Portfolio Management – Crypto Aware

Investment in Cryptocurrency – Basic Awareness

Crypto Aware — Thu, 28 Apr 2022 09:48:59 +0000

With the huge expected returns publicised in the press over the last few years (Axie, Bitcoin etc.), there are equally important stories of how people have lost their life savings (e.g. Squid Game Token)! Most people advise that investment in cryptocurrency, that it’s risky but there are ways to mitigate those risks.

This is the seventh section of the Cryptocurrency and Blockchain awareness programme,
How to Crypto.

This page deals with longer term investment (at least a couple of years) rather than day or swing trading (buy and sell within a day or within a week or two). Cryptocurrency trading requires a different approach as you are typically taking in increased risk based on more complex criteria in a very volatile market. It isn’t impossible to do, but many experts argue that 60%-80% of all day trades for example, lose money.

If you are new to investing in cryptocurrency, the following points may help you avoid disaster…….

- For the foreseeable future, Cryptocurrencies will be more volatile than traditional investments in stocks, bonds and precious metals – there will be wild price swings up and down. You should only invest what you can afford to lose and whatever you do, never borrow to invest in crypto…. NEVER!

- Your investment in cryptocurrency requires you to do some research to find an exchange that is suitable for your needs. This is where you will buy and sell your coins (sometimes called on and off-ramping). You need to know that you can buy and sell easily and convert back to your national currency without hindrance. You should test the exchange of your choice before making any significant investments. It’s really important to do this! My favourite exchange for instance, is Binance, but my bank wouldn’t let me transfer money from my bank account to the exchange. Such problems are common. Banks and financial institutions (noticing that money is leaving their customers’ accounts for crypto) are attempting to stop transfer to exchanges to ‘protect’ their users from unscrupulous deals. I personally believe that the real motive for this is to reduce the flow of money to financial institutions outside their control.

- Store most of your investments in Hard/Cold wallets (see the Security section, Crypto Security – Protecting Digital Assets). Only keep crypto on exchanges when you are looking to make trades. Exchanges can be hacked and accounts looted. If it’s not your wallet, it’s not your crypto! Some crypto exchange customers have lost considerable amounts of money. I transfer crypto to and from exchanges only when I am about to make a trade.

- Watch for scammers. Scammers love crypto because most people don’t do due diligence when investing. Your investment in cryptocurrency is important enough to carefully undertake your own research before deciding to part with your money. Why do you believe that the team behind your favourite the crypto project are honourable and are you sure that the project will still be around in a year or two?

- Make sure you have an Investment Strategy and stick to it!

- Don’t succumb to psychological pressure. This may sound silly but it’s probably the most important rule. Don’t suffer from Fear Of Missing Out (FOMO) which will cause you to prematurely invest without doing the necessary research and due diligence work. And, just as importantly – Don’t sell because of Fear Uncertainty and Doubt (FUD) when the market plummets – don’t have weak hands, trust in your original research and decisions – you will have considered what you need to do in such circumstances, deviating from your strategy (after all that research), is counterproductive. After an investment in cryptocurrency when the price has dropped significantly, it is very normal for the price to go back up again, we just need patience. Carefully consider the status before exiting your investment. Bitcoin, as an example, has had numerous crashes (some by as much as 80%!) and always bounced back.

If you think you can do all of the above, let’s look at some cryptocurrency investment options.

Basic Investment – Major Cryptocurrency (currently)

Crypto currencies are usually listed in order of market cap (total value of all the coins minted). This changes regularly because of popularity, perceived use case and media hype. New currencies and tokens come and go and with over 10,000 cryptocurrencies it can be a difficult job to find the right ones to invest in.

Let’s take a look at some of the most popular by market cap:

Bitcoin (BTC)

Market Cap: $880bn. This is the most obvious choice as a store of value (i.e. it’s like digital gold). Bitcoin’s price has skyrocketed and it has become a household name. In May 2016, you could buy a Bitcoin for about $500. As of Jan. 3, 2022, a single Bitcoin was priced over $46,000. That’s growth of about 9,200%.

