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Crypto noobs: What to tell newcomer friends about digital currency



Crypto noobs: What to tell newcomer friends about digital currency

Interest in crypto has been growing since the 2017 bull market and has increased even further since 2021, which saw the nonfungible token (NFT) boom and Bitcoin (BTC) hitting its highest price so far. 

So, what can a crypto investor tell family and friends who are interested in cryptocurrency? Here are some common and important questions that one can come across regarding crypto and some appropriate responses with opinions from experts in the industry.

What is cryptocurrency?

One of the most common questions a crypto investor might get asked is what cryptocurrency is in the first place. Cryptocurrency is a digital currency that is designed to be used as a medium of exchange. This exchange can come in the form of peer-to-peer (P2P) payments and retail purchases. 

Lucaz Lee, CEO of Affyn — a mobile-based metaverse platform — told Cointelegraph, “A cryptocurrency is a digital or virtual currency designed to work as a medium of exchange. It uses cryptography to secure and verify transactions, making it difficult for anyone to create fake transactions or counterfeit money.”

Lee continued, “Additionally, cryptocurrencies are decentralized and use distributed ledger technology, meaning no central bank or government is controlling them.”

Cryptocurrencies exist on the blockchain, which is a public ledger that records all transactions that take place, making it possible for anyone to see how money moves through the network. While anyone can see how much money a user owns and how it is spent. Users need a wallet to send and receive crypto, and these wallets use alpha-numerical identifiers, which add a layer of anonymity to the users.

What purpose does cryptocurrency serve?

The main purpose behind cryptocurrency is the ability for anyone to send and receive money through a decentralized P2P network. This works as a digital version of cash. For example, when users pay with cash, they pay directly to another person without having to go through an intermediary such as a bank or payment processor.

Cryptocurrency does this on a digital level, allowing anyone to transfer money directly to another person, entity or organization while retaining control of their funds at all times. Lee agreed with this take, stating, “cryptocurrencies can be used as a medium of exchange or payment for specific services without any intermediary or centralized control. It removes the limitations of traditional finance, enabling the globe’s large numbers of unbanked and underbanked users to access financial services.”

Cryptocurrencies are also being used as investment vehicles, with users being able to make high returns due to their limited supply, high volatility and high level of speculation.

Lee added, “With each passing day, cryptocurrencies are becoming more attractive investment options. Certain variations also support opportunities to generate passive returns, helping investors expand and diversify portfolios.”

If crypto isn’t backed by anything, how is it worth anything?

Most cryptocurrencies aren’t backed by any traditional assets apart from stablecoins like USD Coin (USDC) and Tether (USDT), which have a large portion of their tokens backed by reserves of fiat money and bonds. Some people may wonder why cryptocurrency has any value if they aren’t backed by anything. 

First, a lot of the value comes from the utility of a cryptocurrency. The more a cryptocurrency is needed for a particular task, the more demand there will be for that cryptocurrency. Examples include using crypto as a store of value and uses for particular protocols within sub-industries like decentralized finance (DeFi) and NFTs.

Recent: Armenia aims to position itself as a Bitcoin mining hub

Igor Mikhalev, partner and head of emerging Tech at EY and decentralized autonomous organization chairman of Blueshift — a decentralized exchange — weighs in on this question, telling Cointelegraph, “cryptocurrencies built well are worth increasingly more because they exhibit the foundational functions of traditional currencies: scarcity, medium of exchange/account and store of value. It is possible due to advances in the underlying tech, legislation and people’s general attitude toward it.”

It’s also worth noting that fiat currencies like the United States dollar, euro and Great British pound aren’t backed by anything (hence the term “fiat” currency). Mikhalev spoke on this, adding, “the USD is not backed by real assets such as gold and is only backed by people’s trust in the U.S. as the issuer. So, why should we not want to support, own and exchange currencies issued by other mission-driven collectives backed by their value and utilities? This is the foundation of the new decentralized economy.”

Lee gave his opinion on the value of cryptocurrency, adding, “cryptocurrency is not backed by anything, but it is intrinsically worth something because people believe it has value. Market forces of supply and demand determine the price of a cryptocurrency.”

Speculation and investment also play a role in the value of cryptocurrency. If investors believe the value of a coin will increase over time, they’re more likely to buy and hold that coin, expecting to turn a profit in the future.

Lee added, “the more people want to buy a cryptocurrency, the higher the price will be. The more people want to sell the cryptocurrency, the lower the price. Blockchain technology has proven reliable and secure; accordingly, many people believe in its longevity and therefore invest in cryptocurrencies.”

Can cryptocurrency replace real money?

In a broad sense, no, as cryptocurrency isn’t regulated, and there are a lot of services, products and commodities that will always need traditional cash. However, governments are looking into creating their own digital tokens known as central bank digital currencies (CBDCs) and there are growing uses for decentralized cryptocurrencies.

