If you’re new to cryptocurrency and blockchain technology, look no further - this is your ultimate guide! If you’ve been involved for a while, but still don’t really know that much about it - this guide is for you too. What exactly is a cryptocurrency? In short, it’s a digital asset designed as a medium of exchange using cryptography. What’s blockchain? Blockchain is the technology behind Bitcoin (and other cryptocurrencies) and is a decentralized and distributed digital ledger that is now being used to change virtually every industry on earth. If you’re like me, you probably thought (or still think) that Bitcoin was some fake internet money, scam, or a way for criminals to fund things - nothing more than a passing fad. If you dig a little deeper, you’ll realize that this is one of the most profound inventions in recent human history. Continue reading to find out everything you need to know about this emerging technology.
“[Blockchain] is the most powerful technology that the world has seen, I believe; since the invention of agriculture” - John Mcafee (inventor of the first anti-virus software and former programmer for NASA)
*Disclaimer: This is not financial advice of any kind! This is a guide to getting started with cryptocurrencies & blockchain technology. You are responsible for your own actions.
Beginner’s Guide to Cryptocurrency
Whether you want to just buy $20 bucks worth of a cryptocurrency, make short term investments, long term investments or anything in between - this section will walk you through each step along the way.
First things first, how do I purchase cryptocurrencies?
The most popular way to purchase a cryptocurrency like Bitcoin, Ethereum or Litecoin is through an online exchange like Coinbase or CEX.IO.
Coinbase is based out of San Francisco, California and is the world’s most popular way to buy and sell bitcoin, ethereum, and litecoin. You can pay with a credit or debit card, link a bank account or send a wire transfer as well. If you pay with your bank account, it can take up to a week before you have access to your cryptocurrency, however paying with a debit or credit card is instant although the fees are higher.
If you decide to use Coinbase, click this link and we will both get $10 of free Bitcoin from Coinbase after you buy or sell $100 worth of Bitcoin on there. https://www.coinbase.com/join
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CEX.io is another popular place to buy Bitcoin & Ethereum (does not offer Litecoin at this time). They are based out of London and have over half million users. Similar to Coinbase, you can pay with a credit or debit card and also do a bank transfer to purchase your desired cryptocurrency.
There’s a lot of other exchanges out there and new ones coming out all the time. To explore more exchanges: List of the top 40+ exchanges
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Another way to purchase Bitcoin is from a Bitcoin ATM. For a list of Bitcoin ATM locations, check out: Bitcoin ATM Map
So I bought some cryptocurrency, now what?
Congratulations and welcome to the cryptocurrency world! You have quite a few options as to what to do next.
1) Nothing. You can just leave it on Coinbase, CEX.io, etc and let it appreciate over time (hopefully!). At anytime, you can transfer the money (or a portion of it) back to your bank account.
2) You can send it to a wallet for storing it off of an exchange (like Coinbase). *More info on wallets below.
3) You can send it directly to another exchange like Bittrex to trade for other altcoins such as NEO, TenX (PAY), Ripple and over a thousand more.
4) You can send it directly to an ICO (Initial Coin Offering). ICO’s are the new IPO (Initial Public Offering) and are one of the hottest things in the cryptocurrency space at this time. If you’re considering this option, make sure you know the risks involved and do your research! There are many legit ICO’s and many, many more that aren’t. Just like the dot com bubble, most of these companies won’t survive, but the ones that do will change the world. For a curated list of ICO’s check out: smithandcrown.com
5) Purchase items off of sites like Overstock.com, book a flight on Expedia, and even get a 15% discount on Amazon just for paying with Bitcoin via Purse.io. For a list of more retailers that except Bitcoin and other cryptocurrencies, check out This List of Companies. You can also use coinmap.org to search an interactive map of places that currently except Bitcoin.
6) You can link it to a debit card like TenX (PAY) or Monaco and spend it anywhere Visa is excepted.
7) You can loan it out. There are new companies coming out such as Denver, Colorado based Salt that allows for traditional lending secured by cryptocurrencies. You can be a lender on here, but keep in mind you have to be an accredited investor in accordance with federal regulations and guidelines established by the SEC (United States Securities and Exchange Commission). To learn more: SALT Enables Traditional Lending Secured by Cryptocurrency
8) You can donate it to charity or help support content creators on sites like Steemit, Patreon, and really any website where someone lists their address for donating/supporting.
