It’s not a week without us hearing about a bitcoin exchange or users who have been hacked. So is it possible to keep bitcoins and cryptocurrencies safe? Well yes and it’s not that complicated thanks to the Ledger Nano S.

If you want to become a crypto-investor, it is essential to know how to keep your cryptocurrency.

But before anything else remember that what you need to keep are your private keys. If we compare the use of cryptocurrencies like bitcoin to a credit card, the public key is your credit card number and your private key, your secret code.

The purpose of a crypto wallet is to keep these private keys so that you can spend your cryptos. The whole question is how to keep them safe.

Leaving your cryptos on an exchange or in an online wallet (“hot wallet”) is to entrust the code of your credit card to a provider that you do not know. Maybe you start to understand the risks that you take by leaving your cryptos on the internet.

Ledger Nano S in few words

This is where the Ledger Nano S comes in. This is one of the first crypto portfolios to keep private keys out of the internet. The idea is of course to limit the risks as much as possible.

From this point of view, the Ledger Nano S is surely one of the safest ways to keep your cryptos at the moment.

It must be seen as a safe rather than a wallet. Indeed, the goal of a portfolio like the Ledger Nano S is not to be practical, but to keep your cryptos safe. So, if you want to pay for your coffee in bitcoin, it is better that you download a wallet on your mobile that will be less safe but much easier to use on a daily basis.

The best is to have both and keep most of your crypto in the ledger wallet, much like a checking account and a savings account.

What are the Cryptos covered?

The list is now extremely long and almost all cryptos are covered:https://www.ledger.com/pages/supported-crypto-assets

I still remember the first Ledger Wallet that only covered bitcoin. Now it is possible to keep almost all cryptos. As we will see the memory of the Ledger Nano S is however not illimited, which is sometimes a little frustrating.

The Ledger Nano S is also used to store ERC20 tokens, i.e. tokens that are compatible with the Ethereum protocol. A lot of ICO (“Initial Coin Offering”) use this standard today, so it is very popular to be able to keep the chips purchased at an ICO directly in your Ledger Nano S.

What does your box contain?

You will receive a sealed box. The idea is of course to protect the content and ensure its authenticity. This type of protection, however, has many limitations since the seals could have been peeled off and glued. For maximum security, we advise you to buy Ledger Nano only from the official Ledger store. You can access it by following ce lien.

You will find a small folder with instructions “Getting Started” and a form in which you will be able to note what we call the “seeds of recovery”. These are 24 words that will allow you to access your cryptocurrency if you lose your Ledger Nano. It is therefore essential to keep them in a safe and inaccessible place.

Straps and rings also carry your Ledger Nano around your neck or keychain. The USB cable will allow you to connect your Ledger Nano S to a computer. For connection with an Android smartphone, an OTG adapter is required that you can purchase from the ledger store.

Configuring your Ledger Nano S

It goes without saying that you should never buy an already configured e-wallet. Generally, we do not recommend buying a second hand Nano Ledger S.

Step 1 – Connect to Ledger Live :

The first step is on your computer. You must first connect toLedger Live. If you have not downloaded it, start by doing it. Make sure you have downloaded the latest version of Ledger Live.

Once you have downloaded it, you will have to choose between several options:

• Initialize a new device
• Restore a Ledger device
• Use a device that has already been configured
• You do not have a Ledger yet

Step 2 – Choosing the type of configuration

For the next steps, we will now switch to the Ledger Nano S. Once connected to your computer, the software opens automatically and you can start via the “Start” button. Just read the instructions on the screen of your device and press the two buttons on the top to start:

We will assume that you have purchased a new device. So you just have to choose the first option “Configure as new device” by clicking on the right button.

Step 3 – Choosing a PIN

You are now asked to choose a PIN that will allow you to secure access to your Ledger Nano S. Note that versions after version 1.3 require a PIN code between 4 and 8 digits. Press the right or left buttons to select the numbers and both buttons at the same time to confirm. Once you have chosen all your numbers, section the icon (✓) and press both buttons at the same time to validate your PIN.

Step 4 – Transcription of passwords

The 24 passwords will now appear and you will be able to note them one after another on the notebook provided in the box. It is essential to note these words without fail and in the order in which they are transmitted to you, otherwise they will be unusable to find your crypto-assets in case of needs.

Once you have written down all your words, the Ledger Nano S will ask you to confirm one. You just have to choose it by navigating with the right or left buttons and validate it by pressing the two buttons.

Once again, it is essential that you are the only one to know these 24 words, since they can give access to your crypto-currencies without your Ledger Nano S.

Once these steps are over, you should see on your computer screen: “Your Device is Now Ready”. Which means, as you probably know, that your wallet is ready for use. It will now be necessary to install the corresponding applications cryptos that you want to add.

Installing applications

You will now be able to install cryptographic applications that you want to use. For that you will click on the “Manager” tab of your Ledger Live.

You will arrive on a page containing all the cryptos supported by your Ledger Nano S. As you can see they are numerous. Simply click on “Install” in front of the crypto that interests you and your Ledger Nano S will be ready to welcome this crypto.

We have to admit that Ledger Live makes it much easier to use your device. It’s a long way from downloading all apps on your computer from Google Chrome and navigating from one to the other.

Add an account

Once you have installed the application, you can add an account by clicking on the “plus” next to “Account”.

If you choose a bitcoin account for example, you must choose the bitcoins and name your account.

You must then connect to your Ledger Nano S by dialing your code and then select the Bitcoin icon by clicking both buttons simultaneously.

Limits of the Legder Nano S

For a long time, only about five applications could be installed simultaneously on the Ledger Nano S due to the small amount of disk space. This space depends on the installed applications and their order.

Since March 2018 with the latest version, it is possible to install many other applications. Many cryptos rely on the Bitcoin protocol, so Ledger has taken over this common code base in the Bitcoin application, which has significantly reduced the size of other applications.

Following this principle, it is possible to install up to 18 applications and therefore 18 different cryptos. However, if the applications are installed with a completely different code base (Bitcoin, Ethereum, Ripple, for example), you will not be able to add more than 4 or 5 applications.

In summary, depending on the type of applications installed, a very different result can be obtained. You will normally be able to install up to 10 applications. Note that you can still manage your applications by not installing them all at the same time.

For example, if you do not use your Ledger Nano S often to keep your Ether, the application can be temporarily uninstalled. Alternatively, you can buy a second Ledger Nano, or switch to Ledger Nano Blue which contains twice as many memories. If you start with cryptos, the Ledger Nano S will be more than enough.

To go further

Binance review: all you need to know [2019]

Buy bitcoin without verification: it’s still possible !!

By now most recognize the term “blockchain” and associate it with bitcoin, or with cryptocurrency transfers in general. But with so many other uses for the technology having emerged in the last couple of years, it’s worthwhile to step back on occasion and look at how it is impacting (or may impact) society more broadly. The following are just a few industries and practices that are ready to start making effective use of blockchain – and in some cases may have already started doing so.

1. Real Estate

This may be one of the more fascinating areas to discuss, because it’s one that very few people saw coming, but which has already begun to make use of blockchain. Proponents of integrating blockchain into real estate argue that it will grant people looking to invest in property the ability to liquefy and sell just like one would through a stock exchange. This could in theory allow people to sell fractions of property, rather than having to find a single buyer in order to move on with a transaction. Meanwhile, the blockchain can also be used to help people create what are called “smart contracts,” which can be of use in more conventional buy-and-sell situations. A smart contract in this context essentially guarantees through a blockchain application that funds will be transferred exactly as has been agreed upon, and in exchange for the deed to a property. 

