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2. Intermediate Course

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  1. 1. What is Layer 0 in Blockchain technology?
  2. 2. What is layer 1 in Blockchain?
  3. 3. Second layer (layer 2) - what is it? 
  4. 4. Blockchain and its layers - What is layer three in Blockchain (L3)?
  5. 5. Ethereum 2.0 - What is it? 
  6. 6. Ethereum Proof-of-Stake (PoS) - what should you know?
  7. 7. Ethereum London Hard Fork - what is it ? 
  8. 8. What is the Ethereum Name Service (ENS) and how does it work?
  9. 9. Arbitrum: Ethereum scaling solution - everything you need to know
  10. 10. Polygon 2.0 - the value layer for the Internet
  11. 11. Ethereum ERC-4337 - what is it and how does this standard work?
  12. 12. What is an ERC20 token and how is it created?
  13. 13. The ERC-721X VS ERC-721 Standard – Key Differences!
  14. 14. What is cryptocurrency burning?
  15. 15. Examples of the use of WEB3 on the blockchain
  16. 16. What is Web5? 
  17. 17. Blockchain Oracle - what are oracles? 
  18. 18. Polkadot - Decentralized blockchain and DOT cryptocurrency
  19. 19. Polkadot Parachain - Next-generation blockchain
  20. 20. Interoperability in the world of cryptocurrencies and blockchain
  21. 21. What is Blockchain sharding?
  22. 22. Mainnet versus Testnet on the Blockchain. The complete guide!
  23. 23. MINA Protocol: the lightest blockchain in the world!
  24. 24. Sustainable Blockchain - Proof of Useful Work & Flux
  25. 25. Cosmos SDK: Building the Blockchain Ecosystem
  26. 26. What is cross-chain interoperability in Blockchain technology?
  27. 27. Blockchain trilemma - explanation of the problem. What is the impact on cryptocurrency payments?
  28. 28. Non-fungible tokens and NFT exchanges
  29. 29. How to make money with NFT?
  30. 30. What is the NFT licence fee?
  31. 31. NFT Gas Fee - what is it? How can you reduce your gas fee?
  32. 32. The main differences between static NFT and dynamic NFT
  33. 33. What is minting an NFT?
  34. 34. What are NFT Ordinals? A guide to Bitcoin NFT.
  35. 35. What is KnowOrigin NFT, and how does it work?
  36. 36. ERC-6551 - the new NFT standard. What does it bring to the non-exchangeable token sector?
  37. 37. What is NFT Lending all about? An innovative solution in the world of cryptocurrencies!
  38. 38. The Metaverse – a new virtual world
  39. 39. Metaverse – TOP 15 virtual reality projects
  40. 40. Technical analysis – is it worth using?
  41. 41. Trading order types: stop loss, trailing stop loss, LIMIT
  42. 42. Market Cap versus Fully Diluted Market Cap - the most important differences you should know!
  43. 43. Set up of Stop Loss and Take Profit orders
  44. 44. What are DeFi liquidity pools?
  45. 45. Real Yield in DeFi - what is this trend? What does it consist of?
  46. 46. Vampire Attacks in Decentralized Finance (DeFi): Explanation and Examples
  47. 47. What are wrapped tokens 
  48. 48. What are security tokens?
  49. 49. What are Social Tokens? 
  50. 50. Liquidity Provider Tokens (LPs). What are they, and why are they so important?
  51. 51. What is the Lightning Network, and how does it work?
  52. 52. What is Play-to-Earn (P2E) and how does it work?
  53. 53. Cryptocurrency steps - What is move to earn M2E?
  54. 54. Segregated Witness - what is Segwit Bitcoin all about?
  55. 55. What are Decentralized Cryptocurrency DEX Exchanges?
  56. 56. What is Curve Finance?
  57. 57. What is GameFi and how does it work?
  58. 58. What is Proof of Reserves (PoR)? How does it work?
  59. 59. DAO Investment: A revolution in the world of finance and investment
  60. 60. What is MakerDAO and DAI Stablecoin?
  61. 61. What is the SubDAO protocol, and how does it work?
  62. 62. How to Create Your Own Decentralized Autonomous Organization (DAO)?
  63. 63. Atomic Swap: What is an atomic swap, and how does it work with cryptocurrencies?
  64. 64. What Is Cryptocurrency Vesting? What Are Its Advantages?
  65. 65. What Is the Metaplex Candy Machine Protocol? How Does It Work?
  66. 66. What Is the BNB Greenfield Ecosystem?
  67. 67. What Is Slashing in Cryptocurrencies?
  68. 68. Royalties – What Are They? How Does This Type of Licensing Fee Work?
  69. 69. What is TradFi? The importance for cryptocurrencies!
  70. 70. What is the Real World Asset (RWA) trend in cryptocurrencies? Explanation and examples!
  71. 71. Pyth Network: a powerful oracle harnessing the power of Solana!
  72. 72. What are stables in the world of cryptocurrencies?
  73. 73. What Is Binance Oracle?
  74. 74. Shibarium: A new era in the Shiba Inu ecosystem?
  75. 75. What is an ETF? How will an exchange-traded fund on bitcoin work?
  76. 76. Symmetric and asymmetric encryption - key cryptography techniques!
  77. 77. Hedging in cryptocurrencies - great portfolio protection against risk!
  78. 78. How to create your own cryptocurrency? 
  79. 79. What is a Dusting Attack in cryptocurrencies? How to protect against it?
  80. 80. What is a Black Swan?
Lesson 77 of 80
In Progress