And yet, it’s not been an easy ride for Bitcoin. The number of people in the media that believe it’s a scam is considerable. This year, I saw a video of a guy asking people if they would rather have a hundred dollars or a bitcoin, a large proportion would rather have the dollars! Some noteworthy headlines from ‘reputable’ publications over the years show similar sentiments (note the price per bitcoin in 1st Jan of that year (in brackets)):

- - 2010 “Why Bitcoin can’t be a currency” – The Underground Economist ($0.09)
  - 2011 “So that’s the End of Bitcoin Then” – Forbes ($0.30)
  - 2012 “Wired, Tired, Expired for 2012: Bitcoin” – Wired ($5.27)
  - 2013 “A Prediction: Bitcoin is Doomed to Fail” – The New York Times ($13.30)
  - 2014 “Bitcoin revealed: a Ponzi scheme” – The Washington Post ($770.00)
  - 2015 “Jamie Dimon: Bitcoin Will Not Survive” – Coindesk/Fortune ($313.92)
  - 2016 “R.I.P. Bitcoin. It’s time to move on” – The Washington Post ($434.46)
  - 2017 “The Great Bitcoin Scam” – Forbes ($997.69)
  - 2018 “The Bitcoin Pyramid scheme continues to collapse” – New York Post ($12,414.75)
  - 2019 “Bitcoin will soon be worth zero” – New York Post ($7,188.00)
  - 2022 On January 1st Bitcoin was worth $47,743.22

Bitcoin has recently been made legal tender (can be used to pay for goods in shops and businesses – by law) in El Salvador with other countries lining up to do the same. Adoption is increasing a a speedy rate but as yet, the super large investment portfolios don’t include Bitcoin.

It’s true that Bitcoin still has a number of hurdles to overcome in terms of mass adoption, but advocacy has increased considerably in recent months and Bitcoin is widely considered the safest investment potential of all digital assets. I was interested in getting some Bitcoin in 2013, I decided against it because I couldn’t be bothered. As many bitcoin advocates will argue, it is never too late to get in.

Ethereum (ETH)

Market Cap: $445bn. A Layer 1 crypto with the ability to operate smart contracts. It’s currently the most popular option for the development of applications including Decentralised Finance. It is very expensive to buy and sell on Ethereum at the moment because of high transaction fees. There are many other faster and cheaper layer 1’s ecosystems out there. I should say though, that most analysts believe that Ethereum is a very safe investment currently.

Binance Coin (BNB)

Market Cap: $72bn. Binance Coin is the native token issued by the Binance cryptocurrency exchange and trades with the BNB symbol. Binance is the largest cryptocurrency exchange in the world. In 2020, it recorded a high of $3 trillion USDT in total trading volumes. Governments and financial institutions are keen to impose restrictions and regulations on the exchange which can be prohibitive to users wanting to trades. But the fact is, dispite this, Binance is still the most popular exchange because it’s infrastructure is feature rich. Many new projects are supported and Binance have investment funds of their own to promote projects on their ecosystem.

Tether (USDT)

Market Cap: $70bn. This is the most popular stablecoin. It is linked to the US dollar and mostly used by people like you and me to trade other crypto-currencies. Many traders are changing to other stablecoins as Tether is mainly backed by debt rather than actual dollars. Despite this, it is still the leading stablecoin in an increasingly competitive area. You would typically buy Tether with your fiat currency in preparation to invest in a cryptocurrency on an exchange. However, there are an increasingly large number of people buying USDT to invest in DEFI as they would get a better interest rate than their bank.

Cardano (ADA)

Market Cap: $44bn. Another powerful layer 1 coin that was one of the first to embrace the Proof of Stake consensus mechanism. It has recently released its smart contract functionality which will also have cheaper and faster transaction speeds than Ethereum (although it is still struggling a little with performance issues).

These are relatively low risk cryptocurrency investments. Other higher risk (but with greater expectation of rewards) are some of the small market cap ‘altcoins’:

Dogecoin (DOGE)

Market Cap: $7.5bn. The infamous meme coin has no value other than as a store of value. It was initially developed as a tipping coin that would never gain high value but then declined in popularity and price. Recently Elon Musk has taken an interest in it and it has regained much of its early popularity.

Dogecoin is widely considered a favourite cryptocurrency investment of Elon Musk who has recently purchased Twitter. Many expect the coin to rise in value as it is thought the Musk will increase it’s utility and use case as part of his activities regarding Twitter. Do you own research before investing though, this may just be hype and until we see a good reason why Dogecoin should be valuable, it should continued to be considered a meme-coin.

Cosmos (ATOM)

Market Cap: $10bn. This is a cryptocurrency that powers an ecosystem of blockchains designed to scale and interoperate with each other. The team aims to “create an Internet of Blockchains, a network able to communicate with each other in a decentralised way.” Cosmos has a proof-of-stake blockchain consensus mechanism.

