InvestHL Archives | Page 60 of 67

Oct

2021

How to Use a Bitcoin ATM: How Bitcoin ATMs Work

How to Use a Bitcoin ATM in 7 Easy Steps

By Colin Dodds | Growing Wealth, invest, Investing | Comments Off

While most Bitcoin transactions take place online, sometimes cryptocurrency users have physical cash that they want to convert to Bitcoin. In that case, they’d want to use a Bitcoin ATM.

What is a Bitcoin ATM?

A bitcoin ATM is a standalone machine or kiosk that serves as a portal for customers to deposit cash and receive bitcoins. Some crypto ATMs offer only bitcoin, while others also allow users to take out other cryptocurrencies.

Around the United States and the world, bitcoin ATMs are popping up in gas stations, convenience stores and other locations. As of October 2020, there were more than 9,000 bitcoin ATMs, according to Coin ATM Radar. Some estimates list a total of 14,000 bitcoin ATMs in the world. The companies that operate these ATMs sometimes require that you use their particular cryptocurrency trading platform, or their proprietary wallet. For this reason, some bitcoin ATMs only work for customers who have an account with a particular platform.

Many bitcoin ATMs have strict minimums and maximums for each transaction. The Financial Crimes Enforcement Network (FinCEN) requires that all bitcoin ATM operators in the United States observe and follow the anti-money laundering provisions of the Bank Secrecy Act (BSA). As a result, users who make larger transactions on a bitcoin ATM may have to provide personal information. That information may include a mobile phone number to use for transaction verification. In addition, some users may have to scan a government-issued identification, such as a passport or driver’s license, to verify the identity of the person making the transaction.

A bitcoin ATM provides a fast and easy way to buy bitcoin with physical cash. Otherwise, users would need to deposit the cash into a traditional account and then transfer it into a crypto exchange in order to do the transaction.

Recommended: 12 Benefits of Owning Crypto in 2021

How Do Bitcoin ATMs Work?

Despite the name, a bitcoin ATM doesn’t work like a bank’s automated teller machine (ATM). Those traditional ATMs typically allow customers to withdraw cash, deposit cash and checks, or to transfer the money between accounts in the same bank.

Like a traditional ATM, a bitcoin ATM is connected to the internet. But bitcoin ATMs, by contrast, receive hard fiat currency, such as dollars, from the user, and give them bitcoin or other types of cryptocurrencies in return.

It delivers that cryptocurrency to the user’s crypto wallet, which the user identifies by scanning a unique quick response (QR) code into the machine. Most ATMs offer a real-time exchange rate, but they also charge users a fee for the convenience of the bitcoin transaction.

The dollar-to-bitcoin rate changes from minute to minute. And the rate offered by a machine may carry a larger financial impact on the transaction than the fees themselves. So, investors who plan to use a bitcoin ATM on a regular basis to turn cash into crypto may want to take a close look at the exchange rates offered by different bitcoin ATM providers, in addition to their fees, as they may be significantly higher than what you’d see in a crypto exchange.

While most machines do not dispense cash in exchange for the bitcoin a user owns, some newer machines have begun to offer this capability. A user can confirm that their cash purchased bitcoin or another form of crypto by checking their crypto wallet. But the transaction may take several minutes to show up.

For users who want to buy bitcoin from a bitcoin ATM but don’t have a crypto wallet, some bitcoin ATMs will generate a new wallet for them.

How to Use a Bitcoin ATM

Using a bitcoin ATM requires several steps:

1. Get a crypto wallet.

Before using a bitcoin ATM, you’ll need a wallet in which to deposit the bitcoin that you purchase. Those assets live on the blockchain, but the crypto wallet tracks your balance and lets you access your cryptocurrency with an alphanumeric key. Those wallets can be web-based or can be hardware devices.

2. Prepare the wallet.

Make a note of the alphanumeric code for your wallet, or download a QR code to allow for quicker access.