9) Video Games, Movies & Apps - Companies like Microsoft are now accepting bitcoin for the purchase of these.
10) Gift Cards. You can exchange your bitcoin through services such as eGifter and Gyft.
Other options? What are your plans? Do you want to be a long term investor? Day Trader? Just use cryptocurrency to spend as a replacement to your current fiat currency? The cryptocurrency world is evolving rapidly and there will likely be other options and opportunities in this exciting new industry. It’s up to you to decide what you want to do and form a plan to go along with that. Whatever you choose to do, I’d recommend learning as much as you can about cryptocurrency & the blockchain technology behind it. Hopefully this guide will help you with that!
How do I store my cryptos safely?
Security should be your top priority if you’re planning on holding any amount of any cryptocurrency for any period of time! With great power comes great responsibility and having the power to be your own private bank is no exception. Here’s your options:
1) Cold Wallet - Storing your cryptocurrencies offline. Methods of cold storage include: On a USB drive or other storage media, on a paper wallet or use an offline Hardware Wallet (see below).
2) Hot Wallet - Any wallet that is stored on the internet via an app on a computer or phone. This is the most risky way to store your cryptocurrency and not recommended for storing your savings this way. However, hot wallets are useful if you want to send a small amount of money to your hot wallet to spend throughout the day via your phone. Think of it like this: Right now you have your bank account where you store all or most of your wealth - you don’t walk around day to day with all of the money in your possession, but rather carry around a small amount of your wealth for daily spending and take out larger portions for bigger purchases. A hot wallet is a modern equivalent to a normal wallet you’d store cash in and a Cold Storage wallet is like your bank, except now YOU are the bank.
3) Hardware Wallet - A special type of cryptocurrency wallet which stores the user's private keys in a secure hardware device. They have major advantages over standard software wallets: private keys are often stored in a protected area of a microcontroller, and cannot be transferred out of the device in plaintext. A hardware wallet is a physical device that you will typically hook up to your computer via USB and is currently the most secure way to store your cryptocurrencies. Here are two popular hardware wallets:
4) “Watch-Only” Wallet - A wallet that only allows you to see the contents of the wallet, but not spend them. This is helpful if you want to monitor your wallet(s), with no risk because even if someone stole your phone they could only see your account balances, but wouldn’t have the private key to send your money anywhere. Check out How to use Watch-only Addresses or Etherscan for monitoring your MyEtherWallet.com
More info: How to properly store Bitcoins and other cryptocurrencies
At the end of the day, you never want to give out your private key to anyone under any circumstances and don’t ever store it on your computer, phone, and ideally never let it show up on your computer screen - ever. Computers and phones are extremely hackable and your device could be screen hacked, key logged or compromised - revealing your private key to someone. If someone has your private key, they have the ability to send your cryptocurrency to anywhere they want and is the equivalent of someone having all your current banking information.
Listen to what John McAfee has to say about it: https://www.youtube.com/watch?v=NQsQviHLZsE
Your cryptocurrencies are actually stored on the blockchain and your wallet holds the keys to unlock your account and spend them. There is no company to call or any way to get back your key should you lose it. If you use a hardware wallet (highly recommended) you will keep your keys secure from potential hackers, malware, etc because your private key will never leave your wallet and it’s also encrypted. You will just type in a pin (and passphrase if you want) to access your account with your hardware wallet.
The Cryptocurrency Market
Think of this as the new digital stock market that never shuts down. Instead of trading stocks, people trade cryptocurrency and cryptoassets which are also referred to as coins or tokens. Some examples include Bitcoin, Ethereum, Steem, Zcash, Dash, Omisego, however there are well over a thousand and many more coming out by the week.
