"Saving" is primarly collecting funds. Investing, on the other hand, is a financial activity, in which shares or bonds are acquired. This is why saving and investing need to be treated differently. Crypto market shares and bonds are Coins and Tokens, which can be used for trading. This can be compared trading with commodities. Investing in shares or bonds, especially in cryptocurrencies, there is no such thing as guaranteed profit. In order to accumulate wealth the investor needs to find cryptocurrencies that can be located on several exchange platforms – meaning that so far there is no one site that allows the purchase of all tokens. Before choosing the trading platform the user should carry out an in-depth analysis for his/her own safety and profits. This includes the user looking into coin availability and it’s liquidity, as well as the limits for buying/selling/depositing and withdrawing the tokens. Once this is done, the safety of the webpage should be researched. This can include searching the history of the webpage, e.g is it previously hacked, are there past complaints about the platform etc. Also the general safety - are there indicators that can shut down the webpage, like not being in complience with the local laws, irregular activity and so forth.
ICO - Initial coin offering is similar to IPO (which stands for Initial Public Offering). The idea of ICOs is to collect money for product development or for it’s service. ICO usually offers Tokens for the participants, usually with lower prices than when the company gets into the market. There are still things that need to be considered the biggest one being that the product or service could never realized. Because the ICO is raising money in order to start the development of the product, not selling their finished work . This has a resemblence with startups, who are raising money for experimenting with new ideas or who develop a new product.
Coin -The idea of a Coin is to function as a currency: being unit of an account, securities and to the transferring of the assets. Every coin has it's own chain platform, which gives the users a possibility to create new sub-chains in order to create tokens. Examples of Coins: Bitcoin (BTC), Litecoin (LTC), Monero (XMR).
Token - Tokens has value, but they are not the same as Coins, because Tokens are usually created on top of blockchains like Ethereum, Waves, Lisk etc, which allows the users to create their own cryptocurrencies with basic functions. Tokens can consist of several functions – like using them for voting, paying out dividends, using them in platform for purchasing services etc. Examples of Tokens: Augur, TenXPay, Red Pulse etc.
There are analysis that needs to be done before trading and there are some princibles that need be known beforehand. This includes the unrealistic expectations of buying and selling during the perfect times (buying at the lowest and selling at the highest prices). There is also a time when the people participating in the market buy the Token or a Coin when it’s rising for a no reason is being bought by a person/company that doesn’t have a an analysis done beforehand, which can cause buying an overvalued coin at it’s peak, possibly leading to the coin price drop after. This is called FOMO, which stands for Fear Of Missing Out. There is also a risk of Pump and Dump schemes which in essence are price manipulations. Everyone has a different goal with investing and trading in general, this also applies to investing and trading in cryptocurrencies. First thing that the buyer should do is to set his/her goals, then making a plan how to get there and understadning what needs to be done in order to reach it? Trading and investing with goals are far more effective methods than just gambling with securities, commotities, shares, cryptocurrencies etc.
Even experienced, not to mention less experienced traders have had a lot of emotional feelings when they have won or lost big amounts of investment. Every trade and investment teaches the traders, tells that they should learn from their past success and failure, to live in the moment and try to foresee the future. This means that everyone should analyse their trades, staying with or, when necessary, chaning up their tactics in order to get the best potential profit and avoid the next mistakes.
Investing and speculating of cryptocurrencies can be compared with investing and speculating with regular investments, but it should be metioned that Bitcoin and cryptocurrencies aren’t treated as stocks, but they are rather seen as commodities. Essencially they have their monetary value, but they are different in their fundamental basis. For both stocks and commodities, the similarity can be seen in their trading possibility, meaning that both can be exchanged against other currencies. It is known that Bitcoin technology (blockchain) has the potential to spread over different fields in everyday use, for example institutions, real estate, retailing etc. But other coins, Ripple (XRP), for example, cooperates with several worldwide banks to help them finding best solutions for everyday banking system. Decentralization in cryptocurrencies means that currency isn't controlled by institutions or by the government, meaning that nobody has the real control over the cryptocurrency. But there are ways to, at least partially, manipulate cryptocurrencies.
For example - mid November in 2017, there was scheduled a SegWit2x hard fork for Bitcoin, which would divide the Bitcoin’s blockchain into two different chains – the Legacy Chain and the Bitcoin2x. Their only difference would be their block size, with Bitcoin having 1MB and Bitcoin2x 2MB blocks, which would temporarily fix Bitcoin scaling problems because of the blockchain increase.
Before explaining the event, we need to go back to August of 2017, where a Bitcoin hard fork found place. This emerged a different chain from the original Bitcoin blockchain - Bitcoin Cash (BCH). Bitcoin Cash had the biggest difference from Bitcoin, having an 8MB block size, making it's blocks 8x bigger compared to the Bitcoin ones. Because at the time of SegWit2x fork, the bigger part of miners and their hashing power would be adjusted to the new Bitcoin2x chain, which would have made Bitcoin transactions the slowest they have been, but without switching the chain and updating the protocol, the fork can't be carried out. Miners agreed to NYA (New York Agreement) beforehand to ensure the mining hashpower into fork. Neverthless, SegWit2x was cancelled and all miners who had to mine the new Bitcoin2x put all their hashing power to Bitcoin Cash because of it's much smaller difficulty level compared with Bitcoin, meaning much higher profits for the miners. This action caused a huge pump in the Bitcoin Cash price, where it went from 600$ to 2800$ because of Bitcoin slower transactions and higher fees. But the rise of the price didnt last for long, since Bitcoin Cash also automatically adjusts it’s difficulty level, which surged the price to 1000$. This move also caused the Bitcoin price to fall down to 5500-5600$ levels (it was trading around 6000-7800$ range). This situation showed huge changes in crypto world where many people sold their Bitcoins in panic with lower prices and lost a lot money. In this case it was the institutional miners who caused these drastic changes in the market. This case teaches to always keep up with the news and shows that everything is possible in the crypto world, weather its the miners, countries or other reasons that change the market prices..