2. Voting

Election security has become a major issue in recent elections around the world, prompting discussions about how to circumvent potential problems. Some have suggested doing away with electronics altogether and reverting to paper voting ballots. But this seems unlikely, and if we look forward instead of backward, the blockchain may offer the best solutions. Keep in mind, if you’re not particularly familiar with this technology, that blockchain can transfer data as readily as wealth. And given that it’s designed to be incorruptible and wholly transparent, it may just prove to represent the tamper-proof, secure election system we’ve been waiting for. 

3. Online Gaming

The world of online gaming is one that has always stayed current with regard to digital innovations. Some related sites have in fact already experimented with cryptocurrency, which opens the door to further blockchain integration. Where conventional gaming is concerned this may result in faster downloads and more efficient microtransactions. There’s also casino gaming to consider though, which is where the greatest blockchain potential may be. For one thing, a universal wealth transfer system like this may make people more comfortable and secure dealing with international platforms, which is significant given that online casinos in New Zealand and other far-flung locations are some of the biggest worldwide providers. The instantaneous withdrawal and deposits that blockchain could offer in this space would be valued by many as well. 

4. Crowdfunding

The internet has made it incredibly easy to send and receive money digitally, not only with friends but with strangers as well. This is exhibited in particular by the rise in crowdfunding platforms, which has been ongoing for several years now. As good as these platforms have gotten though, blockchain looks particularly promising in this space because of its ability to reduce fees associated with the actual collection of money raised. Blockchains are decentralized by nature, and thus not connected to any one processing or crowdfunding company that would be looking to collect fees to generate a profit.

5. Health Care

It may take a while to see sweeping adoption in health care, but ultimately this is an industry that may make significant everyday use of blockchain functions. To be sure, the technology could be used to streamline various processes relating to insurance and payments. However, the more constant use might ultimately be in handling patient data and records. This is by nature sensitive and confidential information, and yet it also needs to be transferred, fairly frequently, from one doctor or facility to another. Storing patient information in the blockchain would in theory make this process instantaneous while protecting the integrity of the data, ultimately allowing for more efficiency in numerous hospital functions. 

The Platform

Are you interested in buying or selling any cryptocurrency? There are a few cypto exchange platforms that you can consider. You could now be facing the problem of many choices. Binance is one of the many crypto exchange platforms that we have today. It is the most popular crypto exchange platform in the world today. It is the leading crypto exchange platform in terms of trading volume. In this Binance review, you will know why you should choose Binance as the platform for exchanging cryptocurrency.  

Binance was founded by Changpeng Zhao in 2017 and rose to prominence due to its ability to support a wide variety of cryptocurrencies. It is one of the most reliable and fastest crypto trading platforms that we have today. Binance became worth more than $1 million in less than a year, which made it one of the first few companies in the cryptocurrency industry to achieve the “unicorn” status. The platform offers very competitive rates. In this article, I will give you a deep and thorough Binance review to make it easy for you to trade cryptocurrency on the platform.

Inscription on Binance?

This is the first step before you can begin to use the platform, hence we had to discuss it in this Binance review. Follow the steps given below to join Binance for free:

Opening the home page of the Binance website. Here is the URL:

Click the Register button located on the top right of the home page.

• You will be taken to the registration page in which you will be required to enter your personal details including your email address and password.

Enter the details and click the checkbox to agree with the terms of use. Click the Create account button.

• Verify your email address by clicking the Go to email and verify button.

• Open the email that has been sent to you by Binance and click the Confirm registration button.

• A new tab will be opened. You will be notified that verification was successful Click the Log In button.

• You will be taken to the Binance login page.Enter your email address and password and log into your account by clicking the Login button.
• You can answer the quiz or skip to answer them later. You will be taken to the dashboard of Binance exchange platform.

Now that you have created your account, you can begin to use it to trade cryptocurrency.

How to use the platform?

In this section of the Binance review, I will guide you on how to use Binance. You will know how to open an account and exchange crypto.

Funding your Account

Your Binance account should be funded before you can begin to perform transactions. There are various through which you can fund your Binance account, but in this Binance review, we will use a credit card. Follow the steps given below:

1. On the home page of your Binance account, point the Wallet dropdown from the menu bar using your mouse cursor. Choose Deposit.

• On the new page, click Buy BTC & ETH with credit card now.

• You will be able to purchase binance bitcoin or eth using your Visa or Mastercard credit card. Specify the type of cryptocurrency you need to but, the amount and select whether you will pay with US dollar or euro.
• You will be required to confirm your billing information, email address and your identity.

How to Trade?

Binance provides you with two options for trade setting, Basic and Advanced. If you are a beginner, you should start with Basic.

The Basic option will provide you with a simple layout that is easy to understand. You will only see the information that is important for trade. It won’t take you long to grasp how to use Binance with this setting.

The Advanced setting is for expert traders. They can access market data, trade charts and venture into complex trades. Here is how to place a trade in the Basic setting:

1. First, open the Binance login page and log into your Binance account.
2. Click the Exchange taskbar then choose Basic.

• Select a trading pair. On Binance, you will get hundreds of trading pairs. The kind of crypto you fund will determine your trade. The change can be done on the right side of the window as shown below:

• Select the type of trade you need to place. Binance provides you with three types of trades:
• Limit orders: this will allow you to set the maximum price you are willing to pay for coins or the minimum price you are willing to sell the coins for. The trader will have to wait for a buyer or seller to accept their price.
• Market orders: this will allow you to trade coins at the current prices in the market. It is a simple and fast trade.
• Stop-limit orders: this will allow you to sell or buy a coin after it has reached a specified price.
• Select the amount that you need to trade. Click the Market tab then enter the amount that is to be bought.

• Lastly, you can click the Buy … button. You will have become a Binance crypto trader!

What are the fees?

If you need to maximize your returns when using binance, pay attention to the following fees:

Deposit Fees

Binance will not charge you any fees to deposit any cryptoasset. If you have fiat currency, you should first swap it for crypto on a cryptocurrency exchangeplatform like Coinbase. After getting your crypto, you can deposit it on your Binance account for free.

Trading Fees

Once you have deposited some crypto into your Binance account, you are ready to trade. However, the trading fees determines the amount of returns that you will get from your transactions, hence we have to discuss it in this binance review.

Binance will take a percentage of every trade that you make, similarly to other centralized platforms. The percentage charged is determined by two factors:

1. Whether you have BNB tokens and how much you hold.
2. Your trading volume for 30 days.

Binance charges a fee of 0.1% for makers and takers. When you pay fees with BNB, you get a 25% discount. If your account holds BNB, Binance will use it by default. However, Binance allows you to turn this setting off.

Increasing your trading volume will lead to a reduction in Binance fee. This is because a bigger trade volume translates to a bigger discount. Binance offers 8 levels of discount, with each level requiring you to have a certain number of BNB in your Binance account.

You only get a reduction in your taker fee when you reach the third level (VIP 3). This level requires you to have not less than 4500 bitcoin in your account.

Withdrawal Fee

It is recommended that you take off your crypto from Binance as soon as you can. When making a withdrawal from Binance, a flat fee is charged on the asset you are withdrawing. A different amount of fee is charged for different assets. For example, to withdraw any amount of ether, you will be charged ETH 0.01. For majority of the assets, the withdrawal fee is one-half the minimum amount that can be withdrawn.

Binance wallet

A Binance wallet provides you with a secure place to score your crypto. A wallet can be a hardware, software or a paper wallet. Software wallets are popular because of the convenience associated with their use. Each crypto wallet is identified by two keys, the private key and public key. The public key is the address of the wallet. Other crypto traders will use it to send you money. This means that the public key can be disclosed to the public. The private key grants authorized access to the wallet. This means that it should be kept private.