Use https://coinmarketcap.com/ to check the weighted averages of all currencies and assets on over 5000 different markets. You can also see what exchanges each cryptocurrency and cryptoasset is being traded on by clicking on the name of a coin and then clicking the ‘Markets’ tab to the right of ‘Charts’. Check out the tutorial below to get started with coinmarketcap.
coinmarketcap beginners tutorial
Exchanges
If you want to trade on the cryptocurrency market you’ll need to sign up with an exchange (and likely more than one since not all coins are available on every exchange). It’s easy to set up an account on an exchange, but it can take a bit of your time if you plan on verifying your account (sending them different forms of personal identification) to increase your deposit & withdrawal limits. You can typically trade with a basic account too and get started while you wait days to weeks to get verified.
A few popular exchanges Include: Bittrex, Binance and EtherDelta.
If you plan on trading and want to have more control over your charts for technical analysis, check out TradingView.
If you want to have more control over your charts AND be able to trade check out Coinigy.
Here’s a list of more exchanges: List of the top 40+ exchanges
So you’ve made a few trades and now you have some different tokens - now what?
Leave them on the exchange, however this is risky since exchanges get hacked sometimes and ultimately your coins are not in your possession if they are on any exchange. But if you plan on trading more, you may want to leave some or all of your tokens on the exchange to avoid fees for sending them back and forth between exchanges and your wallets.
Send them to one of your wallets for secure storage - especially for long term holdings. Currently there is no universal wallet that can accommodate all of the different coins so you will likely need more than one wallet. For instance, if you have any coins on the Ethereum platform; called ERC20 tokens, you could store them on myetherwallet.com (which can be set up with a hardware wallet such as Trezor or Ledger for added security). But lets say you also have some Bitcoin - you can’t send your bitcoin to your myetherwallet.com wallet and you would have to create a separate bitcoin wallet. This problem is currently being worked on by companies like Pillar.
Send them to another exchange. Prices fluctuate from exchange to exchange and sometimes you can buy a token for a cheaper price on one and sell it for a higher price on another. Let’s say for example, you’re trying to sell some tokens and they’re on exchange A where the price is $2 per token, but on exchange B they are $2.10 per token. You could send them from exchange A to B and sell them at the higher price. Keep in mind though, it takes time to send a cryptocurrency and the prices move fast so by the time your tokens are on the new exchange it may be a different price point.
Send them to any compatible address for payment, gifts, tips etc. By compatible address, I mean one that is specifically for the type of token you have. For instance, you wouldn’t want to send Bitcoin to a Litecoin address because even though it will likely get rejected, if it does go through consider your Bitcoin gone. To learn more about this: https://themerkle.com/what-happens-if-i-send-bitcoin-to-a-different-blockchain/
Cash out to fiat currency - you can transfer your money back to your bank account at anytime. Keep in mind there may be some time for processing with this depending on your bank and you may or may not have to send them to a different exchange to do this. There can also be limits for how much you can withdraw per day.
Ok, so I’ve been trading and have several different coins and it’s getting kind of hard to keep track of my portfolio. What can I do?
https://cointracking.info/ is a great way to manage your portfolio and keep a record of all trades & transactions for tax purposes if you need that. You can share a public portfolio with people if you want to and also download the CoinTracking app to monitor your portfolio on your phone.
To learn how to use CoinTracking, check out this Tutorial.
Download Apps to manage your portfolio and monitor the market on your phone. Blockfolio, Coin Ticker, and Coins are just a few out there you can use. You can set up price alerts and more to help yourself stay up with current prices without having to constantly check your phone.
Spreadsheets: You can make your own spreadsheets on Excel, Numbers, Google Sheets etc to keep track of things such as your total amount of fiat currency exchanged for cryptocurrency or any other statistics you want to keep track of regarding your coins.
Here’s a Google Sheets spreadsheet you can download: Portfolio Rebalancing Tool Using Google Sheets
Tips & Other Things to Know
- Bookmark sites you visit often on your bookmarks tool bar. For example, maybe put a link to your portfolio, coinmarketcap, exchanges, news, etc.
- Follow companies and their ceos on social media to keep up with current events - this industry is moving fast!
- You can make a custom calculator on a spread sheet to help figure out average buy prices and convert ETH and BTC to USD value.
- If you trade on Bittrex, you can use the Google Chrome extension Crypto Correct that will show the USD prices when you hover your mouse over any price written in BTC(Bitcoin) or ETH(Ethereum).
