𝐊𝐫𝐲𝐩𝐭𝐨𝐰ä𝐡𝐫𝐮𝐧𝐠𝐞𝐧 𝐟ü𝐫 𝐁ö𝐫𝐬𝐞𝐧𝐣ü𝐧𝐠𝐞𝐫 / 𝐄𝐢𝐧𝐬𝐭𝐞𝐢𝐠𝐞𝐫 (Part 3 - Money Money Money)

You invest in ETF, stocks, real estate, gold, savings or similar, recently heard about these "cryptocurrencies" and now want to join the cool kids discussion? Then please read on. This series of articles reveals the basics of the crypto world, touches on a variety of topics and remains superficial at beginner level - the perfect basis to delve deeper into individual areas on your own or to shine at the regulars' table with dangerous half-knowledge.

Part 1 was about what cryptocurrencies actually are and what added value they can generate. You can find part 1 here: https://app.getquin.com/activity/buTJFYxcSD

In the second part, I went into the technology and security of cryptocurrencies, here to read: https://app.getquin.com/activity/QHAzXeXlSO

This part is probably about the most important question for you: how can I make money with cryptocurrencies? This is purely my private experience without any claim to completeness and certainly no investment advice!

𝗩𝗲𝗿𝘀𝘁𝗮𝗻𝗱𝗲𝗻, 𝗘𝘀𝗲𝗹! 𝗪𝗮𝗿𝘂𝗺 𝗴𝗶𝗯𝘁𝘀 ü𝗯𝗲𝗿𝗵𝗮𝘂𝗽𝘁 𝘂𝗻𝘁𝗲𝗿𝘀𝗰𝗵𝗶𝗲𝗱𝗹𝗶𝗰𝗵𝗲 𝗞𝗿𝘆𝗽𝘁𝗼𝘄ä𝗵𝗿𝘂𝗻𝗴𝗲𝗻, 𝗶𝗻 𝗱𝗶𝗲 𝗶𝗰𝗵 𝗶𝗻𝘃𝗲𝘀𝘁𝗶𝗲𝗿𝗲𝗻 𝗸𝗮𝗻𝗻?

Cryptocurrencies may differ, for example, in how quickly coins can be sent from A to B, the fees for such a transaction, and how much power is consumed in the process. In addition, the range of functions and the "specialty" of cryptocurrencies may differ. For example, Bitcoin is mainly seen as a store of value and a means of payment, Ethereum made smart contracts and DApps socially acceptable, Iota was conceptualized for microtransactions in the Internet of Things (IoT), and Cosmos tries to be a link between different crypto networks.

However, the majority of cryptocurrencies exist only to make a profit. The overwhelming majority of all cryptocurrencies will disappear into insignificance in months or years and are worthwhile at most for short-term and highly speculative investments, which also like to fall to 0 sometimes.

𝗚𝗲𝗶𝗹, 𝗵𝗶𝗻 𝘂𝗻𝗱 𝗵𝗲𝗿 𝗺𝗮𝗰𝗵𝘁 𝗧𝗮𝘀𝗰𝗵𝗲𝗻 𝘃𝗼𝗹𝗹! 𝗜𝗰𝗵 𝗺𝗮𝗴 𝗵𝗼𝗰𝗵𝘀𝗽𝗲𝗸𝘂𝗹𝗮𝘁𝗶𝘃𝗲 𝘂𝗻𝗱 𝗸𝘂𝗿𝘇𝗳𝗿𝗶𝘀𝘁𝗶𝗴𝗲 𝗔𝗻𝗹𝗮𝗴𝗲𝗻. 𝗩𝗼𝗿 𝗮𝗹𝗹𝗲𝗺 𝘄𝗲𝗻𝗻 𝗶𝗰𝗵 𝗸𝗲𝗶𝗻𝗲 𝗔𝗵𝗻𝘂𝗻𝗴 𝗱𝗮𝘃𝗼𝗻 𝗵𝗮𝗯𝗲. 𝗘𝗿𝘇ä𝗵𝗹 𝗺𝗶𝗿 𝗺𝗲𝗵𝗿!

Cryptocurrencies are generally highly speculative and very volatile. They are also unregulated, which, among other things, means that absolutely anyone can create a cryptocurrency. Often, these are tokens that do not have their own blockchain, but use an existing blockchain. For example, there are a large number of so-called ERC-20 tokens on the Ethereum blockchain [1]. Such tokens / coins can generate brutal short-term price gains or losses due to wild promises, hype, a meme or people like Elon Musk. Those who want to multiply their stake or send it to 0 in the shortest possible time can look into such hype coins and try to identify favorable entry and exit points. For example, the meme coin Shiba Inu cost 0.000004 euros on 10/02/2021 - only to peak at 0.000104 euros by 10/28/2021. The coin has multiplied its price by a factor of 26 within less than a month. By February 2022, however, it had also fallen back to 0.000016 euros. [2]

Since there are so many cryptocurrencies, it is extremely difficult to find the right coin and the right entry and exit time. In addition, so-called exit scams and rug pulls [3], where developers of a coin simply make off with investors' deposits, pose another danger. The Squid game rug pull, in which investors were cheated out of USD 3.3 million at the end of 2021, is one of the most recent examples [4].

