Spencer Li

What is Tether (USDT) Stablecoin, and is it a Good Investment?

Thumbnail What is Tether USDT and is it a good investment

What Is Tether (USDT)? A Plain-English Guide to the Biggest Stablecoin

Last updated: 3 July 2026 · By Spencer Li, CFTe

Tether (USDT) is the largest stablecoin in the world, a cryptocurrency designed so that one USDT is always worth about one US dollar. A stablecoin is a crypto token pegged to a stable asset (here, the US dollar), so it does not swing in price the way Bitcoin or Ethereum do. Tether holds it near one dollar by claiming to back every coin in circulation with reserves of roughly equal value. In practice, traders use USDT as a place to park money between trades, to move dollars between exchanges quickly, and to buy other cryptocurrencies. It is the most widely accepted stablecoin and the most liquid. Is it a good investment? Honestly, that is the wrong question. A stablecoin is not built to go up. It is built to stay put. You hold USDT to avoid volatility and stay flexible, not to grow your money. The real things to weigh are whether the peg holds and whether the reserves are really there.

Here is the full picture: what a stablecoin is, how Tether works, the case for using it, and the risks nobody likes to mention.

What is a stablecoin?

A stablecoin is a digital asset pegged to something with a stable value, usually the US dollar. The whole point is to avoid the wild price swings of the crypto market while keeping the convenience of blockchain (the shared, tamper-resistant ledger that records every transaction).

Think of it as a dollar that lives on the blockchain. Bitcoin can move 10% in a day. A stablecoin is supposed to sit at one dollar and stay there.

That stability is what makes it useful. A currency that swings around is hard to spend, save, or settle a trade in. A stablecoin is meant to be boring on purpose, which is exactly what you want when you are using it to hold value, move money, or settle a transaction.

What is Tether (USDT), and how does it work?

Tether is a stablecoin pegged to the US dollar, so one USDT is meant to equal one US dollar. It was first issued in 2014 and is run by a company called Tether Limited. The token is now issued across several blockchains, including Ethereum and Tron, not just the original Omni Layer it launched on.

It works like any other crypto token. You can send USDT to another person, use it to pay for goods or services, or store it in a digital wallet (software that holds your crypto, a bit like an online bank account). Every transaction is recorded on the blockchain.

The model is simple in theory. Tether Limited says each USDT in circulation is backed by reserves it holds, mostly cash and US Treasury bills. So in principle every coin is matched by about a dollar of real assets somewhere. That backing is what is supposed to keep the price glued to one dollar: if USDT ever drifts below a dollar, arbitrageurs (traders who profit from price gaps) buy it cheap and redeem it for the full dollar, which pushes the price back up.

Do note that the redemption process is not as frictionless as the original pitch suggests. Direct redemption with Tether is mainly for large, verified accounts and carries minimums and fees. Most ordinary users never redeem with Tether at all. They just sell USDT for dollars on an exchange. That distinction matters more than it sounds, and we will come back to it under risks.

Why traders use Tether

Tether is the default stablecoin for most of the crypto market, and the reasons are practical rather than exciting. Here is the honest case for it.

ReasonWhat it means for youThe honest caveat
StabilitySits near one dollar, so you can step out of a volatile trade without leaving crypto“Near” one dollar, not exactly. It has wobbled before
LiquidityThe most traded stablecoin, so you can move in and out fastLiquidity can dry up in a panic, which is the worst time
Accepted everywhereMost exchanges take USDT, so it is the easiest bridge to buy Bitcoin, Ethereum and the restWide acceptance is not the same as safety
TransparencyTether publishes regular reserve attestationsAttestations are snapshots, not full independent audits. Read the difference
Speed and easeAll you need is a wallet and an internet connection. No mining, no complexitySpeed cuts both ways. A bad transfer is irreversible

A few of these deserve a closer look, because the original pitch around stablecoins tends to oversell them.

On transparency, be precise. Tether publishes attestations: a third party confirms what the reserves looked like at a single point in time. That is genuinely more than nothing, and Tether’s reporting has improved over the years. But an attestation is not a full audit, where an auditor stands behind the numbers over a whole period. If someone tells you Tether is “fully audited”, they are overstating it. Know what you are actually getting.

On liquidity, USDT really is deep and easy to trade in normal conditions. The catch is that liquidity is highest exactly when you do not need it and thinnest in a crisis, when everyone wants out at once. Plan for the bad day, not the good one.

One correction worth making plainly: USDT is not decentralized. Tether Limited issues it, controls the supply, and can freeze tokens at specific addresses when asked by law enforcement. That centralization is a feature for compliance and a risk for anyone who assumed crypto means “no one can touch my coins”. Both things are true at once.

The risks nobody likes to mention

Every stablecoin carries risk, and pretending otherwise is how people get hurt.

The first is hacking, the standard crypto risk. Tether itself has not suffered a major blockchain-level breach, which is a point in its favour, but the exchanges and wallets where you hold USDT absolutely have been hacked. Where you keep it matters as much as what it is.

The second, and the big one, is depegging. Because USDT is pegged to the dollar, the whole thing rests on that peg holding. If confidence cracks and the peg breaks, a stablecoin can fall fast. We saw the worst version of this with Terra USD (UST) in 2022, which spiralled toward zero in days. Tether is a very different design from UST, and it has defended its peg through several scares, briefly dipping below a dollar and recovering. But “it held last time” is a hope, not a guarantee.

The third is reserve risk, which is really the depeg risk underneath the depeg risk. The peg is only as good as the assets behind it. If you cannot fully verify the reserves, you are trusting Tether Limited. That trust has mostly been rewarded, and it has also been questioned, including a past settlement with regulators over how reserves were once represented. None of this means avoid it. It means size it like a position with counterparty risk, not like cash in a bank.

