1. Trading Cryptocurrency For Beginners
2. Cryptocurrency For Beginners Pdf
3. Understanding Cryptocurrency For Beginners Beginner
4. Investing In Cryptocurrency For Beginners
5. Understanding Cryptocurrency For Beginners Investing
6. Understanding Cryptocurrency For Beginners Trading

Cryptocurrency for Beginners Learn everything from blockchain basics to what it means to mine currency, and leave this course with a sound understanding of Bitcoin, Ethereum and other. Bitcoin is a digital currency (also called crypto-currency) that is not backed by any country's central bank or government. This form of payment first came into use in 2009 and has been growing in popularity due to its ease of international use. The 150 billion dollar cryptocurrency market has jumped over 350% just since the beginning of this year.

If you’ve ended up on this page, then there’s a chance that you’ve caught
wind of the massive cryptocurrency buzz sweeping the world. Over the last year,
cryptocurrencies like Bitcoin and Ethereum have gone from being relatively
unknown to household names.

For those of you looking to learn about cryptocurrencies, you’ve come to the
right spot. We’ve developed this detailed beginner’s guide on digital currencies
so that folks with little to no experience with these currencies can learn about
them from the ground up.

In the sections below, we’ll walk you through the basics, including what
cryptocurrency is, how it works, common terminology, and more. By the time you
finish reading this page, you’ll have a good basic understanding of
cryptocurrencies. If you don’t want to read the entire document and would prefer
to jump to a particular section, you can use the jump links below to hop to the
parts that interest you the most.

What Is Cryptocurrency?

At a very high level, cryptocurrency is a type of digital currency that is
created through the use of computer coding. Even though it is a form of
currency, there isn’t any physical money like we’re used to with traditional
coins and dollars. Instead, all cryptocurrencies reside in the digital space and
can be sold, transferred, or exchanged for goods and services.

As you’ll see in the sections below, there’s a ton that you can do with these
digital currencies. From buying cars to paying for your meals, cryptocurrencies
like Bitcoin are becoming more usable every day as more retailers and
restaurants are willing to accept these funds as payment.

Cryptocurrencies have many benefits over traditional money. Some of the most
notable ones include that it is decentralized, fast, secure, and globally
accepted. It’s for these reasons and more that many folks are beginning to adopt
the use of these currencies.

As you can probably imagine, cryptocurrency is a pretty complicated thing.
There’s much more you can learn if you’d like to go deeper down the rabbit hole.
Here is a link to an excellent piece from Blockgeeks that has an
in-depth explanation about cryptocurrencies.

How Does It Work?

We could write an entire article about how cryptocurrencies function. Instead
of boring you with a long page of text, we’ve instead included an incredible
infographic below from Blockgeeks. This image will give you an excellent
high-level overview of how digital currencies function. If you’d like to learn
more about how they work, don’t miss out on the link to Blockgeeks just above.

Popular Cryptocurrencies

If you’re new to the world of cryptocurrencies, one of the things that you
should know is that there are a ton of different ones in existence. Currently,
there are over 2,000 different cryptos available. However, the majority of these
are unknown to most folks. We’ve dedicated this section to three of the most
popular cryptocurrencies that currently exist.

Bitcoin

Considering the fact that Bitcoin was the first ever cryptocurrency, it’s
only right that we lead off talking about it. In 2009, Bitcoin was initially
released to the public for purchase. Since then, Bitcoin has exploded in
popularity and is still the most popular digital currency. On top of its
popularity, it also has the most massive market cap of all other
cryptocurrencies.

Ethereum

Another popular cryptocurrency is Ethereum. However, unlike Bitcoin, Ethereum
is a relative newcomer in the digital currency space, having been founded in
2015. Despite its young age, Ethereum has rapidly risen to one of the most
popular cryptocurrencies in the market.

Litecoin

With roots dating back to 2011, Litecoin is another popular cryptocurrency.
Litecoin was developed by a Google employee and has a notably faster transaction
processing time than Bitcoin.