Axi Infinity (AXS)

Market Cap: $4bn. A token that can be earned while playing a game or purchased on an exchange. This is currently the most popular and most famous ‘Play to Earn’ game. It’s accompanied by the other Axi Infinity token called SLP (Smooth Love Potion). These tokens can be used to create characters in the game or buy items and virtual land. Price fluctuates depending on the popularity of the game or service and scarcity of its resources. The price has taken a dive recently and is currently a tenth of the price it was in 2021 and has not been helped by a huge hack that cost the company $650million!

These major crypto currencies are part of 10,000 plus cryptocurrencies. Some will go nowhere, some were created as scams, some are poorly designed and others are currencies that will make you a millionaire! The only way to tell which is which is by doing your own research (i.e. trust your own judgement rather than others).

When purchasing coins, determine your desired risk to profit ratio. It may be that you want to gamble on higher returns by investing in crypto with a higher risk. Or you may, like most of us, decide that you simply need a store of value (ideally, that can’t be manipulated by the government or those naughty bankers).

In section eight of this awareness course, we start our cryptocurrency investment journey by looking at developing an Investment Strategy: Developing Your Crypto Investment Strategy.

This page is part of the How to Crypto Web Series, an awareness course for beginners interested in blockchain projects and cryptocurrency investment. Please checkout the Bibliography and Glossary of Terms pages for other useful resources and links. To find out what we do, take a look at the About Us page.

Disclaimer: CryptoNET.org.uk is not a registered investment, legal or tax advisor or a broker or dealer. All investment/financial opinions expressed by CryptoNET.org.uk are from the personal experiences of the owner of the website and are intended as educational and entertainment material. Best efforts are made to ensure that all information is accurate and up to date but we would still recommend that you do your own research before making investment decisions.

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Developing Your Crypto Investment Strategy

Crypto Aware — Wed, 27 Apr 2022 09:35:25 +0000

Your crypto strategy will be one of the easiest things to write and one of the hardest to implement. 90% of us invest emotionally. We FOMO (Fear Of Missing Out) into a trade and we exit a trade because of FUD (Fear Uncertainty and Doubt). Your Investment strategy will help you avoid these mistakes – but trust me, investment decisions based on FOMO and FUD are very hard to avoid!

Investment Strategy – Types of Investment

This is the eighth section of the Cryptocurrency and Blockchain awareness programme,
How to Crypto.

Before I start, I’m seriously not a financial expert and cannot tell you what your strategy should be. I believe that your investment strategy will be unique to you and one that is only going to be useful only to you. You will have a different risk tolerance than I do, you are less or more wealthy than I, and you will probably believe in different investments than the ones I believe in.

There are, however, some useful tips that may help you in the development of your investment strategy and take some of the guesswork out of it. These are a good place to start and make the whole process of developing a strategy less daunting.

You will make money in cryptocurrency by buying when the price is low and selling when the price is high. But, perhaps you would like to get involved in short term buy-low-sell-high Swing or Day trades or even the exciting sounding Scalp Trades which are undertaken minute by minute? Or, will you make large single investments that you will hold long term. There are lots of ways to invest in crypto:

Crypto Investment Strategy – Short Term Investments

Day and Swing trading. This is the buying and selling of cryptocurrencies in the short term. Day trading, as the name suggests, is when you get in and out of a trade within a day or so. Swing trading is when you buy a crypto currency and wait for the price to go up over a period of a few days or weeks before selling (hopefully at a profit). As mentioned above, Scalp Trades are those that are entered and exited within a few minutes.

Crypto Investment Strategy – Long Term Investments

This is where you would hold and not sell your investment, perhaps for years! The term HODL has become popular after an on-line early Bitcoin trader was explaining that he would HODL on for dear life no matter what happened to the price! In his excitement he mistyped the word HOLD. Hodlers do not make investments for a quick profit.

Your crypto currency portfolio may contain a range of crypto currencies which you would trade on a regular basis and some currencies that you would hold long term. You need a cash reserve that you use to buy cryptocurrencies (enter your trade) when the time is right. It will be replenished with the money you earn when you exit your trade.

Your investment strategy may have a range of crypto currencies which you would hold long term (usually the ones with the least risk). You may also have riskier, short term investments in the hope that they would realise a profit more quickly by closing the trade early yet still able to make some money. Such a strategy would help you grow your portfolio more quickly but at a higher risk.