Where the human edge comes in

A screen will tell you USDT is sitting at one dollar in a tenth of a second. What it will not tell you is when “one dollar” has quietly become a crowded exit. The data is free. The judgment to not park your whole stack in a single stablecoin, to spread counterparty risk, and to treat a peg as a promise rather than a law, that is the part no tool supplies for you. That judgment is the first of the Five Edges that AI cannot trade for you.

So is Tether a good investment?

Reframe it. Tether is not really an investment, because it is not designed to go up. It is the blue-chip parking spot of the crypto world, a way to hold value in dollars without leaving the blockchain. Used for what it is good at, holding, moving, and settling, it does the job better than any rival. If you are reaching for a stablecoin specifically to chase high yields, understand that the higher the advertised yield, the higher the risk you are taking on, and the peg you are leaning on may be flimsier than Tether’s.

Hold USDT to stay nimble, not to get rich. Keep an eye on the peg, do not concentrate everything in one issuer, and you have used the tool correctly.

FAQ

Is Tether (USDT) safe?
It is the most established and most liquid stablecoin, and it has defended its dollar peg through multiple scares. But it is not risk-free: the main risks are depegging and reserve quality, and you are trusting Tether Limited to back every coin. Treat it as a low-volatility holding with counterparty risk, not as guaranteed cash.

Is one USDT always worth one US dollar?
That is the goal, and it usually trades very close to one dollar. It has briefly slipped below the peg during market panics and then recovered. “Pegged” means “designed to stay at a dollar”, not “legally fixed at a dollar”.

Is Tether decentralized?
No. Tether Limited issues USDT, controls its supply, and can freeze tokens at specific wallet addresses. It runs on decentralized blockchains, but the token itself is centrally controlled.

Is Tether fully audited?
Not in the strict sense. Tether publishes regular reserve attestations, which are third-party snapshots of the reserves at a point in time. That is more disclosure than some rivals provide, but it is not the same as a continuous independent audit. Know the difference before you rely on the word “transparent”.

How do I buy Tether (USDT)?
Register and verify an account on an exchange that supports USDT, such as Binance or other major exchanges, then buy USDT with fiat currency or by swapping another cryptocurrency. Most people then hold it in an exchange or self-custody wallet rather than redeeming directly with Tether.

Now that you know what Tether is and where its risks sit, how do you use stablecoins in your own setup? Let me know in the comments.

If you want the bigger picture on crypto and DeFi, read the pillar: The Ultimate Guide to Blockchain and Cryptocurrencies.

Want a system, not just another coin to watch? Grab the free 15-Minute Swing Trading Starter Kit. It is the exact routine I use to scan once a day and trade any market in 15 minutes.

About the author. Spencer Li is the founder of Synapse Trading and a Certified Financial Technician (CFTe) with 15 years of trading across stocks, forex, crypto, commodities, and bonds. His trade log is public, 404 trades, losses left in. He teaches low-risk swing trading in 15 minutes a day, one system for any market.

Education, not financial advice. Synapse Trading is not licensed by MAS to advise on investment products. Trading and crypto carry risk of loss; past performance is not indicative of future results.

Related

The Ultimate Guide to Blockchain and Cryptocurrencies (pillar) · What is DeFi and how does it work · Bitcoin vs Ethereum · How to store crypto safely

0 Comments/by
Spencer Li

What is a Crypto Blockchain 51% Attack? (Compared to 34% Attack?)

Thumbnail What is a Crypto Blockchain 51 Attack

What Is a 51% Attack on a Blockchain? (And How It Is Prevented)

Last updated: 3 July 2026 · By Spencer Li, CFTe

A 51% attack happens when a single miner or group gains control of more than 50% of a blockchain’s mining power (its “hash rate”), which lets them mine faster than everyone else and rewrite recent transaction history. With that majority, an attacker can stop new transactions from confirming and double-spend their own coins (spend the same coin twice). What they cannot do is steal coins out of your wallet or reverse a transaction that is already deep in the chain. So the damage is real, but it is mostly temporary and limited to recent, unconfirmed activity.

The catch is scale. On a huge network like Bitcoin or Ethereum, buying more than half the mining power is so expensive that it is, in practice, not worth it. The real-world victims have always been smaller coins (Grin, Vertcoin, Bitcoin Gold, Ethereum Classic), where hash rate is cheap enough to rent. The two main defences are simple: keep mining power spread out so no one passes 50%, or switch the network to Proof of Stake, where an attacker has to risk their own money to misbehave.

Here is how the attack works, what it can and cannot do, the real cases, and how networks defend against it.

What is a 51% attack?

A 51% attack occurs when one party in a blockchain network controls more than 50% of its computational power. That majority lets them mine new blocks faster than the rest of the network combined.

Why does that matter? Because the chain follows the longest valid version. If you can build blocks faster than everyone else, you can produce a longer chain and force the network to accept your version of events. You can alter recent data or stop transactions from confirming without getting consensus from anyone else.

Blockchains are secure by design, but they are not perfect. There is no way to guarantee every participant is honest. On Bitcoin, miners decide which transactions go into the next block, so a miner could choose to leave out transactions that do not suit them.

For most large cryptocurrencies, including Bitcoin and Ethereum, this stays theoretical. The computing power needed to out-mine an established network is impossibly large. You mostly see selfish miner behaviour in smaller skirmishes like “penny wars,” where small players spam low-value transactions to push up the per-kilobyte fee they earn. To handle this, most blockchains build in hard fork protocols that can change the rules if needed.

What can a 51% attacker actually do?

This is where most explanations overstate the danger, so let me be precise. A majority attacker can do a specific list of things, and there is an equally specific list they cannot do.