“You can’t walk into a Starbucks in America and pay with Swiss francs or pounds. Yet, both of these are real money. Context matters.” Rockwell Shah, co-founder at Invisible College — a Web3 learning community — told Cointelegraph, adding:

“Similarly, the major cryptos are native currencies of their own digital nations. They have relevancy in their own blockchain borders. If the use cases of crypto are so compelling that people use them instead of traditional currencies even outside of their digital borders, then great. Welcome to the free market.”

Lee also believes the answer to this question is context-based. “The answer to this question is not a simple yes or no. It depends on the country and the corresponding economic system. In countries like Venezuela, where the government has mismanaged the economy and sparked high hyperinflation, cryptocurrency has become a way of life for many people.”

“Compared with traditional money, cryptocurrency is very new and its implications on the larger society are yet to be tried and tested. Nevertheless, central banks are exploring the idea of transition to digital currencies, known as central bank digital currencies,” he added.

Some experts believe that the underlying principles behind cryptocurrencies actually put them ahead of traditional currencies when it comes to adoption.

Recent: Crypto winter teaches tough lessons about custody and taking control

“Remarkably, crypto has already started surpassing national currencies on the foundational functions because of their democratic and transparent nature people intrinsically lean toward. Coupled with the decline in trust in government/official institutions, this presents fertile grounds for accelerated adoption,” Mikhalev said, continuing:

“One can see this awkward (for traditional money institutions) situation already today: The debate around the introduction of CBDCs (nation-level digital currencies) is stalling. Central, by nature, institutions do not want decentralization, as it will lead to their demise. However, there is no turning back. Once the technology is mature enough (and one can argue that it has already happened), it will only take one major geopolitical event for the explosive adoption to begin.”

Can cryptocurrency be hacked?

Blockchains themselves are largely impervious to cyberattacks. Lee spoke to this point:

“Blockchains, by design, are nearly impossible to hack because they are decentralized and rely on different security mechanisms. However, external variables such as hot wallets, centralized wallets, bridges and even smart contracts can be hacked.”

Therefore, the best way to secure users can secure their funds is by storing them in a noncustodial wallet, which is a wallet that allows them to own the private keys and wallet seed. This way, an attacker would need to know the private key and wallet seed to access their funds. Regarding platforms, hackers usually resort to phishing attacks to try and trick users into giving away information such as passwords and login info so the hackers can access their funds.

What causes cryptocurrency prices to increase?

Speculation and supply and demand are some of the main factors driving cryptocurrency prices. Most cryptocurrencies have a limited supply, and when there is a lot of demand for that coin (due to speculation of utility), the price usually surges in response to this.

Lee also believes supply and demand is the main reason a cryptocurrency’s price increases, stating that “the price of all assets, including cryptocurrencies, are determined by demand and supply. When the demand for an asset exceeds the supply, it creates a price surge. At times, macroeconomic and geopolitical factors also influence crypto prices.”

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4 On-Chain Metrics Show the Bitcoin Price Is Primed for Bullish Explosion



4 On-Chain Metrics Show the Bitcoin Price Is Primed for Bullish Explosion

Amid recent macroeconomic extremes, Bitcoin has maintained a quiet stance, almost eerie for its HODLers. Nonetheless, its hashrate and accumulation are soaring — what could this mean for its price?

Bitcoin has been consolidating in a narrow range between $18,800 and $20,200 since the mid-Sept price fall. In volatile markets like cryptocurrency, similar quiet periods of consolidation are rare. 

Recent Glassnode findings show that the current BTC price action resembles both pre-crash November 2018 and pre-rally March 2019. Despite price downturns, mining and accumulation statistics are improving. Let’s look into what this means for the health of the network.

Bitcoin hashrate makes new ATH 

Last week, the Bitcoin hashrate made a new all-time high of 242 exahashes per second.

Source: Glassnode

In the chart below, we can see that Bitcoin’s longer-term, slower hash ribbon was once again overtaken by the faster ribbon, indicating improved mining conditions in late August. Since the price saw no major uptick during this time, the rise in hashrate was likely due to more efficient mining hardware and more mining rigs working in general.

Source: Glassnode

Historically, these hash ribbon moving average swaps precede price gains. Historically, when the hash-rate drops and subsequently recovers, major BTC price bottoms have been made. 

Is a price bottom in?

Apart from the hashrate, Bitcoin accumulation levels also reached a 7-year high. CryptoQuant data shows that 6-month-old and older Bitcoins now make up 74% of the realized cap. During the 2019 and 2015 bottoms, this score sat at 70% and 77%, respectively.

Source: CryptoQuant 

Lastly, for the first time in this cycle, the percentage of supply in loss has reached the 50% level.

CryptoQuant data shows that the price bottoms during previous cycles normally occur when the percentage of supply in loss reaches 50% or more.

