We are in an exciting time in the world of cryptocurrency. With this excitement comes a feeling of FOMO (fear of missing out), which may inspire action when investing, getting a crypto kitty, or using a decentralized application. It can also cause rash decisions leading to doing things we don't entirely understand. This article is meant to go over some tips and wisdom on how to handle your crypto assets, interact with decentralized applications, and the philosophy of hodling.
It is extremely important to understand that blockchain is fundamentally decentralized. This means that it works differently from centralized systems you're used to. All of your assets and holdings are completely and entirely under your control, and are your purview and responsibility alone. This has both pros and cons. XYO cannot access or manipulate your wallets, assets, or holdings for you, as only you have access to these things. Your security, and that you maintain it, is paramount to your cryptocurrency experience.
*Please note that nothing in this article constitutes investment advice or income management advice of any kind.
What we will go over
To start we should go over some key terms and what they represent in the crypto space
This is one half of your cryptocurrency key-pair. Your public key generates your public account address, which is similar to an email address or in banking terms an account number. This address can be shared with others on the network and can be used to receive crypto. Anyone can send the corresponding crypto to that address. However, you need a private key, similar to an email address password, in order to send crypto from that address. Important to note is that every chain has their own address formats. For instance you cannot send BTC (Bitcoin) to an ETH (Ethereum) address, or XYO to a LTC (Litecoin) address.
This is the other half of your cryptocurrency key-pair. A large and random number that is generated when you create an account through a wallet application or client-side dApp service (this will be explained later). This key is protected by a 12 to 24 random word list, otherwise known as a mnemonic phrase. What you should know is that this key should never be shared with anyone. Again, do not share this key with anyone. The mnemonic phrase should also be kept in a safe place and not in any software storage of any type. Do not lose this phrase or the private key. This is like cash, if you lose your private key the currency is lost as well.
This is equivalent to an account number for a bank. This is the where transactions will be documented from. Meaning whenever you send or receive assets, this will be the address the will be sent to or from. We will go over how to see transactions on an explorer.
A wallet is a storage mechanism for crypto assets.
Cold Wallet - otherwise known as cold storage. This is the safest method of storing crypto assets. This involves using a hardware wallet to store your public and private keys. This absolutely must be kept in a safe place. This is equivalent to a wallet with cash in it. Do not lose this wallet, if you do you will lose your cryptocurrency to whoever ends up with it. This wallet is not connected to the internet.
Hot wallet - this is a wallet that is the connected to the internet. This is used for exchanges and interaction with decentralized applications.
An exchange is an app or site that provides the service of actively trading cryptocurrencies. There are many exchanges that are not available to citizens of particular nations. Read the disclaimers of the given exchanges for limitations on country, currencies, and limits on trading. Do your research on the exchange that you are thinking of placing orders in, there are no cold storage options here, so it is possible to lose your currency!
You may read the term Smart Contract in our guides including this one. A smart contract is a computer program that executes functions to complete a transaction. Smart contracts can carry out many different type of functions, from issuing tokens to transferring ownership of a house to staking an XYO node or the network.
This is a concept where machines talk to machines to handle transactions, data, and other forms of knowledge sharing and trade. Blockchain technologies and cryptocurrencies are at the core of this next stage in the growth of the internet.
Handling Your Crypto Assets
Here is the key to handling crypto assets, be deliberate and careful with your assets. If you want to exchange assets or actively buy, then you should hold an amount that you are comfortable with in a cold wallet that you do not intend to use actively.
You can also use a hot wallet on an iPhone or Android phone, such as Trust Wallet or Coinbase Wallet, which can hold XYO directly. These wallets do have security, but are not as ironclad as a cold wallet. These wallets can also be used to interact with dApps such as our XYO network app. Again, these interactions will be on a mobile device. I will go over interactions with a web dApp in the next section.
Handling your crypto takes some responsibility. Here are the keys to handling with your crypto
- Manage your storage methods - know what you want to store in cold storage and hot storage
- Document and carefully store your 12 - 24 word mnemonic phrase
- Never share your private key with anyone
- Before you make any transaction know exactly why you are doing it
- Do your research before purchasing any particular token
Interacting With Decentralized Applications
Interacting with decentralized applications (otherwise known as dApps) is exciting. It is web 3.0! Before interacting though, it is important to keep the following in mind:
Keep track of transactions
Make sure that you are keeping track of any transactions on a dApp. Even if the dApp has a great UI that confirms your transaction or confirms the token or item, you want to be sure that you can track the transaction. For dApps, the primary network is the Ethereum network. You can track your transactions using your account address using Etherscan which is a block explorer for the Ethereum network. This explorer can find transactions that your account sent or received.
Pay attention to what you are interacting with
Whatever transaction you execute using your account address, please pay attention and document if necessary the entire process. Blockchain is immutable, and it would help you if you had information to look up transactions and blocks that contain transactions. Give yourself as much information as possible so that you know exactly where your crypto has gone. This is also important as dApps (including ours) may throw an error in the interface that may not be accurate, or not give you a response at all.
Use Metamask to interact with dApps on the Web
We recommend using Metamask when interacting with our dApps, including the XYO Network App and dApper. Read this article on using Metamask for more information. Metamask will send key notifications when a contract is executed, fails, and when you are about to transfer tokens.
To be a hodler is to identify as someone who is holding crypto for the long haul. As you are collecting and using your cryptocurrency it is important to keep this principle in mind if you want the effects of this investment to be profound and long lasting. You may experience the most gains on your cryptocurrency if you hold your tokens long term. As this industry continues to grow, values have a strong chance to increase.
The hodlr is also a critical thinker who understands the power of cryptocurrency to give the power of currency back to the consumer. With this power comes great responsibility.
- Never give you private key or mnemonic phrase to anyone, including any of us here at XYO
- If someone asks for your private key from a bank, XYO, or another company, it is an attempt to get your private key. Do not let them have it!
- When interacting with decentralized applications (dApps) make sure you are careful and understand what you are doing
- When interacting with dApps make sure that you are keeping track of any information from the transaction, do not blindly depend on the interface of the dApp.
Check out these great articles from our help center on crypto related issues