Can doCannot do
Double-spend their own coins (spend the same coin twice)Steal coins from your wallet directly
Block or delay new transactions from confirmingReverse a transaction already buried deep in the chain
Reorganise recent blocks and run an alternate historyCreate coins out of thin air or change old, settled balances
Redirect their own transactions (broadcast one, mine another)Break the network’s cryptography

So an attacker with majority hash rate can form their own consensus, run a different version of recent history, and double-spend. They can also block transactions they do not want confirmed. All of this hurts end users, because someone with majority power can bend the chain’s near-term rules in ways nobody signed up for.

This is one reason some people prefer off-chain solutions like Segregated Witness (SegWit) or the Lightning Network for everyday Bitcoin payments. Those move activity off the main chain, so they do not depend on heavy on-chain hashing to settle.

How a 51% attack disrupts the network

Most large networks, including Bitcoin and Ethereum’s original design, run on Proof of Work (PoW). Under PoW, the network aims to add a new block roughly every 10 minutes. To add one, a miner has to solve a hard mathematical puzzle, which is near-impossible without serious computing power.

In a 51% attack, the attacker uses their majority to interfere with unconfirmed blocks and transactions. That is the disruption: not stealing settled funds, but jamming and rewriting the recent edge of the chain. Users can lose access to digital assets in the short term, which understandably shakes trust in the network’s reliability.

Is the damage permanent?

Do note that the damage is usually temporary. A 51% attacker can disrupt the chain and invalidate recent transactions, but they generally cannot rewrite settled history.

Here is the part that calms people down. If you already sent Bitcoin to another person or a merchant and that transaction is buried in the chain, an attacker cannot reverse it. They can stop future transactions from confirming, and they can double-spend their own coins, but those are different things from reaching into a settled payment and undoing it. Once the attack ends, normal access to funds returns.

So even if it looks like money has vanished during an attack, it does not stay gone forever.

51% attack vs 34% attack: what is the difference?

People sometimes confuse the two, so here is the clean line between them.

34% attack51% attack
Share of mining powerLess than half, but a large minorityMore than half (majority)
What it can doTamper with the ledger to a limited degreeRun an alternate chain, double-spend, block transactions
SeverityLimitedFar more severe
Why it worksEnough power to interfereEnough power to outpace the entire main network

A 34% attacker can meddle with the ledger but cannot dominate it. A 51% attacker, with more than half the power available, can create competing versions of the chain and out-mine the main network. That is the difference between vandalism and control.

Real 51% attacks: the case file

The theory matters less than the track record. Every real attack has hit a smaller coin, because smaller coins have cheaper hash rate. Here are the four from the original post.

CoinWhat happenedNetwork response
GrinAn unknown miner took 57% of Grin’s hash power. The attacker’s intent was never clear.Grin shut off payouts, told miners to pause, then re-established the network with extra safeguards.
VertcoinAttacked several times. In one, attackers replaced genuine blocks with their own.Switched to a more robust PoW system and cut out powerful mining chips to keep mining community-based.
Bitcoin Gold (BTG)Uses Equihash and GPU mining instead of ASICs. An unknown miner took over 51% of hash rate in 2018; another attack in 2020 caused two chain reorganisations in two days, with a large sum double-spent.The community pushed for a more secure algorithm. There was suspicion that hidden ASIC devices were involved.
Ethereum Classic (ETC)Attacked three times in a single month in 2020. ETC’s decentralised PoW makes 51% attacks hard to mitigate.Prices were not badly hit, but user trust in the network fell.

Notice the common thread: privacy coins, forks, and minority networks. None of these were Bitcoin or Ethereum proper. The size of the network is itself the security.

Can a 51% attack be prevented?

Blockchain is decentralised, but it is not immune to attack. There are two practical defences.

Keep mining power spread out. The simplest protection is to make sure no single miner or pool ever holds more than 50% of total hash rate. If no one can pass the line, no one can run the attack. This is partly social and partly built into how a healthy network distributes its mining.

Use Proof of Stake (PoS) instead of Proof of Work. Under PoS, validators (not miners) produce blocks, and they have to lock up their own cryptocurrency as a stake. To attack the network, they would have to risk forfeiting that entire stake. The bigger the stake at risk, the less rational it is to misbehave. This is a large part of why Ethereum moved to Proof of Stake.

Hence, the strongest network is not the one with the cleverest cryptography. It is the one where attacking it costs more than it could ever pay, either because the hash rate is too expensive to corner, or because the attacker’s own money is on the line.

Where the human edge comes in

A scanner can tell you a coin’s hash rate is concentrated, or that its market cap is small enough to rent an attack against. That data is free now. What it will not do is supply the judgment to size your exposure to a thin, attackable network smaller than you would a blue-chip one, or to treat “cheap to attack” as a real risk rather than a footnote. The chain’s security is the easy part to look up. Pricing that security into your own position is the judgment, and judgment is the first of the Five Edges no tool can trade for you.

FAQ

What is a 51% attack in simple terms?
It is when one party controls more than half of a blockchain’s mining power and uses that majority to mine faster than everyone else, letting them rewrite recent transactions and double-spend their own coins. They cannot steal funds from your wallet or reverse settled payments.

Can Bitcoin suffer a 51% attack?
In theory, yes. In practice, no one has done it, because buying more than half of Bitcoin’s mining power would cost an impossibly large amount. The networks that have actually been attacked are much smaller coins like Grin, Vertcoin, Bitcoin Gold, and Ethereum Classic.

Is my money safe during a 51% attack?
Mostly. An attacker can block new transactions and double-spend their own coins, but they cannot reverse a payment that is already deep in the chain or steal coins out of your wallet. Once the attack ends, normal access returns.

