InvestHH Archives | Page 29 of 44

Mar

2022

What Is Cryptography and How Does It Work?

By Caroline Banton | Growing Wealth, invest, Investing, Terminology | Comments Off

Cryptography is a science that has evolved over time since the ancient Egyptians used it to communicate. Today, it takes many forms, with quantum computer scientists just one group who uses this coded system. Throughout history and into the digital age, the purpose of cryptography has remained the same: It is a means to transmit data in a secure form so that only the recipient can access the information.

Modern cryptography is front and center in advancements in computer science and cryptocurrency ecosystems. Sophisticated encryption algorithms protect data, but the threat levels continue to rise as quantum computers offer a new arsenal to adversaries.

In this article, we’ll explore how cryptography originated, how it has transformed over time, and how it is applied in the world of cryptocurrencies. We’ll delve deep into:

• Cryptography Definition

• The History of Cryptography

• How Cryptography Works

• Cryptography and Cryptocurrencies

• Cryptographic Algorithms

• Cryptography and Quantum Computing

Cryptography Definition

Cryptography is a way to transmit information and data so that only the intended recipient can access it. The message, content, or data is encrypted by the sender and then decrypted by the receiver using codes or other methods.

In computer science, the process of encryption typically takes plaintext, or unencrypted text, and scrambles it into ciphertext. In the context of cryptocurrency, the cryptography definition is the process by which digital assets are transacted and verified without a trusted third party.

Cryptography is the technology that underpins cryptocurrency protocols. One large appeal of cryptocurrencies, such as Bitcoin (BTC) and Ethereum (ETH), is that transactions are anonymous.They occur on a secure, decentralized, peer-to-peer network without the need for a central authority, like a bank or financial institution.

Bank transactions rely on certain protocols and policies to protect transactions and reduce fraud: the signature on a check issued by a bank must be verifiable and counterfeit-proof (not forged), and the signer cannot later go back on the commitment the check represents. Cryptocurrency transactions rely on different protective measures: Cryptography and encryption keys allow cryptocurrencies to be traded without real-world signatures.

The History of Cryptography

Cryptography, derived from the Greek words “kryptos” (meaning hidden) and “graphein” (meaning to write), existed long before the digital age. The history of cryptography dates back to the year 1900 BC, with cryptographic symbols appearing in hieroglyphics found in tombs in ancient Egypt.

Later, around 40 BC, Julius Caesar encrypted messages using a system that became known as “Caesar’s cipher”. He used letter substitution to scramble a message so that only the person who knew the secret could unscramble the letters and read the text.

Giovan Battista Bellaso created the first encryption in the 16th century. It was called the Vigenere cipher (falsely attributed to diplomat Blaise de Vigenere), and featured a grid with the alphabet written across 26 rows. The written encryption matched the length of the message, and Bellaso used the grid to create the code to encrypt the message, letter by letter. The sender shared the secret key word and the encrypted message with the recipient, who possessed the same grid and could decode the message.

Modern computers have made encryption commonplace and much more sophisticated, but the intention is the same: to ensure that only intended parties can access the information.

How Cryptography Works

While cryptography methods have evolved from ancient times, the art has always served the same purposes: confidentiality, integrity, non-repudiation, and authentication.

• Confidentiality ensures that only the intended recipient can access the information.

• Integrity ensures that the data cannot be altered in transit or storage without the change being detected.

• Non-repudiation ensures that the intentions of the sender of the information cannot be denied later.

• Authentication ensures that the sender and receiver can confirm each other’s identity and the origin and destination of the information.

There are three forms of cryptography, each with different levels of sophistication for data protection: hash functions, asymmetric encryption, and symmetric encryption.

Hash Functions

Hash functions secure information using algorithms. Instead of using traditional keys, this approach relies on algorithms to turn data into a fixed-length string of characters. Hash functions are one-way encryption because it’s impossible to decode a hash into its original data.

Blockchain technology uses hash to encrypt large quantities of information without compromising the original data. Hashes create organized, structured, encrypted data that act like digital fingerprints. Any unauthorized modifications that may occur during transport through networks can be verified, and changes to the original data result in a new hash. That new hash would not match the original source and would not be verifiable on the blockchain.

SHA-1 (Secure Hash Algorithm 1), SHA-2, and SHA-3 are cryptography examples of hash functions.

Asymmetric Encryption

Asymmetric encryption, also known as public-key encryption, uses a pair of keys. One key is a public key that can be exchanged with anybody over any network. This key shows how to encrypt the data and anyone can access it. The second key is a private key. The private key explains how to decrypt the message, but only the private key holder has access.

Both keys are generated by an algorithm composed of large prime numbers to create two unique keys that are linked mathematically. Anyone with access to the public key can encrypt a message, but only the private key holder can decode the message.

Rivest-Shamir-Adleman (RSA) is an example of public-key cryptography and is typically used for VPNs, email, web browsers, and chat.

Symmetric Encryption

Symmetric encryption — also called secret-key encryption — relies on a single key. For symmetric encryption, the sender and receiver of the data share the same key used both to encrypt and decrypt the information.

To encrypt data, the secret key is agreed upon in advance. Because there is only one key, and one less layer of security, this level of encryption is riskier than symmetric encryption.

Advanced Encryption Standard (AES) is a cryptography example of symmetric and single-key encryption. AES was established in November 2001 by the National Institute of Standards and Technology (NIST). It is a Federal Information Processing Standard (FIPS 197) for encryption in the private sector mandated by the U.S. government.