3. Find a bitcoin ATM.

There are many guides, such as this one , to help you find a nearby bitcoin ATM machine. Many work like maps, in which you simply type in your ZIP code to receive a list of addresses where you can find a bitcoin ATMs and the company that operates the bitcoin ATM. They also list the company that operates the bitcoin ATM.

4. Set up an account.

To use a bitcoin ATM, set up an account with the ATM operator. This process will require you to enter some personal information.

5. Enter your wallet information.

At the ATM you will follow a prompt to indicate your wallet – via QR code or alphanumeric key.

6. Insert cash.

When you physically deposit cash, the bitcoin ATM operator transfers that into bitcoin or the other forms of crypto you requested. If you insert $200, for example, you’ll receive $200 of bitcoin at its current market price, minus the ATM provider’s operating fee. Some ATMs also charge a miner’s fee, which they deduct from the deposit amount.

7. Confirm the purchase.

This is your last chance to review and confirm your purchase and what fees you’re paying, before making the transaction.

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Bitcoin ATM Fees

When users buy bitcoin or other forms of crypto at a bitcoin ATM, they have to pay a fee. While you may be familiar with the single-digit percent-of-withdrawal fees charged by traditional ATMs, the fees are much higher for bitcoin ATMs.

Like the fees charged by cash ATMs, the fees charged by a bitcoin ATM are not a flat dollar amount, but a percentage of the transaction. According to Coin ATM Radar, the average fee for buying crypto at a bitcoin ATM is 8.4%. Some research shows that there are bitcoin ATMs that charge fees of more than 25%, while others commonly charge between 10-15%, so it can pay to shop around.

The Future of Bitcoin ATMs

Most bitcoin ATMs only allow users to deposit cash, often at very high fees. But there has been a movement among some operators to make them more like traditional ATMs and allow for cash withdrawals. Some bitcoin ATMs have the capability for both types of transactions.

The process for converting crypto into cash and withdrawing the cash will work like the current deposit process, but in reverse.

Given the high fees available to bitcoin ATM operators, it’s likely that these machines will continue popping up with greater frequency, offering more features, and hopefully competing more aggressively on the prices they charge for their services.

The Takeaway

Bitcoin ATMs are increasingly common. They offer convenience to some crypto investors, but often they also charge extremely high fees and require the user to have a crypto wallet.

Photo credit: iStock/farakos

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.

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

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Oct

2021

What is SushiSwap (SUSHI)? How to Buy SUSHI

Guide to Investing in Sushi Swap (SUSHI)

By Matthew Zeitlin | Growing Wealth, invest, Investing | Comments Off

Behind every new cryptocurrency these days, there’s typically an old one. One classic example is when Bitcoin Cash split off from Bitcoin. In the volatile and dynamic world of DeFi (decentralized finance), consider SushiSwap forking from Uniswap, one of the biggest and most valuable decentralized cryptocurrency exchanges.

SushiSwap is one of the fastest growing types of cryptocurrency. Here, we’ll explore what it is, how it works, and whether it’s a good crypto investment.

What is SushiSwap (SUSHI) Cryptocurrency?

SushiSwap, a decentralized cryptocurrency exchange, is run on smart contracts. Individuals can trade cryptocurrency with each other using the Ethereum blockchain. The Sushi coin is a token that allows its holders to make decisions about how SushiSwap is run.

This is different from how more mainstream, centralized cryptocurrency exchanges operate. How those cryptocurrency exchanges work is not that different from a traditional brokerage: you set up an account, load it up with money, and buy an asset — with the exchange taking either a fee or the “spread” between how much the asset is selling for and how much people are willing to pay for it (or sometimes both).

Decentralized exchanges like SushiSwap try to live up to cryptocurrency’s anarchic ethos by building a framework for people to exchange cryptocurrency with each other. One way this happens is by “liquidity mining”, where users contribute cryptocurrency they own to “pools” (pairs of crypto that can be traded on the exchange) in return for fees from the platform or, in this case, Sushi. Conceptually, this is similar to Bitcoin mining, but it typically happens on Ethereum-based blockchains and in some ways is also analogous to how banking works.