Therefore, I personally would only invest in established projects that, from my point of view, generate added value and have potential. Of course, it is tempting to gamble a bit with smaller sums. But: If I start an experiment with e.g. 100 Euro and make 100% profit, I still have only 200 Euro. Whether the thrill and the risk is worth it, everyone must decide for themselves. For example, I participated in an ICO (Initial Coin Offering, the equivalent of an IPO) in 2017 and invested 5 Ether worth 1,000 euros at the time. Unfortunately, the project never really got off the ground and my money is long gone. If I had just kept my 5 Ether and not participated in the ICO, I would have turned the 1,000 euros into over 10,000 euros today.

𝗠𝗼𝗺𝗲𝗻𝘁, 𝗷𝗲𝗱𝗲𝗿 𝗸𝗮𝗻𝗻 𝗺𝗶𝘁 ü𝗯𝗲𝗿𝘀𝗰𝗵𝗮𝘂𝗯𝗮𝗿𝗲𝗺 𝗔𝘂𝗳𝘄𝗮𝗻𝗱 𝗲𝗶𝗻𝗲 𝗞𝗿𝘆𝗽𝘁𝗼𝘄ä𝗵𝗿𝘂𝗻𝗴 / 𝗲𝗶𝗻𝗲𝗻 𝗧𝗼𝗸𝗲𝗻 𝗲𝗿𝘀𝘁𝗲𝗹𝗹𝗲𝗻? 𝗜𝗰𝗵 𝗿𝗶𝗲𝗰𝗵𝗲 𝗚𝗲𝗹𝗱!

Yes, this is another way to make money with crypto. You can create your own currency - for example as a token on an existing blockchain. I've never done this myself, which is why I won't recommend any articles here. But feel free to google "create erc20 token" - you should find enough instructions and examples here. Maybe you'll do some proper advertising for your token and then your own little rug pull? With honest means and without added value / unique selling proposition it might be difficult to earn money with your own cryptocurrency.

NFTs are currently very trendy. With NFTs, you can create unique tokens that, for example, make your farts [5], your tweets [6] or pictures of monkeys [7] tradable on a blockchain. Maybe someone will auction off the rights to their GetQuin posts soon? So you can create "digital art" and sell it on appropriate platforms like https://opensea.io/ sell it. Now, if you can still find a buyer and you actually own the rights to your art, there's nothing standing in the way of immeasurable wealth. And unlike rug pulls with self-created cryptocurrencies, this isn't even illegal.

Conversely, you can of course also buy NFTs and speculate on a higher sale value. The whole thing becomes more exciting in the context of computer games, where you can acquire unique items as NFTs, for example. With https://sorare.com there is even a soccer manager and trading card game in which you can buy player cards as NFTs, form your team from them and, ideally, sell them later at a profit.

𝗗𝗮𝘀 𝗸𝗹𝗶𝗻𝗴𝘁 𝗷𝗲𝘁𝘇𝘁 𝗱𝗼𝗰𝗵 𝗮𝗹𝗹𝗲𝘀 𝘇𝗶𝗲𝗺𝗹𝗶𝗰𝗵 𝘄𝘆𝗹𝗱. 𝗞𝗮𝗻𝗻 𝗺𝗮𝗻 𝗮𝘂𝗰𝗵 𝗵𝗮𝗹𝗯𝘄𝗲𝗴𝘀 𝘀𝗲𝗿𝗶ö𝘀 𝗺𝗶𝘁 𝗞𝗿𝘆𝗽𝘁𝗼𝘄ä𝗵𝗿𝘂𝗻𝗴𝗲𝗻 𝗚𝗲𝗹𝗱 𝘃𝗲𝗿𝗱𝗶𝗲𝗻𝗲𝗻?

Absolutely! You can analyze cryptocharts and buy / sell based on them or follow a buy & hold strategy (or hodl, as the crypto community says). When hodln cryptocurrencies, you should pay attention to the fundamentals - just like when buying stocks. You can pay attention to market capitalization, trading volume, the age of the cryptocurrency, security, decentralization, energy consumption, transaction speed, developers (individual(s) vs. company vs. large community), projects / use cases, usage and / or the specialty of the cryptocurrency, among others.

In general, many cryptocurrencies are trying to solve similar problems. Analyze what makes the cryptocurrency of your choice different and better than the other cryptocurrencies and what added value it generates. What is its unique selling point? Why should someone use exactly this cryptocurrency and not another or even a centralized solution in the future? It definitely takes work to find suitable cryptocurrencies for investment. And when you have found them, you will probably find other cryptocurrencies with similar fundamentals shortly after.

So-called Proof of Stake (PoS) [8] cryptocurrencies like Ada can also be staked. By staking you support the network and get paid interest in the respective cryptocurrency. The amount differs from cryptocurrency to cryptocurrency and is approximately 5% per year for Ada [9]. Note, however, that the additional coins have to come from somewhere and imply a corresponding inflation of the respective cryptocurrency. Since staking is a native function of PoS cryptos, you don't need a central entity like a crypto exchange for this either. The investment and withdrawal is done directly within and through the crypto network. If you do not want to deal with the manual staking process, you can often stake via central crypto exchanges. This is convenient, of course, but it doesn't support the network and you lose control over your coins (see Part 2 https://app.getquin.com/activity/QHAzXeXlSO ). Unless you are invested in a PoS cryptocurrency, I would therefore recommend native staking on the network without a central instance.