You can access your wallet from top menu on the home page of your Binance account.

When you point at the dropdown menu, you will see various options including Balance, Deposit, Withdraw etc. You can choose any of these options based on the action you want to perform.

You can create a wallet on Binance DEX and it will allow you to store private keys on your own. To create the wallet, visit the following URL:

Click the Create Wallet as shown below:

You will be guided through a sequence of simple steps to create the wallet.

Binance app

The goal of Binance is to make it easy for crypto traders to trade cryptocurrency on their exchange. That is why they have developed a mobile app, for both android and iOS devices. You can use the Binance app to buy cryptocurrency such as Bitcoin. The app comes with the live chat feature.

The Binance app provides you with the fastest and simplest way to buy and sell crytocurrency using your mobile device. The crypto trading app has Binance crypto margin trading. The trading app will connect you to a matching engine capable of supporting 1.4 million transactions per second. This will ensure that trade runs smoothly on various cryptocurrency markets.  

 With the Binance app, you can trade a wide range of cryptocurrency including Bitcoin Cash (BCHABC), Bitcoin (BTC), Ethereum Classic(ETC), Ethereum (ETH), Ripples (XRP), Basic Attention Token (BAT)*, Litecoin(LTC), Zcash (ZEC)* TrueUSD, USDT, 0x,(ZRX)* and USD Coin (USDC). It also supports many other altcoins, meaning that you can trade them from your mobile device.

The Binance app has made it easy for you to keep track of your digital assets. It allows you to view live trades and check your account. You get an easy access to live prices and tools such as charts at any time of the day.

Their customer support team is dedicated towards helping you solve any issues that may arise when using the app. You can contact them using the live support feature or by sending them an email.

Binance coin

Binance coin, abbreviated as BNB is the coin used on the Binance platform for payment of fees. This makes it an important topic of discussion in our Binance review. Many businesses are now accepting Binance coin as a form of payment. When you pay Binance fee using the Binance coin, you get a discount.

Binance coin was introduced during the period between June 26th and July 3rd, 2017 through ICO (Initial Coin Offering). 11 days after the launch of Binance coin, the Binance Exchange was opened for trading.

The Binance coin was used on the Ethereum network with a supply of up to 200 million coins. The ICO received a total of 100 million coins, but this amount has reduced as a result of periodic coin burns.

There are various use cases of the Binance coin. For instance, you can use it to buy virtual gifts, pay travel expenses etc. But how can Binance coin help you when trading crypto on Binance?

When trading on Binance, one incurs a fee of 0.01%. To pay for this fees, you can use either the assets that you are trading or Binance coin. Paying with Binance coin has an advantage in that you will receive a discount on the trading fees.

What does this mean to those who trade regularly on Binance? It will be good to get more Binance coins and use them for fee payment.

Btc_usdt Binance

Tether (USDT) is a cryptocurrency whose cryptocoins that are in circulation have to be backed by a traditional fiat currency. The amount of the cryptocoins in circulation and the amount of fiat currency backing it must match. Examples of fiat currencies include the Japanese yen, US Dollar, euro etc. Tether tokens, which are the native tokens for Tether network, are traded under the USDT symbol.

Tether is in a new breed of cryptocurrencies given the name stablecoins with a goal of stabilizing cryptocurrency prices. Cryptocurrencies such as Bitcoin and Ethereum have shown wide swings in prices. Since this is not the case with Tether, it is suitable for use as both a medium of exchange and mode for value storage. Other cryptocurrencies can only be used for speculative investments.

Tether was developed to create a bridge between cryptocurrencies and fiat currencies and offer transparency, stability and reduced transaction charges. Its value has remained at 1:1 in relation to the US Dollar. However, no guarantee has been provided for us to exchange tether for real money such as US Dollars.

On Binance, you will get the biggest Bitcoin exchange by volume. They will allow you to exchange your BTC to USDT at favorable prices. Binance provides the biggest Bitcoin exchange in the world. They provide you with price tables showing the price relationship between Btc and USDT. You will also get price charts showing the price fluctuations over a specified period of time.

Binance pro

The Binance pro is the right tool for you to automate your Binance tasks. It will make it easy for you to trade when tired, busy or when you are asleep. It is the best tool to relieve you of sleepless nights. The tool can be accessed on the following URL:

With the Binance pro trading tool, you will get a safe trading. It will allow you to place Stop loss and Take profit orders at once. Your task will be to place your order and their bot will take care of the rest. It is capable of taking care of Stop loss, Take order and Trailing Stoploss. The Binance pro trading tool comes with simple user interface, making it easy for you to carry out your tasks.

The tool comes with a profit trailer, hence, you will be able to make as much profit as you can. The good news is that you don’t need any special skills so as to configure it. This is not the case with other trading bots and automate strategies.

Isn’t it amazing for you to trail your profit without having to log into the exchange? This is now possible with the Binance pro trading tool. You will be able to see the amount of profit that you have made overtime. You will then determine the necessary actions to take to improve the profits.

Referral bonus can help you boost your online profits. The Binance pro trading tool will give you some bonus for any new member that you refer. The tool can also be used on any device that has a web browser. You don’t need to have a virtual private server (VPS). Just sign up by opening the above URL and begin to use the tool. They will require you to enter your Telegram username so that you may receive instant notifications for any orders. The tool offers a 7-day trial period. After that, you will have to make a monthly payment of 0.01 BTC.

Binance chart

A good Binance review must include a discussion on the Binance chart. Binance provides basic charts with a larger amounts of crypto coins for trade compared to other platforms.

To see the Binance chart, log into your Binance account and hover over the Exchange tab. You will see two options, Basic and Advanced.

A basic trading is as shown below:

An advanced trading chart is a shown below:

The advanced chart is a bit harder to read compared to the basic chart. Here are the major parts of the chart:

Let us discuss the items that have been numbered:

1. This is known as the trading pair tab. We are currently looking at a BTC/USDT chart. The chart is for trading Bitcoin against Tether. You can choose another pair by clicking the dropdown and all pairs will be shown.
2. This is the time scale or the time signature and it is very good for trade. If you change this, the time represented in the candlestick will change. The small m is for minute. The H is for hour, and it is marked as 1H which means 1 Hour. 1D is for 1 day, 1W is for 1 week while 1M is for 1 month.
3. This is the order book. It shows the list of all current Buy & Sell orders that await to be filled. The orders have been placed by people but are yet to be completed.
4. These are orders that have been executed and filled recently. This section makes it easy for you to benchmark your trade. You can see your most recent orders then plan for your buying and selling.
5. These are volume bars. They correspond to the time signature that you have selected. They show the amount of the crypto that has been traded over that period of time. The volume gives you an indication of the chances of you finding a buyer or seller for the crypto.

Pros and cons of the platform

The Binance platform is has made the exchange of cryptocurrency easy by providing the latest technology. This has made it the leading platform for crypto exchange in the world.

Here are the pros of the Binance exchange platform:

• It supports a wide array of cryptocurrency pairs to trade.
• It charges a lower fee compared to other exchanges. The platform takes only 0.01% of every transaction that you, which is a reasonable amount. The payment of the fees has been made easy since you can use BNB for this. In such a case, the fee will not be deducted from your trading balance.
• Has a simple interface friendly to beginners.
• Transaction can be completed faster due to the high speed of the platform. The platform can support up to 1.4 million transactions per second.
• Supports a wide variety of devices including Android, web browsers, HTML5 and others.
• Has a very stable mobile app.
• One can create an anonymous account and get a generous limit.
• Users get discount for payment of fee using the Binance coin (BNB). This is because BNB is the native coin for the platform.

