Before you decide to jump into the realm of DeFi (decentralized finance) and cryptocurrency, you need to learn the terminology as well as how each platform and ecosystem functions. From yield farming to staking, there are many terms that can be rather confusing if you don’t understand what they mean.
In addition to learning the terminology, you will also need to learn how to set up and manage a wallet to store your digital tokens. You will need to learn how to maximize your earning potential while keeping your risk of potential loss low. Identifying scams and protecting your investments are important aspects of working in the Bitcoin world.
How to Set Up a Wallet
A crypto wallet is used to manage and store your assets in the cryptocurrency world. Your wallet will keep your currency secure as you trade, sell, or buy items using various types of Bitcoin or tokens. The first steps are to select a crypto wallet app and download it to your phone or other electronic device.
You will need to create an account and follow the steps to complete your identity verification. In most cases, this will be a government photo ID (driver’s license) and a selfie taken in real time. Once your account is open, you can begin to transfer your assets to the wallet. Software wallets are designed to support many different types of cryptocurrencies and tokens.
How to Understand APR/APY Data
APR and APY are two terms that are similar in what information they provide, but still different enough to be confusing for cryptocurrency investors. There are specific nuances you should understand when learning about your earning potential and investment growth in the crypto ecosystem. Your APY is your annual percentage yield. It is the true rate of return that is earned on an investment over a one-year period (including compounding interest).
In the crypto world, your APR, or annual percentage rate is the rate of return of an investment that is gained over a year. An APR, however, does not include compounded interest. The information is more straightforward and provides a more accurate representation of the interest you earn over the period of a year.
How to Look Out for Scams
In the cryptocurrency world, it’s important to be able to identify potential scams so you don’t lose your investment. Remember that only a scammer will demand payment using cryptocurrency in advance. Protect your money and verify the other party before any money changes hands.
One of the best rules of thumb when it comes to investments or any type of cryptocurrency exchange is that if it sounds too good to be true, it probably is. If a person is promising big rewards and easy money, avoid them. Only scammers will make hyped-up promises that they can’t back up.
If you want to be successful when it comes to earning money with DeFi, you need to learn how cryptocurrency and its many platforms work. There are many terms used within the crypto world that can be confusing and misleading.
Don’t jump in with both feet until you have a working knowledge of how to set up and manage your wallet. Do your research on Base Chain and other blockchain platforms. Educating yourself will allow you to make informed decisions and maximize your earning potential while keeping your risks to a minimum.