Cryptography and Cryptocurrencies

Cryptography is what makes cryptocurrency appealing. Crypto transactions are encrypted as they travel across a blockchain and are both secure and transparent.

Bitcoin creator Satoshi Nakamoto devised blockchain technology to solve the “double-spend” problem, where the same currency unit could potentially be spent twice, and a currency’s value as an online payment solution would therefore be extinguished. Bitcoin’s time-stamped, peer-to-peer distributed ledger is secured cryptographically to prevent double-spending.

This was the beginning of blockchain technology and the evolution of the different types of cryptocurrencies we see today.

Learn more about how cryptocurrency works with SoFi’s Crypto Guide for Beginners.

Cryptographic Algorithms

Cryptographic algorithms, also called ciphers, are used to code messages (like those from Julius Caesar and Giovan Battista Bellaso). Algorithms are derived from mathematical and rule-based calculations. The algorithms are used for keys, digital signing and verification, internet web browsing, confidential email, and secure credit transactions.

An algorithm or cipher suite (also known as a cryptosystem) uses one algorithm for encryption, a second for message authentication, and a third for key exchange.

Cryptography and Quantum Computing

Sophisticated algorithms are not impervious to hackers, and there is growing concern of the threat that quantum computing represents with powers to break current cryptography encryption standards.

The length of encryption keys is gradually increasing — as much as 256 bits (32 bytes) — and the algorithms are becoming more sophisticated in order to stop hackers from decoding them. But even the most complicated algorithms may be no match for quantum computers.

Quantum computing uses quantum bits (qubits) that can process an enormous number of potential results in parallel. These supercomputers can carry out integer factorization (breaking down large composite numbers into smaller numbers) at lightning speed, which is what makes current cryptographic algorithms so vulnerable.

The Future of Quantum Computers

Currently, the simple, small-scale quantum computers that have been created have had limited capabilities. But it may only be a matter of time before more powerful quantum computers are successfully developed.

Jason Soroko, CTO of PKI, Sectigo, explained it like this in an interview with EE Times : “A traditional binary computer solves that mathematical problem slowly, whereas a quantum computer with an efficient algorithm can solve that problem much more quickly. That efficient algorithm known as ‘Shor’s Algorithm’, when coupled with a quantum computer with enough stable qubits, will theoretically be able to break current cryptographic algorithms such as RSA and Elliptic Curve (ECC).”

Large-scale quantum computers are still a few years from existence, but the threat that these machines pose to symmetric algorithms like AES and asymmetric algorithms like RSA are real and causing NIST to seek more robust solutions.

The Takeaway

Cryptographic techniques are the cornerstone of the cryptocurrency market and the very reason market participation remains active. Encryption techniques ensure confidentiality, integrity, non-repudiation, and authentication — so that crypto transactions remain secure and anonymous.

Encryption techniques are growing ever-more sophisticated to combat cyber threats, and these threats are expected to intensify in the future with the development of quantum computers. However, focused scientific work is developing advanced algorithms to maintain protection even from the threat of quantum supercomputers.

FAQ

What is cryptography used for?

Cryptography is used for secure communications and as protection from adversarial third parties. In computer science, cryptography is a process of encryption using an algorithm and a key to transform an input (plaintext) into an encrypted output (ciphertext).

Cryptographic techniques allow cryptocurrencies to be traded anonymously. These techniques ensure confidentiality and that only the intended recipient can access information.They ensure integrity so that the data cannot be altered in transit and the intentions of the sender of the information cannot be denied later. Cryptography also allows the sender and receiver to confirm both each other’s identity and the origin and destination of the information.

How does cryptography relate to computer security?

Cryptography ensures secure computer networks and systems. The science of cryptography ensures the confidentiality of data, protects data from unauthorized modification during storage and transit, and allows data authentication.

How is cryptography used in the cryptocurrency space?

Three cryptography methods are used for cryptocurrencies: symmetric cryptography, asymmetric cryptography, and hashing. Symmetric cryptography uses a single key to encrypt the message at the source, transmit the encrypted message, and decrypt the message at the recipient’s destination. This method is simple to implement, but the shared key implies greater security risks.

Asymmetric cryptography uses two different keys — public and private — to encrypt and decrypt data. The public key — for example, the address of the receiver — is known openly, but the private key is known only to the receiver. The message can only be decrypted by the receiver’s private key. This method facilitates authentication and encryption for cryptocurrency transactions.

Hashing verifies the integrity of the data for network transactions by maintaining the structure of blockchain data. Hashes create organized, structured, encrypted data that resemble digital fingerprints. Any unauthorized modifications during transactions can be identified because they would create a new hash that would not match the original source and would not be verifiable on the blockchain.

Photo credit: iStock/MStudioImages

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Mar

2022

Guide to World of Women NFTs

By Rebecca Lake | Growing Wealth, invest, Investing | Comments Off

Non-fungible tokens (NFTs) are increasingly catching the attention of investors who are looking to step beyond simply buying cryptocurrency. Many different NFTs have gained the spotlight in the decentralized finance (DeFi) space, whether they represent art, music, or other types of collectibles.

The World of Women NFT collection, designed by a female artist with a female-centric focus, is built on the Ethereum blockchain. The goal of the project is to inject more diversity and inclusion into the cryptocurrency space.

Before investing in a World of Women NFT, there’s much to know about this ambitious project and the digital art it has inspired.

• What is World of Women?

• How Does World of Women Work?

• World of Women Value

• How to Buy World of Women NFTs

• World of Women vs. CryptoPunks

What Is World of Women?