Source: CryptoQuant

The current data shows the highest percentage of losses at 52% on the daily chart, 50.4% on the weekly (7DMA), and 48% on the monthly (30DMA). 

While quite a few metrics suggest that BTC should be near a bottom, the overall momentum will likely still depend on macroeconomic conditions as well as its correlation with the Nasdaq and S&P 500. 


All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Bitcoin price sees first October spike above $20K as daily gains hit 5%



Bitcoin price sees first October spike above $20K as daily gains hit 5%

BTC price action sees a new October peak amid a declining U.S. dollar and a successful prior day’s trading for U.S. equities.

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Bitcoin price sees first October spike above K as daily gains hit 5%

Bitcoin (BTC) saw its first trip above $20,000 on Oct. 4 as traders expected familiar resistance to cap gains.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Multi-week dollar lows fuel Bitcoin bulls

Data from Cointelegraph Markets Pro and TradingView showed BTC/United States dollar climbing prior to the Wall Street open, up over 5% in 24 hours.

The pair had shaken off macroeconomic concerns at the start of the week, with trouble at Credit Suisse and the escalating Russia-Ukraine conflict failing to slow performance.

Now, the short-term analysis focused on a run potentially topping out closer to $21,000 — as was the case late last month, as sell-side pressure at that level remained significant.

“20500-21000 is a sell zone. If price gets there, which should, don’t be too bullish,” popular trader Il Capo of Crypto told Twitter followers on the day.

Razzoorn, an analyst at international trade group The Birb Nest, noted that the current charge was Bitcoin’s fifth attempt at escaping a major liquidity cloud in several weeks.

Despite the potentially limited upside opportunity, Bitcoin rallied in line with a broader risk asset tide which saw United States equities finish noticeably higher the day prior.

At the same time, the U.S. dollar suffered, the U.S. dollar index (DXY) extending losses to approach 111 points and threaten support in place since mid-September.

U.S. dollar index (DXY) 1-day candle chart. Source: TradingView

“Up the market goes,” a more optimistic Michaël van de Poppe, CEO and founder of trading platform Eight, continued:

“Flipping $19,500 for support. Now, if range-high at $19,600 holds for Bitcoin, I assume we’ll continue towards $22,400.”

Altcoins attempt to change sticky trend

Across major altcoins, it was Ether (ETH) and Ripple (XRP) leading daily performance at the time of writing. 

Related: CoinShares’ Butterfill suggests ’continued hesitancy’ among investors

ETH/USD traded above $1,350, still yet to break out of its sideways trend in place for several weeks since major losses entered during the post-Merge breakdown.

ETH/USD 1-day candle chart (Binance). Source: TradingView

XRP, on the other hand, faced a more stubborn band of resistance after prior gains, bouncing off multi-week support just below $0.45.

XRP/USD 1-day candle chart (Binance). Source: TradingView

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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McDonald’s starts to accept Bitcoin and Tether in Swiss town



McDonald’s starts to accept Bitcoin and Tether in Swiss town

The global fast food chain is among the first to participate in a crypto-friendly experiment in the town of Lugano.

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McDonald’s starts to accept Bitcoin and Tether in Swiss town

Multinational fast food chain McDonald’s started to accept Bitcoin (BTC) as a payment method in the 63,000-populated city of Lugano in Italian Switzerland, which is becoming a hotspot for crypto adoption in Western Europe. 

A one-minute video of ordering food on McDonald’s digital kiosk and then paying for it at the regular register with the help of a mobile app was uploaded on Twitter by Bitcoin Magazine on Oct. 3. The Tether (USDT)  logo could be spotted next to the Bitcoin symbol on the credit cash machine, which is not surprising, as in March 2022 the city of Lugano announced it would accept Bitcoin, Tether and the LVGA token as a legal tender.

On March 3, 2022, the city signed a memorandum of understanding with Tether Operations Limited, launching the so-called “Plan B.” According to this plan, Tether has created two funds — the first one is a $106 million, or 100 million Swiss francs, investment pool for crypto startups, and the second is around $3 million, or 3 million Swiss francs, attempt to encourage the adoption of crypto for shops and businesses across the city.

In addition to allowing Lugano residents to pay their taxes using crypto, the project will extend payments to parking tickets, public services and tuition fees for students. More than 200 shops and businesses in the area are also expected to accept crypto payments for goods and services.

Related: Swiss Post’s banking arm developing in-house crypto custody platform

Speaking to Cointelegraph in June, Paolo Ardoino, chief technology officer of Tether and Bitfinex, claimed that Plan B “is going great,” announcing a two-week educational activity on blockchain and cryptocurrencies in the city.

In September 2021 El Salvador became the first country in the world to allow using Bitcoin as a legal tender. Since that time, McDonald’s has been accepting Bitcoin at all its 19 outlets in the country.

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