Here are the cons of the Binance exchange platform:

• The platform does not support fiat currency. This means that you cannot fund your Binance account using fiat currency.
• It has a relatively low liquidity that resulted from regulations by the Chinese government.
• You only have access to limit and market orders.
• The buyback policy may reduce the prices. The BNB developers are planning to buy back a particular amount of the coins. This will cause a reduction in value, and the prices may diminish.
• BNB is limited to Binance exchange. This means that it will be affected greatly by the performance and reputation of the exchange.

Bitcoin is a revolution because it makes it possible to exchange value between users anonymously. This is why it has been called “Internet Cash”. Yet, is it still easy to see today possible to buy bitcoins without verification or identity checks and so anonymously?

With the success of cryptocurrencies, regulators around the world quickly set about controlling the purchase and sale of tokens. They have indeed asked different players in the blockchain universe, exchange exchanges and brokers in particular, that they comply with the same requirements as banks. That is verifying the identity and origin of investors’ funds. These are the famous “KYC” for “Know your Customer” or “Know your customer”.

Therefore, it is now increasingly difficult to buy bitcoins and other crypto-currencies without providing a copy of your passport and often other documents.

There are still methods to buy bitcoins without checks.

LOCALBITCOINS

As we already mentioned in our full article (“Localbitcoins Avis“), this platform connects buyers and sellers of bitcoins. You can also check out our video that will show you how to use Localbitcoins step by step:

The transfer of bitcoins and currencies, however, do not pass through LocalBitcoins. For this reason, they are not legally obliged to verify the identity of its users.

The platform only offers a secured environment for bitcoin buyers. But transactions are made directly between them.

Benefits of peer-to-peer platforms

– very low fees:

The services offered by these platforms are limited and for this reason they offer very interesting fees. For example, if you buy bitcoins on Localbitcoins, you will not pay any fees. Only the seller will incur a 1% fee.

– large number of possible payment methods:

As you trade directly with the bitcoin seller, you are free to choose the payment method that best suits both parties. These platforms therefore offer a wide choice of payment methods. It is important to note that the choice of the means of payment can vary the fees significantly.

– anonymous:

Again, because the transactions are peer-to-peer, the platform is not required to verify your identity. You will be able to buy bitcoins anonymously if your seller or buyer does not ask you to reveal your identity.

Disadvantage of peer-to-peer platforms

– more risks:

The fact that payments are made only between users is a risk. Fortunately, these platforms typically offer pledge services to ensure that bitcoins are kept until the end of the transaction.

– limited number of crypto currencies available:

as for the broker, it is generally possible to buy only bitcoins on these platforms. But no other crypto currencies.

How to use Localbitcoins anonymously?

Choose an anonymous payment method:

To use Localbitcoins, simply register on the platform. You can add the name and email address you want. And that’s it, you can use Localbitcoins.

You will then have to choose a country, a national currency and a payment method.

To purchase bitcoins anonymously, you will need to choose payment methods that do not require your original identification, such as a bank transfer or credit card payment. You can choose a payment in hope or through prepaid card like NeoSurf.

Once you have chosen these different options you will get a list of proposals for sale or purchase.

You can choose the one that suits you best.

Choose a seller / buyer who agrees to buy or sell anonymously

The price will not necessarily be the most important criterion. Indeed, the reliability of the seller or the buyer, as well as the proposed conditions will also be decisive.

As we have already mentioned, the role of LocalBitcoins is to ensure the security of the transaction. You therefore have information on the seller and the buyer and in particular a note on their reliability, the number of transactions made …

The conditions of sale or purchase differ from one offer to another. They describe the steps necessary to complete the transaction. Note that some sellers / buyers will require that your identity has been confirmed by the LocalBitcoins site, but not all.

You will need to follow these steps to complete the transaction. Also note that once the bid is accepted by the seller or buyer, bitcoins are pledged by Localbitcoins and will only be released once both parties have confirmed that they have completed their obligations.

In case of disagreement, a third party will be appointed to study the evidence and decide. Therefore, it is essential to only use Localbitcoins messaging to communicate with the seller or buyer.

AUTOMATIC BITCOINS DISTRIBUTORS

The concept of bitcoin distributors is the same as that of cash dispensers. You can buy bitcoins at a kiosk with a credit card or in cash.

Advantage of bitcoin vending machines

• Simplicity: Although the operation of these terminals varies from one manufacturer to another, they are studied to be particularly simple. It is usually sufficient to follow the instructions.
• Anonymity: No verification of your identity is required to use bitcoin distributors and you can use cash.

Disadvantages of bitcoin vending machines

• Limited number of crypto available: in general you will have access only to bitcoins and in some cases to Ether and Litecoin. But the choice stops there. If you want to buy other crypto-currencies, you’ll have to transfer your bitcoins to a crypto / crypto exchange.

• Fees: The fees are higher than if you buy your cryptocurrency on an exchange. The service rendered by the distributor at a price (purchase and maintenance of the machine, rental of the location …) and you will have to pay for this service. These fees range between 6 and 10%, which corresponds to the fees charged by brokers like Coinhouse or Coinbase.

• Maximum amount: You can buy or sell a limited number of bitcoins at the terminals (500 euros on average). Obviously nothing prevents you from having several different portfolios and repeat the operation for each of them.

Acheter des bitcoins sur un distributeur automatique

To buy bitcoins, you will need to have created a bitcoin wallet beforehand.

As you may already know, a bitcoin wallet consists of a public key and a private key. If we compare the payment in bitcoin with the credit card payment, the public key corresponds to your card number and the private key to your secret code. It is therefore essential to never divulge your private key otherwise it is like giving your crypto.

So you can disclose your public key without any problem in any form you want. By email, by QRcode where even in you tattooing on the arm.

This is your public key that will be asked when you use the distributor. It is strongly recommended that you use the QR code provided when creating your portfolio. The QR code is nothing else than your public key represented in another form. You can scan it directly on the distributor and avoid making a mistake by copying your public key.

To obtain this public key, you must have created a wallet that can accommodate your bitcoins. Note that the wallet you choose must accommodate bitcoins. If you buy Ether or Litecoin, you should also choose crypto-compatible portfolios.

Ideally you should choose a portfolio “Off the Internet” type Ledger Nano S which are the most secure. But they are not the easiest to handle. You can create an online wallet in 5 minutes by going to blockchain.info.

If you want to buy Ethers, you can choose a wallet like Myetherwallet which is free, fast, anonymous and secure. To learn more about creating a Myetherwallet portfolio, you can read our article Myetherwallet avis.

Once your portfolio is established, you can proceed to the purchase or sale of bitcoin, ether or litecoin.

Where to find bitcoin distributors?

You can visit «buybitcoinworldwide» which offers a map of all the bitcoin distributors in the world.

BUY BITCOINS AT A BROKER

A broker is an intermediary who buys wholesale bitcoins in order to resell them at retail. These are just simple resellers, as we currently know sellers of precious metals (gold, silver …).

There are a large number of brokers available today. The advantage of using a broker is usually the ease of use. On the other hand, brokers sometimes offer personalized advice for people who have difficulties with technology. This is particularly the case of the bitcoin house which offers appointments in their Parisian shop.

Obviously these services have a price and brokers normally take a large commission that can oscillate between 6% and 10% of the amount purchased.

On the other hand brokers are regulated and must verify your identity before you can sell cryptocurrencies.

Yet some brokers based outside the European Union, can buy crpyotmonnaies without checks. However, the amount of your purchase is almost always a limit to the number of bitcoins you can acquire.

You will find below a list of these brokers as well as their limits:

• BitBoat : 500 euros per week, in money order, Toneo First, Neosurf card, etc.
• Bity : 1000 dollars a day, by bank transfer or Sofort.
• VirWox : 90 euros per day, and 270 euros per month, in credit card, Paypal or Paysafe.
• Happycoins : Variable ceiling, by bank transfer, Sofort, Bancontact.

