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Crypto Definitions

What Is Blockchain?

Blockchain is the technology that makes NFTs and cryptocurrencies like Bitcoin possible. And although it’s definitely a buzzword these days, few people actually know how blockchain works.

In this quick guide to blockchain technology, we’ll demystify this technological innovation and explain how it works and how it could be useful for much more than investing in crypto assets.

Blockchain Definition

First off, let’s give a clear definition of what a blockchain is.

A blockchain is a series of connected digital ledgers distributed to and maintained by a network of computers (aka nodes). The ledgers contain vital information about transactions, and blockchain technology uses cryptography (think: codes) to keep the information secure.

Information stored on a blockchain cannot be edited, deleted, or destroyed. 

Every time a transaction occurs on a blockchain, it’s verified and time-stamped by the network of nodes, and a record of it is added to the chain of information. 

Another term for this process is Distributed Ledger Technology (DLT).

Because blockchain technology is decentralized, there’s no third party such as a bank or government needed to handle transactions. 

Computer scientists have been discussing the concept of blockchain technology for 40 years. However, the theory was put into practice in 2008 by the pseudonymous Satoshi Makamoto in his academic paper “Bitcoin: A Peer-to-Peer Electronic Cash System.”Although blockchain technology was first applied to Bitcoin, thousands of cryptocurrencies and non-fungible tokens (NFTs) now depend on DLT.

How Does Blockchain Work?

I know, it’s complicated.

Let’s walk through a theoretical blockchain transaction to give you a better idea of how blockchain or DLT works.

  1. You buy some Bitcoin through a cryptocurrency platform like Coinbase
  2. The transaction information is transmitted to a network of thousands of nodes, or computers, located around the globe.
  3. The node network starts “mining,” or using computer algorithms to verify the transaction.
  4. Once the transaction is confirmed, details of the transaction are added to a block of information on the chain.

Are Blockchain Transactions Secure?

Blockchain transactions are relatively secure.

Now, blockchain technology isn’t 100% safe from hackers. However, because it’s decentralized, it’s not easy to hack into a blockchain.

That’s because, in order to alter the chain of information, a hacker would need to break into more than half of the nodes with the same distributed ledger. And there can be thousands of them!

The larger the blockchain network, the safer the data. That makes major players like Bitcoin and Ethereum safer than “private” blockchain networks.

Of course, if you’re investing in any kind of cryptocurrency, make sure not to give away your wallet key credentials to anyone. There are loads of phishing scams out there — be smart and aware!

Alternative Uses for Blockchain

OK, so we know that most cryptocurrencies and NFTs use blockchain technology.

But there are other uses for DLT as well.

Any organization or company that needs to store large amounts of data can benefit from using blockchain. Walmart (WMT), Pfizer (PFE), and IBM (IBM) already use blockchains to manage transactions and inventories.

Healthcare providers can also use blockchain technology to securely store patients’ medical records. Because the records will be protected by encryption, there’s no way to alter them once they’ve been verified.

There’s also huge potential in using blockchain for keeping track of property records and legal contracts. In fact, the verification that DLT transactions involve could help eliminate the need for costly attorney, mediator, or notary services.

Blockchain could also be used to create a more secure voting system, in which it’s practically impossible to tamper with ballots.

Blockchain Pros and Cons

Pros

  • Blockchain transactions are secure and private
  • Decentralization makes it nearly impossible to tamper with blocks of data
  • Blockchain technology efficiently eliminates the need for a third party in transactions
  • Blockchain eliminates human error in record-keeping

Cons

  • Mining blockchain data can be expensive and energy-intensive
  • Blockchain tech can be slow — it takes 10 minutes to add a block to the Bitcoin blockchain
  • There’s uncertainty about whether blockchain transactions will be regulated

The Bottom Line

Blockchain technology has the power to revolutionize not only how we handle money and transactions, but also how we store sensitive data.

Of course, the most popular use of blockchain today is with cryptocurrencies. A lot of people have made big money on crypto trades, making it one of the hottest trading niches.

