious tip, but it’s imperative to make sure you use secure passwords on your exchange accounts. If you have not implemented 2FA, it’s the only barrier between your funds and cybercriminals who want to brute force your credentials.

Remember, crypto exchanges and other hot wallets don’t give you a security token like a bank, and there are no industry-wide rules for refunds or recourse in the event that you’re the victim of a theft.

To make sure you don’t forget your hard-to-remember secure passwords, use a password manager like LastPass.

Mistake 10: Falling for Crypto Scams

One of the most important ways to keep your assets safe—whether it’s fiat money or cryptocurrency—is to steer clear of scams, frauds, and the other ways people try to con you out of your capital.

Sadly, scams are common in the world of crypto. For example, you need to perform no more than a cursory search on Twitter to find people offering to send you 50 ETH seven days from now if you send them 10 ETH today.

Like anything in life, if something sounds too good to be true, it probably is. Exercise the same caution and common sense that you would with any other financial asset.

Of course, keeping your cryptocurrency safe when it’s under your control is just one part of the security puzzle. You also need to have a thorough grasp of how secure Bitcoin transactions are and other crypto threats facing your coins.

Read the full article: How to Keep Your Cryptocurrency Safe: 10 Common Mistakes to Avoid

Circle wants more women to invest in cryptocurrency

The earliest adopters of Bitcoin — the libertarian anarchist “cypherpunk” crowd — were mostly men. Today, roughly a decade after Satoshi Nakamoto’s famed white paper was released, the majority of cryptocurrency holders are still men. This poses a problem for the companies betting on the mainstream adoption of cryptocurrency. At this point, they’ve already tapped into […]

The earliest adopters of Bitcoin — the libertarian anarchist “cypherpunk” crowd — were mostly men. Today, roughly a decade after Satoshi Nakamoto’s famed white paper was released, the majority of cryptocurrency holders are still men.

This poses a problem for the companies betting on the mainstream adoption of cryptocurrency. At this point, they’ve already tapped into that core base of Bitcoin enthusiasts, namely Millenial men. But how do they reach more women? Or Gen Xers? Or Baby Boomers?

Crypto finance company Circle thinks accessible, educational resources are the answer. As of today, the company has added a new feature (pictured above) to their crypto investing app, Circle Invest. Their hope is that simple, jargon-free explainers — sort of a ‘Cryptocurrencies for Dummies’ built into the app — will make it easier for new demographics to get their foot in the door of the crypto universe and learn a thing or two along the way.

“A lot of the apps that exist on the market are geared toward folks that understand the market already and unfortunately, that tends to be men,” Circle’s head of product Divya Agarwalla told TechCrunch.

The inspiration for the new feature came after the results of a study showed a serious lack of diversity among crypto investors. The study, commissioned by Circle, surveyed 3,000 Millennials, Gen Xers and Baby Boomers in the U.S. and found that Millennial men are more than twice as likely to invest in crypto in the next year.

For anyone that has attended a blockchain event or crypto conference, this probably isn’t news. According to Coin.dance, roughly 95 percent of Bitcoin “community engagement” comes from men.

A strategic attempt to tap into a new user base is a natural step for Circle, which has long had ambitions of becoming the PayPal (and Venmo) of cryptocurrency.

Most people are familiar with Circle’s consumer-facing payments app, Circle Pay, though the company also operates a trading desk called Circle Trade, as well as Poloniex, another exchange platform the company tacked on via its acquisition of the company of the same name earlier this year. That deal, according to Fortune, was worth some $400 million.

Circle has raised about $250 million in venture capital funding to date from IDG Capital, Breyer Capital, General Catalyst, Accel, Digital Currency Group, Pantera, Blockchain Capital, Goldman Sachs, Tusk Ventures and more. A $110 million round in May valued the company at $3 billion.