If you have a Proof of Work (PoW) cryptocurrency like Bitcoin, it cannot be multiplied by staking for the time being. PoW coins are instead created by solving computational operations, known as mining [10]. To obtain new PoW coins, you can equip yourself with special hardware, install software, and thus mine new coins from home. Nowadays, however, for many cryptocurrencies this requires enormous initial investments in corresponding hardware. In addition, there is an extreme consumption of electricity and highly volatile prices of cryptocurrencies. From my point of view, mining is usually not worthwhile for private individuals in Germany.

𝗢𝗸𝗮𝘆. 𝗞𝗹𝗶𝗻𝗴𝘁 𝗷𝗮 𝘀𝗰𝗵𝗼𝗻 𝗳𝗮𝘀𝘁 𝗹𝗮𝗻𝗴𝘄𝗲𝗶𝗹𝗶𝗴. 𝗚𝗶𝗯𝘁𝘀 𝗻𝗼𝗰𝗵 𝗶𝗿𝗴𝗲𝗻𝗱𝘄𝗮𝘀 𝘇𝘄𝗶𝘀𝗰𝗵𝗲𝗻 𝗵𝗼𝗱𝗹𝗻 𝘂𝗻𝗱 𝗥𝘂𝗴 𝗣𝘂𝗹𝗹?

Definitely! On platforms like. https://crypto.com you can also generate "interest" on your PoW crypto deposits. However, this is then done by the respective platform and independent of the network. For example, by lending your coins to other market participants. On many platforms, this also works for so-called stablecoins [11], whose value is tied to another asset such as the dollar. This way, you do not have to endure the price fluctuations of "ordinary" cryptocurrencies when investing in such stablecoins.

In addition, some platforms like Binance offer other investment products for your cryptocurrencies. These include, for example, futures or the provision of liquidity for certain crypto trading pairs. If you want to avoid centralized platforms - in line with the crypto idea - you can use DeFi (Decentralized Finance) [12]. DeFi allows you to trade cryptocurrencies in a decentralized manner and to invest your coins, for example, in lending products.

One request: Study the matter in detail before you invest money in cryptocurrencies or increase (or decrease) your cryptocurrencies with a corresponding product. Especially if you want to generate interest income with your cryptocurrencies, you should take a close look at how the respective product works and the associated risks. The market is not regulated. If you make a mistake or don't understand an investment product and your money is gone because of it, no one will replace it for you! Also the operator of a product can in principle go bankrupt at any time.

𝗞𝗼𝗺𝗺𝗲𝗻 𝘄𝗶𝗿 𝗻𝗼𝗰𝗵 𝗲𝗶𝗻𝗺𝗮𝗹 𝘇𝘂𝗺 𝗞𝗮𝘂𝗳 𝘂𝗻𝗱 𝗩𝗲𝗿𝗸𝗮𝘂𝗳. 𝗦𝗶𝗻𝗱 𝗞𝗿𝘆𝗽𝘁𝗼𝘄ä𝗵𝗿𝘂𝗻𝗴𝗲𝗻 𝘇𝘆𝗸𝗹𝗶𝘀𝗰𝗵? 𝗚𝗶𝗯𝘁 𝗲𝘀 𝗶𝗿𝗴𝗲𝗻𝗱𝘄𝗲𝗹𝗰𝗵𝗲 𝗢𝗿𝗶𝗲𝗻𝘁𝗶𝗲𝗿𝘂𝗻𝗴𝘀𝗽𝘂𝗻𝗸𝘁𝗲 𝗮𝘂ß𝗲𝗿𝗵𝗮𝗹𝗯 𝗱𝗲𝗿 𝗙𝘂𝗻𝗱𝗮𝗺𝗲𝗻𝘁𝗮𝗹𝘀?

Generally, a distinction is made between Bitcoin, as the first of all cryptocurrencies, and the cryptocurrencies that followed it, known as altcoins. It can often be observed that altcoins, a short time after bitcoin has risen or fallen significantly, also react accordingly and swing in the same direction [13]. This can be observed for the great mass of altcoins, but of course not always for all of them. If altcoins rise after a bitcoin rise, this is called an altcoin season [14].

In recent years, bitcoin seems to correlate with stocks. This was not always the case, but could be observed in 2020 to 2021 [15]. Thus, an investment in cryptocurrencies currently diversifies you insufficiently from the stock market. At the same time, of course, you can try to use this knowledge for your investments. However, keep in mind that this correlation does not have to exist forever.

In the past, one recurring event in particular caused enormous price increases of Bitcoin: the so-called halving. Halving occurs about every four years, the next time in 2024, when the number of Bitcoin that miners receive as a reward for providing computing power is halved. The miners currently receive 6.25 Bitcoin per block and from 2024 only 3.125 Bitcoin. That is, they will receive only half the dollar equivalent for consistent performance. As a result of such halving, enormous price increases could be observed in the past. After the first halving in 2012, the bitcoin price rose from $12 to over $1,000 at the end of 2013. Before the second halving in 2016, the price stood at $650, only to rise to almost $20,000 within 1.5 years. Prior to the last halving in May 2020, the bitcoin price was below 10,000 USD and has so far peaked above 60,000 USD. So in the past, a halving was followed by a rapid rise in the price, followed by a huge drop in value, but never below the price level before the halving. If we look at the price trends in the past on this basis, the last ATH could not be broken again until 2024 / 2025. In addition, there could be further price declines, but never below the USD 10,000 level. [16] [17]

𝗜𝗰𝗵 𝘄𝗲𝗶ß, 𝗸𝗲𝗶𝗻𝗲 𝗔𝗻𝗹𝗮𝗴𝗲𝗻𝗯𝗲𝗿𝗮𝘁𝘂𝗻𝗴. 𝗔𝗯𝗲𝗿 𝘀𝗮𝗴 𝗱𝗼𝗰𝗵 𝗺𝗮𝗹: 𝗔𝘂𝗳 𝘄𝗮𝘀 𝘀𝗲𝘁𝘇𝘁 𝗱𝘂?

