Market Overview
Speculation
In this advanced section you get more information about; crypto assets in general, an overview of the market with its participants and most important, what to do next? In case of unfamiliar terms, strategies or abbreviations, you can seek help on the internet! We recommend using google/youtube or YourCryptoLibrary.
Be aware that a critical mind is needed in this information world. Search results can vary from reliable to completely unreliable. So don’t believe everything you read on the internet.
What are crypto assets?
Most of the cryptocurrencies are aiming to be sovereign money that is uncensorable and ultimately a big ‘Fuck You’ to the banks. Bitcoin, the largest and most popular digital currency, was created in response to the economic crisis of 2008.
With the current global climate and distrustful attitude to the current establishment of bankers a global ‘mass movement’ is forming. Resulting in one of the largest capital shift of our generation, the so-called ‘’crypto revolution’…
By crypto assets, we generalize different categories each part of a unified market.To plan accordingly and position yourself in the market it is therefore important to understand which those categories are.
- Crypto Blue Chips: Bitcoin, Ethereum
- Platforms: Ethereum, Binance Coin, Solana
- Gaming: SandBox, Axie Infinity, Merit Circle
- NFT: OpenSea, Magic Eden
- Privacy: Monero, Zcash
- Finance/Bank Settlement: Ripple
- Blockchain solutions: Vchain
This list goes on and on, and the blockchain and cryptocurrency world is becoming more extensive and detailed every day, in such a way that it is even impossible to list them all in this document.
What types of crypto assets are there?
As just explained there are different cryptocurrencies, we classify them on our website as follows: Asset Tokens, Equity Tokens, Utility Tokens, Security Tokens & Reputation Tokens.
The two most common types of tokens are the utility token and the security token.
Security Tokens
Security tokens can be seen as an investment product. Security tokens are bought with the expectation of receiving dividends or making a profit on the stock exchange.
An example on our website of a security token is NEXO.
However, many crypto projects do not want their token to be labeled as a security token. When a token is seen as a security token, the issuer of the token is bound by certain laws and regulations, which he would not be bound by in the case of a utility token.
In addition to having to comply with various laws and regulations, security tokens also have some specific characteristics:
- Security tokens entitle a company to a profit distribution in the event that a company makes a profit.
- They entitle you to a say within the company.
- They are supervised by national regulators such as the AFM or SEC.
Utility Tokens
Utility tokens can be used to gain access to a network, service, control, etc. (think of a traditional loyalty card, a discount on meals, voting in % for shares, etc.). In the same way, you could, for example, determine something for a product or service of a certain crypto project (discount on certain products if you hold tokens). So the tokens have a specific use-case within the ecosystem of the blockchain project.
As a token creator, you enjoy several advantages the moment you create a utility token. For example, you do not have to abide by certain laws that do apply to some other types of tokens. These laws and regulations do not currently apply to utility tokens, because by their nature they are not designed as investments. However, this is still a gray area.
Thus, most companies with their own cryptocurrency promote it as a utility token, such as: TrustSwap (SWAP), Energy Web Token (EWT) and many others.
Characteristics of utility tokens are:
- Utility tokens operate on an existing blockchain that smart contracts have been developed on, such as Ethereum or GoChain.
- Each token has its own functionality and in most cases can only be used within one specific blockchain project.
- They allow for digital trading. They have more functions than just a means of payment. For example, they are also used as proof of a product or a stock.
Equity Tokens
Equity tokens are in our opinion a subset of security tokens. Equity tokens can be compared to a (digital) share, where the equity tokens represent ownership in a project/company. By buying these tokens you become, just like with shares, part owner of the company that issued this token. Given the many uncertainties surrounding the laws and regulations, equity tokens are not yet very common in for example the Netherlands.
Asset Tokens
Asset tokens represent a physical product. A good example of such a physical product is, for example, a house, which is fully registered on the blockchain and therefore enables owners to sell all or part of a house (online).
