Table of Contents:
What is a Cryptocurrency Exchange?
How Do I Buy and Sell Crypto?
What is a White Paper?
What is a Cryptocurrency Exchange? A cryptocurrency exchange is a business that allows customers to purchase or trade digital assets. These assets can typically be purchased with fiat money or with other digital currencies. Some crypto exchanges offer a variety of products and services, while others are used purely for buying and selling digital assets. One should consider their financial goals and risk tolerance before choosing an exchange.
Crypto exchanges fall into one of two categories:
Centralized Crypto Exchange - These are run by a centralized party, and the customer experience can range from smooth and beginner friendly to complex and professional-trader oriented. These exchanges make it easy to add a debit card or link your bank account to purchase crypto. They usually charge some sort of fee per trade, and some offer additional services such as borrowing/lending, margin trading, or derivatives trading. Popular centralized exchanges include Binance, Coinbase, and FTX.
Decentralized Crypto Exchange - Discussed in “DeFi Basics”. These are a bit more advanced, so let’s leave them out until then!
It is important to do your research before choosing an exchange. Since crypto currencies are very volatile and some exchanges are more reliable than others, it is critical to look at the details. Some details you should consider are: deposit/withdrawal limits, fees, payment methods, regulations or restrictions in your location, reputation, and verification requirements.
If you are located in the U.S. and looking to get started, we recommend starting with a simple, reputable, centralized exchange like Coinbase or FTX.us for ease of use and a gradual entry into the space. Although this is obviously based on preference, we'll highlight a couple centralized exchanges here, specifically for beginners who are trying to decide which one to use first.
Centralized exchanges:
Coinbase/Coinbase Pro - This is always a solid place to get into crypto investing. You can sign up, link your bank account, deposit dollars, and use those dollars to buy various crypto tokens. They offer a reasonable amount of tokens, high liquidity, and reasonable fees - that is, IF you use Coinbase Pro. If you decide to use Coinbase as your exchange, you will get both a Coinbase and Coinbase Pro account - you should use Coinbase Pro for buying and selling, as the fees are much lower here and it doesn't cost you any extra. You can check out our How to Use Coinbase Pro tutorial for a quick walkthrough.
Binance - The exchange with the most volume. Binance (or Binance US, if you're in the United States - keep in mind Binance US offers less tokens than the "normal" Binance does, due to regulation) is another good centralized exchange to use.
FTX - Fast growing and just as easy to use as Coinbase, FTX (or FTX.us, if you're in the United States - again, it offers less tokens) has a great UI and is another great option.
Video:Article: https://www.gemini.com/cryptopedia/what-is-a-crypto-exchange
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-How Do I Buy and Sell Crypto? Once you’ve signed up for a centralized exchange, you can deposit money by linking your bank account. The exchanges mentioned above are some of the most trustworthy. For instance, Coinbase is a publicly-traded company. Once you have money in the exchange, you will be able to buy and sell crypto. Again, check out our How to Use Coinbase Pro tutorial for a quick walkthrough.
No video or article for this one!
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-What is a White Paper? White papers explain the purpose and technology behind a crypto project or cryptocurrency. A white paper is created by the team in order to fully explain the idea at a deep level, and to possibly convince others to invest in their project. Most crypto projects will have a public white paper. Obviously, the most important part of these white papers is the content within them. They are typically written in a very technical manner. Reading white papers is a great way to understand a project and tell if it is legitimate. They also explain what sets them apart from other projects and outlines what makes them valuable in the crypto space. (Side-note: often times it’s easier to start with articles or videos, when learning about a new crypto project, rather than diving directly into the white paper. Also, sometimes, though rarely, the project has changed and the white paper is now out of date).
So, overall, white papers give an introduction to a project, define what problem they are going to solve, and explain how their project solves it. A good white paper could have all of the following:
- Summary - A high level summary of the project
- Intro - A statement of a current problem and how their product is going to solve it
- Technology - A description of the technology behind the product
- Token Distribution - A description of the strategy to create and distribute the token (if there is one)
The below sub-headings are protocol-layer (the blockchain itself) white paper specific:
- Transaction Technology - Describes how the crypto is exchanged between people
- Security technology - Describes how transactions are verified and recorded (plus mining, staking, etc)
- Network technology - Describes the blockchain and how data is sent, received, and recorded
- Incentives - Describes why people would want to participate in the product
- Conclusion - overall summary of the project
- References - a list of other white papers and documents mentioned
Some white papers may have additional chapters that dive deeper into these sections, but most roughly follow this outline. Again, reading and understanding white papers can be a very helpful tool in evaluating the potential success of a project. However, it can be tough to get through some if you’re less of a technical person (look up the Filecoin white paper for a pretty solid example!). Overall, it’s usually best to start with an article or video when learning about a new project, but the white paper can be good for a more in-depth view of the project.
Video:Article: https://www.investopedia.com/terms/w/whitepaper.asp
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