What is Kusama Crypto? Learn More About KSM Coin
Blockchain is an important technology for the future. You have also surely heard about cryptocurrencies - especially as they run on blockchain technology.
So, what is Kusama crypto? How does the KSM coin work?
One cryptocurrency, called Kusama, is an interesting one as it is comparable to a laboratory or a testbed to innovate. Once something useful is created, the project can be shifted onto Polkadot, another cryptocurrency.
In this article, we will talk about what is Kusama crypto, what KSM coins are used for, and how they work. We will list the use cases of Kusama crypto and then move on to the all-important topic of how to trade Kusama crypto.
Lastly, we will briefly list some advantages and disadvantages of Kusama crypto.
Are you ready to learn more about Kusama crypto and the KSM coin? Let’s begin.
Table of Contents
What is Kusama Crypto: An Introduction
Kusama crypto was founded in 2019 by the former CTO of Ethereum, Gavin Wood. Gavin is also the founder of Polkadot.
You will keep hearing about the connection between Polkadot and Kusama throughout this article. In fact, Kusama is nicknamed the “canary network” of Polkadot.
The Kusama crypto can be thought of as a network of specialized blockchains. We say specialized because these blockchains are used by developers to innovate and create custom solutions.
The Kusama substrate and codebase are very similar to that of Polkadot. The idea behind this design is that a project is developed and tested on Kusama, it can then be moved to the Polkadot network.
Gavin Wood had already created Polkadot before Kusama. He had envisioned the creation of an environment that allowed rapid iteration and deployment of projects in an environment that was less restrictive than the Polkadot network.
Kusama was also designed to identify the risks and vulnerabilities of a project in the testing phase itself.
By inviting active users to participate, various flaws could be identified in Kusama, itself, before the project would be moved on to the Polkadot network. This protects the stability of the entire Polkadot ecosystem.
Overall, one can think of Kusama as a testbed or pre-production network where all the work before the final show takes place.
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How Does KSM Coin Work?
A blockchain network will have a token for transactions to take place. The Kusama network has KSM coins. They are the native tokens (or cryptocurrency) of the network.
KSM coins can be bought on crypto exchanges that support their trading. KSM is the acronym for Kusama.
Since the Kusama network runs on a blockchain, a decentralized and distributed ledger is used to record all transactions that happen using the KSM coin.
There is no maximum supply of KSM coins. However, KSM coins are subject to a maximum of 10% annual inflation, the same as Polkadot DOT coins.
KSM coins can be stored in online and offline wallets in the same way as any other cryptocurrency coins can be stored.
You can view the TradingView widget, below, to see the Daily fluctuations and movements of the KSMUSD pairing:
*Past performance is not reflective of future results.
Kusama Crypto: Use Cases
KSM tokens or coins are used for staking on the Kusama network. Staking of KSM tokens is done in order to participate in the proof-of-stake mechanism and authorize transactions.
Such actions contribute to the Kusama network’s security. Besides, token holders have to stake to have the opportunity of earning more KSM coins.
KSM coins are also used to pay transaction costs and fees when transacting on the Kusama network.
As Kusama and Polkadot are closely linked, there are possibilities for interoperability and communication between the two networks. KSM coins are used when such interaction happens.
Another important use of the KSM coins is governance. Holders of KSM coins have the right to vote and propose upgrades to the Kusama network.
The whole concept behind the democratic voting system within the Kusama (and Polkadot) network is that those who are token holders can influence the direction of how the overall blockchain system functions and the development of the ultimate network goals.
Important decisions related to the Kusama platform as well as developments on parameter changes are all part of the network’s governance process.
How to Trade Kusama Crypto
Traders can either transact in KSM coins or they can consider KSM CFDs, for example, KSM versus USD.
CFDs are Contracts for Difference. They follow the price of the underlying asset (KSM coins in this case) against a fiat currency, for example, USD.
By holding a CFD contract on any given asset, you don’t actually hold KSM coins, the underlying asset.
You don’t have to own the underlying asset of KSM coins when you buy or sell CFDs. Rather, you simply trade on the price movements (in both directions, Buy or Sell) of the KSM coin.
When you trade KSM coins directly, you simply buy or sell the coins. You pay what it costs to buy the coins at the prevailing market rate through any given crypto exchange.
With CFDs, it is also possible to use leverage. Leverage means that you can pay a smaller amount to purchase a much larger quantity of exposure to KSM coins.
However, it is crucial one understands that leverage is a double-edged sword. It can amplify your profits but it can also result in outsized losses. Each and every trader must consider this before embarking on any trading activity or with leverage.
Risk management is essential when trading with leverage (when trading CFDs).
If you are looking to trade CFDs, then you may consider reputable broker/online platforms that offer KSM CFDs against other currencies, whether that be traditional currencies or other cryptocurrencies.
Using certain technical indicators when trading KSM coins or KSM CFDs could be a part of any given trading strategy. One of the most common indicators is the moving average (MA).
Plotting different moving averages (short and long-term) can give you a deeper insight into the price trend and the strength of the trend. Moving average crossovers can be used to generate buy or sell signals.
Indicators like RSI or Bollinger Bands can be combined with moving averages to identify important zones and breakouts/breakdowns.
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Advantages and Disadvantages of Kusama Crypto
Some of the key advantages of Kusama crypto are:
Interoperability: Kusama is designed in such a way that it can interact with other parachains on the Polkadot network. So, seamless transfer of data and assets is possible.
Inclusive: The Kusama network encourages active user participation. Decentralized governance is possible with Kusama.
Supporting Innovation: As pointed out previously in the article, Kusama is designed to allow developers to iterate their projects faster and shorten development cycles. This is essential for fostering innovation in decentralized apps.
Kusama is not without its flaws, naturally. Some of its disadvantages are:
Governance: While decentralization has its benefits, too much of it can hamper decision-making. The more views there are, the harder it is to get everyone on the same page.
Vote Share: Another concern is one entity holding too many KSM coins. This could increase their voting share to an uncomfortably large level.
Volatility: Traders and investors holding KSM coins can expect high volatility. Kusama crypto is still relatively new and not every project created there will find its way to the Polkadot network. There is uncertainty.
What is Kusama Crypto: Conclusion
Do you feel more engaged and informed in regard to how the Kusama network works and the use cases of KSM coins?
In this article, we have covered the basics of the Kusama network and KSM coins.
We also talked about how to transact with KSM coins and what the coins can be used for.
We then touched upon some trading options for KSM coins and listed the advantages and disadvantages of Kusama, generally speaking.
Trading and investing are always an ongoing learning process which is why we remind you to keep your risk management strategy at the forefront.
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Is Kusama crypto a good investment?
Whether or not Kusama crypto is a good investment is always completely subjective; not every cryptocurrency or financial asset will be suitable for every individual. It is most important to always first determine your risk appetite and management style. Cryptocurrencies and cryptocurrency CFDs are highly volatile instruments.
Is Kusama better than Polkadot?
Also a subjective question, it would depend on a case-by-case basis and on the requirements of the blockchain. Kusama and Polkadot are independent of each other and can be considered 'cousins' - The two blockchains work together in synchronicity to complement each other and reach the same end goal in various network developments.
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