More on this topic

local bitcoins review – Read this before using [Full Guide 2019]

Bittrex review: Get access to almost all available cryptos

LocalBitcoins could be compared to the “eBay of bitcoin”. Bitcoins are indeed exchanged directly between the members of the network without passing through an exchange or a broker. Indeed, the platform only provides a secure environment for buyers and sellers to exchange bitcoins but does not hold any token itself. In this article (“Localbitcoin review”), we tell you all the steps necessary to use the platform safely.

This platform is used for several reasons:

• The platform only links buyers and sellers of bitcoins and therefore charges much less than other methods.
• It does not verify the identity of its users. The transactions are therefore anonymous.
• All means of payment are accepted as long as the seller and the buyer agree. The fees applied by the seller however a lot depending on the means of payment used.
• The platform can provide certain services such as pledging bitcoins for the duration of the transaction to ensure that it runs smoothly and to collect user feedback to rate recurring vendors.

A disadvantage of Localbitcoins is that you can only buy bitcoins. You can not buy other cryptocurrencies. This is not a major problem, however, since you only need to transfer these bitcoins on a crypto / crypto exchange like Bittrex, to acquire other cryto-currencies.

Register on Localbitcoins

You will visit the Localbitcoins website. As with all cryptocurrency trading platforms, you must be careful about the URL you use. In other words, you must make sure that the link you are clicking on corresponds to the official Localbitcoins website. The presence of a small green locker usually confirms that you are on the right site.

There are many scammers using google ad, ie google ads at the top of search pages to offer links to fraudulent sites.

If you have any doubts, you can use the link below:

Once on the Localbitcoins homepage, it is extremely easy to register. You just have to click on “sign-up free”.

Insert your details (exacts or not)

A window will open and you will need to fill in the required information.

You must enter the name that will appear on the site and your e-mail address. Note that you do not have to add your exact last name and last name. Localbitcoins allows to buy and sell crypto-currencies anonymously, so you can invent a nickname and add an email address created for the occasion.

A tamper-proof password

You are also asked to choose a password that is complicated enough to make your account really secure. The best way to get one is to create it from a platform generating passwords like strong Password Generator.

As a first step, simply choose the password settings. That is, the number and type of characters you want to embed.

You will then be able to generate the password by clicking on “Generate Password”.

Once you have your password you must save it in a safe place on your computer or write it on a paper.

I emphasize this because it is important to understand with the cryptos that you will acquire are your responsibility. Crypto-currencies bring great freedom by eliminating a large number of intermediaries such as banks and credit card companies. But that means that you are now in charge of the safety of your money. However, you should be particularly careful when buying, transferring and keeping your cryptos. That’s it, you have to be vigilant all the time.

Rest assured, getting started is easy and today there are many tools that allow you to use cryptos securely. On the other hand, it is not certain that your money is more secure when it is in the hands of intermediaries.

It is also important to realize that Localbitcoins is not the most secure way to acquire bitcoins. We will describe all the elements that you need to be careful about to take no chances.

Two factor authentification

For this reason, it is essential to enable the two authentication option. This type of protection is now well known and adds a layer of security to your account. For each operation you will solve on Localbitcoin, you will need to add a code.

To activate it, you must click on “Account Security”.

Then ask to activate the “Two Factor Authentication”.

You will then be able to choose the means of issuing your code. Either on your mobile or on a separate page.

If you choose the paper code, you will be able to download a word page containing 100 codes numbered from 1 to 100. For each operation, you will have to provide a random code.

If you choose the mobile code, you will have to download the “Google Authenticator” application on your mobile. You will then have to configure your application by clicking on “Proceed to activation” which will reveal a QR code that you will have to scan with your mobile phone from the “Google Authenticator” application.

Opening of a wallet

By opening an account on the Localbitcoin platform, you open a bitcoin wallet instantly. You can use this portfolio without buying bitcoins on the platform beforehand.

The charges for depositing bitcoins are 0.00015 BTC regardless of the amount you transfer.

Again this is not the most secure kind of bitcoin wallet. This is indeed what is called a “hot wallet”. This type of wallet is convenient because it is accessible on the internet from any computer, but you do not hold your private keys. In other words, the secret code that allows you to use your bitcoins (your private key) is kept by the website and therefore at the mercy of any potential hacker. So ideally do not leave your bitcoins too long in this wallet and transfer them to cold storage. As a reminder, with portfolios of cold storage (Ledger, Trezor …), you keep your private keys off the internet on a device that looks like a USB key.

Receving bitcoins

To receive bitcoins on your Localbitcoins portfolio, simply use the public address that is provided on the Localbitcoin site. Note that this is your public address, that is to say that you can disclose it without risk. The public address can be compared to your blue card number and the public address, your PIN.

It is important to transmit your public address without errors. Indeed if the public address that you transmit is not complete, you will not be able to receive your bitcoins and the person who sent them will not be able to recover them. For this reason, the best is to use the button provided for this purpose next to your public address.

A good habit is to copy this address to another document and have it in your mailbox, for example, to be able to easily send it to people who must send you bitcoins without having to connect to Localbitcoins each time.

Another important point to consider is that the public address issued by your Localbitcoins wallet will change periodically. Of course, you can continue to use the previous public addresses at the same time as the news and you will always receive bitcoins in your wallet.

Send bitcoins

It’s just as easy to send bitcoins from your Localbitcoins wallet than it is from any other wallet. It’s just about introducing the public address of the recipient of the bitcoins, as well as the number of bitcoins you want to send.

Be careful to add all the data that is required by the recipient.

Buy bitcoins on Localbitcoins

Choose an offer

The great advantage of Localbitcoin is that it is not a centralized platform. In other words, the platform gives sellers and buyers the freedom to organize the transaction as they want.

They are first free to choose the currency they will use to determine the amount to buy. If you buy from a person based in the EU, it is likely that the euro is chosen. But this is not always the case and the dollar is often used as the reference currency.

You will then be able to choose the country where you want the transaction to take place. This field is especially important when you choose the option of payment in cash or bank transfer. Indeed, the geographical proximity with the seller is in this case important. For example, if you decide to pay by bank transfer and your seller is also in the EU, you will be able to use a SEPA transfer and therefore not pay any fees. Which would not be the case if you had to make a bank transfer to a bank based in the United States.

Finally, LocalBitcoins is renowned for offering the ability to pay with almost all available payment methods. Just find a seller who uses the payment method you want. We will now see below how the most commonly used means of payment work.

Once you have selected these three variables, you will see a list of sellers responding to these criteria. You can quickly sort the offers according to what interests you.

This information is as follows:

Trader: This is of course the seller’s preudo. As for you, the seller is not obliged to reveal his true identity. The two digits in parenthesis located next to it, correspond to the number of transactions realized by the salesman and the score that attributed to him by his previous customers.

In the example above, the seller has completed more than 3,000 transactions and has a 98% satisfaction rate. So you have to go to a serious seller.

Payment Method: This column refers to the payment method you selected in the previous step.

Price / BTC: as you will understand, this is the price per bitcoin. The lower you go, the higher the price. It is important to note that the price of Bitcoin on LocalBitoins, can be very different from the price you will find on reference exchange such as Bitstamp. This price difference is due to the often unconventional means of payment used by the sellers. In other words, you pay the service provided by the seller who offers the means of payment that suits you. This means of payment is generally not available on traditional exchanges.

Limits: These numbers correspond to the minimum and maximum number of bitcoins that the seller is willing to offer you. In the example below, the seller is ready to sell you at least 25 and up to 150 euros of bitcoins.