The World of Women NFT collection is made up of 10,000 NFTs developed by French artist Yam Karkai. In founding World of Women, along with co-founder BBA (an acronym for Being Bored Ape), Karkai sought to empower women and increase their representation in the NFT and cryptocurrency spaces. The NFTs launched on July 27, 2021, quickly selling out after catching the attention of several high-profile celebrities and influencers.

What Is an NFT?

But what does NFT mean, exactly? An NFT is a type of digital asset. NFTs use blockchain technology, the same technology that powers different types of cryptocurrency, to operate. NFT assets can be sold through peer-to-peer platforms and are typically associated with artwork or digital imagery, though a video or audio file could also be an NFT.

To date, the Securities and Exchange Commission (SEC) doesn’t have any standard guidelines in place for determining if and when an NFT is considered a security. As of January 2022, World of Women NFTs and other NFTs do not fall under any regulatory guidelines established by the SEC or the Financial Industry Regulatory Authority (FINRA).

How Does World of Women Work?

The 10,000 illustrations that make up the World of Women NFT collection were designed by Karkai using Procreate and Adobe Photoshop. Each NFT is a unique piece of art designed to represent an individual woman. When someone purchases a World of Women NFT, they’re purchasing a piece of digital artwork.

These NFTs are officially sold out, but can be bought and sold on the secondary market through the OpenSea platform. You’ll need a compatible cryptocurrency wallet and the required amount of Ethereum to complete the purchase of a World of Women NFT.

In addition to owning the digital artwork itself, World of Women NFTs allow owners to collect royalties for the commercial use of those images. Specifically, owners can receive 50% royalties for any profits associated with commercial use of the NFTs. World of Women does require NFT owners to agree to its licensing terms as a condition of earning royalties.

World of Women also sets itself apart in terms of how it reinvest profits. The company uses part of its earnings to fund women-centered projects around the world, such as Too Young to Wed , She’s the First , and Rockflower . This is all part of the company’s efforts to empower women while supporting art that’s designed to appeal to people of all backgrounds.

World of Women Value

When World of Women NFTs made their debut, they had a minting price of 0.07 ETH, which was equivalent to roughly $130 U.S. dollars. As of January 2022, the floor price (or starting price) for a single World of Women was 7.37 ETH. The average all-time price is 2.17 ETH, with trading volume hovering between 46,000 and 47,000 ETH.

At the lowest point, World of Women NFTs trade at 0.01 ETH. The highest sale price recorded to date is 260 ETH. That NFT, Woman #9248, sold for the equivalent of $587,269.80 USD. One of cheapest options is Woman #3556, which has a most recent sales price of 0.01 ETH or $22.47 in USD. Total trading volume is around $10.73 million.

So what determines how much a World of Women NFT is worth? Several factors related to the design of the image can influence pricing, including:

• Background color

• Clothing

• Skin tone

• Facial features

• Accessories

The rarer or more unique an image is, the more it’s likely to sell for. That’s also the case with other image-based NFTs, such as CryptoPunks. These NFTs, which launched in 2017, have reached astronomical valuations as collectors seek out the rarest or most unusual images. CryptoPunk #7523, for example, sold for $11.75 million at a Sotheby’s auction.

How to Buy World of Women NFTs

If you’re interested in collecting NFTs from World of Women, you can purchase them through OpenSea, which is a secondary market for trading NFTs. To purchase World of Women NFTs, you’ll first need to connect or create a compatible cryptocurrency wallet. From there, you can use different filtering options to find NFTs to buy.

Filtering options include:

• Price

• Status (i.e., buy now, auction, etc.): An NFT that’s listed as “Buy Now” or “Make Offer,” would allow you to purchase it at that moment for the listed price or offer a different price to the seller. Ones that are listed as “Auction” will only allow you to place a bid.

• Design (including backgrounds, facial features, etc.): The design filter feature can help you gauge an NFT’s rarity, as it breaks down what percentage of the NFTs share similar features.

The timing for completing the transaction can depend on which option you choose. It’s also important to keep in mind that demand on the Ethereum blockchain can slow down processing. OpenSea charges fees to use the platform. The fee is equal to 2.5% of every transaction processed.

World of Women vs CryptoPunks

World of Women is a newer NFT option, while CryptoPunks NFTs have been around for several years. In terms of valuation, the recent sale of CryptoPunk #7523 illustrates just how valuable a single CryptoPunk can be. Here’s a closer look at how World of Women and CryptoPunks compare.

	World of Women	CryptoPunks
Year Launched	2021	2017
Collection Size	10,000 images	10,000 images
Owners	Around 5,000	Around 3,400
Image Theme	Illustrations feature colorful images of women from different backgrounds	Illustrations include a mix of pixelated images of men, women, zombies, and animals
Trading Volume	Estimated at 45.9K	Estimated at 791.8K
Highest Valued NFT	Woman #9248, which sold for $587,000 in January 2022	CryptoPunk 7523, which sold for $11.75 million in 2021

The Takeaway

The World of Women NFT collection is another creative entry in a burgeoning digital market. While the entire collection is officially sold out, interested buyers can bid or buy a World of Women NFT on a secondary market, using Ethereum.

Understanding the difference between NFTs and cryptocurrency, as well as what it means to trade each of them, is useful info for anyone who is curious or considering expanding their investing horizons.

FAQ

Who is behind World of Women NFT?

World of Women NFTs were created by digital illustrator and artist Yam Karkai. Karkai co-founded the company along with Being Bored Ape (BBA) in order to empower women and encourage diversity in the NFT space.

When did World of Women NFTs launch?