What is the difference between a 51% attack and a 34% attack?
A 34% attacker has a large minority of mining power and can tamper with the ledger to a limited degree. A 51% attacker has the majority, which is far more severe: they can run an alternate chain, block transactions, and double-spend.

How do you prevent a 51% attack?
Keep mining power spread out so no single party passes 50%, or switch the network to Proof of Stake, where attackers must risk forfeiting their own staked cryptocurrency to misbehave.

Now that you know what a 51% attack can and cannot do, can you tell which small tokens are most exposed to one? Let me know in the comments.

And if you want the full picture of how blockchains and crypto fit together, read the pillar: The Ultimate Guide to Blockchain and Cryptocurrencies.

Want a calmer way to trade crypto and any other market? Grab the free 15-Minute Swing Trading Starter Kit. It is the exact routine I use to scan once a day and trade any market in 15 minutes.

About the author. Spencer Li is the founder of Synapse Trading and a Certified Financial Technician (CFTe) with 15 years of trading across stocks, forex, crypto, commodities, and bonds. His trade log is public, 404 trades, losses left in. He teaches low-risk swing trading in 15 minutes a day, one system for any market.

Education, not financial advice. Synapse Trading is not licensed by MAS to advise on investment products. Trading carries risk of loss; past performance is not indicative of future results.

Related

The Ultimate Guide to Blockchain and Cryptocurrencies (pillar) · What is Proof of Stake vs Proof of Work · What is a blockchain fork · How to value a cryptocurrency

0 Comments/by
Spencer Li

What are Blockchain Forks & How do they Affect Your Trading Platform?

Thumbnail What are Blockchain Forks How do they Affect Your Trading Platform

Blockchain Forks Explained: Soft Fork vs Hard Fork (and What It Means for Your Crypto)

Last updated: 3 July 2026 · By Spencer Li, CFTe

A blockchain fork is when a cryptocurrency’s chain splits into two paths because the network’s software rules changed. A soft fork is backward-compatible: old nodes (computers running the network) still work, so the chain stays as one. A hard fork is not backward-compatible: it creates a permanent new chain, and you end up holding coins on both the old and the new chain. That is the whole thing in two sentences. A soft fork is an upgrade everyone can live with; a hard fork is a divorce. Bitcoin Cash splitting from Bitcoin in 2017 was a hard fork. SegWit on Bitcoin was a soft fork. As a holder, the practical question is simple: a soft fork rarely needs you to do anything, while a hard fork forces a choice (old chain, new chain, or claim both).

Here is what each fork actually is, why developers choose one over the other, and how it affects your holdings and your exchange.

What is a blockchain fork?

Cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) run on decentralized, open-source software called a blockchain (a shared ledger of transactions that anyone can read and contribute code to). Because it is open-source, the network relies on its community of developers to keep the code current.

A fork is when that chain of data suddenly diverges into two branches. The new branch shares all of the earlier branch’s history, then heads off in its own direction. From the split point on, each branch goes its own way.

Forks happen for many reasons, but they fall into two buckets:

  • Accidental forks. Thousands of miners (the computers that race to add new blocks) are working at once. Sometimes two of them mine the same block at nearly the same moment. The network resolves this on its own: it keeps building on the longer chain and abandons the shorter one. No drama, no new coin.
  • Intentional forks. Here the network does not reconverge. Developers deliberately change the protocol (the blockchain’s core rulebook), for example to alter the block size, reduce block time, or test a new consensus algorithm. Intentional forks are the ones worth understanding, and they come in two flavours: soft and hard.

Soft fork vs hard fork: what is the difference?

The whole distinction comes down to one word: compatibility.

A hard fork is a permanent divergence that creates a brand-new chain and makes the old rules invalid on it. Every node has to adopt the new rules to stay on the new chain. Nodes on the two chains can no longer talk to each other. This usually happens when developers simply cannot agree on a proposed change. When it happens, users and miners face a decision: keep running the old software (stay on the legacy chain) or upgrade to the new one. Either way, you now hold coins on both chains. You still own the legacy coin, and you can claim the new chain’s coin. Any node that refuses to upgrade gets kicked off the new main chain, because it cannot process the new consensus rules.

A soft fork is the gentle version. Its changes are backward-compatible with the pre-fork blocks. Blocks created under the new rules are still valid under the old rules, so nodes do not have to upgrade. You can keep running the old software and still take part in the network. Soft forks tighten the rulebook rather than rewrite it, so the community is nudged onto the new rules instead of being forced. If you never update, things keep working and you still interact with everyone who did update.

Here is the side-by-side.

Soft forkHard fork
CompatibilityBackward-compatible (new blocks still valid under old rules)Not compatible (old and new chains cannot communicate)
Must nodes upgrade?No, old software still worksYes, to stay on the new chain
ResultOne chain, upgradedTwo permanent chains
New coin created?NoYes, holders end up with coins on both chains
Typical useRoutine upgrades and improvementsMajor rule changes, or an unresolved community split
ExamplesBitcoin SegWitBitcoin Cash, Ethereum Classic

What are the different types of soft forks?

Not all soft forks activate the same way. There are two:

  • User-activated soft fork (UASF). Nodes agree to switch on the new rules at a specified block height (a point in the chain’s count). Once activated, those nodes enforce the new rules on every block from then on and reject blocks built under the old rules. A UASF only activates once a majority of hash power (mining power) has signalled support. The risk: if a lot of hash power stays on the old version, you can get a replay attack, where a transaction made on one chain also appears on the other.
  • Miner-activated soft fork (MASF). This one activates at an agreed-upon block number, triggered by nodes and miners at regular intervals, so there is a built-in delay before full activation. MASFs are generally less disruptive than UASFs because they do not interfere with how users create transactions.