- It can sometimes take minutes to hours to transfer cryptocurrency depending on how busy the network is at that time. Some transfer faster than others (for example, Litecoin currently transfers much faster than Bitcoin). This is evolving and will likely be lighting fast in the near future.
- Bitcoin is modeled after gold in a sense that there is a finite resource and you have to mine it with actual energy using machines - like real gold. It is sometimes referred to as “digital gold” or “gold 2.0”.
- On coinmarketcap.com you’ll want to check and be familiar with the following things:
Market Cap - Total amount of money currently in that particular coin.
Circulating Supply - Total number of tokens currently in circulation on the market.
Total Supply - Total number of tokens in existence.
Volume (24hour) - How much money has been exchanged with that coin in the last 24 hours
Also, the timezone used by coinmarketcap.com is UTC (Coordinated Universal Time).
*If you skipped over the coinmarketcap.com tutorial earlier in this post, check that out to learn more (above exchanges).
Mining
Mining is the process of adding transaction records to Bitcoin's public ledger of past transactions. This ledger of past transactions is called the blockchain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.
Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the hashcash proof-of-work function.
The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid any transaction fees as well as a "subsidy" of newly created coins. This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system.
Bitcoin mining is called mining because it resembles the mining of other commodities: it requires exertion and it slowly makes new currency available at a rate that resembles the rate at which commodities like gold are mined from the ground.
To learn more about mining:
Everything you need to know about Bitcoin mining
Largest Cloud Bitcoin Mining Company | Genesis Mining
What you need to know about cryptocurrency mining
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Brief History of Cryptocurrency
Bitcoin is the world’s first decentralized cryptocurrency and the technology behind bitcoin is called blockchain. On January 3, 2009, the bitcoin network was formed with the release of the first open source bitcoin client and the first bitcoins were mined. Nobody knows who actually invented Bitcoin, but the person(s) who released it, did so under the name Satoshi Nakomoto. Satoshi mined the first block of bitcoins ever, which is known as the genesis block.
To learn more about the history:
https://en.wikipedia.org/wiki/History_of_bitcoin
https://medium.com/blockchain-blog/a-brief-history-of-bitcoin-432a8d44b0f3
https://www.youtube.com/watch?v=mVM67wASG_o
Blockchain - The Technology Behind Cryptocurrencies
Think of blockchain as an operating system and Bitcoin is one of many applications that runs on it. It is completely decentralized and not controlled by anyone.
The Blockchain and Us Documentary
Understand the Blockchain in Two Minutes
What is Blockchain Technology? A Step-by-Step Guide For Beginners
The Truth About Blockchain - Harvard Business Review
Blockchain Decentralized Network Effect Video
Microsoft Launches Advanced Enterprise Blockchain Service - Bitcoinist.com
How the blockchain is changing money and business | Ted Talks
Beyond bitcoin: 5 things you need to know about blockchain technology | PCWorld
Bitcoin was the first blockchain to ever be used, but now there are a lot of other blockchains. For example, Ethereum uses a different blockchain than Bitcoin and Litecoin uses a different blockchain than Ethereum or Bitcoin. In addition to tracking cryptocurrencies, blockchains are being used to record loans, stock transfers, contracts, healthcare data and even votes.
Blockchain technology will have an impact on virtually every industry in a major way. The infrastructure is currently being laid for a decentralized future. The blockchain provides a trust relationship between two parties - without having ever met each other and nobody owns or controls it. It is literally a mathematical equation that we all have access to - and we each control our own data, apps and identity.
Industries that blockchain technology will disrupt and change:
19 Industries The Blockchain Will Disrupt
Decentralized apps are starting to come out with blockchain technology, which are called Dapps. Here’s a list of a few and their current comparable centralized version.