I hold Bitcoin and Ether as they are the largest and most important cryptocurrencies and I consider the risk with the two to be significantly lower than any other altcoins. I also hold Iota and Hbar. The two rely on DAGs (decentralized directed graphs) instead of a blockchain. In theory, DAGs are superior to blockchains and could become something like Blockchain 2.0. In practice, however, that remains to be proven. So this is a bet on highly speculative coins. Otherwise, I believe that the top 3-100 cryptocurrencies differ very little (exceptions like Iota and Hbar prove the rule) and pretty much any of them can go to 0 or 100. However, I would like to diversify my portfolio a bit, which is why I put Ada into my hardware wallet as a relatively arbitrary fifth currency.

I store my Ada and Iota in the respective network. BTC, ETH and Hbar lie quite useless in their wallets and wait for price increases. In addition, I still have a few stablecoins that I have invested in Binance to generate a little return.

𝗛𝗮𝘀𝘁 𝗱𝘂 𝘀𝗼𝗻𝘀𝘁 𝗻𝗼𝗰𝗵 𝗲𝗶𝗻𝗲𝗻 𝗧𝗶𝗽𝗽 𝗳ü𝗿 𝗺𝗶𝗰𝗵?

Deal with the taxation of your crypto earnings (sale, staking, DeFi, ...) in time. In Germany, for example, there is a free contribution. In addition, cryptocurrencies can be sold tax-free after a one-year holding period.

𝗜𝗰𝗵 𝗳ü𝗵𝗹𝗲 𝗺𝗶𝗰𝗵 𝗷𝗲𝘁𝘇𝘁 𝗯𝗲𝗿𝗲𝗶𝘁 𝗺𝗶𝘁 𝗞𝗿𝘆𝗽𝘁𝗼 𝗠𝗶𝗹𝗹𝗶𝗮𝗿𝗱ä𝗿 𝘇𝘂 𝘄𝗲𝗿𝗱𝗲𝗻! 𝗪𝗼 𝗸𝗮𝗻𝗻 𝗶𝗰𝗵 𝗸𝗮𝘂𝗳𝗲𝗻?

A comparison of the most popular crypto exchanges has the good @Europoor already created. I recommend you to stop by his site: https://app.getquin.com/activity/PfAxjKLYpc

I personally use Binance, Kraken and Bison. If you liked this series of posts and want to sign up with Binance or Bison, feel free to use any of my ref links.

Binance (refund 10% of your transaction fees to you and me): https://accounts.binance.com/en/register?ref=YQXHXPWS

Bison (€15 in BTC to you and me if you trade more than €50): https://join.bisonapp.com/pd2u9c

Alternatively, of course, feel free to leave a Lambo at my doorstep once you become a billionaire.

Sources

[1] https://www.bitpanda.com/academy/de/lektionen/was-ist-der-erc20-token-standard/

[2] https://coindaten.at/kurs/shiba-inu/

[3] https://coinmarketcap.com/alexandria/glossary/rug-pull

[4] https://www.washingtonpost.com/world/2021/11/02/squid-game-crypto-rug-pull/

[5] https://www.spiegel.de/netzwelt/web/nfts-ein-furz-auf-der-blockchain-bringt-75-euro-a-48a46f66-e63a-470f-b4d2-e45e14465e26

[6] https://v.cent.co/tweet/20

[7] https://boredapeyachtclub.com/

[8] https://www.btc-echo.de/academy/bibliothek/proof-of-stake/

[9] https://www.adatainment.com/index.php?page=staking_calculator

[10] https://www.bitpanda.com/academy/de/lektionen/was-ist-bitcoin-mining-und-wie-funktioniert-es/

[11] https://www.coinbase.com/de/learn/crypto-basics/what-is-a-stablecoin

[12] https://www.coinbase.com/de/learn/crypto-basics/what-is-defi

[13] https://www.commpro.biz/why-does-bitcoin-have-such-a-big-influence-on-other-cryptocurrencies/

[14] https://zipmex.com/learn/what-is-altcoin-season/

[15] https://blogs.imf.org/2022/01/11/crypto-prices-move-more-in-sync-with-stocks-posing-new-risks/

[16] https://bitcoin-2go.de/bitcoin-halving/

[17] https://finance.yahoo.com/quote/BTC-USD/history

#anfänger
#reflink
#learn
#esel
#crypto

𝐊𝐫𝐲𝐩𝐭𝐨𝐰ä𝐡𝐫𝐮𝐧𝐠𝐞𝐧 𝐟ü𝐫 𝐁ö𝐫𝐬𝐞𝐧𝐣ü𝐧𝐠𝐞𝐫 / 𝐄𝐢𝐧𝐬𝐭𝐞𝐢𝐠𝐞𝐫 (Part 2 - Safety)

You invest in ETF, stocks, real estate, gold, savings or similar, recently heard about these "cryptocurrencies" and now want to join the cool kids discussion? Then please read on. This series of articles reveals the basics of the crypto world, touches on a variety of topics and remains superficial at beginner level - the perfect basis to delve deeper into individual areas on your own or to shine at the regulars' table with dangerous half-knowledge.