Blockchain forks in practice: the real examples

Most coins have an independent developer community responsible for upgrading the network, so forks happen whenever they add features or harden security. Developers can also use a fork to spin off an entirely new currency and ecosystem. The most famous splits:

EventTypeWhenWhat changed
Bitcoin Cash (BCH)Hard forkMid-2017Forked from Bitcoin; block size limit raised from 1 MB to 8 MB, later to 32 MB
Ethereum Classic (ETC)Hard forkOctober 2016A group rejected the new hard-fork rules and kept running the old Ethereum chain, later renamed ETC
Bitcoin SegWitSoft fork2017Segregated Witness restructured transactions without splitting the chain; un-upgraded nodes still participate
Ethereum to EthashSoft fork,Moved off Bitcoin’s SHA256 algorithm to Ethash via a forward-compatible upgrade

A couple of things to notice from these.

Bitcoin Cash and Ethereum Classic both came from disagreement. BCH split off after the community could not agree on how to upgrade Bitcoin’s software, so the BCH side loosened the restrictions on what you could do. ETC was the opposite reflex: a group that rejected a hard-fork change and chose to keep the old chain alive. Same mechanism, opposite motivations.

SegWit is the instructive one. It was widely assumed that changing Bitcoin’s transaction structure would need a hard fork. The developers found a forward-compatible way to ship it as a soft fork instead, so nodes that never updated still work on the network. That is the pattern: because a hard fork can split the community in two, developers usually try to solve the problem with a soft fork first, and only hard-fork when there is no compatible path.

If a coin you hold goes through a hard fork, this is the knowledge that lets you decide which branch to follow.

How do forks affect a trading platform?

This is the part that touches your money directly. A hard fork can change how you buy, sell, or trade a coin, because it briefly turns one asset into two.

Not every exchange handles this the same way. Some platforms only list coins they consider viable to trade, which means an upcoming hard fork might be unsupported or trading might be disabled entirely while it resolves. Other platforms support all hard forks. A few even let you buy during a fork by giving you access to the funds and the new coin before trading opens elsewhere, which can give you an early read on how the change will hit your portfolio. The practical takeaway: before a known fork, check how your specific platform plans to handle it, because “do nothing and it sorts itself out” is true for a soft fork and not always true for a hard fork.

Where the human edge comes in

Here is the honest bit. Knowing the mechanics of a fork is the easy half, and frankly an AI can recite the soft-vs-hard difference for you in a second. What the textbook will not do is sit you down before a contentious hard fork and ask whether you actually want exposure to a brand-new coin born out of a community that just fractured, or whether the cleaner move for your book is to step aside through the noise and reassess after the dust settles. That call is judgment, sizing, and a bit of psychology under uncertainty. It is the same skill that separates a good trader from a well-read one, and it is the first of the Five Edges no model trades for you.

FAQ

What is the difference between a soft fork and a hard fork?
A soft fork is backward-compatible, so old nodes keep working and the chain stays unified; it is used for routine upgrades. A hard fork is not backward-compatible, so it creates a permanent second chain, and holders end up with coins on both. SegWit was a soft fork; Bitcoin Cash was a hard fork.

Do I get free coins from a hard fork?
Effectively yes. After a hard fork you still hold your original coin on the legacy chain and can claim the new chain’s coin as well, so you hold the asset on both chains. Whether the new coin holds any value is a separate question entirely.

Is Bitcoin Cash a hard fork or a soft fork?
Bitcoin Cash (BCH) is a hard fork. It split from Bitcoin in mid-2017 and raised the block size limit from 1 MB to 8 MB, later to 32 MB.

What is a UASF versus a MASF?
A user-activated soft fork (UASF) switches on new rules at a set block height once a majority of mining power signals support. A miner-activated soft fork (MASF) activates at an agreed block number triggered by miners, with a built-in delay, and is usually less disruptive.

Should I sell before a fork or hold through it?
There is no one answer, and this is not advice. A soft fork rarely requires you to do anything. For a contentious hard fork, the real question is whether you want exposure to a new, untested chain or would rather reduce risk through the event. Check how your exchange handles the fork before deciding.

So, the next time a coin you hold announces a fork, you will know which kind it is and what it asks of you. Would you sell your tokens and buy back after the split, or hold straight through it? Let me know in the comments below.

And if you want the full picture on how blockchains, coins, and DeFi fit together, read the pillar: The Ultimate Guide to Blockchain and Cryptocurrencies.

Want a system instead of more crypto trivia? Grab the free 15-Minute Swing Trading Starter Kit. It is the exact routine I use to scan once a day and trade any market, crypto included, in 15 minutes.

About the author. Spencer Li is the founder of Synapse Trading and a Certified Financial Technician (CFTe) with 15 years of trading across stocks, forex, crypto, commodities, and bonds. His trade log is public, 404 trades, losses left in. He teaches low-risk swing trading in 15 minutes a day, one system for any market.

Education, not financial advice. Synapse Trading is not licensed by MAS to advise on investment products. Trading carries risk of loss; past performance is not indicative of future results.

Related

The Ultimate Guide to Blockchain and Cryptocurrencies (pillar) · What is Bitcoin and how does it work · Proof of work vs proof of stake · How to start trading cryptocurrency

0 Comments/by
Spencer Li

Best Ways (Where & How) to Buy Bitcoin and Other Cryptocurrencies

Thumbnail for Where and How to Buy Bitcoin and Other Cryptocurrencies

Have you ever wondered, what is the best way to buy Bitcoin and other cryptocurrencies?

Cryptocurrencies are on their way to becoming mainstream and are here to stay.