DTube - Decentralized YouTube
Steemit - Decentralized Reddit
UJO - Decentralized Spotify
Lunyr - Decentralized Wikipedia
Blockstack - Decentralized Chrome
Synereo - Decentralized Facebook
Other Resources
There’s more and more people reporting on cryptos so be sure to seek out people yourself, but here’s a list of some youtube channels worth checking out:
Resources for Cryptocurrency Laws & Regulations
https://www.coindesk.com/information/is-bitcoin-legal/
https://www.cryptocompare.com/coins/guides/how-legal-is-bitcoin-and-crypto-currencies/
https://bitcoinmagazine.com/articles/how-five-states-are-approaching-bitcoin-regulation/
Cryptocurrency & Blockchain News
What do world leaders, corporate figures and other famous people have to say about Bitcoin & other cryptocurrencies?
Celebrities Continue to Discuss the Subject of Bitcoin With Optimism - Bitcoin News
Famous/Rich people talking about bitcoin growth
What do leaders say about Bitcoin?
Goldman Sachs Advises Clients About Bitcoin | Fortune.com
Free Bitcoin and cryptocurrency technologies course from Princeton University on Coursera: Bitcoin and Cryptocurrency Technologies | Coursera
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Frequently Asked Questions
Is Bitcoin money?
Listen to what Chris Dunn has to say about this topic here: Is Bitcoin Really Money?
Is Bitcoin (and Blockchains in general) secure?
Yes, the blockchain has never been hacked and would be extremely difficult to do so because you’d have to hack every computer on the network on a global scale at the same time in a matter of minutes to alter any information on the blockchain. It is military grade cryptography and virtually bulletproof. When you hear about bit coins being stolen and exchanges being hacked, that is being done at the point of entry such as the browser you are using on the internet - not the blockchain. The block chain has never been hacked and is extremely secure.
What’s the difference between blockchain and the internet?
The current internet is vulnerable to mass data breaches, insecure connections and has platform lock-in (meaning with traditional apps, the digital keys to identity and authentication are owned by large monopoly platforms (like Google and Facebook). Users and developers are locked in and restrictions are placed on innovation.
With the new internet (blockchain), you own your data, apps, identity and trust is mathematically built into the sytsem. It is encrypted and un-hackable and even if someone did hack it, everyone on the network would see what they changed and realized the network had been breached.
Check out this Ted Talks video on this topic: Welcome to the new internet | Muneeb Ali | TEDxNewYork
So why would I even want/need to use cryptocurrencies?
7 Incredible Benefits Of Cryptocurrency | HuffPost
Where does bitcoin come from, how is it made?
It takes a lot of energy to create one bitcoin and that’s being done my miners using computers to solve complex problems on the blockchain. For this, they are rewarded the fees (when you send a cryptocurrency you have to pay small fees and that money goes to the miners) as well as a "subsidy" of newly created coins. This is modeled after gold as in there’s a finite amount and you have to mine it - with computers.
How many Bitcoins are there and what controls the supply of them?
Currently there’s approximately 16.5 million Bitcoin in circulation with a total supply capped off at 21 million. The remaining 4.5 million bitcoins are projected to be mined by 2140 - yes like 123 years from now. That would be on average, roughly 36,585 bitcoins per year. The puzzles computers solve on the blockchain progressively get harder as explained below.
A puzzle that gets harder the more you try and solve it: from kH/S to MH/s to GH/s. That sounds pretty simple so far: computers are good at crunching numbers, and an average computer can run several thousand of these calculations (called hashes) a second. But there is a catch: to restrict the flow of new Bitcoins, the difficulty of solving the block to find the Bitcoins changes regularly. One of the factors that controls this change is how much computing power was used to solve the last few blocks. This means that the more computing power people throw at the problem, the harder it gets. This happens by increasing the number of consecutive zeroes that are required to solve the block. Source: Medium.com
What is Bitcoin cash - are there two bitcoins?
Yes, and potentially more. Since bitcoin is decentralized people from different parts of the community (developers, miners etc) sometimes can’t come to an agreement on how they want to update the network and a clone can be made of the original coin that is now a different coin on the market. This is known as a hard fork. Most likely only one of the Bitcoins will become the long term store of value though - will it be the original or a new clone? Only time will tell.
I thought bitcoin was only for the dark web and buying drugs?