Part 1 was about what cryptocurrencies actually are and what added value they can generate. You can find part 1 here: https://app.getquin.com/activity/buTJFYxcSD

In this second part, we'll touch on a few technical details and shed some light on the topic of security. Please forgive me for simplifying some of the facts (and thus making them more suitable for the target group).

𝗜𝗺 𝗲𝗿𝘀𝘁𝗲𝗻 𝗧𝗲𝗶𝗹 𝗵𝗮𝘀𝘁 𝗱𝘂 𝘃𝗼𝗻 𝗞𝗿𝘆𝗽𝘁𝗼𝘄ä𝗵𝗿𝘂𝗻𝗴𝗲𝗻, 𝗠ü𝗻𝘇𝗲𝗻 𝘂𝗻𝗱 𝗲𝗶𝗻𝗲𝗺 𝗡𝗲𝘁𝘇𝘄𝗲𝗿𝗸 𝗴𝗲𝘀𝗽𝗿𝗼𝗰𝗵𝗲𝗻. 𝗟𝗮𝘀𝘀 𝘂𝗻𝘀 𝗱𝗮𝘀 𝗱𝗼𝗰𝗵 𝗯𝗶𝘁𝘁𝗲 𝗺𝗮𝗹 𝗴𝗲𝗿𝗮𝗱𝗲𝘇𝗶𝗲𝗵𝗲𝗻. 𝗔𝘂𝘀 𝘄𝗮𝘀 𝗯𝗲𝘀𝘁𝗲𝗵𝘁 𝘀𝗼 𝗲𝗶𝗻𝗲 𝗞𝗿𝘆𝗽𝘁𝗼𝘄ä𝗵𝗿𝘂𝗻𝗴 𝗱𝗲𝗻𝗻 𝗴𝗲𝗻𝗮𝘂?

A cryptocurrency is mainly composed of four components:

1) The crypto network. The network is the set of nodes (distributed computers) that communicate digitally with each other to conduct transactions and create new coins, for example. The crypto network is the executing component, so to speak. In many crypto networks, anyone can run a node. One example is the Ethereum network. [1]

2) The actual currency, a coin [2] or token [3] depending on the context. These are the digital coins that you can send from A to B. For example, the currency of the Ethereum network is called Ether (ETH). I.e., you can send Ether from A to B on the Ethereum network, just like you can send Euros from A to B on the banking network. [4]

3) The storage, in most cases a blockchain. A blockchain does not store the account balance for all addresses in the crypto network, but all transactions ever made in a crypto network. I.e. you can see in a blockchain which address has ever sent how many coins to which other address. If, for example, address A first received 10 coins and then another 5 coins before 7 coins were sent, this implicitly results in an account balance of address A of 10+5-7=8 coins. When a new transaction is made on a crypto network, it is permanently written to memory/blockchain by the nodes. [5]

4) The code / software. The code specifies how the network works. For example, when a transaction is valid or invalid, how coins get from A to B, how and when new transactions are written to the blockchain, ... The code therefore determines how the nodes have to do their work.

𝗪𝗲𝗻𝗻 𝗷𝗲𝗱𝗲𝗿 𝗲𝗶𝗻𝗲𝗻 𝗡𝗼𝗱𝗲 𝗯𝗲𝘁𝗿𝗲𝗶𝗯𝗲𝗻 𝗸𝗮𝗻𝗻 𝘂𝗻𝗱 𝗻𝗶𝗲𝗺𝗮𝗻𝗱 𝗱𝗶𝗲 𝗞𝗼𝗻𝘁𝗿𝗼𝗹𝗹𝗲 𝗵𝗮𝘁, 𝘄𝗶𝗲 𝗸𝗮𝗻𝗻 𝗶𝗰𝗵 𝗱𝗲𝗺 𝗡𝗲𝘁𝘇𝘄𝗲𝗿𝗸 𝗱𝗮𝗻𝗻 𝘃𝗲𝗿𝘁𝗿𝗮𝘂𝗲𝗻? 𝗪𝗶𝗲 𝘄𝗶𝗿𝗱 𝗯𝘀𝗽𝘄. 𝗕𝗲𝘁𝗿𝘂𝗴 𝘃𝗲𝗿𝗵𝗶𝗻𝗱𝗲𝗿𝘁?

Cryptocurrencies are designed in such a way that their network and blockchain can still be trusted even if a part (< 50%) of the network behaves in a malicious way. Malicious behavior occurs, for example, when a participant wants to send the coins in his wallet to two addresses at the same time, or a node tries to manipulate the transaction history of the blockchain.

To prevent such scenarios, cryptocurrencies implement some security mechanisms. For example, the blockchain is not managed by a single node, but is stored in parallel on many nodes. If a node manipulates its locally stored blockchain, the network is not affected because all other nodes still store the original blockchain.