No one can say how long they’ll be around, but they have already made a mark on the world and are becoming more popular by the day.

Not only do they make it easier for people to send and receive money, but they also offer a level of privacy that traditional currencies don’t.

While many people are still wondering what all the fuss is about, many others are busy buying cryptocurrencies.

So, if you are one of those sitting on the fence and wondering what all the fuss is about and how you can get involved in this growing market, then you’ve come to the right post.

This post will discuss all the ins and outs of cryptocurrencies, including why they are valuable, where to buy as well as how to buy them.

So, before you get involved in this growing market, let’s understand the basics.

 

Infographic for Best Ways Where and How to Buy Bitcoin and Other Cryptocurrencies psd

Introduction to Cryptocurrency

Many people thought that cryptocurrencies were only a passing fad.

However, in the past years, it has been evident that they are here to stay.

So, what exactly is cryptocurrency?

In simple language, cryptocurrencies are digital currencies that are created and stored on the blockchain.

The blockchain is a digital ledger that keeps track of every transaction ever made with a cryptocurrency.

This allows people to keep track of their money without having to trust any third party like a bank or government.

If we talk about the cryptocurrency types, then the most popular ones are Bitcoin and Ethereum.

  • Bitcoin is the first and foremost valuable cryptocurrency that was created in 2009 by an anonymous developer named Satoshi Nakamoto. It is a decentralized currency, which means no central authority can control it or inflate its value.
  • Ethereum is the second most known cryptocurrency after Bitcoin. It was developed in 2013 by a team of developers led by Vitalik Buterin and is used more as a platform for decentralized applications (dApps).

Apart from this, there are many more, like IOTA, Litecoin, Neo, and Cardano.

So, it’s difficult to answer which one is better than the others. The only thing that matters is what you want to achieve with the currency.

If you want a cryptocurrency that can be used for payments and storing value, then Bitcoin is the best choice.

On the other side, if you choose a platform to create dApps or smart contracts, then Ethereum is your best bet.

Why are They Valuable?

Cryptocurrencies are valuable because they are decentralized, meaning no one governing body controls it.

It’s also encrypted so that only the owner of the wallet has access to their funds.

This makes it super challenging for hackers to steal your money.

Also, the fact is that cryptocurrencies are global means they can be sent anywhere in the world without any hassle.

This makes them highly valuable to those who need to send money overseas.

How to Buy Crypto?

If you are a beginner or new to the world of cryptocurrencies, then you will feel lost in this big sea.

But no panic; here is a step-by-step guide to help you understand the process of buying cryptocurrency.

1. Choose a cryptocurrency to invest in

There are many different cryptocurrencies, so the the first step is to decide what cryptocurrency you want to invest in.

Bitcoin (BTC) is one of the most popular choices because it’s been around since 2009 and has proven itself a valuable investment option.

You can also choose Ethereum (ETH), Ripple (XRP), Litecoin (LTC), and others, depending on which ones appeal to you most.

2. Choose a broker or crypto exchange

The next step is to choose a broker or crypto exchange.

A broker will help you to purchase cryptocurrency, but you’ll need to be careful to choose a reputable one.

A crypto exchange is like an online bank where you can buy and sell cryptocurrency.

This option is easier than using a broker, but it’s also less secure because it doesn’t have the same security measures in place.

However, some exchanges are better than others, so make sure that you research the ones that interest you before choosing one.

If you are looking for a list of recommendations, you can check our full list of tools and resources.

3. Create your account

Feeling excited? You should be!

The next crucial step is to open up your crypto account.

Once you have chosen a broker or crypto exchange, you’ll need to sign up for an account with them.

This will involve providing some personal information like your name and address, but it also means that the company has all of your details in case anything goes wrong.

4. Fund your account

You will need to fund your account before you can buy any cryptocurrency.

This means that you need to deposit some money into the exchange so that it can be used as a base currency amount for buying or selling cryptocurrencies.

The amount of funds you need to deposit will depend on how much cryptocurrency you want to buy and what type of coin it is (e.g., Bitcoin or Ethereum).

5. Place your order

Once you have deposited funds into your account, it’s time to place an order.

This is when you tell the exchange what type of coin you want to buy and how much of it.

You should also specify which currency should be used as a base (e.g., USD) and whether or not you want immediate delivery or if you want to set up a future date for receiving the coins.

6. Store safely

Once your order has been placed, you will receive your coins at the specified wallet address, and it is then crucial to keep it safe.

Storing your crypto assets on an exchange might be convenient, but it is also more vulnerable to theft.

So, if you want to avoid this, then consider using an offline hardware wallet. They allow you to store your private keys on secure devices that are not connected to the internet.

This way, if someone were to steal them from you, they would be unable to access your coins.

Now that you are equipped with how to buy Bitcoin and other cryptocurrencies let’s move on to where to buy.

Where to Buy Crypto?

You will be mesmerized to know that the value of Bitcoin has increased from $0.5 to $20,000 in just months.

This is the reason why people are investing in Bitcoin and other cryptocurrencies today.

However, with numerous such choices available, it can be confusing to find a reliable place to buy your coins.

That’s why we’ve come together with this handy guide on the best places to buy Bitcoin and other cryptocurrencies online.

There are two ways to get started.

One is going through a broker, and the second is using a cryptocurrency exchange.

Below are the pros and cons of both options so that, in the end, you are piped line with the right information to make an informed choice.

a) Broker:

A broker is simply a person or a company that acts as an intermediary between you and the cryptocurrency exchange.

They provide a platform where you can buy, sell, and trade cryptocurrencies.

The benefit of using a broker is that they offer a simple and convenient way of purchasing Bitcoin or other cryptocurrencies.

You can also use a broker to sell your coins when you want to close your positions or rotate back to fiat currency.