Crypto Investment Strategy – Three Parts to Your Portfolio

Your portfolio will only contain money that you are prepared to lose – you will not have gone into debt to buy crypto and you would not suffer any significant hardship if all your crypto investments were to crash to zero. Sure, you would be upset but you would not be in a position to lose your house/flat or suffer financial hardship.

I would therefore suggest that the three elements in your portfolio should be: Long Term investments, Short Term Investments and Cash Reserves.

Your Portfolio Management

First of all, you need to work out how much your portfolio will be worth when you begin investing. For simplicity’s sake, we will look at portfolio investment values of 1000 dollars/euros/pounds representing a small portfolio and 10,000 and 100,000 representing medium and large portfolios respectively. Of course these figures are relative, some might consider 10,000 to be a small portfolio. The determination of classifying small, medium and large portfolios is therefore based on risk tolerance rather than monetary amount.

For instance, if you have a portfolio value of over 100,000, you will most likely want to secure a larger portion in longer term, less risky investments (let’s say Bitcoin or Ethereum). If you only have 1,000, you are more likely to want to invest it in higher risk investments which would hopefully yield higher returns. When you take profits from these returns, you will put them in your cash reserves or use them to purchase currencies for the long term holding pot. This sort of activity is what we mean by portfolio management.

You will regularly manage your portfolio to ensure the same percentage values are regularly maintained. You would, of course, determine the percentage values based on your own objectives and risk tolerance. The guide below is for indicative purposes only.

In section nine we will take a look at options for deciding on which cryptocurrencies to invest and also include facts and stories of the some of the more unscrupulous crypto projects: Choosing Your Cryptocurrency Investments.

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How to Buy Crypto Coins and Tokens

Crypto Aware — Tue, 26 Apr 2022 11:15:57 +0000

Buying cryptocurrency as an investment is quite convoluted. At the moment, we can’t just go into a shop and buy crypto in the same way we can go to the bank and buy holiday currency. There are steps that need to be followed and although it sounds complicated, it isn’t difficult. It is however, important to do it correctly for security and regulatory reasons.

This is the thirteenth section of the Cryptocurrency and Blockchain awareness programme,
How to Crypto.

Crypto is usually purchased on-line from a CEX (Centralised EXchange), a Broker or a DEX (Decentralised EXchange) using your fiat currency. You can also sell your crypto back to that exchange or broker for Fiat currency of choice. This is sometimes known as on and off ramping.

Banks simply don’t like cryptocurrency and they regularly resist allowing you to move money to and from your account for cryptocurrency trades. Your exchange too, may have a restriction of some sort in allowing you to place your money on their exchange (e.g. an amount limit or verification delay). Worse still, your bank may refuse transfers to and from a specific exchange (e.g. Binance as is currently the case with many European banks at the moment).

A bank may refuse to accept your currency once it has been converted back to fiat currency because they think you may be money laundering! Again, this happens regularly so you need to ensure you can easily move money between your cryptocurrency exchange or broker and bank. Try with small amounts first.

Choosing a Broker or Crypto Exchange

Consider your priorities. When buying cryptocurrency, do you want to leave your crypto on a secure website or hold it in your own wallet? Would you pay a small premium to buy from a marketplace without the possible interference from banking institutions and government agencies (i.e. safer but more expensive). All these things need to be considered carefully and not rushed. Lets look at three different methods of acquiring Cryptocurrency.

Buying Cryptocurrency from Brokers

The easiest way to buy crypto is by using a Broker. There are quite a few and they are generally well regulated and secure. They work by charging you fees to help you purchase crypto with your fiat currency from their on-line service. This can be at a much higher rate than crypto exchanges. Some brokers claim to be free and make their money by providing your trade information to other brokerages or by selling at suboptimal prices.

You should also note that some brokers have restrictions on the ability to move crypto on and off their system. They may say that this is a security benefit for you but it is nevertheless restrictive. The most popular brokers are Robinhood and SoFi and, at the time of writing, they do not allow you to transfer your crypto purchases off their site. This could be a problem if you want the ability to secure your own cryptocurrency!

For these reasons, I believe that although brokerages are easy to use, they are one of the most expensive ways to buy crypto and the least flexible when it comes to personal financial security.

