When Bitcoin, the first cryptocurrency, was introduced in 2009, most people didn't acknowledge the value of the underlying technology – blockchain, nor its potential. Now, almost ten years later, we witness an explosion of various cryptocurrencies and other blockchain related projects. All of these new cryptocurrencies and projects lead to new investment possibilities that are more immediately available than classical stock exchange investments. Many individuals pursue these new possibilities without educating themselves thoroughly enough. The purpose of my thesis is to educate those who wish to invest into cryptocurrencies. In my work, I introduce the key concepts needed to understand the basics of blockchain technology: blocks, block connections, decentralized peer-to-peer network, the basic proofing algorithms of “proof of work” and “proof of stake”. Furthermore, I also explain the way to safely store cryptocurrency coins and what are the basic flaws of the blockchain technology. Besides that, I also present and analyse different trading platforms and the differences between them, common trading risks that are specific to cryptocurrency trading, and current Slovenian taxation laws regarding cryptocurrency trade. Since the goal of this work is to educate readers in trading with cryptocurrencies and the risks associated with it, this work also contains a presentation of a practical software that allows users to quickly exchange their assets on the Bittrex trading platform in cases when the value decreases for a predefined amount in a certain time interval. The presented software and analysis have confirmed the hypotheses that (1) it is possible to develop a program to automatize risk management in cryptocurrency trade and (2) the use of such a program does not qualify as trading activity under the taxation law of Slovenia.
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