World of Women NFTs launched on July 27, 2021 and sold out overnight after being mentioned by influencer Gary Vaynerchuk (GaryVee). Other fans of the NFT include actress Reese Witherspoon and YouTuber Logan Paul.

How can you buy a World of Women NFT?

You can purchase World of Women NFTs through the OpenSea platform. You’ll need to connect a compatible cryptocurrency wallet to make your purchase. NFTs are available with “Buy Now,” “Auction,” or “Make Offer” purchase options.

Photo credit: iStock/South_agency

Mar

2022

Guide to Cryptocurrency Jobs

By Rebecca Lake | Growing Wealth, invest, Investing | Comments Off

If you’re interested in earning money with cryptocurrency, investing is one option. Seeking out jobs in crypto is another way to capitalize on this burgeoning market.

Cryptocurrency jobs are popping up in cities across the U.S. and around the world as interest in crypto trading grows. Some of the locations that offer the most opportunities for starting a career in crypto include New York, Los Angeles, San Francisco, and Chicago. For those with experience — or at the very least a passion and willingness to learn — there are a number of ways to put your skills to use.

What Sorts of Jobs Are Available in Cryptocurrency?

There are numerous possibilities for careers in crypto, each of which utilizes a different range of skills, expertise, and knowledge of how crypto works.

Some crypto jobs are more technical than others and you may need a specialized degree or training to qualify. Others may allow you to leverage the skills or experience you already have. Those are important considerations to keep in mind when researching how to get a job and earn money in cryptocurrency. Here are a bunch of different paths for exploring a career in crypto.

Blockchain Developer

Blockchain developers are responsible for developing protocols and systems related to blockchain, a decentralized system for recording and transferring information and assets between connected parties. This is the foundation on which cryptocurrency operates.

In terms of salary potential, blockchain developers earn around $155,000 per year on average , according to ZipRecruiter. You’ll need to be familiar with different types of crypto and be well-versed in various programming languages, such as C++ and Python. A degree in computer science or a related field and/or online certification in blockchain development can help you acquire the necessary skills and experience.

Journalist

Journalism jobs in crypto can include freelance writing, blogging, and content marketing. You may be paid to write articles or blog posts about the latest crypto trends for a financial website, or draft white papers and case studies for a crypto company’s marketing team.

Freelance writers earn around $63,000 per year on average , according to ZipRecruiter, though more experienced writers can easily earn in the six-figure range. You don’t necessarily need a college degree or a professional background in writing to get this kind of crypto job. You do, however, need to have solid writing skills and understand concepts like blockchain and how purchasing crypto works.

Venture Capital

Venture capital is a form of private equity financing in which individuals or investment firms provide financial backing for startups. If you’re interested in venture capital crypto jobs, there are different roles you might take on.

For example, you could join a venture capital firm that supports crypto investments as a research analyst or a business operations associate. Or you might work in corporate development or marketing. The types of jobs available — and the corresponding annual salary — can vary from one crypto venture capital firm to the next.

Miner

Crypto mining is the process in which new cryptocurrency is created. This type of crypto job involves using computer software programs to solve math problems in order to generate or “mine” new coins. As such, you’ll need to have knowledge of the different types of crypto and a background in computer programming and/or coding for this kind of crypto career.

Crypto miner jobs can pay around $89,000 a year on average , according to ZipRecruiter, though some companies may pay miners salaries of $150,000 or more. In addition to understanding how mining works, mining crypto jobs may also require research and analysis skills.

AI Developer

AI developers focus on machine learning and its application across different industries, including cryptocurrency and blockchain. This is a more technical type of crypto job and you’ll typically need either a bachelor’s degree in a related field or a strong background in computer science, programming or engineering to get hired.

Salary-wise, AI developers can command higher pay because there’s ever-increasing demand for them. On average, AI developers can make $126,000 a year though some can earn closer to $200,000 a year, according to ZipRecruiter.

Account Executive

Account executives are responsible for acting as a go-between between vendors and clients. Cryptocurrency companies can employ account executives to help attract new clients and maintain positive relationships with existing ones. This type of crypto job does require knowledge of cryptocurrency but it also relies heavily on soft skills, such as communication skills and critical thinking.

Salaries for crypto account executives can vary by company and may be based on previous experience or your track record of success with former employers. A degree in communications, marketing, and/or business management is typically required.

Software Engineer

Software engineers create software programs and work out the kinks in existing ones. In the cryptocurrency job market, software engineers may be hired to develop new products, oversee engineering projects, design databases or web applications, conduct research, or delve into data analysis. This type of crypto career requires a combination of technical and soft skills, as collaboration and communication with other departments is often essential.

Crypto engineers can earn $120,000 a year on average , based on information from ZipRecruiter, and you may be working on-site or remotely, depending on the company.

Product Manager

Product managers work to develop new digital products and find solutions that meet the needs of the company’s clients or customers. For example, you might be charged with developing a product to help a crypto platform expand into the NFT market.

This type of crypto job is all about innovation and creative thinking; depending on the company, you may not need a degree or even a lengthy work history to qualify. Base salaries may start in the high five-figures/low six-figures and go up from there, depending on how much experience you have.

Accountant

Cryptocurrency companies have to manage the books just like any other business operation. But running a growing startup can be time-consuming and founders or executives may not be able to oversee this task themselves. That’s where accountants come in.

Accountants manage financial records and accounts. Crypto accounting jobs can pay in the $100,000 a year range for accountants who specialize in working with digital currency companies, according to ZipRecruiter. You will need at least a bachelor’s degree, though an advanced degree and additional training or certification is often preferable.