The only drawback is that they charge higher fees than cryptocurrency exchanges do.

b) Cryptocurrency exchange:

A cryptocurrency exchange is a platform where you can buy and sell cryptocurrencies.

It works much like a stock exchange, except that it deals with digital currencies instead of stocks or bonds.

The primary benefit of using a cryptocurrency exchange is that it provides you with a wide range of coins to choose from.

You can also use it to trade different cryptocurrencies against each other.

The only drawback is that you’ll have to pay fees for each transaction, which can be pretty high if you make a lot of trades.

Concluding Thoughts

Cryptocurrencies are becoming increasingly mainstream, and with that comes an increase in the number of ways to buy Bitcoin and other digital assets.

While there are many different exchanges available, not all of them are created equal.

It is supreme to do your own research to find an exchange that is reputable and offers the features that you are looking for.

Now that I have shared where and how to buy Bitcoin and various cryptocurrencies, which do you think is the best way to do it?

Let me know in the comments below.

 

thumbnail the ultimate guide to blockchain and crypto assets

If you would like to learn more about crypto & DeFi, also check out: “The Ultimate Guide to Blockchain & Cryptocurrencies”

0 Comments/by
Spencer Li

How to Stake on Proof-of-Stake Blockchains for Passive Crypto Income

How to Stake on Proof of Stake Blockchains for Passive Crypto Income thumbnail

What Is Crypto Staking, and How Do You Earn Passive Income From It?

Last updated: 2026-06-14 · By Spencer Li, CFTe

Crypto staking is when you lock up coins you already own to help run a proof-of-stake blockchain, and you get paid a reward for doing it. Think of it as putting your crypto to work instead of letting it sit. You commit your coins to the network, the network uses them to validate transactions, and in return you earn more of that coin, often somewhere in the range of 4 to 8 percent APY (annual percentage yield, the yearly return including compounding). The process is mostly passive once set up: you deposit, you stake, you wait, you withdraw. The catch is that “passive” does not mean “risk-free”, your coins are locked, the yield is paid in a volatile asset, and the underlying network can fail in ways a savings account never will.

So staking is real income, but it is income with strings attached. Here is how it works, how to actually do it, and where it goes wrong.

What is proof of stake, and how is it different from mining?

To understand staking you first need to understand the system it belongs to. A blockchain needs a way for strangers who do not trust each other to agree on which transactions are real. That agreement mechanism is called a consensus algorithm (a shared set of rules everyone in the network follows to validate transactions and block fraud).

The famous one is proof of work (PoW), the system Bitcoin uses. Miners race to solve hard math problems, and the winner earns the right to add the next block. It works, but it burns a lot of electricity and expensive hardware.

Proof of stake (PoS) replaces that race with a stake. Instead of competing on computing power, validators lock up their own coins as collateral. The network then picks who creates the next block based partly on random selection and partly on how much each validator has staked. No mining rigs, no power bill, no math race. You earn by holding and committing coins, not by burning energy.

The term “proof of stake” was coined by a Bitcointalk forum user called QuantumMechanic. The core idea was simple: it is wasteful to make everyone compete on raw processing power, so let people put skin in the game with their coins instead.

Proof of Work (PoW)Proof of Stake (PoS)
How you qualifySpend computing power to solve mathLock up (“stake”) your own coins
Who adds the next blockWhoever solves the puzzle first (a miner)A validator chosen partly by stake size, partly at random
Main costHardware plus electricityThe coins you tie up (opportunity cost)
Energy useHighLow
Barrier to entryExpensive rigsJust hold and stake coins
Example chainsBitcoinEthereum, Cardano (ADA), Solana (SOL), Polkadot (DOT), Algorand (ALGO)

The key line to remember: in PoW you earn by working, in PoS you earn by committing capital. That is why staking feels closer to earning interest than to running a business.

The basic staking terms you need

Before going deeper, here is the vocabulary, defined plainly:

  • Stake is the amount of cryptocurrency you have locked into the network.
  • Stakeholder is the person doing the staking (you).
  • Validator is a node that creates new blocks on the blockchain.
  • Block reward is the crypto paid to a validator for creating a new block.
  • Delegated proof of stake (DPoS) is a version where you hand your staking power to a validator who stakes on your behalf, so you do not have to run a node yourself.

How does the network decide who earns the reward?

Validators are not picked at random alone. A node has to stake a minimum amount of coins before it can even be considered for the validator role, and the bigger the stake, the higher the odds of being chosen to forge the next block.

A simple example makes this concrete. Say John contributes $100 to the network and Cindy contributes $500. Cindy’s chance of being picked to forge the next block is five times higher than John’s. More stake, more turns, more rewards. The system is weighted toward those who commit more capital, which is the whole point: it aligns the people securing the network with the people who have the most to lose if it breaks.

Do note that the stake is always worth more than what the validator earns in transaction fees. That gap is deliberate. It keeps the validator financially motivated to behave, because misbehaving puts a larger pile of their own money at risk than they could ever gain by cheating.

How do you actually stake your crypto?