If you’d like to get started trading cryptocurrencies — or would like a helping hand — I recommend signing up for a free membership to Titan Alerts. You’ll receive daily trading intel and education from our team of experts. 

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Crypto Definitions Trading Guides

What Is Cryptocurrency? A Quick Guide

Cryptocurrency is digital money that circulates without a central monetary authority. It uses cryptography (basically, secret codes) to protect against fraud and counterfeiting. 

You can use cryptocurrencies to buy and sell goods. You can also trade them for a profit.

There are thousands of cryptocurrencies currently in existence, and some are more worthwhile than others. In this quick guide to cryptocurrency, we’ll tell you what you need to know to get started in this exciting and innovative market.

What Are Cryptocurrencies?

Cryptocurrencies, also known as “cryptos,” are digital or virtual currencies that aren’t issued or backed by any central banking system. 

That makes cryptocurrencies beyond the reach of government interference (at least, in theory). They’re part of a larger movement of decentralized finance, or DeFi, for short.  

Many — but not all — cryptocurrencies are based on blockchain technology.

What’s a blockchain?

In a nutshell, a blockchain is a publicly distributed digital ledger that uses cryptography to protect information. Every time a new transaction occurs on the blockchain, a verifiable record of it is added to every participant’s ledger. 

This makes transactions nearly impossible to forge. And it also keeps sensitive financial information safe from prying eyes.

What’s Bitcoin?

Bitcoin is the world’s most popular cryptocurrency. It was also the first. An anonymous person calling themself Satoshi Nakamoto created Bitcoin in 2008.

Since then, literally thousands of cryptocurrencies have been created. You’ll sometimes hear them called “altcoins.” 

Some altcoins are Bitcoin clones, while others — such as Ethereum and Litecoin — have been built from scratch.

Are Cryptocurrencies Legal?

Yes, trading cryptocurrencies is currently 100% legal in the U.S. and many other countries around the globe. In fact, Bitcoin is now the legal tender of El Salvador.

However, there are a few countries — notably, China — where crypto transactions are banned.

Now, a lot of people (and, unfortunately, politicians) live with the misunderstanding that the crypto economy is the domain of criminals.

They’d have you believe only thieves, money launderers, hackers, and drug dealers use cryptos. And while it’s true that illegal activity does happen on blockchains, it’s by far the minority of crypto transactions.

What Are Cryptocurrencies Used For?

Major cryptocurrencies like Bitcoin can be used for everything from booking hotel rooms on Expedia to paying for your Starbucks order. You can even use them to pay your AT&T phone bill or buy stuff at Home Depot.

A growing number of businesses are accepting cryptocurrencies for payment.

Other people speculate on the future prices of Bitcoin and other cryptos. These traders use platforms like Coinbase and even brokerages like Charles Schwab to buy and sell at a profit. 

Although the market isn’t without risk, it’s possible to make tidy profits from crypto trades. In fact, in 2020, American investors made more than an estimated $4 billion on Bitcoin trades alone. If you’d like to learn how you can profit from cryptocurrency too, sign up for alerts from Titan Trading.

How to Buy Cryptocurrency

Buying cryptocurrencies is surprisingly easy. 

All you have to do is sign up for a cryptocurrency exchange. That will allow you to buy, sell, and hold crypto in an online account.

The top exchanges for cryptocurrency include Coinbase, Kraken, and Gemini. You can also trade cryptocurrencies via more traditional platforms like Robinhood, Charles Schwab, Webull, and TD Ameritrade.

There are also other platforms that specialize in advanced crypto trading, like Binance and FTX. 

You can also withdraw crypto from an exchange and store it in a digital wallet for the long term or to use in transactions. You can easily obtain a digital wallet from your bank, Apple Pay, Google Pay, PayPal, or Venmo.

Is Cryptocurrency a Good Investment?

You can make a lot of profit from speculating on cryptocurrencies. But right now, they’re not a particularly stable investment that you’d want to hold for the long run.