77. Hedging in cryptocurrencies – great portfolio protection against risk!

Despite their dynamic nature, cryptocurrencies are an area where investors are looking for different strategies to hedge risk. One popular approach to proper risk management is hedging.

In today’s lesson, we will look at what hedging is in the context of cryptocurrencies, what methods exist and how investors can utilise this strategy to protect their portfolios from market volatility.

What is hedging? Definition.

Hedging is a risk management strategy frequently used by investors. It aims to offset the potential losses associated with a particular investment.

This concept is often likened to taking out an insurance policy, where investors, similar to homeowners, seek to protect their assets against potential losses by making appropriate investments to minimise the risk of negative asset price movements in the financial and cryptocurrency markets.

How does hedging work in the cryptocurrency sector?

Hedging in the cryptocurrency industry applies the same principle as hedging in traditional financial markets. It involves taking positions in related assets that move in the opposite direction of the underlying position.

Here are other ways that a cryptocurrency investor can use to hedge in the crypto market:

  1. Investors can use futures on cryptocurrencies to hedge against possible price movements. Selling a futures contract on Bitcoin, for example, can offset a loss if the value of Bitcoin falls.
  2. Holders of options on cryptocurrencies have the right, but not the obligation, to buy or sell the underlying cryptocurrency at a certain price over a certain period of time. By buying put options, you can hedge against a fall in the value of the cryptocurrencies held.
  3. Investors can use CFDs to hedge against the risk of cryptocurrencies by speculating on price movements of the underlying assets without actually owning them.
  4. Perpetual swap contracts, which track the price of the underlying asset, such as Bitcoin, and allow investors to trade continuously without an expiry date.
  5. Investors can convert volatile crypto assets into stablecoins whose value is pegged to the asset’s reserve to protect against a drop in value in the market.
  6. The next step is diversification. Owning different cryptocurrencies can act as a hedge, as different assets can react differently to market changes, helping to offset losses.

It is important to understand the risks and costs associated with each of these strategies before using them.

What are the benefits of hedging in cryptocurrencies?

Firstly, it protects against dips.  Hedging allows investors to protect their portfolios from sudden price drops, which is common with cryptocurrencies.

Secondly, it allows maintaining flexibility. Investors who hedge their positions with different financial instruments retain flexibility in their investment decisions.

Thirdly, it reduces risk. Hedging allows reduce system risk, that is, the risk associated with the overall cryptocurrency market. Even when the overall market is falling, an investor can minimize losses from hedging.

Some tips on how to take advantage of hedging in cryptocurrencies!

Hedging is a complicated topic that requires a comprehensive knowledge of the financial markets. It is an approach that is certainly not recommended for beginners, indeed, even experienced traders should exercise caution when engaging in hedging operations. Here are some tips for using hedging strategies in the cryptocurrency space.

  1. Understand the risks. Before implementing any hedging strategy, make sure you have a full understanding of the associated risks and potential drawbacks. Each financial instrument and strategy has its advantages and disadvantages, so it is crucial to fully understand before making a decision.
  2. Second – Avoid concentrating all your resources in one area. Consider investing in diverse cryptocurrencies or even dispersing your investments in different asset classes. Such a strategy can help minimize the impact of volatility on one particular asset.
  3. Don’t complicate things! Using overly complicated strategies to maximize profits or minimize losses can be tempting. However, excessive complexity usually carries additional risks. If you are not an advanced trader, simpler strategies are usually more recommended.


To summarise, the use of hedging with cryptocurrencies requires appropriate knowledge and caution. For traders, especially beginners, it is crucial to avoid excessive risks and use simpler, more understandable hedging strategies.

Hedging in cryptocurrencies is an advanced strategy that can help traders hedge their portfolios against the risks associated with the dynamic cryptocurrency market. Choosing the right hedging instruments depends on individual preferences, investment goals and the sophistication of the investor. Before deciding on hedging, it is always advisable to consult an experienced financial advisor and conduct a thorough risk analysis.

Complete today’s lesson!

  1. Interoperability in the world of cryptocurrencies and blockchain.
  2. Vampire Attacks in Decentralized Finance (DeFi): Explanation and Examples
  3. What is DeFi?