More and more people are interested in owning some digital asset built with blockchain. Either Non- Fungible Tokens (commonly known as NFT) or Bitcoin, there is no denying that blockchain technology has gained traction over the years. The most conventional digital asset is cryptocurrencies.
Although many people see cryptocurrencies as investment assets, it is vital to emphasize that not everyone treats them as an investment.
For example, I am not interested in the dynamics of “buying the dip” (term used to buy crypto when value is lower than usual) or selling when its value is up. I use cryptocurrencies as money because I have made payments in crypto. I also exchanged some savings for crypto because I am confident that the value of my savings will be higher than leaving everything in a savings bank account. But, I need to clarify that even though you may use crypto in a certain way, that doesn’t mean the government agrees with you. So you must become aware of how crypto is taxed if the earnings are worth it.
I should warn you that I am not an expert in cryptocurrencies or blockchain. Nevertheless, I understand the value community, decentralization, and cryptography provide. So, I have incorporated some of the tokens and cryptocurrencies into my life. I do not intend on recommending any currency, product, or tools. I desire to provide a starting point, to my readers, about the topic. You can read a Spanish version of this post here. On that note,
Where should you start if you’re going to own cryptocurrencies? It all begins with a digital wallet.
They have three functions: hold, transfer, and change cryptocurrencies.
When I mean to hold, you can visualize something similar to a wallet that contains cash.
To transfer is to send cryptocurrencies from a person or business to another. We can visualize moving cryptocurrencies as giving or receiving cash from another person or company.
Lastly, with a digital wallet, you can exchange cryptocurrencies. When you buy Bitcoin or Ethereum, you change the dollar, euro, or peso for the mentioned cryptocurrencies using a digital wallet to make that change. You can also exchange between cryptocurrencies, like the change between Bitcoin and Ethereum, and vice-versa.
Owning a digital wallet consists of creating an account on a platform that hosts the digital wallet. The platform provides the different functions to buy, sell, and transfer currencies and graphs with each currency’s value. To use your country’s currency (dollar, euro, peso, etc.), you will likely have to connect your digital wallet to your bank account within the platform.
There are multiple options to use as digital wallets, and you can own numerous digital wallets at the same time. I mainly use Coinbase and Uphold and have an account on MetaMask, which I barely use. When I started exchanging dollars for BTC (Bitcoin), ETH (Ethereum) back in 2013, Coinbase was one of the few digital wallets available. So I stayed with them. I use Uphold because they are one of the few digital wallets with the Basic Attention Token, or BAT, open to exchange. I will write more about BAT later. Meanwhile, in 2018 I was working on a project where I made some transaction tests using MetaMask.
UniSwap is a decentralized cryptocurrency exchange platform. The UniSwap protocol is responsible for providing liquidity funds based on smart contracts. These liquidity funds back up the tokens for exchanges in the UniSwap platform. The UniSwap protocol makes transactions on the Ethereum blockchain.
A digital wallet may be the standard form of holding cryptocurrencies, but hardware wallets also exist.
Unlike a digital wallet, these wallets are physical. The hardware is similar to a USB (universal series bus). To sign transactions like moving funds out of your wallet or interacting with a smart contract, connecting the wallet to a computer is required. To mitigate the loss of a hardware wallet, you can back up your hardware wallet by saving the seed phrase. A seed phrase is a series of words generated by the hardware wallet that gives you access to the cryptocurrencies stored in that wallet. If you lose a hardware wallet and get a new one, you can access the cryptocurrencies stored in the old wallet with the new wallet using the old wallet’s seed phrase. Ledger is the hardware wallet I have owned for a couple of years now.
Now that we know about digital and hardware wallets, let’s dive into some of the actions you can do to incorporate cryptocurrencies.