Nope. Those days are over and now bitcoin and cryptocurrencies are starting to see the beginning of mass adoption with more stories in the news by the day and companies like Microsoft, Expedia, Reddit, Overstock.com, Bloomeberg.com and many more are starting to accept cryptocurrencies as payment. Colleges and Universities are starting to teach classes on blockchain and cryptocurrencies too.
10 Universities That Offer Blockchain Courses
Microsoft to Add Extensive Support For Bitcoin, Describes it as Currency
Is Bitcoin in a bubble?
https://www.youtube.com/watch?v=LzGmLDDE2Ss
I heard Bitcoin is similar to a pyramid or ponzi scheme, is this true?
Wikipedia defines a ponzi scheme in the following way:
A Ponzi scheme is a fraudulent investment operation where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities or profit of financial trading. Operators of Ponzi schemes can be either individuals or corporations, and grab the attention of new investors by offering short-term returns that are either abnormally high or unusually consistent. Ponzi schemes rely on a constant flow of new investments to continue to provide returns to older investors.
Does Bitcoin have a central authority? No
Does Bitcoin pay returns to its investors? No
Does Bitcoin require an ever increasing flow to sustain it? No
Bitcoin is NOT a Ponzi scheme.
Wikipedia defines a pyramid scheme in the following way:
A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products or services. As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal. In a pyramid scheme, an organization compels individuals who wish to join to make a payment. In exchange, the organization promises its new members a share of the money taken from every additional member that they recruit. The directors of the organization (those at the top of the pyramid) also receive a share of these payments. For the directors, the scheme is potentially lucrative—whether or not they do any work, the organization's membership has a strong incentive to continue recruiting and funneling money to the top of the pyramid. A pyramid scheme is characterized by a few people (including the creators of the scheme) making large amounts of money, while most who join the scheme lose money. For this reason, they are considered scams.
Does Bitcoin recruit members via a promise of payment or services for enrolling others? No
Are there directors (or anyone in charge) at the top of the pyramid? No, Bitcoin is decentralized and not controlled by any person or group of people.
Bitcoin has no pyramid-like structure whatsoever. The gains and overall value come from the limited supply of coins and as more people acquire the coins, the more valuable each one becomes because the supply gets rarer.
Bitcoin is NOT a pyramid scheme.
Fundamentally, you can see Bitcoin is not a pyramid scheme or ponzi scheme. That doesn’t mean that these types of schemes aren’t going on in the cryptocurrency space though, along with other scams. Here’s an article from Forbes about crypto-scams: How To Spot A Bitcoin Scam
Article on five past scam-coins: http://bitcoinchaser.com/top-5-cryptocurrency-scams
There are a lot of scams, hackers and other threats to take very seriously, but is this much different from our current system? Are there not a lot of scams, hackers and other threats to take very seriously? We are in a transition phase and the infrastructure for this new blockchain technology is still being laid down. Eventually things will likely be far more secure and better for all of us who use this amazing new technology.
What is a network effect?
A network effect (also called network externality or demand-side economies of scale) is the effect described in economics and business that one user of a good or service has on the value of that product to others. When a network effect is present, the value of a product or service is dependent on the number of others using it. The classic example is the telephone, where a greater number of users increases the value to each. A positive externality is created when a telephone is purchased without its owner intending to create value for other users, but does so regardless. Online social networks work similarly, with sites like Twitter and Facebook increasing in value to each member as more users join.The expression "network effect" is applied most commonly to positive network externalities as in the case of the telephone. Negative network externalities can also occur, where more users make a product less valuable, but are more commonly referred to as "congestion" (as in traffic congestion or network congestion). Over time, positive network effects can create a bandwagon effect as the network becomes more valuable and more people join, in a positive feedback loop. Since blockchain is the network that is behind cryptocurrencies, the more people that use this technology, the more valuable it becomes.