Central Cryptocurrency Exchanges (CEX)

These are centralised cryptocurrency exchanges owned and operated by organisations/companies from central locations. They are platforms where buyers and sellers meet to trade crypto. A CEX will usually have low fees and more complex interfaces with multiple types of trades and services including performance charts which are updated in real time. All very exciting and very intimidating if you are new:

Figure: A Spot Trade market page from a Crypto Centralised Exchange (Binance). This is the chart and trades information for the trading pair Bitcoin (BTC) and United States Dollar Tether coin (USDT)

When buying cryptocurrencies, you would first convert your fiat money into a stablecoin (lets say USDT), and use that to buy, in the above case, Bitcoin. This simple trade is known as a ‘Spot’ trade. The exchange lets you see the current price, the price trend, market volume indicators and high and low price differences. When I first saw this screen it looked very intimidating. There are however lots of videos available to teach you how to trade crypto on a wide range of exchanges. The graphic above is a screenshot of one of my favourite exchanges, Binance.

The chart in the middle is called a candle chart and it lets you see at a glance how well (or badly) the currency is doing. You can change the timescales from minutes or seconds to days, weeks and even months. Lets say that each candle in the chart represents an hour of trading. Each candlestick shows the open, high, low, and close price for each hour. The green or red colour indicates if the price closed lower (red) or higher (green). The thin lines represent the candle ‘wick’ which shows the highest and lowest prices for that time period.

A candle chart is very useful for determining the current trend for the cryptocurrency you are about to purchase. If you can see that it is on a downward trend, you may want to hold off a little until the price gets lower before you buy. It’s very difficult to guess where the lowest price will be before you purchase and can be quite frustrating while trying.

A key Central Exchange (CEX) service is the opportunity to undertake leveraged trading. If you are new to trading then the simple advice about leveraged trades is DON’T DO IT! – Seriously, 95% of the leveraged trades you make (no matter how good you think you are) will likely be very destructive to your bank balance there are very sad stories of people losing all their possessions because of leveraged trades that went wrong!

The leveraged trading definition from Wikipedia should discourage you sufficiently: “…. is the collateral that a holder of a financial instrument has to deposit with a counterparty to cover some or all of the credit risk the holder poses for the counterparty.” Basically it refers to the buying of securities (crypto) with cash borrowed from a broker (the exchange), using the bought securities as collateral. It enables you to magnify the effect of any profit or loss made on the securities. The securities serve as collateral for the loan. The element that most people fail to realise however is that the leverage is inversely proportional to the investment. If you short-sell leverage trade an investment for 1000 dollars by 10x. and the price goes up by 10%, your trade will be ‘recked‘! and your 1000 dollars will be taken by the exchange. Central Exchanges make a lot of money from people who think they can trade the crypto market and they have many financial incentives for you to give it a try!

Market volatility is often linked to the huge losses (or gains) that are made by leveraged traders. Some consider Cryptocurrency Exchanges as betting halls and it should be noted that some Central Exchange owners are now amongst the richest people in the world! It seems the ‘house’ usually wins! Some of the most well-known cryptocurrency exchanges are:

- - Coinbase (CEO Brian Armstrong worth $13 Billion)
  - Gemini (CEO Winklevosss twins worth $4.1Billion)
  - Binance (CEO Changpeng Zhao worth $77 Billion…. erm ….. that means that he is worth more than 82 of the worlds countries!!)
  - Crypto.com (is very new but the CEO (Kris Marszalek) is already worth $150Million).

While a CEX may seem complicated for the beginner (sorry for the pun) there are some really fun and interesting options to explore (sorry for the pun). Crypto.com for instance offers a really nifty set of credit/debit cards for you to spend your crypto or fiat! The main features of four of the most popular Central Cryptocurrency Exchanges are:

	Coinbase	Gemini	Crypto.com	Binance
Buy/Sell Fees (Maker/Taker fees)	1.99%/1.99%	0.4%/0.4%	0.4%/0.2%	0.4%/0.2%
# Cryptocurrencies	100+	50+	170+	600+
Ease of Use	Easy	Easy/Medium	Medium	Medium/Complex

Figure: Comparison of the more popular Cryptocurrency Centralised Exchanges

The largest Cryptocurrency Exchange is Binance and it is continuously under fire and scrutiny from government institutions and banks. I think that they feel threatened by it’s success. Banks for instance, have restrictions on depositing money to Binance – for our own protection no less! I wonder if the real reason is because they are seeing large amounts of money withdrawn to buy crypto. A Central Exchange is in direct competition with banks. Lately, Exchanges have also been providing staking services that give annual percentage rates (APR) of interest that are ten to twenty times higher than high street banks!

Figure: Not all exchanges are reputable, the green indicator above is provided by CoinMarketCap website and is a reputation indicator. There are some in the list which have a very high volume reported daily, but their figures simply aren’t believable!