This is also already being done with art, book and film patents and all kinds of other physical products. This market is enormously emerging and will probably continue to grow enormously in the coming years on digital marketplaces.
Reputation Tokens
Reputation tokens, or reward tokens, are used by some projects to establish a kind of rank system within their ecosystem. The tokens represent a reputation within this ecosystem, which is rewarded to active community members who help the project grow. Often these reputations come with different benefits.
Why invest in Bitcoin?
Perhaps you have already decided for yourself that you want to invest in bitcoin or other cryptocurrencies. It is also quite possible that you are still unsure. We are not here to convince you to invest in bitcoin, but of course we can think of some reasons.
Store of value
Bitcoin, like gold, is increasingly seen as a store of value (purchasing power reserve). This term refers to the function of money or other assets that can maintain their purchasing power into the future. To be useful as a store of value, it must be easy to store and retrieve at a later date. Gold is favored as a store of value because of its rarity, which reduces the risk of devaluation due to a (large) increase in supply, for example.
Bitcoin may seem like an even better store of value in the current zeitgeist. Because bitcoin is digital, you can simply “move” it even more easily. Moreover, the maximum amount of bitcoins is fixed. It is a given that only 21 million bitcoins will be available and that this maximum number will be reached approximately in 2140. Bitcoin is therefore increasingly being referred to as digital gold.
Bitcoin as a means of payment
With more and more professional parties turning to bitcoin, the currency may still be able to serve as a means of payment. Paypal has offered the possibility to buy bitcoin through its platform since the end of 2020. According to rumors, consumers will also be able to pay for products and services in bitcoin in the future. Those bitcoins can then be converted into “real” currency.
Price Action of Bitcoin
Bitcoin as an hedge against inflation
Gold historically does well in uncertain times and provides some form of protection against inflation. Recently, governments and central banks have decided to print huge amounts of additional money to combat the corona crisis. The hefty stimulus purchases also bring a lot of new money into the system and as a result many investors now think inflation is on the horizon.
Although the official figures hardly show inflation, people rather speak of asset inflation. This term indicates that assets are rising sharply in value. However, this price inflation is not reflected in the traditional indices, which only reflect the price development of consumer goods. However, we do see these developments on the financial markets. To protect yourself against this asset inflation, you could invest in bitcoin, but also in shares, real estate or gold.
Visible Effect of Inflation – Gold Example
Hedge against a collapsing money system
The 2008 financial crisis left a deep impact on many people. After that period, the price of gold rose hard and still some people think that the monetary system may not survive another crisis. We also see this when we look at the recent popularity of gold and bitcoin. Investing in bitcoin is therefore increasingly seen as a hedge against the collapse of the ‘system’.
Money revolution
One could argue that Bitcoin is bringing about a new monetary separation of powers. The power over money and money creation is decoupled from central banks and governments. Bitcoin, by the way, is more than just a monetary asset. It is an asset, but also an innovative and promising financial technology.
The underlying blockchain technology has not been cracked since its inception (over 12 years ago) and has never suffered downtime. Bitcoin can therefore be seen as a revolutionary, extremely secure, uncrackable and transparent payment network. By investing in bitcoin, you can be part of this digital money revolution.
Examples in the Netherlands
Blockchain technology and cryptocurrencies are also playing an increasingly important role in the Netherlands. For example, we have already looked at several Dutch projects. To better explain the possibilities to you, I will outline a few examples here:
LTO Network
LTO Network is a Dutch company, based in Amsterdam. We have published a full research report on our website, you can find it here.
LTO Network is a top project that is in the top 25 blockchains worldwide in terms of transactions. Every day the network counts more than 40,000 transactions and the network has more than 1.2 million users.
LTO Network is working with the Dutch Ministry of Infrastructure, among others. They have put waste transport on the blockchain, which has allowed the ministry to significantly reduce its costs, reduce manual process handling, and all while being GDPR compliant (which is a challenge when using blockchain technology). Watch this three-minute video to understand how this works and how the government can save over $7 million annually thanks to this solution. A great example in the Netherlands, and their technology is fully powered by their utility token ‘LTO‘.