Recommended: What is a Decentralized Exchange (DEX)?

SushiSwap incentivizes users to provide liquidity for certain token pairs so that they’re available to traders on the platforms by adjusting how much they get paid out in fees. The pairs are usually Ether and another token.

Governance is another defining feature of Sushi crypto. The Sushi token enables its holders to vote on platform policy and technological choices.

How Does the SUSHI Token Work?

The Sushi token works as an incentive for staking SushiSwap with cryptocurrency pairs that can then be exchanged by its users. By staking your crypto, you get paid out in Sushi as well as fees from the exchange itself. You can also buy and sell Sushi itself.

SUSHI Price

Despite only being around for less than two years, Sushi has taken a wild ride in terms of price. As of September 30, 2021, it was the 76th most valuable token on CoinMarketCap and was trading at nearly $11. It had been priced as low as 49 cents late 2020 and as high as $23 in March of this year. The token has a market cap of $1.4 billion.

Because SushiSwap underlies a whole ecosystem of tokens, there are other relevant statistics besides the price of the Sushi token. One should also look at the whole sushi exchange universe, including SushiSwap. There’s about $4.3 billion of “total value locked” on SushiSwap, representing the value of assets staked on the platform.

History of SushiSwap

SushiSwap grew out of the most prominent DeFi exchange, Uniswap, in 2020. The Uniswap developer, “Chef Nomi,” explicitly designed SushiSwap to reward Uniswap users who migrated to the fork.

But controversy soon followed. Nomi admitted to and apologized for extracting $14 million worth of Ether from the platform before returning it to the crypto wallet used for the platform. This led to a major crash in the price of the Sushi token that it didn’t recover from until earlier this year.

Since then, the governance of SushiSwap has been overhauled and it has more than made back the losses it earned from its early developer errors.

What Can You Use SUSHI For?

The primary use for Sushi is on SushiSwap, as a reward for staking crypto to make its decentralized exchange function. Additionally, owning Sushi allows holders the right to vote on decisions regarding how the exchange functions.

As with any cryptocurrency or token, when people decide to invest in SUSHI it’s because they hope it will go up in value. Of course, given how volatile cryptocurrencies are, it’s impossible to predict the price of SUSHI or any other coin. This is part of the basics of investing in crypto. Before buying, selling, or trading crypto, investors should become familiar with crypto rules and regulations. For example, Sushi can’t be bought in every U.S. State.

Is SUSHI Crypto a Good Investment?

Interest in DeFi platforms and associated tokens is growing. There are two main reasons for this:

1. People want to trade tokens with each other in a way that doesn’t involve direct use of centralized exchanges and fiat currency.

2. They see the associated tokens as good investments.

On the other hand, this increased interest means there is fierce competition between platforms for staking, liquidity, and token investment. SushiSwap is perhaps the best example of the risks of investing in a given DeFi platform — it was itself a clone that explicitly tried to suck away liquidity from an earlier platform and was rocked by an early scandal with one of its lead developers.

In the wild west of DeFi, software products can spring up very quickly. And because the field is so new, there’s little brand or institutional loyalty among customers, users, and other stakeholders.

How and Where to Buy SUSHI Cryptocurrency

There are two ways to acquire Sushi.

The first is through an exchange that lets you buy cryptocurrencies with U.S. dollars or other fiat currencies. You fill an account with dollars and buy the corresponding crypto. Some exchanges that allow you to buy Sushi are Kraken and Coinbase. Some exchanges also let you trade mainstream, establish cryptocurrencies like Bitcoin for coins like Sushi.

Second, there’s the more native way to earn Sushi. You can connect your existing crypto wallet to
SushiSwap to provide liquidity to the exchange and receive Sushi as a reward.