In addition, transactions are validated by the network. The task of the nodes is to check whether it is a valid transaction. For example, whether the sender actually has the number of coins that he wants to send. Again, the nodes agree together on the next valid transactions to be written to the blockchain. Individual malicious nodes do not stand a chance here as long as they are in the minority. [6], [7], [8]

To protect your own wallet from unauthorized access, there is a private key in addition to your public address. Only those in possession of the private key can send coins from the associated wallet to another address. It is therefore extremely important that no one gets hold of your wallet's private key and that you do not lose it. Lost private keys cannot be recovered. [9]

𝗦𝗰𝗵ö𝗻 𝘂𝗻𝗱 𝗴𝘂𝘁, 𝗮𝗯𝗲𝗿 𝘄𝗲𝗹𝗰𝗵𝗲𝗻 𝗔𝗻𝗿𝗲𝗶𝘇 𝗵𝗮𝗯𝗲𝗻 𝗡𝗼𝗱𝗲-𝗕𝗲𝘁𝗿𝗲𝗶𝗯𝗲𝗿 𝘂𝗺 𝗲𝗵𝗿𝗹𝗶𝗰𝗵 𝘇𝘂 𝘀𝗲𝗶𝗻?

In principle, two aspects play a role. First, a cryptocurrency that is not trusted is worthless. If I alone have control over the majority of a crypto network and manipulate the associated cryptocurrency, users will notice. Usage will decline and the price will fall. I am cutting my own flesh, so to speak - unless my goal is not economic gain, but the destruction of the cryptocurrency.

In addition, node operators will receive a reward for honest behavior in the form of coins of the respective cryptocurrency. These coins are either newly created and / or sourced from the transaction costs incurred when transferring from address A to address B. [10]

𝗜𝘀𝘁 𝗲𝗶𝗻 𝗔𝗻𝗴𝗿𝗶𝗳𝗳 𝗮𝘂𝗳 𝗲𝗶𝗻𝗲 𝗞𝗿𝘆𝗽𝘁𝗼𝘄ä𝗵𝗿𝘂𝗻𝗴 𝗱𝗲𝗻𝗻𝗼𝗰𝗵 𝗺ö𝗴𝗹𝗶𝗰𝗵? 𝗛𝗮𝘀𝘁 𝗱𝘂 𝗲𝗶𝗻 𝗽𝗮𝗮𝗿 𝗕𝗲𝗶𝘀𝗽𝗶𝗲𝗹𝗲 𝗳ü𝗿 𝘀𝗼𝗹𝗰𝗵𝗲 𝗔𝗻𝗴𝗿𝗶𝗳𝗳𝗲?

Crypto networks are based on software. No complex software is bug-free. If an attacker were to discover and exploit a serious flaw in a crypto network, this could make it possible for them to steal or generate coins. This not only affects the cryptocurrency itself, but also software that uses a cryptocurrency. For example, in 2016, attackers successfully exploited a vulnerability in a DAO (decentralized organization) on the Ethereum blockchain and stole $60 million worth of Ether. As a result, the Ethereum Blockchain was split into Ethereum (ETH) and Ethereum Classic (ETC) (a so-called hard fork). While Ethereum reset its blockchain to the state it was in before the attack, the Ethereum Classic blockchain remained unchanged. [11]

It is entirely conceivable that a participant could gain control of more than 50% of the network and thus manipulate it. If this situation is exploited, it is called a 51% attack. In fact, in 2014, a so-called mining pool [12] controlled more than 50% of the Bitcoin network for a few hours [13]. However, this situation was not exploited. The mining pool subsequently voluntarily committed to never control more than 50% of the network again [14]. Ethereum Classic was the victim of several 51% attacks in 2020 [15] while two Bitcoin Cash mining pools (not to be confused with Bitcoin!) conducted a "benign" 51% attack in 2019 to delete two "ownerless" coins [16]. To what extent any form of 51% attack should be considered "benign" remains to be seen.

Another attack vector arises when coins are managed by central institutions, e.g. crypto exchanges. Crypto exchanges have a large amount of coins and are correspondingly lucrative targets for hackers. In 2014, the then largest crypto exchange, Mt. Gox, had 840,000 bitcoin stolen [17]. But even nowadays, crypto exchanges are still successfully attacked on a regular basis. For example, in 2022, approximately 33 million USD were stolen from crypto.com stolen [18].

In addition, the private key that secures a wallet can also be attacked. For example, a wallet's private key can be stored in a location that a hacker can gain access to. Of course, a wallet owner can also be forced to transfer his coins or reveal his private key under the threat or execution of force [19]. Unlike in the banking network, there is no way to reverse such transactions. Since the private keys must be generated by software, there are also opportunities for attack. On pp. https://iotaseed.io/ it was possible to generate private keys for the cryptocurrency Iota in 2017 and 2018. Stupidly, the operators of the site stored the private keys themselves and used them to steal 10 million euros in Iota [20].

𝗗𝗮𝘀 𝗸𝗹𝗶𝗻𝗴𝘁 𝗴𝗿𝗮𝘂𝗲𝗻𝘃𝗼𝗹𝗹! 𝗘𝘀 𝗶𝘀𝘁 𝗱𝗼𝗰𝗵 𝗻𝘂𝗿 𝗲𝗶𝗻𝗲 𝗙𝗿𝗮𝗴𝗲 𝗱𝗲𝗿 𝗭𝗲𝗶𝘁, 𝗯𝗶𝘀 𝗮𝗹𝗹𝗲 𝗞𝗿𝘆𝗽𝘁𝗼𝘄ä𝗵𝗿𝘂𝗻𝗴𝗲𝗻 𝗴𝗲𝗵𝗮𝗰𝗸𝘁 𝘄𝗲𝗿𝗱𝗲𝗻!