That’s because the prices of cryptocurrencies can be extremely volatile. 

Take a look at this chart of the daily price of Bitcoin, the most relatively stable cryptocurrency:

Frequently Asked Questions

In plain English, what are cryptocurrencies?

Here’s the TL;DR definition: Cryptocurrencies are digital assets that aren’t backed by any central bank or government. You can use them to buy stuff online.

How do you purchase cryptocurrency?

You can buy cryptocurrencies through crypto exchanges like Coinbase and Kraken, through an app like PayPal, or from an online broker such as Robinhood or Webull.

How is cryptocurrency made?

Cryptocurrencies are made through a process known as mining. This involves downloading software with a record of network transactions on it. Theoretically, anyone can mine crypto as long as they have a computer and internet access. But it takes a lot of energy, so most cryptocurrencies are mined by large companies.

What’s the biggest cryptocurrency?

Currently, Bitcoin is the most popular and valuable cryptocurrency. But there are thousands of other cryptos — or “altcoins” — on the market.

Is cryptocurrency taxed?

Unfortunately, if you realize any profits from crypto trades, the U.S. IRS will treat them like any other capital gain. If you have questions about capital gain taxes and how to minimize them, consult a tax professional.

The Bottom Line

Cryptocurrencies are the money of the future. These digital assets are gaining in popularity and quickly becoming “mainstream.”

Using cryptos like Bitcoin and Ethereum for everyday transactions is surprisingly easy and convenient. 

However, if you’d like to try making a profit by trading cryptocurrencies, you’re going to need a guide you can trust. 

That’s why I recommend signing up for Titan Alerts. A basic membership is 100% free, and you’ll receive daily trading intel and education.

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Crypto Definitions Trading Guides

What Are NFTs? How Do They Work?

If you’re reading this article, we bet you’ve heard about non-fungible tokens, or NFTs, and are wondering what the heck they are. 

They’re all over the news these days. But how do they work? And how can you make money from them?

In this quick guide, we’ll cover the basics of NFTs so you can decide whether you’d like to get into the game.

If you’re an audible learner, you can also check out our YouTube video on the topic here.

What Are NFTs?

NFTs, or non-fungible tokens, are blockchain-based assets that are one-of-a-kind and verifiable. Each NFT represents a digital asset – for example, an artwork or a GIF.

The super-important thing here is that NFTs are one-of-a-kind. When you buy an NFT, you can rest assured that you own the only one exactly like it.

And therein lies the value of NFTs.

Anyone who collects anything — from ancient coins to Pokemon cards — knows that scarcity is the key to value. The rarer something is, the more valuable it becomes.

It’s the same story with digital artwork.

NFTs vs. Cryptocurrencies: How Are They Different?

OK, so we know that NFTs are one-of-a-kind and thus “non-fungible.” That’s how they’re different from cryptocurrencies like Bitcoin and Ethereum.

Each cryptocurrency is fungible, or equal in value. That means you can trade one Bitcoin for one Bitcoin, one Dogecoin for another Dogecoin, and even one Tiger King for another Tiger King. 

That’s not the case with NFTs. Each one is unique and has a unique value.

However, typically, NFTs are bought and sold using cryptocurrencies. 

Which brings us to this big question…

How Do NFTs Work?

NFTs are held on a blockchain. A blockchain is a publicly distributed digital ledger that uses cryptography (think: codes) to protect sensitive information.

Most NFTs exist on the Ethereum blockchain, so you’ll see most NFT transactions reported in ETH values.

Because NFTs use blockchain technology, it’s easy to verify their ownership and certify their authenticity.

The act of creating an NFT is called minting. Anyone can mint an NFT as long as they have a crypto wallet and access to an NFT marketplace (more on that in a minute).

When you own an NFT artwork, object, etc., you have exclusive ownership rights. Each NFT can have only one owner at a time. 

And just as stocks are bought and sold on the stock marketplace and cryptocurrencies are bought and sold on crypto platforms like Coinbase, NFTs are bought and sold on specialized marketplaces.