The Takeaway

SushiSwap is a decentralized cryptocurrency exchange run on the Ethereum blockchain. It encourages staking by incentivizing users with Sushi tokens. And in turn, Sushi tokens offer governance to holders, so they can vote on platform policy and technology.

Before investing in any cryptocurrency, it can be helpful to read a cryptocurrency guide. The world of crypto is dynamic and can sometimes be counter-intuitive. Doing your own research is always worthwhile.

Photo credit: iStock/Михаил Руденко

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOIN0521216

Oct

2021

What Is a dApp? A Guide to Decentralized Applications

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

The invention of cryptocurrency, blockchain, and smart contracts has opened up a new world of technological possibilities.

Bitcoin, the first cryptocurrency, provided a way for people to transfer value independently of any third-party payment processor thanks to blockchain technology. This same concept has also been applied to more complex transactions, like those involving software applications.

Software applications that run independently of a central authority are known as dApps, or decentralized apps.

What is a dApp?

An application that has no central authority governing it, isn’t hosted on one centralized server, and runs on a distributed, decentralized peer-to-peer network is known as a decentralized application (dApp).

A dApp is, for the most part, similar to any other software application — for instance, it could function on a desktop or mobile device, and will have a graphical user interface (GUI) just like any other app.

What makes dApps different is how they function behind the scenes, with the app being powered by transactions taking place on a decentralized network. Most or all of the backend programming happens on a decentralized network like Ethereum.

How dApps Work with Ethereum

Most dApps run atop Ethereum. Other protocols exist that perform similar functions, such as Tron or EOS, but Ethereum is the dominant market player in this space.

The Ethereum protocol gives users the ability to deploy and run smart contracts. A smart contract is a virtual agreement contained in code that can run specific operations and interact with other smart contracts.

The use of smart contracts eliminates the need for a third party to handle transactions and contract execution between two parties. Replacing the middle man with a program can speed up processes, reduce the potential for fraudulent transactions, and reduce costs.

Where do smart contracts exist? On thousands of servers called “nodes” distributed around the world. The nodes continually work to make sure they all agree on the current state of the network and which transactions are valid.

What Makes dApps Different?

There are a few key characteristics that differentiate dApps from other programs:

• dApps run on a blockchain

• Their code is open-source and operates independently of any person or group

• Many dApps generate tokens in an effort to bring value to their nodes

• Users often must contribute tokens to gain access

• Miners receive new tokens as a reward for contributing to the ecosystem

Not all dApps have a native token. The Crypto Kitties game, for example, was one of the first and most popular dApps of its time, beginning in 2018. Playing the game required ETH gas fees and the value exchanged between players were pictures of digital cats.

Any dApp running atop Ethereum will require gas fees, paid in ETH (the native token of the Ethereum network), to facilitate smart contract transactions. The same holds true of other smart contract protocols. Some dApp protocols may have their own native tokens as well.

Recommended: What is a Crypto Token? Tokens vs Coins

What Can dApps Be Used For?

DApps can be used for just about anything that requires two or more parties to agree on something. When the appropriate conditions are met, the contract will execute automatically.

4 Different Types of dApps

1. Money management applications

These allow users to make peer-to-peer transactions on a blockchain network. Dapps of this kind often have their own independent blockchains, and are commonly called cryptocurrencies.

One of the most popular use cases for decentralized applications in recent years has been decentralized finance (DeFi). Decentralized exchanges (DEXs), for example, allow for peer-to-peer trading of digital assets without the need for a single entity maintaining order books, user accounts, and security. Financial services like borrowing and lending can also take place thanks to dApps. This can provide access to loans for people with poor credit (as no credit check is required) and give investors a chance to earn yield on their idle investments.