Crypto is a relatively young technology and like any new technology, there are teething problems that are gradually being ironed out. If you want to minimize the risk, you can bet on established cryptocurrencies like Bitcoin and Ethereum. Both currencies have been around for a very long time. Accordingly, the probability that there are still serious and undiscovered vulnerabilities in the code is relatively low. In addition, changes to the code are meticulously reviewed by a large community. Younger cryptocurrencies with a smaller community, faster development cycles and more disruptive technology are potentially more vulnerable here.

To prevent the risk of successful network attacks, you should choose cryptocurrencies with large, distributed, and decentralized networks whenever possible. No one actor should control large parts of the crypto network. The size and distribution of the crypto network should keep that unlikely for the future. Unfortunately, decentralization is not that easy to measure. [21] proposes two approaches to this. However, decentrality is not only important in the network itself. For example, a risk also arises if the code of a cryptocurrency is mainly developed by one person or one institution. Who checks that a backdoor is not built in here after all?

To reduce the likelihood of losing a large amount of coins, you should not let these coins be managed by central institutions like a crypto exchange. Instead, it is a good idea to use a hardware wallet for safekeeping at home [22].

𝗠𝗲𝗶𝗻 𝗞𝗼𝗽𝗳 𝗾𝘂𝗮𝗹𝗺𝘁. 𝗦𝗶𝗻𝗱 𝗞𝗿𝘆𝗽𝘁𝗼𝘄ä𝗵𝗿𝘂𝗻𝗴𝗲𝗻 𝗷𝗲𝘁𝘇𝘁 𝘀𝗶𝗰𝗵𝗲𝗿 𝘂𝗻𝗱 𝗱𝗲𝘇𝗲𝗻𝘁𝗿𝗮𝗹 𝗼𝗱𝗲𝗿 𝗻𝗶𝗰𝗵𝘁?

It depends. Many smaller cryptocurrencies advertise better features (e.g., faster speed) than the top dogs. Often, however, one has to accept compromises in decentralization and security (keyword blockchain trilemma [23]). If the security of cryptocurrencies plays an important role for you, you should deal with this aspect of a cryptocurrency before you invest in it. Personally, I consider the decentralization and security of Bitcoin and Ethereum to be sufficient, and that of all other coins to be at least worth checking.

𝗢𝗸𝗮𝘆 ... 𝗴𝗲𝗻𝘂𝗴 𝗧𝗲𝗰𝗵𝗻𝗶𝗸. 𝗜𝗰𝗵 𝗯𝗶𝗻 𝗽𝗿𝗶𝗺ä𝗿 𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿 𝘂𝗻𝗱 𝗺ö𝗰𝗵𝘁𝗲 𝗺𝗲𝗶𝗻 𝗚𝗲𝗹𝗱 𝘃𝗲𝗿𝗺𝗲𝗵𝗿𝗲𝗻. 𝗪𝗶𝗲 𝗴𝗲𝗵𝘁𝘀 𝘄𝗲𝗶𝘁𝗲𝗿?

I'm glad you brought that up! In the next part, we'll actually look at how to make money with cryptocurrencies. You can find the 3rd part here https://app.getquin.com/activity/ZgfENSuSRD

Sources and read more:

[1] https://academy.binance.com/en/glossary/node

[2] https://academy.binance.com/en/glossary/coin

[3] https://academy.binance.com/en/glossary/token

[4] https://ethereum.org/de/eth/

[5] https://academy.binance.com/en/glossary/blockchain

[6] https://www.bitpanda.com/academy/de/lektionen/wie-funktioniert-eine-blockchain

[7] https://www.bitpanda.com/academy/de/lektionen/was-ist-double-spending-und-warum-ist-es-ein-problem/

[8] https://academy.binance.com/en/articles/what-is-a-blockchain-consensus-algorithm

[9] https://www.coinbase.com/learn/crypto-basics/what-is-a-private-key

[10] https://academy.binance.com/en/glossary/block-reward

[11] https://www.gemini.com/cryptopedia/the-dao-hack-makerdao

[12] https://www.bitpanda.com/academy/de/lektionen/wofur-gibt-es-mining-pools-und-wie-funktionieren-sie/

[13] https://www.theguardian.com/technology/2014/jun/16/bitcoin-currency-destroyed-51-attack-ghash-io

[14] https://www.bitpanda.com/academy/de/lektionen/was-ist-ein-51-angriff-und-wie-wird-er-verhindert/

[15] https://www.coindesk.com/markets/2020/08/29/ethereum-classic-hit-by-third-51-attack-in-a-month/

[16] https://de.cointelegraph.com/news/two-miners-purportedly-execute-51-attack-on-bitcoin-cash-blockchain

[17] https://www.buybitcoinworldwide.com/mt-gox-hack/

[18] https://www.btc-echo.de/news/crypto-com-hack-mehr-geld-gestohlen-133356/

[19] https://www.watson.ch/digital/kryptow%C3%A4hrungen/139925245-raeuber-foltern-bitcoin-besitzer-wegen-passwort-und-erbeuten-millionen

[20] https://iotaseed.io/

[21] https://www.sciencedirect.com/science/article/pii/S2405959521000977

[22] https://www.btc-echo.de/ratgeber/bitcoin-hardware-wallet-vergleich/

[23] https://www.gemini.com/cryptopedia/blockchain-trilemma-decentralization-scalability-definition

#anfänger
#sicherheit
#learn
#esel
#crypto

The time has come this month, my first savings plans have been launched. I want to save in them regularly from now on. 😁

I've been active since January this year, made a lot of mistakes at the beginning but you learn from them. In the meantime, I've got to grips with the topic a bit more and "realized" that it's not so smart to start saving wildly without a plan 😂

I would like to pursue a dividend strategy and expand it further, with 13 positions that I always want to save in.