You will probably have to change currency when you visit another country. Visitors make these changes at a currency exchange agency. We can apply the same concept to digital wallets that make cryptocurrency exchanges. When you exchange cryptocurrencies, the digital wallet acts as the agent at the currency exchange, accepting your money. At the same time, they return their equivalent value in the desired cryptocurrency. The same goes the other way around. The wallet accepts your cryptocurrency, and it returns equal value in money. The cryptocurrencies I exchange dollars for are BTC (Bitcoin) y ETH (Ethereum).
Mining is another activity I have incorporated to use cryptocurrencies.
Mining is a term used as an analogy to precious metal mining.
It refers to the process of creating new transaction blocks to be added to the blockchain. Mining crypto is associated with mining BTC (Bitcoin), ETH (Ethreum), ADA (Cardano), DOGE (DogeCoin), or LTC (LiteCoin). But, cryptocurrencies are not the only things you can mine. You can also mine tokens from some blockchain and later change them to other cryptocurrencies.
Some time ago, my husband and I decided to participate in the Helium blockchain. This blockchain decentralizes the creation of a global IoT (internet of things) network. Unlike BTC and ETH mining, the Helium network uses radio technology to validate the proof-of-coverage. Validation combined with multiple processes creates the new blocks on the blockchain, hence mining HNT (Helium Network Token). Basically, with a piece of equipment similar to a wifi router, we mine HNT.
What do we do with HNT after mining? Same as BTC and ETH, we treat them as savings account. We change from HNT to Bitcoin and later to the dollar when we need to use those savings.
You don’t have to mine or put dollars or pesos to own crypto. You can also earn crypto. Earn cryptocurrencies means to obtain crypto in exchange for a service or a product, something similar to paying in dollars or pesos. I haven’t earned crypto by working a job. I have used products like Brave browser, where they reward their users with the “Basic Attention Token,” BAT.
Brave protects user privacy from ads and trackers that capture your data. But, Brave shows you privacy-respecting ads if you configure the browser to do so. Brave pays you a small amount of BAT at the end of each month for your willingness to let them show you ads. Now, you shouldn’t expect to make a living out of this. But, with time, it is a pleasant surprise to see that you have enough to change from BAT to Bitcoin and later to the dollar from a currency you wouldn’t have any way else. Also, if you are a content creator, your followers can send you BAT via the Brave browser.
There was a time when I was earning a particular token by using this social media platform similar but different to Facebook. It was similar because it had a similar user interface. It was different because you can earn a small amount of their token for every post you make. Later, you could change that token for ETH. But, with time, the platform became very toxic for me, so I stopped using it. The point is that there are social media platforms out there and in the making to earn cryptocurrencies for participating.
You can earn crypto with other projects worth mentioning, but I have not participated in those projects. Coinbase has learning courses where you can earn tokens by learning about those tokens. You can earn crypto by solving issues similar to Github’s format using Gitcoin. Another exciting project is Mirror, where you can earn tokens by blogging.
Create cryptographic assets
Another way of owning cryptographic assets is creating a Non-Fungible Token, NFT. An NFT holds unique information that distinguishes that asset in particular. You cannot replicate an individual asset; therefore, it’s non-fungible. Uses for NFT’s includes songs and digital visual art. NFT’s are a way for artists and musicians to secure the authenticity of their creations. Even I do not own NFT’s, I think it’s worth mentioning because many people have found value in them. Maybe you will too!
Cryptocurrencies, therefore blockchain, are barely growing their ecosystems, although the community is a bit mature. A few years ago, most of the products’ built-in blockchain had complicated and technical processes that didn’t attract people interested in tech. Now, many products and platforms facilitate users to make blockchain transactions, and the users do not even know that they are interacting with a blockchain. Changing dollars for Bitcoin on Coinbase was confusing. After some years, the user experience Coinbase has provided has helped lower the entry barrier to the crypto space. Now, people can participate in physical and digital economies.
Thanks for reading!
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By the Way – A playlist for you
I’m sharing this Trip Hop genre playlist created by Spotify. Even though this wasn’t the only playlist I listened to while writing this information, it was my most repeated playlist these pasts weeks.