Financial Analyst

Financial analysts study investments and offer financial advice to institutional or individual investors. A crypto financial analyst specializes in cryptocurrencies. Someone who works as a financial analyst for cryptocurrency may work for an investment or wealth management firm, a brokerage, or an online crypto trading platform.

It’s also possible to leverage your financial analyst skills to write articles about crypto for financial publications.

Security Architect

Security architects are charged with ensuring that an organization’s computer and network infrastructure are secure. While it’s difficult to hack the blockchain, it’s not impossible. In fact, more than $4 billion in cryptocurrencies was stolen by hackers in 2021 alone.

Cryptocurrency companies may hire security architects to keep their systems safe and secure and identify potential threats. This is an in-demand job and as such, the average salary can hover around $150,000 a year , according to ZipRecruiter.

Technical Writer

Technical writers who are knowledgeable about cryptocurrencies can take on a number of different roles. For example, they may be employed as content writers or content developers, manual writers or policy writers, documentation specialists or information designers.

All of these jobs require technical writing skills, which may be acquired through earning a bachelor’s degree or through online learning resources. Technical writers in general make around $70,000 a year on average , according to ZipRecruiter, but since cryptocurrency is a specialized field, crypto writers could potentially draw higher salaries.

Event Manager

Event managers organize and promote events for companies, including conventions, conferences, workshops, seminars, and networking events. Crypto companies can hire event managers to oversee promotional events. A background in marketing, advertising, or communications is typically desirable for this type of crypto job.

Event managers, event planners, and event coordinators make an average salary of around $55,000 a year , according to information from Payscale. But if you have an extensive network or an established reputation as an event manager, you could easily earn a six-figure income.

Web Developer

Web developers design, create, and maintain websites. If a new crypto startup wants to launch a website they’ll hire a web developer or team of developers to do it.

As far as jobs in crypto go, web development roles don’t necessarily require a college degree. Instead, you’ll need coding and programming skills to get hired, which you could learn online. On average, web developers make around $75,000 a year , according to ZipRecruiter, though some could earn closer to twice that based on skills and experience.

Tips for Getting a Job in Crypto

Figuring out how to get a job in crypto is not that different from pursuing jobs in other industries. First, you’ll need to understand the various qualifications required for different jobs, the prospect for growth in that area, salary ranges, and the duties and responsibilities involved when taking on a particular role.

You’ll also need to decide if you’re interested in landing a full-time role or working in a freelance capacity within the crypto career space. This can influence how much you’re able to earn with a crypto job and what type of benefits you may enjoy.

Networking

Networking can be an invaluable tool when trying to get a job in crypto. Who you know can be just as important as the skills and experience you’ve acquired. If you haven’t started building your crypto network yet, that’s something to prioritize.

You can network largely online through LinkedIn and social media but don’t overlook the value of in-person meetings. Crypto conventions, workshops, and conferences can all offer opportunities to meet with key players in the crypto space and increase your own visibility.

Immersion in the World of Cryptocurrencies

It goes without saying that getting jobs in crypto means you need to understand the industry and how it works. If you don’t know the difference between Bitcoin and Ethereum, for example, or you’re in the dark about how a crypto wallet works, then brushing up on your knowledge is vital.

Some of the easiest ways to get immersed in the world of crypto include:

• Learning key crypto concepts and terminology, such as cryptography basics

• Setting up one or more crypto wallets

• Creating accounts with different crypto platforms

• Trading cryptocurrencies online

• Reading crypto news and studying the latest trends

• Following and interacting with influencers in the crypto space on social media

• Watching tutorial videos or guides on YouTube

Cryptocurrency is constantly evolving and changing, with new developments taking place all the time. Spending time to learn about the industry each day can help you keep pace without feeling overwhelmed.

Expected Job Growth

Cryptocurrency is still in its infancy, though the market is growing everyday. As a result, the market for jobs in crypto is also growing, creating new opportunities for people who are interested in a career in crypto.

For example, employment of software developers (which can include jobs in blockchain development) is expected to increase by 22% by 2030 , according to the Bureau of Labor Statistics (BLS). Job growth for information security analysts, which can encompass cryptography jobs, is expected to jump by 33% over that same time period, as reported by BLS.

As the Securities Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FIRA) direct more interest toward regulating cryptocurrency, that could help to solidify its position as a viable form of currency. In turn, that could spark even more demand for jobs in crypto.

Pros and Cons of Getting a Job in Crypto

There are different benefits of crypto for investors, but what are the advantages when you’re looking for a job in crypto? Pursuing a career in crypto can offer some benefits along with some downsides to consider.

Pros	Cons
Cryptocurrency jobs can offer a flexible schedule, especially if you work remotely or are an independent contractor.	Crypto jobs can be demanding and some positions may require you to work well above the standard 40-hour workweek.
Many crypto jobs can offer competitive salaries, with some reaching into the multiple six-figure range.	Entry-level positions may offer lower starting salaries and it could take time to work your way to a higher pay range.
Some cryptocurrency jobs don’t necessarily require an advanced degree to obtain; you may be able to learn the necessary skills online instead.	Jobs in crypto are competitive and landing a position could be tough if you don’t have lengthy experience or the appropriate skills.

The Takeaway

Doing your research is important if you’re interested in how to get a job in cryptocurrency. There are numerous ways to put your skills and talents to work but if you’re new to crypto, learning about it firsthand can be the best place to start.

FAQ

Is it hard to get a job in crypto?

The cryptocurrency job market is competitive but there are new jobs being created every day. Some of the best ways to increase your odds of landing a job in crypto include networking and learning as much as you can about the world of cryptocurrency and how it works.