Recommended: A Guide to Decentralized Finance (DeFi)

2. Applications that align real-world events with digital assets.

An example could be oracles that feed real-time price data to decentralized exchanges or other interested parties. Or a logistics company could use a location-tracking chip to verify that a cargo shipment has reached its destination, at which time payment for the shipment could be released. Such a transaction could be accomplished with crypto, with no action taken on part of the humans involved aside from both the buyer and seller entering into a smart contract agreement beforehand.

Such agreements wouldn’t require notarization by a formal authority, as there would be no way for participants to avoid their contractual obligations (assuming the smart contract code was written correctly).

3. Decentralized Autonomous Organizations (DAOs).

These are decentralized blockchain-based organizations with no leader. Such organizations run according to rules defined by code from day one. These programmatic rules can define who can be a member, how voting works, what activities members can engage in, and how funds or value can be exchanged. After deployment, a DAO operates autonomously.

Recommended: What Is a DAO and How Do They Work?

4. Oracles.

These are an interesting kind of dApp that can be used to compliment other dApps. Oracles like Chainlink are protocols that provide real-time data about something happening in the real world. Synthetic assets, for example, allow people in the DeFi world to trade crypto tokens that are designed to have the same price as a real, physical asset like gold or oil. Oracles provide the price data that allows this kind of trading to happen.

The Takeaway

A decentralized application, or dApp, is a software app that can run atop a blockchain protocol independently and autonomously, without the need for constant human intervention.

DApps have many potential use cases, some of which are still being developed. Decentralized finance (DeFi) and non-fungible tokens (NFTs) are a few of the latest examples, but they likely won’t be the last.

Photo credit: iStock/Poike

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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.

SOIN0921406

Oct

2021

How to Buy Dogecoin (DOGE)

By Samuel Becker | Growing Wealth, invest, Investing | Comments Off

Dogecoin may have started as a joke cryptocurrency, but it’s evolved into a very real digital asset. Like all cryptocurrencies, there are multiple ways that traders or investors can purchase DOGE.

There are two basic ways to buy DOGE: Through a cryptocurrency exchange, or through an online stock trading platform or application.

How to Buy Dogecoin in 4 Steps

Buying Dogecoin is a fairly simple process — it’s more or less the same process you would follow if you were trying to purchase Bitcoin or any other altcoins.

While this may seem complicated for crypto beginners, it’s a fairly straightforward process, whether you’re buying crypto to keep for the long-term or to spend right now.

Here’s a detailed walkthrough of each step:

1. Choose Where You Want to Buy Dogecoin

If you understand the basics of Dogecoin and are interested in buying DOGE, you’ll need to decide whether you’d like to use either a cryptocurrency exchange or an online trading platform. No matter which route you go, you’ll need to establish an account with the platform or exchange (if you don’t have one). That may require banking information (account numbers, etc.), addresses, phone numbers, email addresses, and in some cases, your Social Security number.

Crypto Exchanges

Crypto exchanges are platforms that allow interested parties to buy, sell, or trade different cryptocurrencies. They’re not all the same — some cryptos are available on some platforms, but not on others, for instance — and they tend to work like stock markets.

That is, traders and investors are exchanging cryptos, much like they would with stocks or bonds on the stock market. There are different types of exchanges, too, including centralized, decentralized, and hybrid exchanges.

A quick Google search will reveal plenty of them, if you’re interested in going this route.

Exchanges tend to have a large variety of crypto choices, are generally simple to use, and make it pretty easy to trade. However, some of them may have high fees for trading, and may not grant users complete control over their storage options. While nearly all exchanges will let you buy or sell crypto, some may support more advanced orders such as limit orders or margin trading.

Online Stock Trading Platforms

Aside from crypto exchanges, which can be used to buy Dogecoin, there are also stock trading apps — of which there are also many choices. And, again, a simple Google search will yield plenty of results, if you want to find a few options to start trading.

These trading apps generally work similarly to exchanges for end users. Essentially, it’s a matter of opening and funding an account, and executing the trade. But the apps and platforms in question are generally known for trading stocks, bonds, and ETFs rather than cryptocurrencies, as opposed to crypto exchanges.

