Cryptocurrency
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Reasons to Use Cryptocurrency
If you’re concerned about keeping your financial transactions private, investigating cryptocurrency will be worthhile.
There are four primary reasons to use cryptocurrency:
It can serve as an economic hedge against inflation when governments decide to just print more fiat currency.
It can help with privacy in transactions, because your purchases aren’t tied to your personal information, as they are with, e.g., credit and debit cards.
You have access to, and control over, your money at all times, because governments can’t, e.g., pressure financial institutions to freeze your assets or restrict where you can spend your funds.
You can save a good deal of money, as a variety of retailers offer discounts when paying in cryptocurrency.
Cryptocurrency is decentralized, borderless, permissionless, and unable to be debased.
Different Types of Cryptocurrency
Different cryptocurrencies are optimized for different purposes:
Store of Value:
BitCoin has a fixed supply, so it can’t be debased. It’s not the fastest or cheapest, so it’s not generally used as a currency for everyday purposes. It has an open ledger, which shows clear transaction histories, so it’s not the most private option. Rather, it tends to be used as a store of value, like gold.
Everyday Purchases:
Dash (short for “digital cash”) is intended to be used for everyday purchases (groceries, gas, etc.). Transactions cost less than a penny, and clear in under a second, so it’s ideal for its intended use. While not the most private option, it does incorporate a coin mixing feature (CoinJoin), which provides consumer grade privacy so an observer has difficulty tracing transaction histories.
BitcoinCash is also good for everyday use. There’s no built-in privacy mixing service, but CashFusion provides this on top.
Privacy:
Decentralized Finance (DeFi):
Etherium allows access to various financial tools (earning interest, borrowing, lending, buying insurance, trading assets and derivatives, etc.) without the gatekeepers, middlemen, or censors of the traditional banking system.
Other coins are starting to support DeFi as well.
Accessing Your Cryptocurrency
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Make sure you back up your crypto wallet keys.
Phone wallets:
Bitcoin.com wallet: only Bitcoin and Bitcoin Cash; non-custodial; map to show nearby merchants
Desktop wallets:
Wasabi: privacy focused for Bitcoin
Electron Cash: added privacy for Bitcoin Cash
Cold wallets:
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Crypto wallets are used to access your cryptocurrency. You don’t store the currency itself there, but rather a private key that allows you to access your funds on the blockchain.
Access to funds:
- Custodial wallets
Work more like a crypto bank, which holds your key for you. Any time you want to use your funds, you need to go through the bank to get access. If you’ll likely forget your key, this might be the route for you.
- Non-custodial wallets
Stores the private key directly on the device. The wallet company can’t access the key—only you can. If you lose the key, you lose access to the cryptocurrency. There is no password reset button.
Internet connectivity:
- Hot wallets
Connected to the internet (app on phone, browser plugin, etc.). Easier to hack. Only keep money in these wallets that you access regularly. Easiest is probably a phone wallet.
- Cold wallets
Disconnected from the internet. Small hardware devices that you plug into a computer when you want to access the crypto on them. More resistant to hacking attempts. Best for crypto you don’t expect to spend day-to-day. Buy directly from the company itself; not second-hand.
When you first set up your wallet, you’ll receive a recovery seed. Back this up. Never share it. Store it in a safe place. Write it down by hand. Store two copies in different locations. See “key keepers” (metal).
Purchasing Cryptocurrency
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CEX: Centralized Exchange
Coinbase: FDIC insured
Kraken
Gemini: FDIC insured
Binance
DEX:
ThorChain
ShapeShift
UniSwap
Banxa
Bisq
Haveno: uses Monero
localbitcoins.com: needs phone number and identification
local.bitcoin.com: Bitcoin Cash, non-custodial
localcryptos.com: non-custodial
localmonery.com: custodial
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You send fiat currency from your financial institution to a centralized exchange, and when the money arrives, you can use it to buy crypto.
“Not your keys, not your coins.” CEX issues IOU for your crypto, and you trust they’ll pay it back.
Keep as little funds on a CEX as possible.
CEX fees can differ dramatically, be hidden, etc.
There may also be hold times on your account, where you can’t withdraw the funds to fiat currency for some time.
