Ode to crypto knowledge
Blockchain and cryptocurrencies form a complex and fascinating universe, where technological revolution meets financial transformation. Diving into this ecosystem involves responsibilities and the acquisition of essential knowledge. This article aims to inspire you to take the time to explore the world of cryptocurrencies and blockchain technology more deeply.
The Reasons for Getting Interested in Cryptocurrency and Blockchain
Blockchain and cryptocurrencies offer the potential for financial sovereignty, which comes with certain risks. Whether driven by philosophical, or economic interests, or a pure love for technology, it’s crucial to stay up to date, as the world of blockchain and cryptocurrencies evolves rapidly. It’s essential to know how to protect your cryptocurrencies, safeguard against scams, and, most importantly, understand what you’re talking about.
The Philosophical Approach: Sovereignty
To fully understand the foundational ambitions of blockchain and, therefore, Bitcoin, the best reading is the Bitcoin whitepaper. We can quote part of the introduction: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.” The strength of Bitcoin lies in replacing trust with cryptographic proof, eliminating the need for trusted third parties (financial intermediaries).
This trustless environment, free from financial intermediaries, gives Bitcoin its key advantages:
- Censorship resistance: Institutions cannot interfere with a transaction. There’s no financial intermediary to block or refuse the transaction.
- Cross-border transactions: What was unthinkable before Bitcoin, cross-border transactions now take minutes instead of several days with traditional systems.
- Financial sovereignty: The user is the sole master of their funds (when cryptocurrencies are not stored on an exchange platform or other centralized tool).
- Pseudonymity: Although pseudonymity doesn’t entirely protect against identity tracing, it still provides a degree of protection. Several cryptocurrencies launched after Bitcoin offer complete anonymity.
The Economic Approach: Earning a Return
“Not your keys, not your coins”: Your cryptocurrencies belong to you.
Networks like Bitcoin operate peer-to-peer, relying on participants to maintain their operation. For a blockchain to exist, nodes are necessary. These nodes, the backbone of the network, depend on user participation. This participation often requires providing computing power, which increases with the number of participants.
Each blockchain has its own economic model and rewards its users in different ways. This diversity reflects a fundamental characteristic: sovereignty. Indeed, the blockchain belongs to its users and functions thanks to them.
We will explore these different forms of participation in more detail in the rest of this article.
Trading is also a way to participate, offering the possibility of generating profits.
Whatever method you choose, if you want to get involved in a specific blockchain network, learning is necessary.
Some centralized platforms can do the work for you, whether it’s to participate in the network or to store your cryptocurrencies. However, proceeding without careful consideration goes against the core philosophy of blockchain.
The Technological Approach: Contributing to the Evolution of the Digital World
It’s often said that during Bear Markets (long periods of a declining market), we hear most from those who are “here for the technology.”
Before Bitcoin, transferring money between Alice and Bob without a financial intermediary and avoiding double-spending was simply impossible. It is precisely this innovation that underpins the blockchain revolution.
We are transitioning from a centralized world, where transactions are validated by banks and other trusted third parties, to a decentralized world where participants themselves validate transactions. Thanks to cryptography and the peer-to-peer nature of this network, the actors do not need to trust each other. This guarantees the security of the blockchain.
The more participants there are, the more secure the network becomes. This is why participation is encouraged through the distribution of rewards.
All these elements make Bitcoin and blockchain a true technological revolution.
What drew you to the fascinating world of blockchain? The reasons can be numerous, and I would love to hear your comments to discover what motivated you to join this movement.
Understanding How You Want to Contribute
Does the world of blockchain fascinate you? Do you want to support a particular project?
Trading isn’t the only way. You can also support a project by mining, staking, or by becoming a community member or ambassador.
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Whatever choice you make, remember:
- If someone promises you guaranteed returns, it’s a scam!
- Always DYOR (Do Your Own Research) before investing.
- Always learn at least the basics before committing.
Mining
Mining is reserved for blockchains that operate on the Proof-of-Work (PoW) model. Proof-of-Work is a consensus mechanism where participants must provide computing power to contribute to the network. The more power a participant allocates, the greater their chances of being rewarded for their efforts.
In the early days of Bitcoin, it was possible to mine using a simple computer. Today, the computing power requirements have become so high that it is recommended to join what are called mining pools. These pools allow the computing power of multiple participants to be combined, thereby increasing the chances of receiving network rewards, which are then redistributed among the participants.
For other blockchains, it is still possible to mine at home, whether with your computer’s processor or graphics card or with dedicated graphics cards installed like a server, still in your home.
Make sure to choose your service provider carefully and always remain in control of your funds. Even if you use a service, make sure you always have control over the wallet that receives the rewards.
And once again, whether you use a service or not, do your research and learn the basics of mining before you start. There are plenty of articles and videos on the subject.
Staking
Staking is another way to contribute to blockchain networks that operate on Proof-of-Stake (PoS) and Delegated Proof-of-Stake (DPoS) models. In this model, participants are rewarded based on the number of cryptocurrencies they stake.
The more cryptocurrencies a participant stakes, the more they earn in return.
There are different types of nodes and various ways to stake. Some nodes require specific technical skills, while others are less demanding.
You have the option to run your node, set it up by yourself, or use a service. In the latter case, you can either have a dedicated node with your stake, receiving all the rewards for yourself, or pool your cryptocurrencies with others, sharing the rewards among participants.
Whether you set up your node on your own or use a service, it cannot be stressed enough: do your research beforehand.
Again, you must remain in control of the wallet that holds the cryptocurrencies where you receive rewards. The third-party service should neither know nor hold your private keys.
Communities
If you want to contribute to the evolution of blockchain networks, you can actively participate in the communities.
Show your commitment, ask all the necessary questions to fully understand the projects, and once you’ve grasped the fundamentals, help other members in turn.
You can also test products and services before they go live on the “mainnet.” Participation in testnets is usually rewarded.
If your contributions are valuable and you’re lucky enough to be noticed, you could become an ambassador.
Trading
We are not traders. Living off trading is uncommon and requires a significant time investment.
If you have little time to dedicate but still want to buy cryptocurrencies, many will advise you to follow the DCA (Dollar Cost Averaging) method.
After doing your research, select 2 to 5 different cryptocurrencies and invest the same amount every month, distributing it according to your strategy.
Please note, I must point out that I am not an investment advisor. In France, only individuals with CIF (Conseiller en Investissements Financiers) accreditation are authorized to provide investment advice. To learn more about this status, I recommend visiting the AMF (Autorité des Marchés Financiers) website.
Be cautious of anyone giving you investment advice and always ask if they have the proper accreditation.
Engage with communities, ask questions, and expose bad practices.
Beware of Scams: A Reminder of Best Practices
Here is a list of best practices if you want to invest both personally and financially:
- Stay informed about the latest types of scams;
- Always research a project before investing in it. Take time, like a week, between research and investment;
- Never invest more than you can afford to lose;
- If a return is promised, run away;
- Even professionals can be wrong; never place 100% trust in someone or their advice — your investment is your responsibility;
- No one has a crystal ball and can tell you what tomorrow’s winning investment will be;
- If you don’t have the time to learn, don’t invest.
I hope these tips will help guide your research and inspire you to learn more about blockchain and cryptocurrencies. As always, I’m available to answer any questions you may have.