They act as brokerages, in other words, and may charge a markup or fee for executing a trade.

That said, many of these apps have opened themselves up to crypto trading as demand has grown. And, for the most part, trading crypto on these platforms is a similar (if not the same) process as trading stocks.

As for the pros and cons of using these apps, it’ll depend on the specific platform. Some may require minimum deposits to open an account, for example. Others will charge fees of varying degrees (or none at all), and some will be less user-friendly than others. On some brokerage platforms, you can’t withdraw your crypto directly from the account, instead, you’d need to sell your assets to be able to withdraw the balance to other accounts.

It’ll take a little research and experimentation to find one that you like, if you choose to use one of these apps to buy Dogecoin or other cryptos.

2. Setup a Payment Method

Once you’ve decided where you want to buy Dogecoin, it’s time to get down to brass tacks: Laying the lines to execute a transaction. That means setting up a method to pay for your new Dogecoin holdings.

Depending on whether you choose an exchange or a trading app, the specifics of this step will vary. But in general terms, it’s connecting a way to make a payment to the exchange or brokerage — usually by connecting a credit or debit card, or a bank account — to your account, so that you can make purchases or trades.

3. Purchase Dogecoin

At this point, it’s simply a matter of executing the transaction to buy Dogecoin. This process will vary depending on the exchange or app you’re using. But it’s usually as simple as inputting the amount of Dogecoin you want to buy, and hitting the “purchase” button to initiate the purchase.

4. Safely Store Your Dogecoin

Securely storing your cryptocurrencies isn’t quite as simple as holding a stock or ETF. Both exchanges and crypto wallets have become targets for hackers, so it’s important to make security a priority after you’ve purchased crypto.

Depending on whether you’ve used an exchange or an online trading platform to buy Dogecoin, your storage options vary. Crypto storage is a deep topic all on its own, but what you need to know is that specific exchanges and platforms may store your coins differently.

Platforms may store your Dogecoin in either “hot” or “cold” wallets. The essential difference is that “cold” storage is offline — making it more difficult for hackers, or other bad actors, to access. Conversely, coins held in “hot” storage remain online, and can be accessed quickly to facilitate trades.

Some platforms use a combination of hot and cold storage. Again, it depends on the specific platform you choose.

You can also transfer your Dogecoin to your own digital wallet, of which there are many to choose from with varying degrees of security and features. You can also choose from DOGE-specific wallets or those that allow you to store multiple types of cryptocurrency.

The Takeaway

The process of purchasing DOGE is similar to that of buying other cryptocurrencies. Once you’ve decided whether you want to go through a crypto exchange or a brokerage platform, you simply need to create an account and execute the purchase. Keep in mind that like all cryptocurrencies, DOGE is a risky investment with extreme price volatility.

Photo credit: iStock/StockRocket

Oct

2021

What is Proof of Work? Definition & Guide

By Laurel Tincher | Growing Wealth, invest, Investing | Comments Off

Cryptocurrencies are known for their high level of security — and in many cases, that security is made possible by a proof-of-work (PoW) algorithm. The proof-of-work consensus algorithm is currently used by Bitcoin, Ethereum, Dogecoin, Litecoin, and many other cryptos (although the Ethereum network is transitioning to a different algorithm known as proof-of-stake).

Proof of work largely serves to prevent double spending, which is when the same coins are spent more than once. Digital currencies are prone to double spending since they don’t have any material exchange — it can seem easy and tempting to forge transactions that are just numbers on a screen.

Proof of work and the blockchain keep track of every transaction to prevent this from happening. The algorithm is extremely secure and complicated, making it nearly impossible to double-spend Bitcoin and other PoW cryptocurrencies.

The concept of proof of work was originally developed to prevent denial of service attacks (DDoS) and spam emails, but in 2004 Hal Finney adapted it for use in blockchain digital currency networks. Bitcoin was the first cryptocurrency to put the idea to use.