Can trading crypto be a job?

Trading cryptocurrencies could potentially be considered a career if you’re able to earn a full-time income through buying and selling. This can be an incredibly risky endeavor, given the volatility surrounding cryptocurrencies. And you wouldn’t have the basic safety nets included with a 9-to-5 job, such as health insurance or access to a 401(k).

What are some possible careers in cryptocurrency?

There are a number of ways to make money with crypto jobs, including becoming a blockchain developer or web developer, mining cryptocurrency, and getting paid to write about crypto and the latest digital currency trends. You could also earn money with crypto jobs related to venture capital, research, or AI development.

Photo credit: iStock/izusek

Feb

2022

What Is a Fiat Wallet & How Does It Work?

By Brian Nibley | Growing Wealth, invest, Investing | Comments Off

A fiat wallet is a place to digitally store your fiat currencies. Many crypto exchanges offer fiat wallets to users because it makes it easier to buy and sell cryptocurrencies.

One of the main advantages of having a fiat wallet is that it removes the wait time for depositing fiat to an exchange. If a user wanted to get fiat currency like dollars, euros, yen into their exchange account and didn’t have a fiat wallet, it could take several business days for a bank deposit to go through.

This can be problematic for users who want to take advantage of steep corrections in the often-volatile crypto markets. If the price of a coin were to drop significantly overnight, and a user had to wait three days to have their fiat deposited, they might miss the chance to buy at a discount.

With currency held in a fiat wallet, however, the purchase can be made instantly.

How to Use a Fiat Wallet

Using a fiat wallet is not unlike using a bank account, although it functions more like a crypto wallet for a specific type of fiat currency. The only real use of a fiat wallet is to buy any number of different types of crypto or hold the proceeds of a crypto sale.

The mechanics of using a fiat wallet are even simpler than using a crypto wallet. While crypto wallets require making use of QR codes or long strings of random alphanumeric characters (known as addresses), fiat wallets only involve selecting a function and executing it.

Fiat wallets can be used to:

• Deposit fiat currency from a bank account

• Deposit fiat currency from the sale of crypto

• Purchase cryptocurrency with fiat currency

• Withdraw fiat currency to a bank account

Performing these actions often involves little more than clicking a few buttons, entering the correct number, and perhaps providing some form of two-factor authentication (2FA).

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How Do Fiat Wallets Work?

A fiat wallet works like a crypto wallet in that both hold a form of currency. But instead of corresponding to a token on a blockchain, the funds in a fiat wallet are just your standard fiat currency, like funds in a bank account.

A crypto exchange hosts a fiat wallet just like they host a cryptocurrency wallet. They do this to provide convenience to their users in the ways mentioned earlier.

Holding funds in a fiat wallet allows users to transact between fiat and crypto without having to go through their banks directly. It’s sort of like a stepping stone between the worlds of traditional finance and cryptocurrency.

Alternatives to Fiat Wallets

Fiat wallets aren’t necessary to interact with the crypto ecosystem or use an exchange. In fact, in the early days of crypto, fiat wallets didn’t even exist.

The two main ways to accomplish the same thing that fiat wallets can do would be to use either stablecoins or Bitcoin as a unit of account for other types of cryptocurrency.

In both cases, users can remain within the crypto ecosystem while exchanging funds for other cryptocurrencies. Most exchanges have a variety of trading pairs against BTC and popular stablecoins.

So, rather than cashing out to a fiat wallet, users could potentially cash out to BTC or a stablecoin like USDT or USDC. When they want to exchange for another cryptocurrency, there likely wouldn’t be a need to switch back into dollars beforehand.

The only caveat would be that to get back into the banking system, users would have to sell their BTC or stablecoin for dollars first. In this sense, there really is no exact alternative to fiat wallets, as they represent the only way to hold fiat inside an exchange.

The Takeaway

A fiat wallet is like an exchange wallet for fiat currency. The wallet allows users to hold fiat on an exchange and make use of it with ease. While you don’t need a fiat wallet to trade crypto, it can be helpful for quickly switching funds from fiat to crypto and back again.

FAQ

How can you get a fiat wallet?

Many exchanges provide a fiat wallet for free upon signing up. Users are automatically granted a wallet for their fiat currency of choice in addition to a wallet for each cryptocurrency they purchase or deposit on an exchange.

How are fiat wallets and crypto wallets different?

Crypto wallets are blockchain-based and contain the private and public keys to a user’s crypto. Fiat wallets are more like a personal checking account. They are simply one way to store, send, and receive fiat currency.

What do fiat wallets do?

Fiat wallets, like crypto wallets, allow users to store, send, and receive fiat currency. When hosted on an exchange, fiat wallets also allow users to purchase cryptocurrency, provided the exchange has trading pairs against both the fiat and the crypto in question.

Fiat wallets make it easy for users to exchange fiat currency for crypto and vice versa without having to interact directly with their bank.

Photo credit: iStock/tommaso79

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

²Terms and conditions apply. Earn a bonus (as described below) when you open a new SoFi Digital Assets LLC account and buy at least $50 worth of any cryptocurrency within 7 days. The offer only applies to new crypto accounts, is limited to one per person, and expires on December 31, 2023. Once conditions are met and the account is opened, you will receive your bonus within 7 days. SoFi reserves the right to change or terminate the offer at any time without notice.

First Trade Amount		Bonus Payout
Low	High	Bonus Payout
$50	$99.99	$10
$100	$499.99	$15
$500	$4,999.99	$50
$5,000+		$100

SOIN0122022

Feb

2022

Can Cryptocurrency Go Negative?