CEX also require identification as part of government KYC (Know Your Customer) regulations.
Foreign exchanges may not require this, but usually for smaller amounts.
Most fiat to crypto bridges are embroiled in all the beuracracy of the legacy financial system.
DEX: Decentralized Exchange. No middle man. No KYC.
Find someone willing to pay crypto for services and perform work for them.
Earning Cryptocurrency
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The best way to acquire crypto is to earn it.
People can live entirely on crypto.
Earning means you don’t need to go through a CEX.
LBRY: Peer-to-peer video hosting service, with Odysee frontend. You can earn LBC (LBRY Credits), no KYC, no minimum withdrawals, you have access to your funds, traded on exchanges (CoinEx, Bittrex). Can use LBC to boost content you approve of, but that doesn’t actually spend your tokens. You can also tip content creators, or put content behind a paywall such that you purchase it with LBC. You can earn LBC just by watching content.
Hive: Facebook meets Reddit. Earn Hive Tokens based on how your content is upvoted. Various interfaces to the Hive ecosystem. PeakD for blogging. 3Speak for Twitter status update. D.Buzz for UNKNOWN. Can convert to other coins via exchanges. Can “stake” your Hive Tokens and earn interest.
Flote: Facebook alternative that allows people to send you recurring Bitcoin donations. Kind of like Patreon.
Minds: Like Facebook with YouTube sync feature. Not decentralized on the back-end, but Minds Tokens are. Earn them through engaging on the platform. Needs a Minds+ membership to withdraw.
Read.Cash is great for blogging. Read articles. Post status updates. Send someone a tip. Uses BitcoinCash. Sponsorships allow people to bid on add placement on your sponsor block.
Crypto shines in microtransactions.
Memo.Cash: Crypto version of Twitter. Also uses BitcoinCash. Reaction tokens are tradeable on a marketplace.
Brave Basic Attention Token (BAT): Can be donated to as a creator on a variety of platforms. Don’t need to be a creator. Can also earn by watching ads that Brave normally blocks. Can spend them on gift cards, trade them on exchanges, etc.
Cointr.ee: Tipping platform. Handy link page for all your crypto addresses and social media platforms.
BitcoinCash: Read.cash: get tipped for your blog. Memo.cash: get tipped for your tweets. Noise.cash: get tipped for your photos. Flipstarter: crowd-fund projects.
Spending Cryptocurrency
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Savings are a great use for cryptocurrencies.
It can be part of your diversification strategy.
It’s possible to live entirely off of cryptocurrency, depending on where you live and what your expenses are.
Dash
If a business doesn’t accept crypto yet, have a conversation with the owner to see if they’d be open to it.
If consumers want it, businesses won’t want to miss out.
Bitrefill: Gift cards, etc. Accepts several different coins. Earns rewards.
Purse.io: Purchase from major chains with crypto, and you’ll get discounts for doing so.
Irving gas station gift cards.
DashDirect: 155,000+ merchants. Discounts on everything. Pay in Dash. Map of nearby merchants. You’re buying a gift code in the exact amount of your purchase, in the fly.
Flexa: Digital payments network. Allows any app to spend any asset at merchants all over the world. You pay in whatever you want, the merchant receives in whatever currency they want. Used behind the scenes in Gemini Wallet (and others).
Using crypto can be easier than using a credit card. No need to be 18. No credit check. No bank account.
Paying bills is the hardest part with crypto. US regulations make it difficult.
Given crypto volatility, when things are high, that’s when you make your major purchases; when things are low, you live leaner.
Crypto debit and credit cards allow you to pay with crypto pretty much anywhere. Some don’t require KYC.
DashDirect: See above. Also offer a MasterCard. Just-in-time funding, on-the-fly for each purchase. MasterCard limit is $1000/day, to keep it KYC free. Limit on the gift card is $10K/day, also KYC-free. MasterCard has no fees.
BitPay MasterCard: Supports more coins. Load balance on the card when in line at the store. No fees. $10K/day limit, but does require KYC. Can purchase crypto with credit/debit cards in the app.
Volatility will level out as more people adopt crypto for everyday transactions.