How Proof of Work (PoW) Works

Proof of work is basically what it sounds like: proof that work has been done. The “work” is the conversion of electrical energy into “weight” on the Bitcoin blockchain through the use of computing power and a complicated mathematical calculation. Overall, this work makes forging transactions on the blockchain prohibitively expensive and difficult.

The mathematical calculation involves a hash function, which in turn generates a long string of unique numbers. This helps validate transactions and create the next block on the blockchain. Each block contains information about a specific Bitcoin transaction. As the transactions are validated and recorded on the chain, this ensures that double spending hasn’t occurred. Once information has been stored on the blockchain, it cannot be changed or deleted. This helps to keep the private keys of Bitcoin owners secure and anonymous.

Miners’ Role in Proof of Work

Bitcoin miners (nodes) run specialized machinery that works to solve the equation as quickly as possible, and they are rewarded with new bitcoins depending on how much computing power, or hash power, they contribute to keeping the network running.

The objective of PoW is to extend the blockchain. The miner that creates the longest chain gets the reward as well as the transaction fees contained in the block. The best way to solve the calculation is through trial and error, so the more computing power a miner can put into doing as many trials as possible as quickly as possible, the more likely they are to win the block reward.

Why Proof of Work is Needed

Proof of work ensures that double spending doesn’t occur in digital asset networks. It provides security and a record of transactions as well as an incentive for miners to keep the network running.

Proof of work is also needed because Bitcoin has no central authority (vs. a bank, for example). A central authority would keep track of transactions as well as issue new bitcoins to the network. Instead of this, the network of miners keeps track of the blockchain.

Proof of work also adds value to Bitcoin because it shows that people are willing to convert energy, a material resource, as well as fiat currency, into the production of the cryptocurrency. This provides more confidence for those who are interested in investing in Bitcoin.

Pros and Cons of Proof of Work

There are several reasons why PoW is used for Bitcoin and other popular cryptocurrencies, but there are arguments against it as well.

Pros of Proof of Work

• PoW helps keep the network secure

• It prevents double spending

• It adds value to the network through the use of energy

• It is an integral part of the decentralized authority system of the network

Cons of Proof of Work

• It requires computational power, which uses a significant amount of electricity

• PoW has low performance capacity for the execution of on-chain transactions

• Getting involved in mining requires a large upfront equipment cost and ongoing maintenance and electricity costs

• There is a risk that miners may group together to attack the network, undermining its decentralized nature

Which Cryptocurrencies Use Proof of Work?

Proof-of-work is the most commonly used algorithm for cryptocurrency networks. However, some cryptocurrencies use other algorithms, such as proof of stake. The following cryptocurrencies use proof of work:

• Bitcoin (BTC)

• Ethereum (ETH) (for now until it moves to proof-of-stake)

• Bitcoin Cash (BCH)

• Litecoin (LTC)

• Monero (XMR)

• Dogecoin (DOGE)

• Ethereum Classic (ETC)

• Bitcoin SV

• Decred

Proof of Work vs. Proof of Stake

Since PoW has some downsides, developers have been working on many other types of consensus algorithms for cryptocurrency networks. One of the most anticipated is proof of stake (PoS).

Rather than miners, PoS uses validators who are chosen to create blocks based on how many coins they hold, rather than having to compete to create the blocks. Proof of stake rewards validators that hold the most coins with the ability to mine blocks and validate transactions.

The benefit of PoS is that it uses a lot less electricity. However, PoS rewards nodes for holding tokens, resulting in hoarding rather than use of the crypto. PoS is also vulnerable to 51% attacks, where an individual crypto miner or group of miners gets control of more than 50% of a network’s blockchain.

The Takeaway

Proof of work is the original way to secure blockchains and protect cryptocurrency from being double-spent and potentially devalued. Bitcoin uses the PoW consensus algorithm, as do a number of other cryptocurrencies.

Photo credit: iStock/MesquitaFMS

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