By Caroline Banton | Growing Wealth, invest, Investing | Comments Off

Cryptocurrency may be a virtual currency, but its value can never go negative. In short: The value of a cryptocurrency cannot be worth less than $0.

That said, the crypto market is volatile and it’s possible for investors themselves to lose considerable amounts of money, especially if they use higher-risk strategies such as short selling and margin trading, as these can potentially result in significant losses as well as gains.

So, can cryptocurrency go negative? Not in the technical sense, but an investor’s account could end up in the red if they don’t fully understand the risks of this fast-moving market. Keep reading to learn more.

Can Cryptocurrencies Go Negative? An Investigation

Cryptocurrency trading is one of the more volatile investment strategies, which is part of the attraction for high-risk traders. The largely unregulated crypto market can manifest huge profits for some, but cause severe losses for others.

As an example: In 2021 alone, bitcoin (BTC) saw a low of about $29,000 in July, and reached a record high of about $67,000 in November. By January of 2022, however, BTC had plunged to about $35,000 — off nearly 50% from the peak in November 2021. While that’s just one example of how volatile a single cryptocurrency can be, this type of fluctuation is common among most forms of crypto.

💡 Recommended: Bitcoin Price History from 2009 to 2022

Is it possible then that crypto can go negative? The short answer is no, though your investment account can.

The Short Answer

As mentioned earlier, no asset, virtual or not, can ever be worth less than zero. That includes property, security, or currency. So the lowest price crypto can ever reach is $0.

However, that doesn’t guarantee a bitcoin investor will not see losses from investing in cryptocurrency.

The Long Answer

The long answer is more complex. It is possible for an investor’s crypto account to fall into negative territory, especially if they open a short position or trade using a margin account — two strategies that involve leverage, i.e. debt.

Using leverage means an investor opens a margin account and borrows funds from their broker-dealer to buy securities in the hope that the price will go up (or down, in the case of short selling), and they will make a profit.

By using margin funds, loaned to them at a certain interest rate, investors can typically purchase greater amounts of a security than they could using only cash. Thus, if the security appreciates beyond the purchase price (and the amount of interest charged in the margin account), the investor could see a substantial gain, pay back what they owe, and pocket the rest.

Here’s the rub, though: If the price of the asset drops below the purchase price, the investor would be on the hook for all the money they lost plus the interest owed on the money they borrowed. (More on margin trading below.)

Can You Lose Cryptocurrency Investments?

Unfortunately yes, you can lose cryptocurrency — but not because a coin’s value can sink so low that it’s underwater. Rather, cryptocurrencies themselves are vulnerable to being hacked, and sometimes crypto literally gets lost, thanks to human error.

There are two factors to understand here: how the blockchain works, and how crypto wallets work.

What Happens When the Blockchain Is Hacked?

Blockchain technology, which emerged with the launch of Bitcoin in 2009, is a decentralized web of computers that essentially allows for the creation and trading of various types of crypto. Typically, each form of crypto (e.g. bitcoin, ether, dogecoin, ada, polka dot) exists on its own blockchain.

Because most cryptocurrencies are decentralized, they don’t require a third party like a bank or government agency to verify buying, selling, crypto payments, and other transactions. Also, most forms of cryptocurrency are not regulated by the government or a body like the Securities and Exchange Commission (SEC), although that may change.

In effect, it’s the people who own the crypto who monitor the platforms and each other.

That kind of self-policing works well, until it doesn’t — and there have been some well-known instances where a blockchain or crypto exchange was penetrated by hackers who stole millions of coins. In some cases, the hackers managed to fraudulently “mint” additional coins (sort of like digital counterfeit).

Unfortunately, individual traders can’t do much about these vulnerabilities, but crypto platforms continue to evolve new ways to keep investor’s crypto secure.

You Can Lose Crypto When You Lose Your Keys

Then there’s the unfortunate impact of human error.

When you buy crypto you become the sole owner of the cryptographic string of numbers and letters that comprise the private key that gives you, and only you, access to your cryptocurrency. You cannot buy, sell, or trade your crypto without the private keys.

Unfortunately, some people have simply lost the private keys to their own crypto — effectively losing all their coins. A study done in January 2021, for example, found that about 20% of the existing 18.5 million bitcoin has been lost or is inaccessible.

So, while the unregulated nature of crypto platforms and exchanges may allow for some independence and anonymity, the downside is that there are fewer legal guardrails to protect ordinary investors. The cash in your traditional checking or savings account is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, but that’s not always the case with crypto exchanges.

Some crypto exchanges may store your crypto offline to keep it secure. Others may offer FDIC protection for the cash in your custodial account, up to $250,000, but terms vary from exchange to exchange. Often it falls to investors to suss out how secure their crypto is — and decide how much risk they’re comfortable with. According to Cryptonews.com, exchanges lose $2.7 million every day on average.

Some exchanges are more secure than others. The better ones use valid HTTPS certificates; secure passwords with two-factor authentication (2FA); cold storage where crypto is secured offline rather than held in a hot wallet accessible on a computer or mobile device; and whitelisted IP and withdrawal addresses so that funds can only be withdrawn by approved addresses.

The best line of defense against hackers is to use a private crypto wallet and to back it up.

Can You Lose More Than You Put In?

We’ve established that the value of crypto can never fall below zero. But investors can lose money on crypto investments and see a negative balance depending on their investing strategy. How? By over-leveraging. Two situations where this can occur are short selling and buying on margin.