The mechanics are straightforward. Here is the sequence:

  1. Find a supported wallet or exchange that offers staking for the coin you already hold.
  2. Deposit your tokens into that wallet or exchange.
  3. Check the minimum. Some networks require a set amount before you can participate. To stake directly on Tezos you need a minimum of 8,000 Tezos (XTZ). Running your own Ethereum validator calls for 32 ether (ETH). Many exchanges let you stake far smaller amounts by pooling, which is how most beginners start.
  4. Choose how much to stake and for how long. Your reward depends on the amount staked, how long you stake it, and the specific rules of that network.
  5. Wait. Once deposited, the process is passive. You earn without doing further work.
  6. Withdraw when you are done, subject to any lock-up or unbonding period the network enforces.
NetworkTypical minimum to stake directlyNotes
Tezos (XTZ)8,000 XTZLower via delegation or an exchange
Ethereum (ETH)32 ETH to run a validatorFar less via pooled or exchange staking
Many othersNone to smallExchange staking often has no hard floor

A note on yield: there are coins offering an APY of 4 to 8 percent or higher. That is attractive next to a bank, but read it honestly. The percentage is paid in the coin, not in cash, so if the coin’s price drops 20 percent, your 6 percent yield has not saved you. Lock-up rules vary too. Some networks need a minimum staking period (say 30 days), others have none. As a rule, the longer you stake, the more you earn, but the less flexible you are if the market turns.

Why stake at all?

The appeal is simple. Proof-of-stake chains let you earn passive income just by holding coins in a wallet. There is no mining hardware to buy, no electricity bill, no complex math to solve. That makes staking far more accessible than mining ever was, you can start with what you already own.

There is a structural argument too. PoS networks tend to be more censorship resistant than PoW ones. In a PoW system a small group of miners can, in principle, choose to censor certain transactions. In a PoS system the say is spread across everyone who holds and stakes coins, which makes it harder for any single party to block or refuse transactions.

What are the risks and problems with staking?

This is the part the “earn passive income” headlines skip, so I will not. Staking has real downsides.

  • Scale and maturity. No PoS system today scales to the level of Bitcoin or Ethereum’s track record, and many are not yet as decentralized or battle-tested as the most advanced PoW systems. Newer consensus designs (such as Casper) aim to close that gap, but “aim to” is doing work in that sentence.
  • Validator downtime. If a validator fails to show up and do its job, that can cause problems. The usual fix is choosing networks or pools that keep a large set of backup validators.
  • Security trade-offs. PoS can be less secure than PoW in specific ways. Because the network’s power is spread across all users rather than concentrated in miners, a PoS system can be more exposed to a Sybil attack (where an attacker spins up many fake identities to gain control). It can also be vulnerable to a 51 percent attack, where one entity controls more than half the staked currency.
  • Forks. A blockchain is technically at risk of a fork if two valid blocks are created at the same instant and one gets built on before enough validators confirm it. Depending on your setup, that can affect rewards.
  • Lock-ups. To manage some of these risks, many projects use vaults that lock stakeholder deposits until they are periodically released and rewarded. That protects the network, but it means your coins are not liquid the moment you want out.

One common workaround for the hassle is delegated proof of stake, where you delegate your stake to another party who stakes on your behalf. It lowers the effort, at the cost of trusting whoever you delegate to.

Where the human edge comes in

Here is the honest framing. A platform will show you a glowing APY number in a second, that part is free and getting freer. What it will not do is tell you whether locking your coins for 30 days is worth giving up the ability to sell into a crash, or whether an 8 percent yield on a coin that could halve is actually a good trade. The percentage is the easy part. Sizing the position, judging the lock-up against your own risk tolerance, and deciding whether this network deserves your capital at all, that is judgment, and it is the first of the Five Edges no dashboard can supply for you.

Staking is a tool. Whether it belongs in your portfolio, and at what size, is a decision only you can make.

FAQ

Is crypto staking really passive income?
Mostly yes, once it is set up. After you deposit and stake your coins, you earn rewards without doing further work. But “passive” is not the same as “safe”. Your coins are usually locked, the yield is paid in a volatile asset, and the network itself carries risk a bank account does not.

How much can you earn from staking crypto?
Many coins offer an annual percentage yield (APY) of 4 to 8 percent or higher. Remember that the reward is paid in the coin you staked, so the real return depends on what that coin’s price does while your funds are locked.

Do you need a minimum amount to stake?
It depends on the network. Staking directly on Tezos needs 8,000 XTZ, and running your own Ethereum validator needs 32 ETH. Most exchanges and pools let you stake much smaller amounts, which is how most beginners start.

Is staking safer than mining?
Staking is easier and cheaper than mining, with no hardware or electricity cost. “Safer” is not the right frame though. Proof-of-stake networks carry their own risks, including Sybil attacks, 51 percent attacks, validator downtime, and lock-up periods that stop you exiting when you want.

What is the difference between staking and delegated proof of stake (DPoS)?
Staking can mean running your own validator, which takes a minimum holding and some setup. Delegated proof of stake lets you hand your staking power to a validator who stakes on your behalf, so you earn rewards with less effort, in exchange for trusting that delegate.

Now that you know how staking works and where it can bite, would you stake your own crypto? And do you think the reward-to-risk profile beats what you can find in traditional finance? Let me know in the comments.

And if you want the bigger picture on crypto and DeFi (decentralized finance, the ecosystem of financial apps built on blockchains), read the pillar: The Ultimate Guide to Blockchain and Cryptocurrencies.

Want a calmer way to approach any market? Grab the free 15-Minute Swing Trading Starter Kit. It is the exact routine I use to scan once a day and trade any market in 15 minutes, the same discipline that keeps me from chasing a shiny yield number.

About the author. Spencer Li is the founder of Synapse Trading and a Certified Financial Technician (CFTe) with 15 years of trading across stocks, forex, crypto, commodities, and bonds. His trade log is public, 404 trades, losses left in. He teaches low-risk swing trading in 15 minutes a day, one system for any market.

Education, not financial advice. Synapse Trading is not licensed by MAS to advise on investment products. Crypto and trading carry risk of loss; past performance is not indicative of future results.

Related

The Ultimate Guide to Blockchain and Cryptocurrencies (pillar) · What is DeFi and how does it work · Proof of work vs proof of stake explained

0 Comments/by