Get Protocol
GET Protocol is also a Dutch company, based in Amsterdam. We have published a full research report on our website, you can find it here.
GET Protocol offers a smart ticketing solution that uses blockchain technology. These smart tickets can be issued by organizations or individuals looking for a better and more transparent way to sell tickets.
GET Protocol working with GUTS Tickets have already sold hundreds of thousands of tickets through the protocol. GUTS Tickets offers a convenient mobile app that allows you to easily manage your tickets.
There are several successful examples to share, I will mention a few:
- Jochem Myjer. A Dutch cabaret artist, who sold out a nationwide show with GUTS. Not a single ticket was resold and Decrypt wrote an interesting article about it.
- More recently, during lockdown, more and more live streamed shows were getting tickets. One of these shows was for the rock band DI-RECT, which attracted over 10,000 (paying) spectators. Of notable note is the fact that GUTS holds the record for the largest blockchain ticket show, which was obtained by selling tickets to stadium concerts of Guus Meeuwis, called “the Dutch Bruce Springsteen” by GUTS CEO Maarten Bloemers.
Effect.AI
Effect.AI is a Dutch company, based in Amsterdam. We have published a full research report on our website, you can find it here.
Effect.AI is a project that we believe is still under the radar. Effect.AI is building the Effect Network on the EOS Blockchain. The Effect Network is an open, democratic and decentralized network for artificial intelligence.
Effect.AI is building three initial decentralized applications for AI development. These applications are: Effect Force, Effect Smart Market and Effect Power. We discuss these three applications in detail in our full research report. Effect.AI is already working with the United Nations, ING and Kraft Heinz, among others, with these.
Effect.ai uses the token Efx across the ecosystem to pay for transactions and activities. Efx is used by token holders within a kind of governance model, where they have influence on what happens within the Effect Network.
Where do I buy cryptocurrency?
There are currently over 400 different exchanges where you can buy cryptocurrency. Which one has the best prices, which one has the lowest fees, and which one is the best fit for you right now? That’s where we would like to help!
There are different types of exchanges, namely:
- Centralized Exchanges
- Brokers
- Decentralized Exchanges such as Uniswap, SushiSwap, etc.
- Derivative Exchanges
We (will) have manuals available for many different exchanges, but for beginners we would recommend the following two exchanges, as they are simple to use and have low transaction fees:
Crypto equals speculation
It cannot be said otherwise. Trading crypto is more like gambling than trading shares of companies. Trading is done in a totally different way than traditional markets. Several pro traders do not understand that the same principles do not always apply in these markets.
So the technical analysis of crypto assets is different and can sometimes be totally pointless.
One moment it will seem to work, the next day it doesn’t work at all.
Crypto trading is speculation in every way. How it will be used, where it will be used, speculating on the fact that other “investors” believe this could hold something of value.
Who owns what?
For several crypto assets, no one really knows how many of these coins are owned by large groups of whales. You can see the public addresses to some extent, but you can’t know for sure who controls them. Manipulation of these unregulated markets brings the greatest uncertainty with it.
In the traditional market this information is communicated and made public. In crypto this will not be done all the time. That way you have to be cautious and assume more than 50% is owned by insiders.
Unregulated exchanges
In the traditional markets, you have almost all exchanges that are regulated by governments. Exchanges in crypto are not always regulated and don’t have to follow the same rules traditional ones have to.
This creates problems in estimating the ‘real’ value of a cryptocurrency. But also problems with liquidity and price movements. Potentially opening the market up to manipulation.
Therefore it’s important to understand what exchanges have to offer and where you can sign-up with trustworthy regulated exchanges. Visit our exchange page here.
Exchanges come and go in crypto
What to do next?
Don’t be discouraged by this bleak reality representation. Don’t confuse the usefulness projects that are among the 99% crap projects. Cryptocurrency and blockchain will provide a narrative that will create the financial and information systems and the human consciousness.