Margin and Leverage Risks and Possible Benefits

To margin trade crypto, a user will put down a certain percentage of the margin position they want to open, and borrow money from an exchange to cover the rest. (Depending on the crypto exchange, margin trading may or may not be allowed, and margin terms may vary.)

If the price of the security rises, the trader makes money. However, if the price drops, and the exchange requires a certain borrowing ratio or margin balance, the buyer will have to deposit more money. In some cases, the exchange may automatically sell the investor’s assets to cover the difference — this is known as a margin call.

The United States is cracking down on margin trading so that only qualified investors with plenty of capital can access these accounts. Investors also have the option of limiting their losses with crypto futures contracts. Futures contracts can protect short and long positions because speculators can also buy the opposite option contract.

Pros and Cons of Buying on Margin

Pros	Cons
Profitable opening positions compared to other asset vehicles	Higher risk of losses if prices drop
Profits are possible in a bear market if you sell short on margin	Losses could theoretically exceed committed assets
Investors have more buying power, which means they can purchase additional securities and diversify their portfolios.	Interest is charged on borrowed amounts

Short Selling Crypto: Risks and Possible Benefits

To short sell, investors borrow crypto at current market price, sell it, and then hope to buy it back at a lower price, making a profit. Of course, if the price of the asset being sold short continues to rise, the potential loss is unlimited. The higher the price goes, the more the investor will lose. As with any high-risk strategy, there are also benefits to shorting crypto.

Pros	Cons
Opening positions could be more profitable	High risk
Profits are possible in a bear market	Losses could theoretically exceed committed assets
Because positions are short term, there is limited risk	It requires a margin account, which comes with fees and interest charges
Short positions can reduce a portfolio’s volatility	Rapid price spikes, or short squeezes, can add risk
	Borrowing crypto could be difficult

Tips on Preventing Crypto Losses

The crypto market is volatile without a doubt. So, the wise crypto investor does what they can to reduce exposure and minimize losses. Three ways to do this are:

• Realize losses to offset gains. (Note that the wash sale rule does not apply to crypto, which makes this strategy easier.)

• Set up a trading strategy with entry and exit points and stick to it. Some investors use stop losses as a fundamental risk mitigator.

• Lastly, crypto futures trading allows traders to use leverage to hedge the market.

Losses and Taxes

Crypto gains are taxable, but the taxes that apply depend on whether the gains are treated as investment gains, income, or profit from the sale of a property.

But there are some rules that can help with losses. Losses and gains in the crypto market can be substantial. But there is an upside to the downside — as of early February 2022, the wash sale rule doesn’t apply to crypto (although there is a movement to change that, so be sure to check if you think wash sale terms may apply to you).

According to the SEC, a wash sale occurs when a trader sells or trades a security at a loss and buys a “substantially identical” stock or security, or acquires a contract or option to do so, within 30 days.

The loophole is that crypto is not technically considered a “security,” it’s considered property. Crypto investors can sell crypto for a loss, use that loss to reduce or eliminate capital gains tax on winning investments, and also buy back the crypto they sold and avoid missing out on a subsequent rebound in price.

Let’s say a bitcoin investor incurs a $20,000 loss in one year but then sells another crypto and realizes a $20,000 gain. The bitcoin loss would cancel the capital gain, and the investor could also buy up bitcoin at its low price. A stock investor who incurred a loss could not buy back stock they had sold in the same way because of the wash sale rule.

Stop Losses

Many traders use stop loss orders to reduce their exposure. A stop loss order allows the investor to automatically buy or sell once the price of an asset, like bitcoin, touches a specified price, i.e. the stop price. This limits losses or locks in profits on a long or short position.

For example, setting a stop-loss order for 15% below the buy price would limit losses to 15%. The advantage of stop-loss orders is that they can prevent investors from making decisions based on emotion. The best traders choose entry and exit points and stick to their plan.

Futures

Crypto futures trading is another way to limit losses in cryptocurrency trading. Similar to commodity futures trading, the trader does not need to own the crypto assets. Rather, the trader only takes risks on the price changes.

For example, let’s say a trader enters a bitcoin futures position at $50,000 each. They take a long position. When the futures contract expires, if the bitcoin futures price settles at $55,000 for each contract, the trader receives a profit of $5,000 from the exchange.

Crypto traders also use leverage in crypto futures trading, which is capital efficient. For example, one bitcoin might cost $50,000. A futures contract would allow a trader to open a position with only a fraction of that cost, perhaps $5,000 worth of bitcoin.

Alternatives to Crypto Investing

Crypto is probably the most volatile asset there is, and few alternatives have the same level of risk. Thus finding ways to diversify your holdings may help manage risk.

The obvious alternatives to crypto investing are stocks, bonds, and precious metals. ETFs and mutual funds may also offer some options for diversification. Fine art, jewelry, and other collectibles are an example of alternative investments for those with a talent for selecting those kinds of valuables.

TheTakeaway

While cryptocurrency can never go negative in the true sense, it is possible that traders can lose money, particularly if they use strategies like margin trading or futures contracts.

Wise investors can choose risk mitigation strategies like stop losses and hedging.

Lastly, bear in mind that cryptocurrency is largely an unregulated asset class, and the ways to make money using crypto are still evolving. Still, fake crypto schemes are rife. According to the Federal Trade Commission, from October 2020 to May 2021, some 7,000 people reported combined losses of more than $80 million total, with an average loss of $1,900. So, buyer beware applies here. Investors can protect themselves by signing up with a reputable trading platform and explore potentially profitable ways to invest in crypto.

Photo credit: iStock/Dilok Klaisataporn

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
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