It’s up to you to choose the offer that suits you best.

Identify good sellers

Once you have made your choice, you will be able to obtain additional information about the seller by clicking on his name. You will go to the seller’s presentation page where you will have access to additional information.

First information about the reliability of the seller with the number of stars allocated to him, the number of trades made and feedbacks that we have just described. You will also be able to determine the frequency of its sales. Suspicion if he has not made a sale for several months.

Finally the speed at which you will get your bitcoins once the transaction has been completed.

It is also important to consider when the seller’s account was created and if its identity was verified by LocalBitcoin.

Note that some vendors may also claim that you have validate your identity.

In the example below, you will also see all the offers currently offered by the seller. This also allows you to see all the payment methods accepted by the seller and perhaps choose one that suits you best.

Finally, at the bottom of the seller’s page, you will be able to access the notice of previous buyers. Naturally, the more recent they are, the better. These reviews are interesting because they sometimes allow you to get information about the process of completing the transaction. It will appear in some cases that it is too complicated.

The transaction steps

How to contact the seller?

Once you have chosen the offer that interests you, you will be able to send a message to the seller using the space provided for this purpose in the offer. It is recommended not to use external communication channels. Indeed in case of dispute, it will be easier for you to prove your good faith if you used the Localbitcoin messaging system.

Follow the steps prescribed in the offer

On the right side of the offer, the seller can specify the conditions that you need to fulfill for you to be eligible as a buyer. It can also provide guidance on the steps to complete the transaction.

These steps are always different from one seller to another and from one type of payment to another.

Bitcoins are pledged

In addition to an evaluation of sellers (and buyers), LocalBitcoins offers a bitcoin pledging service to ensure that transactions are completed to the limit by significantly reducing scams.

The bitcoins that the seller proposes to sell you are in fact retained by the site until the seller confirms that he has received the payment.

In case of dispute, a trusted third party belonging to Localbitcoin will decide according to the rules established on the website and according to the reputation of the seller and the buyer.

The fees applied by LocalBitcoins

As we have already mentioned, LocalBitcoins is a platform that connects buyers and sellers of bitcoins. It offers only a secure environment for buying and selling bitcoins, but does not hold bitcoin itself. This limited risk-taking allows LocalBitcoins to offer uncompromising fees.

There is indeed no charge on buyers and only 1% on sellers. We are far from the 4% imposed by brokers like Coinbase. Note that sellers generally pass on sales charges, which is why Localbitcoins prices are higher than on traditional exchanges.

The main methods to buy bitcoins

Buy bitcoins in cash

For cash purchases, you can do them either in person or through a pre-paid card.

If you are in the same geographical area as the seller, you can meet him. Just make sure that it releases bitcoins well before your eyes. Otherwise it would be difficult to prove that you gave him the funds.

Neosurf or PCS prepaid cards seem a better solution. You usually only need to provide the code on the card to complete the transaction.

Buy bitcoins with a credit card

Buying with a bank card is relatively simple. Once you have chosen an offer that interests you, you will contact the seller. Remember to use Localbitcoins email at the bottom of the sales page. In case of conflict, it will indeed be easier to prove your good liver.

The seller will then send you the details of his account. You will make the transfer and upon receipt of payment, it will indicate to Localbitcoins that bitcoins can be sent to you. In most cases, as in the example below, the seller will wait for funds to be credited to his account. So it’s not surprising to have to wait a day or two before you receive your bitcoins.

Buy bitcoin with Paypal

As you can see in the example of an offer to sell bitcoins with Paypal, the purchase conditions are much more restrictive than for other means of payment that you can use on LocalBitcoins. This comes from the fact that Paypal is perceived right or wrong as an unsafe way of payment. The sellers consider indeed that there is a possibility to convince Paypal to return to the transaction once it has been done on LocalBitcoins.

It is not uncommon for sellers to ask you:

• your exact identity and verified on LocalBitcoins
• request SMS verification
• A verified Paypal account
• A personal Paypal account that corresponds to that of LocalBitcoins
• The money must already be on your Paypal account
• You must have already completed a number of LocalBitcoins
• transactions and obtained positive feedback.

Buy bitcoins with other crypto-currencies

Among all the methods that are offered, you can also use some altcoins to pay the seller. At present, only Dash, Ripple, Litecoin, Monero and Ethereum are usable.

The process is then the same, you will transfer your altcoins to the public address that you have provided the seller and upon receipt of the tokens, it will release bitcoins.

More on this topic

How to buy bitcoins and altcoins: the ultimate guide

Bitcoin Value in Dollar – how to analyze and predict it? [Ultimate guide 2019]

Appeared in 2009, bitcoin is still an enigma for a large number of investors. How to classify it? How is the bitcoin value in dollar determined? What are the elements that influence its price?

Bitcoin, like all other crypto-currencies, has created a new business model very different from that of traditional companies. Indeed, none of the valuation instruments that we currently use can be applied to cryptos.

This article will give you many keys to better understand what these new ecosystems really are. We will also try to explain how they work and existing theories at the moment to try to value it.

Where to find the bitcoin value in Dollar?

It is essential to begin by clarifying how the value of the bitcoin is represented. It is always determined by national currencies or other cryptocurrency. For example, the price of bitcoin to be determined in dollar, we then speak of the pair “USD / BTC”. As you can imagine, there are a large number of pairs available.

The price of bitcoin is constantly changing and results from the confrontation between supply and demand in the cryptocurrency market. In other words, the price of bitcoin at a “T” time is what sellers and buyers are willing to accept for their bitcoins.

The history of all these prices is usually represented on a graph with the date on the abscissa and the price on the y-axis.

Value of Bitcoin in dollar

The price of bitcoin in dollar can be found in many places. A quick way to find is through Google. For this, simply type “Bitcoin” in the search bar and you will immediately see the price.

However, this application only offers the price of bitcoin. If you are interested in the price of other cryptocurrencies, you can visit Coinmarketcap.

Bitcoin price live

The bitcoinwisdom website offers a graphical representation of bitcoin prices against the dollar from its creation. This platform brings together the prices proposed by several exchanges. We advise you to use the one that exists from the beginning, which is the price proposed by Bitstamp.

You will thus be able to chart as well as many tools of technical analysis.

Bitcoin value against other cryptocurrencies

If you are looking for the value of bitcoin against other crypto-currencies, then you have an advanced level. The best place to find them is on crypto exchanges, where supply and demand meet. It is indeed on these exchanges that you can find all these pairs. But not all exchanges offer an important number of pairs. Crypto / Crypto exchanges, on which it is only possible to deposit crypto-currencies, generally count much more.
Indeed, exchanges like Bittrex or Binance offer hundreds of possibilities. It is thus possible to buy any cryptocurrency with bitcoins.

As you can see on the page below, Bittrex offers many Bitcoin / Cryptocurrency peers:

What is bitcoin?

Before describing the elements that impact the bitcoin price, it is essential to determine what bitcoin is. There has been much debate in recent years to clarify whether bitcoin is a currency, a financial security or a commodity.

To answer this question, we must first better understand the structure of the bitcoin network.

Bitcoin is a network and a coin

The word bitcoin defines both the network of bitcoin users and the token that is exchanged between these users. The bitcoin network consists of a large number of user members connected to each other by their computers. The purpose of this network is only to exchange value between its members, thanks to bitcoin tokens.

veryone can become a member of this network. If a user wants to interact directly with the network he will download the bitcoin protocol on his computer by downloading the bitcoin source portfolio. It is also possible to take part in the bitcoin network through an intermediary, such as an exchange. You can also interact with the bitcoin network without downloading the protocol. That’s what you do when you buy your bitcoins on a cryptocurrency exchange.