There is and will be value in these markets that can be extracted into your portfolio. Anyone who has a plan and process can make 100% to 400% in these markets. This can be done in relatively short time frames.
You have to remain patient, planned and controlled and be different than most of the people who participate in this game. Control yourself and fight the urge that wants you to overtrade. Do not follow the habits of the majority without some reflection. This mindset will cripple and crush you in the inevitable disaster scenario it will bring to you.
The first step in your journey begins with being informed. Be aware that this is an information battle. Whoever has read the first and the best information will be the best prepared. It is commitment and willpower that distinguishes the profitable trader from the losing one. If you want to make money you need to improve and educate yourself.
Bitvavo
Bitvavo is a Dutch cryptocurrency exchange, here you can buy Bitcoins and other cryptocurrency by first depositing euros and then trading them on the site. In addition to Bitcoin, you can also buy 47 other cryptocurrencies. There are different ways to deposit money, here it is the cost and the transaction speed that make the difference. Once you have deposited euros you can start trading them on the website. There are some costs associated with trading. These costs are 0.25% per transaction.
We have a very good experience with Bitvavo and would definitely recommend it. A complete manual for the exchange, in which we simply explain how to create an account – deposit money – buy cryptocurrencies, can be found here.
Binance
A second exchange we recommend is Binance. Binance is the largest (centralized) cryptocurrency exchange when it comes to crypto-to-crypto trading. So, on Binance you can buy and sell cryptocurrencies. In a short time Binance has grown to become the largest cryptocurrency exchange in terms of daily trading volume. The trading volume now amounts to billions per day. In less than a year, Binance has become the most popular cryptocurrency exchange.
We recommend Binance for beginners because the exchange is easy to use, has a great selection of altcoins and has a good reputation in the market. You can find a full guide with all the steps here.
In addition to these exchanges, there are many others. Should there be a specific cryptocurrency you want to buy, we recommend using CoinGecko. CoinGecko offers a list of almost every cryptocurrency that exists. They share information such as: the unit price, the price trend, the exchanges where this cryptocurrency is traded, the website, the total valuation of the project (market cap), 24-hour transaction volume, and so on.
So you can also find on which exchange the price of this particular cryptocurrency is the cheapest at that moment.
Other Exchanges
As mentioned, there are more than 400 different exchanges. On Cryptobieb.nl we have made an overview with manuals and reviews for several exchanges that have a good reputation. If Bitvavo or Binance are not your preference, check out our page for other options.
How do I keep my cryptocurrency safe?
Buying cryptocurrency is one thing, but storing it is another. It is extremely important to do this in the best (and safest) way.
Cryptocurrencies are stored in a wallet. This can be done in both a digital and a physical wallet (the currency itself is of course always digital), it is also possible to store these on an exchange. However we advise against this, after all it’s safest to have the currency in your own possession at all times and not at a centralized party.
When you create a wallet, you receive a public address and a private address. The public address can be seen as your public bank account number, which you can send to other people so they can deposit currency into your account (but also publicly view your balance on the blockchain). The private address can be seen as your unique pin code, you should never share it with anyone and keep it safe.
Trezor
The easiest and safest way of storing crypto currency in our opinion is through a Trezor. The Trezor is a (physical) hardware wallet that you can think of as a kind of USB stick. It is the safest because it is only owned by you, and you can store backup codes if you lose your Trezor and access your currency again with a new Trezor (for example if the original one is lost or stolen).
If the original is stolen someone still can’t access your currency. For this they need your unique pin code.
Nano Ledger
In addition to the Trezor, it is also possible to possibly use a ledger. Like the Trezor, this is an offline wallet that supports multiple crypto currencies. Personally, I have been using the Ledger for over two years and I am very satisfied with it.
Digital options
In addition to the hardware options, it is also possible to store your cryptocurrency digitally. There are several options available in this regard:
- Storing Cryptocurrencies on Exchanges. Personally, we would advise against storing your crypto on a centralized exchange. Only those things you actively want to trade with should be stored here. In recent years exchanges have often gone down or been hacked, with users being the victims.