That would be one time:

$VWRL

$AAPL

$MSFT

$O

$MAIN

$SHEL

$BATS

$PM

$MCD

$KO

$PEP

$PG

$MA

Since I unfortunately don't have much at my disposal per month at the moment (I'm a student and as soon as I have a mini-job or have finished school etc. it will certainly be more 🫡), my question would be around €50 to €100, which varies from month to month. Would it be better to save all shares equally or to buy individual shares every month with a certain amount per month?

$VWRL and that $LYY7 I would like to save 10€ each month😄

Why I have the $LYY7 inside is the simple reason that I would like to have another ETF inside that is accumulating and I think that I have too many US shares and I think the German companies are strong 😁

I am happy to receive criticism and tips and I absolutely welcome them, as I am an absolute beginner and have only gained my "knowledge" from 2 books and the YouTube channel of Finanzfluss and partly even from this community😄

I hope I'm not annoying anyone with this post and yes I know it's not a lot of money that I have or can invest but I think it's better this way than not at all and my goal is not to get rich in 2 weeks 🫡😄

please just ignore the crypto currencies for now, these were also such strange ideas from my head 🤔😂😂

otherwise I wish everyone a nice day/evening 🤙🏼✌🏼

#dividend
#strategie
#anfänger

Should then now fit ... actually ... 🫣

who does not know it 😂

#anfänger

Today from the category #anfängerfehler ❌

My first months as a semi-active investor are over and already a first résumé of a whole series of expected beginner mistakes can be written!📖

In addition to a too high transaction urge (around 80 in 4 months excl. savings plans), my chronic restlessness😰 at falling prices and the hope of a favorable re-entry ruined some of my returns💰.

Here are my Top 5 selling fails of the last 4 months:

$AMD : Sell price 80 (+18%) | Current price 116 (+72%)

$NB2 : Selling price 14.20 (-21%) | Current price 19.40 (+8%)

$NFLX : Selling price 304 (-7%) | Current price 391 (+20%)

$TSLA : Selling price 182 (-7%) | Current price 227 (16%)

$AAF : Sell price 1.38 (+8%) | Current price 1.51 (+18%)

What do I learn from this: keep fingers still and trust my original idea when entering. My holding periods on sold shares are consistently less than 2 months, so far too short 🆘. The fact that almost all my sales have now risen again significantly is of course due to the good market situation 🚀

Dear #anfänger , you are not alone with your mistakes!

My first year on the stock market #anfänger

Hey,

I want to invest in stocks or even ETFs but unfortunately don't know which stock or ETF to invest in this month. Can you guys please recommend me something?

Thanks in advance !

#etfs
#aktien#anfänger
#new

Question from a #anfänger to the community about #verlustbescheinigung and #freibetrag

(...I can't get my head around it right now...)

In my first year on the stock market, I have currently realized around €500 in losses and €300 in gains in my only portfolio with Trade Republic. I am thinking about realizing profits this year (& buying back the corresponding positions immediately if the spread is suitable) in order to be able to use part of my allowance.

On the other hand, my loss of €200 would be carried forward to next year anyway and I could then offset it against any gains - is it worth considering the tax-free amount at all?

I have also applied for a loss certificate, but I don't know whether this will help me at all if I only have one custody account (?). Originally, I assumed that I would need it in order to be able to carry over the TR losses to the next year. I was probably wrong and would not have needed it at all.

I would be very happy to hear your explanations!

$EIMI vs. $EMXC + $ICHN ? ( #anfänger )

Hello dear community :)

About me:

Since a few months, I (27) also count to the illustrious circle of stock owners and follow with huge interest the many instructive discussions on getquin. Thank you for the many insights!

About my PF:

Besides very small short term investments in single stocks (to satisfy my gambling needs) I invest monthly in ETFs. Here, I would also like to track emerging markets to a certain extent (approx. 20-25%). However, I have been put off by the high proportion of Chinese stocks in mainstream EM ETFs. Personally, I am just not comfortable with around 30% China in the emerging market portion. I would actually like to have less China allocation, manage the allocation flexibly in case the situation improves at some point and also not have to sell the entire EM ETF in case China goes completely belly up....

My (possibly naive) idea was to split off the China portion to be able to manage shares and risks more flexibly. So I currently invest 85% of my EM volume in the $EMXC (EM Ex China)
and 15% in the $ICHN (MSCI China). I am aware of many of the "downsides" such as rebalancing expense, slightly higher TER, Taiwan portion remaining in the Ex China ETF. My following question is more about my general ETF understanding.

About my problem/question:

Actually, I assumed that a blend of 70% MSCI EM Ex-China + 30% MSCI China should perform very similar to a common MSCI EM (which usually include 30% China). This is what my splitting logic is based on. However, as you can probably guess now, this is not the case ;-) Especially the $EIMI seems to perform differently than this mix now and also in the last years.

Where is the flaw in my logic?

And what are your thoughts and recommendations on flexibly managing China risk in the ETF portfolio?

Would be extremely happy to receive explanations! :)

#etfs
#emergingmarkets
#china
#risk
#newcomer
#hilfe