[Bitcoin protocol: The bitcoin protocol is the source code of the bitcoin. It is an open source computer program, that is to say accessible to all. This program provides all the operating rules of the bitcoin network: creation of transactions, mechanism of mining, interaction between members. For simplicity, the bitcoin protocol contains all the rules to tell your computer how to join the bitcoin network].

All transactions are then added to the blockchain. The blockchain is a decentralized database that is updated by miners. Miners are therefore the bankers of the bitcoin network since they are the ones who update the “accounts” of the network recorded on the blockchain. The big innovation is that the update of the account is no longer done by a trusted tier (bankers for example), but directly by members of the network (the miners).

What is important to remember is that bitcoin is a decentralized network of computers, which perform transactions with each other using bitcoin. All these transactions are then stored in a blockchain chronologically.

Is bitcoin a currency?

Really sorry, but the answer is both yes and no.

First, bitcoin shares many features with traditional currencies. Bitcoin is indeed a unit of account. That is, it can be used to measure the value of another good. Then bitcoin is used to exchange value. As we have done this exchange of value is between the members of the network or those who use an intermediary as a stock exchange. Finally, bitcoin is a store of value. The strength of its technology based on advanced cryptographic mechanisms, allows its users to store value for the future.

Yet bitcoin is not a currency in the same way as the Euro for example. First of all, bitcoin does not have a “legal tender”. In other words, not all economic actors are obliged to accept euros. Although more and more merchants are accepting payments in bitcoin, you can not force those who do not want it.

Another important difference is that the euro is a currency managed by a central bank. In other words, monetary policies related to the euro and its volume are managed centrally. This is not the case for bitcoin as we have seen previously. Indeed, bitcoin is based on a decentralized technology (blockchain), so its management is subject to the permanent consensus of its users.

Finally, bitcoin is not yet regulated, unlike national currencies. That’s why if you lose your bitcoin no regulation can protect you. This is not the case if you steal your credit card since your bank will theoretically compensate you.

Bitcoin and crypto-currencies in general represent an important advance in that they allow the exchange of value directly on the Internet between people who do not know each other. Until today, we always had to go through an intermediary (bank or credit card company). This freedom comes at a price since bitcoin holders are fully responsible for their conservation.

Is bitcoin a financial Security?

Like traditional financial securities, the value of bitcoin is determined by the market. It is therefore legitimate to wonder if bitcoin and other cryptocurrencies cannot be qualified as traditional financial securities.
The answer to this question must be balanced. Indeed the role played by a token in the network that created it is not always the same. The main role of tokens is to transfer value between members of the network, as does bitcoin. But in other applications, tokens can have different or additional functions. In the “Utility Tokens” for example, are qualified thus by that they can have very different functions.

William Mougayar is also one of the first to have listed the roles that can have tokens.

You may be wondering what the regulators’ position is on this issue. Many of them have not yet pronounced. In France, it has been admitted that tokens are not financial securities. That’s why a full-fledged lefak category has been created to oversee tokens, the famous Initial Coins Offering (“ICO”)

The American Stock Exchange regulator, the Security and Exchange Commission (“SEC”), submits the tokens to the “Howey Test”. The Howey Test determines that a token represents an investment contract if

“a person invests his money in a joint venture and is expected to expect profits solely from the efforts of the sponsor or a third party”.

Certain token fulfills these conditions when for example they produce dividends for their holders. Numerous ICOs have thus been requalified by the SEC as an “Initial coin offering” and have been sanctioned for failing to comply with the regulations in force.

However, SEC chairman Jay Clayton confirmed in a statement released in late December 2018 that bitcoin is not an investment contract and as such is not subject to current regulations.

Is bitcoin a commodity?

What is a commodity?

A commodity could be defined as a unit of a tangible asset or not. This asset can be alive like livestock, cereals or not such as coal, gold, gas or electricity. Unlike other financial stocks such as stocks or bonds, it does not matter who produces the commodity. Indeed, the action of a company A can never be valued in the same way as the action of a company B.

On the other hand, a commodity is by definition fungible. This means that one gram of gold can be replaced by any other gram of gold provided both are of the same nature and quality. In other words, the price of a commodity is almost solely determined by a confrontation between supply and demand on the market. It does not have any value in itself that can influence the way its price is determined. That means you have to sell it to make money with it.

This first definition seems to perfectly stick with what is bitcoin. A fungible intangible asset that must be produced and has no intrinsic value, which implies that the price is solely determined by the market. Indeed, as for gold or coal, the production of bitcoin has a cost. The term used for the production of bitcoin is also the same since we are talking about “mining” bitcoin. Miners are network members whose mission is to produce bitcoins.

The cost of mining

It is important to understand that the mining of bitcoin is a business for miners. Indeed, they compete with each other to add blocks to the bitcoin blockchain. The first miner who solves the mechanism of the “Proof of work”, is indeed the one who can add the block to the blockchain. The “Proof of Work” can be compared to a problem that miners must solve.

But to be able to participate in the “Proof of Work” mechanism, you need very specific and expensive equipments. Added to this is the cost of internet connection and electricity. Miners must therefore invest extremely large amounts to remain competitive in the race for mining. They are paid only by receiving 12.5 BTC for each block added and the fees attached to each transaction.

It is also important to remember that the difficulty of the “Proof of Work” increases with the number of miners involved in the mining mechanism.

Some analysts have estimated that bitcoin can be considered a commodity because of its cost of production (or “extraction”). Like gold, the creation of bitcoins generates significant costs. It is in this sense that the other policeman of the American stock market, the United Commodity Futures Trading Commission (CFTC), decided by officially qualifying the bitcoin of raw material.

Now, there is no evidence that this cost of mining impacts the evolution of bitcoin prices. On the other hand, the opposite is much clearer. Indeed, the price of bitcoin directly impacts the mining industry. Many miners have invested in hardware at the time when bitcoin was worth USD 20,000 and end up in 2019 with a very different profitability. Bankruptcies in the mining industry are so overwhelming that some wonder if bitcoin can survive at too low prices.

The future will tell, but in theory yes, since the protocol adapts to the number of miners (“Hashing power”) present on the network.

What is the real value of bitcoin: the elements to take into account

In this section, we will go into the details of what makes or contributes to the value of bitcoin. In fact, many factors influence the price of bitcoin and we will try to list them below. As mentioned above, the price of bitcoin is the result of the confrontation of supply and demand on the capital markets. So what drives people to want to buy bitcoins?

The service rendered by the network

First, the bitcoin network renders service efficiently to its members. As we have seen, bitcoin is a decentralized and autonomous network made up of all computers that have downloaded the bitcoin protocol. But the initial goal of this network is to solve a very specific problem. That of the transfer of value on the internet.

The transfer of value on the internet

This is one of the great contributions of blockchain technology. To illustrate, take the example of the transfer of a video on the internet. At the moment when you transfer a video on the internet you keep a copy on your computer. But if you want to transfer 20 euros, you must make sure that the sum has been sent to you and has not been sent to another person in the meantime. For this, the only way is to go through a trusted tier, a bank for example.

But using bitcoin, you can now transfer the 20 euros directly to a stranger via the internet and without an intermediary. This is the service bitcoin provides. It makes it all the better that the transfer is immediate and almost free whatever the country of the recipient and the volume of the transfer.

Each cryptocurrency solves a very particular problem

Each cryptocurrency available today has set itself to solve a very particular problem. There are thousands of them, so there are thousands of problems that need to be solved through these decentralized exchanges. The tokens issued by these crypto-currencies are only the means necessary to solve the problem. Bitcoin is only the means to allow the transfer of value. But it is nothing without the protocol, the network of programmers, miners, users, the blockchain and all the other constitutive elements of these crypto-currencies.