- Store cryptocurrencies in a software wallet, such as Trust Wallet, Exodus and Jaxx. We explain software wallets in detail on this page. Software wallets can be easily installed on a desktop or cell phone. Software wallets are safer than exchanges because you hold your own private keys. We would recommend it to those who do not want to buy a hardware wallet
How do I do good research on projects?
It is of course possible that you have your eye on a project / cryptocurrency that we have not yet researched. We think it is important to mention that there will be more and more new projects in this industry.
Unfortunately, there are also projects with malicious intentions (or scammers) among them. So how do you do proper research on a crypto project? What should you pay attention to? We would like to give you some tips on this.
First of all, take a look at our existing research reports. You will see that all our reports basically follow the same outline. You can use this outline when you would like to do research on a project yourself. Here we look mainly at the following things:
- The product/services offered by the company. Does it actually add something in the eyes of the consumer and how likely is it that it will actually be used?
- The current market cap (valuation of the project). How high is it currently? How high is this compared to (direct) competitors and how much growth potential is there still in this compared to the risks?
As well as, how has the price of this cryptocurrency developed recently? Has it recently risen enormously, is it constantly falling or is there also growth potential here?
- The team. Is it known who the team members are? Do they already have experience in this industry and in what country is the company registered? This is hugely important to assess, for both the success of the company and the risk of it being a scam.
- The token. Is this a utility token, a security token, or? How is this token used within the ecosystem and does it actually require a token? Or was this just a way for the company to raise money? A good project will make sure that the ecosystem around the token is a big priority and that token holders are listened to/thought about.
- The token allocation. How many tokens are left in the hands of the team/advisors? How likely is it that a small number of players can greatly influence the token price?
Do proper research on what you are investing in. Only invest in things you understand and believe in yourself. In our opinion, this results in the highest chance of success and also there is often more patience in long-term investments in projects that you yourself believe in and have done research on.
What to look out for? (Bonus)
Basically, you can make the “crypto adventure” as easy or difficult as you want. For beginners we would like to give the following tips.
- Stick to Bitcoin / Ethereum in the beginning. These are the projects with the most ‘adoption’ and, in our opinion, the crypto currencies with the lowest risk. Should you have more time to actively research, read our (free) coin research reports.
Here you will find all the information about specific projects, which will allow you to form your own opinion and decide whether or not to invest in an altcoin.
For long-term investments, it is wise to use a Ledger/Trezor. This way you will always be in possession of your cryptocurrencies. On an exchange you remain dependent on a centralized party and this entails risks. If you want to actively trade your crypto currency, you could consider leaving a part of it on exchanges.
Never share your private keys with others, they will have access to your holdings. Always keep backup codes of exchanges / wallets in a safe place, do not do this online and make sure that others can not just get to it.
Cryptocurrencies are more volatile than stocks. So it is normal for them to fluctuate by more than 5-10% per day. Should you invest for the long term, make sure you can handle this and don’t act out of emotion. Therefore, only invest money you can afford to lose.
- Make sure you have good risk management. This means don’t blindly invest in something you don’t understand. We hope to provide you with good information on our website to learn the ropes. In addition, don’t go all-in in one cryptocurrency, but spread your capital. This way, the risk is spread.
Conclusion
We hope we have answered your questions with this explanation: How do I buy cryptocurrency, how do I store cryptocurrency and what should I pay attention to?
At YourCryptoLibrary we want to explain in an easy and clear way what cryptocurrency and blockchain is. We do this by means of many articles in which we explain how wallets work, exchanges work, how to buy crypto etc.
If there are any questions you can always send an email to: partners@yourcryptolibrary.com or ask a question in our telegram group.
Trading and investing in cryptocurrencies (also called digital or virtual currencies, altcoins) involves a substantial risk of loss and is not suitable for every investor. You are solely responsible for the risk and financial resources you use to trade crypto. The content on this website is primarily for informational purposes and does not constitute financial advice.