Terminology
Bitcoin is a worldwide cryptocurrency and digital payment system invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto. It was released as open-source software in 2009. The system is peer-to-peer, and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain. Since the system works without a central repository or single administrator, bitcoin is called the first decentralized digital currency
Satoshi is the smallest amount within bitcoin representing 0.00000001 bitcoin, one hundred millionth of a bitcoin. For example, if you had 0.008 Bitcoin you could say you have 800 thousand satoshis. Check out this site to learn more and convert to different fiat currencies: https://99bitcoins.com/satoshi-usd-converter/
Ethereum is an open-source, public, blockchain-based distributed computing platform featuring smart contract (scripting) functionality. It provides a decentralized Turing-complete virtual machine, the Ethereum Virtual Machine (EVM), which can execute scripts using an international network of public nodes. Ethereum also provides a cryptocurrency token called "ether", which can be transferred between accounts and used to compensate participant nodes for computations performed. "Gas", an internal transaction pricing mechanism, is used to mitigate spam and allocate resources on the network.
Ethereum was proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher and programmer. Development was funded by an online crowdsale during July–August 2014.The system went live on 30 July 2015.
In 2016 Ethereum was forked into two blockchains, as a result of the collapse of The DAO project, thereby creating Ethereum Classic.
Cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. Cryptocurrencies are classified as a subset of digital currencies and are also classified as a subset of alternative currencies and virtual currencies. Bitcoin became the first decentralized cryptocurrency in 2009. Since then, numerous cryptocurrencies have been created. These are frequently called altcoins, as a blend of bitcoin alternative. Bitcoin and its derivatives use decentralized control as opposed to centralized electronic money/centralized banking systems. The decentralized control is related to the use of bitcoin's blockchain transaction database in the role of a distributed ledger.
Blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block contains typically a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data. Functionally, a blockchain can serve as "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way." For use as a distributed ledger a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks and a collusion of the network majority. Blockchains are secure by design and are an example of a distributed computing system with high Byzantine fault tolerance. Decentralized consensus has therefore been achieved with a blockchain. This makes blockchains potentially suitable for the recording of events, medical records, and other records management activities, such as identity management, transaction processing, and documenting provenance. The first distributed blockchain was conceptualised by Satoshi Nakamoto in 2008 and implemented the following year as a core component of the digital currency bitcoin, where it serves as the public ledger for all transactions. The invention of the blockchain for bitcoin made it the first digital currency to solve the double spending problem, without the use of a trusted authority or central server. The bitcoin design has been the inspiration for other applications.
Decentralized - Decentralization is the process of redistributing or dispersing functions, powers, people or things away from a central location or authority. While centralization, especially in the governmental sphere, is widely studied and practiced, there is no common definition or understanding of decentralization. The meaning of decentralization may vary in part because of the different ways it is applied. Concepts of decentralization have been applied to group dynamics and management science in private businesses and organizations, political science, law and public administration, economics and technology.
Authenticator - a way to prove to a computer system that you really are who you are - Google authenticator is an example and you'll want to use it for added security with exchanges.
Hard Fork - A hard fork is a software upgrade that introduces a new rule to the network that isn't compatible with the older software. You can think of a hard fork as an expansion of the rules. (A new rule that allows block size to be 2MB instead of 1MB would require a hard fork). When a hard fork happens, a coin splits into two versions - one that’s the original and one that’s a clone. This happened with Bitcoin (original) and Bitcoin Cash (clone). It also happened with Ethereum and Ethereum Classic.
Initial Coin Offering (or ICO) - a fundraising mechanism in which new projects sell their underlying crypto tokens in exchange for bitcoin and ether. It's somewhat similar to an Initial Public Offering ( IPO ) in which investors purchase shares of a company.
FUD Fear, Uncertainty and Doubt
FOMO Fear Of Missing Out
Pump & Dump Pump and dump is a scheme that attempt to boost the price of a coin through recommendation based on false, misleading or greatly exaggerated statements. People with a lot of money will influence a bunch of people to buy into the hype and then sell all of their coins - raking in the profits while everyone else loses their shirt. Pump and dump can also be used to reference swing trading and can be a good thing as well. In a nutshell, you buy low and as the coin ‘pumps’ and rises in price, you sell high and ‘dump’ your coins and make a profit.
Bullish & Bearish The use of "bull" and "bear" to describe markets comes from the way the animals attack their opponents. A bull thrusts its horns up into the air, while a bear swipes its paws downward. These actions are metaphors for the movement of a market. If the trend is up, it's a bull market. If the trend is down, it’s a bear market. People will say things like “I’m very bullish on NEO right now”.