WHAT IT SHOULD BE UNDERSTANDING IS THAT IN THEORY, THE VALUE OF THE TOKENS DEPENDS ON THE NETWORK’S CAPACITY TO SOLVE THE PROBLEM IT SET FORWARD. IF THE SOLUTION PROPOSED BY THE NETWORK WORKS AND IF IT IS PERCEIVED BY INVESTORS THERE WILL BE A REQUEST FOR TOKEN.

The number of tokens issued

The case of bitcoin: a non-inflationary cryptocurrency

Unlike national currencies that can be produced without limits, the number of bitcoins is limited. The bitcoin protocol provides for the maximum number of bitcoins that can be issued. This figure is 21 million.

As you may know, bitcoins are emitted through the mechanism of mining. Indeed, each time a block is added to the blockchain by a miner, 12.5 bitcoins is emitted (“created”) and distributed to this miner. This one then puts them (or not) in circulation, by transmitting them to other users of the network. The protocol also provides that a block is added to the blockchain every 10 minutes. 12.5 bitcoins are created from scratch and put into circulation every 10 minutes.

At this rate, it is estimated that all bitcoins will have been mined by 2022. Bitcoin is therefore not an inflationary currency, which directly impacts its valuation. The fact that the total number of bitcoins that will be issued is already known leads to a feeling of scarcity in the face of the growing demand for this cryptocurrency.

This feeling is accentuated by the fact that bitcoin is often perceived as a “store of value”. Remember that bitcoin is also called “digital gold”. Bitcoin is still young, but we must recognize that since its creation no hacker has managed to find and exploit a flaw in the bitcoin protocol. Many stock exchanges and cryptocurrency portfolios have been hacked, but never bitcoin itself. Yet, with a valuation of several billion dollars, it is obvious that bitcoin is a prime target for any hacker. That would be the immediate glory for the latter!

The number of tokens issued

It is also important to note that the number of tokens issued by a project, directly impacts its volatility. The price of a token will rapidly increase or decrease if the project has issued 100,000,000 tokens or less. It’s different from a billion chips.

Ripple, for example, has several billions of tokens in circulation. If a large number of investors decide to withdraw their chips at the same time the price will only be slightly impacted. Obviously, the opposite is also true.

For these reasons, it is generally considered that cryptocurrencies with more than 1 billion chips are less risky. It should be kept in mind that the gains are proportional to the risks taken by the investor. Crypto-currencies emit a large number of chips offering a more progressive return. This does not mean that performance cannot be important. An XRP (tokens issued by Ripple) went from $ 0.01 in 2016 to $ 3 in 2018, a price multiplied by 300.
A cryptocurrency with a number of token in circulation between 100 million and 1 billion, presents a moderate risk. Below 100 million, the risk and volatility are as old.

In summary:

Price manipulation

If the decentralized network does not have any objective or tries to solve any particular problem, then the token emitted by this network can not theoretically have any value.
The only explanation for valuing in these circumstances would be price manipulation.

Crypto market is still unregulated and for this reason, are the prey of many course manipulations.

The best known is that carried out by the most important investors. Also called “whales” (or whales), it is not uncommon to see these investors massively buy the tokens of a network to raise the price artificially. Once the price is inflated, they abruptly down all their tokens, thereby dropping the price of the token.

All small investors attracted by the rising price and the buzz that accompanies it, is usually found with a worthless token. These operations are often called “Pump & Dump”. These manipulations are usually very well orchestrated. They are accompanied by a promotion campaign on forums lead by people paid by the Whales or simply informed by the latter.

Indeed, knowing in advance that the tokens will be the subject of a “Pump” is the insurance of quick returns. In addition to the manipulation of the courts, there is an insider’s offense or at least a complicity in manipulation.

All these manipulations have largely contributed to the instability of the prices of crypto-currencies in recent years and to their important volatility. It is important to note that on regulated markets, all these acts are penalized.

This type of manipulation obviously occurs without taking into consideration the real value of the network. This real value can only be obtained by carrying out a thorough analysis of the project that interests us.

Token Valuation Theories

Several methods or theories have been proposed to try to determine the current or future value of bitcoin and crypto-currencies in general. We will focus here on the two best-known models. You can also check out models developed by Vitalik Buterin, Brett Winton, and Percy Venegas. 

The Network Value to Transaction (NVT Ratio)

Imagined by Willy Woo, the NVT ratio could be compared to the Price / Earning ratio which is a classic business analysis tool. Willy Woo describes it in this way:

“We did not know how to value Internet securities in the 1990s. The P / E ratios were at their peak and people did not understand the zero marginal cost of businesses. … In Bitcoin, we know the flow of the transaction, but we do not know its income, because it is not a company. It’s the closest proxy we have. That’s all it really is. If Bitcoin was a payment company, measure its debt to its value. “

NVT = Network Value / Daily Transaction Value

You can find this information on blockchain.info. The “Network Value” is what we also call the market capitalization of the bitcoin network at a given moment. This is the dollar value (or any other currency) of all bitcoins. The “Daily Transaction Value” as its name indicates is the amount (always in national currency) exchanged during the last 24 hours.

Divide the first by the second and you get the “Network Value to Transaction ratio”. The NVT Ratio is based on the idea that we can use money flowing through the network as a proxy for network evaluation.

As Willy Woo says on his blog:

“When the Bitcoin NVT is high, it indicates that the value of its network exceeds the value transmitted on its payment network. This can happen when the network experiences high growth and investors value it as a high yield investment, or when the price is in a bubble. “

Clearly, the higher the NVT, the more it indicates that the value of the bitcoin is superficial and a correction is probably close. The opposite is also true. If the NVT is too low, a reversal of trend could be expected. It is one of many tools that we mention because it allows us to anticipate changes in trends.

It determines whether the price of a token is underestimated or over-valued, but not to predict its exact value.

“Equation of exchange” (Token economy)

Developed by Chris Burnisk, this theory uses the same equation used to value traditional currencies. Chris Burnisk is indeed the first to have proposed to use the Equation of Exchange.
The equation is presented in the following way: M x V = P x Q
where
M = the total value of the tokens
V = the velocity of the tokens, that is to say the number of times they have been traded over a given period.
P = in the case of cryptocurrencies, P represents the price of resources monetized by the network represented in $ / GB.
Q = total resources used by the network.

We could take the example of SIA COIN, a project based on the Ethereum blockchain. The purpose of SIA and to share the unused memory space of the members of the computer of the network. In other words, information belonging to members of the network could be stored in the memory of the computers of other members of the network.

In the case of SIA, to find “P” it will be necessary to determine the price in dollars of Gigabites of storage available on the network, represented in $ / GB. “Q” will represent the number of Gigabites available on the network.
If we multiply P and Q (where P = $ / GB and Q = GB), we get an amount in $. PQ represents the exchange of value in the ecosystem. It is in a way the Gross Domestic Product (“GDP”) of the micro-economy created by the protocol and the network. But this GDP is recorded on the blockchain.

Now that we know the value “PQ”, we must determine the velocity of the tokens on the network to be able to deduce “M”. Indeed M = PQ / V.
Once we know “M”, we can divide it by the set of tokens issued by the network and thus obtain the value of a token. To forecast the evolution of this value it is necessary to replace these data over several years.

As you can imagine all these data are relatively subjective. That’s why Chris Burnisk often recalls that he uses this method as an indicator rather than a foolproof instrument.

More on this subject

A general introduction on blockchain

How to buy bitcoins and altcoins: the ultimate guide

How to securely store your coins: the ultimate guide