Figure: Although the Hoo exchange is reporting very high daily turnover, their reputation brings such claims into question. Cryptocurrency Exchanges deal in very large sums of money and that doesn’t make them trustworthy. When trading, remember that it’s the exchange that usually benefits the most! I personally don’t trust exchanges and make it a point to transfer my money off their systems and into my own hardware wallet as soon as I’m able.

There are many Central Exchanges to choose from and as long as you use one that is established (and know how to get around restrictions your bank may place for transferring money) you should be ok. I would strongly recommend that you do not keep your crypto on an exchange unless you intend to trade it. For security reasons, it is always best to use your own wallets to store crypto.

Decentralised Cryptocurrency Exchanges

One of the biggest issues with buying and using cryptocurrency financial services is that they are managed and controlled by central entities or organisations and regulated by central authorities or governments. These institutions have very poor reputations, especially after causing the recession in 2008 and after all the problems caused by money printing in the last two years. Many are even seen as corrupt or at the very least extortionately inefficient and not cost effective. The simple task of transferring fiat money from an account in your country to an account in another country is time consuming and expensive. Buying cryptocurrency from your bank is a service that is currently not available in most countries.

The alternative is to use a Decentralised crypto EXchange (DEX). These exchanges allow for autonomous, cheap and very efficient forms of exchange. They allow hundreds or maybe thousands of different currencies to be traded. It is vital that they are outside the influence and control of individuals, institutions and governments and therefore seen to be incorruptible and free from bureaucracy. Some believe that buying cryptocurrency via a DEX is one of the most exciting innovations in finance since the checkbook!

When buying a cryptocurrency, a decentralised exchange (DEX) allows for very simple exchanges between cryptocurrencies using a basic interface. Importantly, a DEX is non custodial so it doesn’t actually take your money/currency and store it on the exchange for trades. It makes exchanges directly to and from your wallet.

Figure: Exchanging BNB Tokens for Cake Tokens using the Pancakeswap Decentralised EXchange

Because it’s decentralised, the DEX uses smart contracts to perform the exchanges. Party A has a specific amount of currency X and gives it to Party B provided Party B gives a specific amount of currency Y in exchange. Simple! There are no third parties taking fees off-the-top, no opportunities of bureaucracy or fraud and because the application is not centralised, it is free from interference.

DEX’s are used by up-and-coming crypto projects that can’t easily get their coins traded on Central Exchanges. In my experience a DEX is very easy to use and absolutely trustworthy. There is at least one Decentralised Exchange for each of the major Layer 1 Blockchain Networks that can utilise smart contracts.

Figure: Comparison of the top 5 Decentralised Exchanges. Note that they (at the time of writing) have around $4 Billion trading volume per day which is still less than 3% of all the crypto traded. It is definitely becoming more popular, last year it was less than 1%.

When buying cryptocurrency, Decentralised Exchanges are somewhat anonymous and there is nothing institutions or governments seem to be able to do about it. Users can trade immediately without logging in and retain their private keys at all times. It’s easy and fast and more and more people prefer doing spot trading this way. Centralised Exchanges are certainly the most used but they are keen to take on some of the efficiencies and trust-less services that the DEXes offer.

The whole decentralised thing is very exciting for crypto enthusiasts because of its trustless. Binance for instance, is a central exchange that turns over billions of dollars each day. However, I challenge anyone to find out where the head office is located? Sure, there are offices in all major countries but not an obvious head office? Although Binance has a registered HQ in the Cayman Islands, in 2020, Changpeng “CZ” Zhao famously said, “Binance doesn’t have a headquarters because Bitcoin doesn’t. Wherever I sit, is going to be the Binance office.” This is not seen as a trustworthy trait for a global company – especially by governments that want them to be regulated.

When buying cryptocurrency, both DEX’s and CEX’s have their advantages and disadvantages. The decentralisation of an exchange is in line with what many believe Satoshi Nakamoto hoped for Bitcoin. For many traders however, the performance, flexibility and huge number of financial services and tokens available is a compelling factor in the continued use of central exchanges like Binance. Centralised Exchanges however, have recognized the advantages of DEX’s and are working on their own variants and other trust-less decentralised innovations.

This may be a little too intensive for people new to crypto so in section fourteen we will show you some alternative ways you can still be part of the crypto revolution without actually using crypto exchanges. Section Fourteen: Blockchain & Cryptocurrency Investment Alternatives.

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