What Can Be an NFT?

Any digital file can become an NFT.

Many NFTs represent internet memes or pieces of digital art. But we’ve also seen NFTs in the form of video game skins and accessories, as well as virtual real estate. 

Musicians are also hopping into the NFT market. The Weeknd recently made $2 million by selling unreleased tracks as tokens. And rapper Nas is selling royalties to songs in the form of NFTs.

As tech companies continue to build out the metaverse — an interactive digital universe where users can attend virtual concerts, buy products, and hang out with friends — we’ll see that practically everything can become an NFT.

What’s the Most Valuable NFT?

So far, the most expensive non-fungible token ever sold was a digital collage called Everydays — The First 5,000 Days. Created by American artist Beeple, the artwork fetched $69 million at a March 2021 sale at the prestigious Christie’s Auction House.

Not all NFTs are fine art, though. Remember the video “Charlie Bit My Finger” that went mega-viral on YouTube back in 2007? An NFT representing the video’s ownership sold for $761,000.

Other notable NFT sales have included Twitter founder Jack Dorsey’s first tweet, which sold for nearly $3 million, and the original source code for the world wide web, which sold at a Sotheby’s auction for $5.4 million.

That said, there are plenty of NFTs currently for sale for as little as $1.

How to Buy an NFT

If you’ve decided to start owning NFTs for yourself, you’ll need to get set up with both a funded digital wallet and an NFT marketplace account.

You can easily get a digital wallet through Apple Pay, Google Pay, PayPal, Venmo, or even your bank. Chances are, you probably already have one on your phone.

Because most NFT marketplaces use the Ethereum blockchain, you’ll probably want to load up on some ETH. However, check the NFT marketplace you’re interested in using to make sure you’re using the right cryptocurrency. 

You can buy cryptocurrencies through a platform like Coinbase or Kraken. But even PayPal and Robinhood offer cryptocurrency trades. 

Once you’ve put some crypto in your digital wallet, it’s time to get started on a marketplace.

What Are the Top NFT Marketplaces?

There are loads of NFT marketplaces on the internet these days.

As a beginner, you’re probably best off starting with one of the tried-and-true most popular platforms. These include:

  • OpenSea: This is currently the biggest NFT marketplace. It’s free to sign up and check out different NFTs on offer. It’s also easy to use OpenSea for minting your own NFTs.
  • Rarible: Some of the biggest brands (such as Taco Bell and Twitter) partner with this platform to issue NFTs. You’ll find all sorts of digital assets here, from art to music.
  • NBA Top Shot: NBA NFTs are big with basketball fans. You can buy “collectible moments” (video clips) from basketball’s history and other B-ball-themed tokens on this platform.
  • Foundation: This one feels like a fine art gallery. You’ll be able to browse and bid on serious NFT art here. (In other words, it’s a bit pricey but really fun to look at!)

Frequently Asked Questions

Are NFTs safe to buy?

No investment is 100% risk-free. That said, NFTs are riskier than trading, say, stocks. That’s because the market for these digital art assets is unregulated. Anyone can make or sell an NFT, and there are plenty of scams around. And keep in mind that each NFT asset’s true value is equal to whatever someone else would want to spend for it.

While it wouldn’t be wise to put all of your investment money in NFTs, they can be a fun speculation and a great way to support your favorite artists.

Are NFT transactions taxed?

Yep. If you sell an NFT asset at a profit, you may be subject to capital gains taxes – just as you would if you sold a stock. Although the IRS hasn’t made it exactly clear how it will consider NFTs for tax purposes, it’s possible you might be taxed at a higher collectibles tax rate than the rate that’s applied to stocks.

The Bottom Line

Browsing NFT marketplaces and investing in a favorite artwork or two can be a fun way to spend the time. 

But if you’re serious about building an NFT collection and making money, you should join the official Titan Alerts Discord server. You’ll receive real-time trades, exclusive NFT offers, and more.