Shorting For people who want to profit from a falling price, short selling (or shorting) is an option where you borrow some cryptocurrency that you don't already own from somebody who does, then sell it in the market, hoping to buy it back at a lower price. A number of exchanges offer margin facilities to enable that borrowing. This can be very risky!
Volatility - liability to change rapidly and unpredictably. The cryptocurrency market moves up and down at a rapid pace and you could say it’s extremely volatile, but the overall trend is up.
Whale - A person or company that has a lot of money and can greatly influence the price of a token by investing a ton of money into that coin. They can often be part of pump and dumps too.
Whitepaper - a government or other authoritative report giving information or proposals on an issue. Basically every new blockchain company coming out has a white paper on their website that you’ll definitely want to look at if your considering buying their tokens.
Address - A Bitcoin address, or simply address, is an identifier of 26-35 alphanumeric characters, beginning with the numbers 1 or 3, that represents a possible destination for a bitcoin payment. Addresses can be generated at no cost by any user of bitcoin. Addresses for other cryptocurrencies are similar and this is where you would send money to or you'd give someone your address for them to send money to you.
Public/Private Key - Public key is your address that other people would use to send money to you and your private key is just what it sounds like, private! Don’t ever share it with anyone because this is your password to your private bank account.
Altcoin - Altcoins, meaning "alternative coins", is another term for cryptocurrencies (other than Bitcoin).
Block - Transaction data is permanently recorded in files called blocks. They can be thought of as the individual pages of a city recorder's recordbook (where changes to title to real estate are recorded) or a stock transaction ledger. Blocks are organized into a linear sequence over time (also known as the block chain).
Block Height - The height of a block is the number of blocks in the chain between it and the genesis block (the first block on the blockchain).
Block Reward The Bitcoin block reward refers to the new bitcoins distributed by the network to miners for each successfully solved block.
Distrubted Ledger - A distributed ledger (also called shared ledger) is a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, or institutions. There is no central administrator or centralized data storage.
Multisig - Multisignature (multisig) refers to requiring more than one key to authorize a Bitcoin transaction. It is generally used to divide up responsibility for possession of bitcoins.
Node - Bitcoin’s health largely depends on how many people run the decentralized peer-to-peer network globally by participating as a ‘Bitcoin node,’ which vary in size. A node might represent a single individual with a laptop, a company running a single node for mostly symbolic purposes or even a massive Bitcoin mining farm harnessing a large percentage of Bitcoin’s overall hashing power. In short, Bitcoin nodes keep the Bitcoin blockchain’s peer-to-peer network running.
Smart Contract - Smart contracts are computer protocols intended to facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts were first proposed by Nick Szabo in 1996.
Fiat - Fiat currency is legal tender whose value is backed by the government that issued it. The U.S. dollar is fiat money, as are the euro and many other major world currencies.
HODL - Slang that stems from a typo that means to hold your coins.
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In conclusion, cryptocurrencies and the underlying blockchain technology are an amazing innovation that will likely have profound effects on a global scale. Will it be perfect? Probably not. Is our current system perfect? Not even close. Will this be better? Vastly better.
If you have any questions please leave them in the comments section below. I hope this has been a helpful and informative resource for you - please consider Upvoting it and sharing it to help spread this to more people. Also, if you noticed any errors or have any thoughts on something I may have missed please let me know! I want this to be as legit as possible so any help is very appreciated.
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Great Article! How do I upvote it? New to Steemit
Thanks! I'm new to Steemit as well and I'm really liking it so far. Just click the ^ arrow that's to the left of where it says the dollar amount (right above where the comments section starts). Thanks again!
Great beginners' as guide, upvoted and following you now as I am also into cryptos.
Thanks!
Good for beginners, nice job upvote!
Thanks for checking it out!
Exceptional Guide! Good job! We have also created something that we think might help add to the comprehensiveness of the article. Have a look. Hope that it helps. :) The Ultimate Cryptocurrency Glossary: From A to Z
This is still a really good guide even after two years. I would be very grateful if the author could add my newly launched crypto directory. It has over 7000 crypto and blockchain businesses listed.