As we mentioned earlier, there are over 2,000 different cryptocurrencies
available. If you’d like to view the full lineup of options outside of the three
major ones that we’ve covered above, you should check out the following link. On
this page, you’ll be able to see all existing digital currencies
and information about their current price, market cap, and price trends.

The History of Cryptocurrency

Many folks don’t have a clue about how or why cryptocurrency first came
about. The idea behind it actually traces back to the early 1980s. However, it
wasn’t until 2009 that the first digital currency, Bitcoin, was launched. Since
then, thousands of other cryptocurrencies have launched, and there doesn’t
appear to be any sign that things are slowing down anytime soon.

The basic idea and premise of cryptocurrency is that it is decentralized.
That means that no government or other organization has control over the digital
currency. Along with that, one of the other primary goals was to make the use of
cryptocurrencies anonymous.

If you’d like to learn more details about the history of cryptocurrency, be
sure to check out the link below. It will take you to our page with a vast
explanation about the history of digital currency so that you can deepen your
knowledge on how things have progressed since cryptocurrencies first began.

In addition to our detailed page about the history, we’ve also built a page
dedicated to why people started using cryptocurrency. If you’re looking for more
color on this subject, then be sure to click on the link below to visit this
insightful page.

Common Cryptocurrency Terms

As you begin your journey into the exciting realm of cryptocurrency, you’ll
want to have an understanding of some common terminology. Below, we’ve provided
definitions of common terms that you’ll come across when dealing with the
digital currencies.

Exchange

In the cryptocurrency world, an exchange is merely a place that you can buy
or sell cryptocurrencies. Exchanges for digital currencies like Bitcoin operate
through websites. One of the most popular exchanges for cryptocurrencies is
Coinbase. If you’d like to check out their exchange to see what it looks like
and how it operates, we’ve included a link below in the next section

Altcoin (Alt)

An altcoin is simply any other cryptocurrency that’s not Bitcoin. Also
sometimes known as an alt, these coins are viewed as alternatives to the
original cryptocurrency, Bitcoin.

ICO

ICO is short for initial coin offering. These take place any time that a new
cryptocurrency is introduced to the market. Essentially, an ICO is the first
time that the general public can purchase a new digital currency. If you’re
familiar with IPOs (initial public offerings) in the stock world, ICOs follow
the same general structure and logic.

Market Cap

The term “market cap” is used to represent the total value of a
cryptocurrency as a whole. To calculate the market cap, you just multiply the
current value of a coin by the existing number of coins in circulation.

Blockchain

This is the type of technology that significant cryptocurrencies like
Ethereum and Bitcoin use in the process of managing their currency. In short,
the blockchain is a series of ledgers showing every transaction for that
currency. However, the primary thing with these ledgers is that they are highly
secured through the use of cryptography. Instead of this sensitive data being
stored on a lone server, it has copies across thousands of computers around the
globe.

Keys

Since cryptocurrencies operate through the use of cryptography, keys are a
common aspect of working with them. Specifically, you’ll have public keys and
private keys. The public keys are what you’ll use to have people send you a new
cryptocurrency. These are keys that you don’t need to be very careful with. It’s
your private keys that you need to secure and store in a safe place so that you
don’t lose them. With these private keys, you’re able to access your digital
currencies and sell them or send them to other individuals. Without your private
keys, you won’t be able to access your funds.

Wallet

While the idea is generally the same as the wallet you may have in your
pocket right now, cryptocurrency wallets differ in their own way. Instead of
being a physical wallet, these wallets act as a place for you to safely store
the keys to any cryptocurrencies that you own. You can choose to use a software
wallet that resides on your computer, or you can utilize a hardware wallet,
which is a specialized USB stick for secure storage of your keys.

How to Buy Cryptocurrency

These days, it’s relatively simple to purchase cryptocurrencies using one of
two primary methods. You can either purchase coins from an exchange, or you can
get them from a cryptocurrency ATM. No matter which one you use, it’s a quick
and easy process.

The most popular way for folks to purchase digital currencies is through the
use of an exchange. Cryptocurrency exchanges are much like a stock exchange in
that they are a place where you can buy or sell crypto funds. If you’d like to
check one out, we’ve added a link to Coinbase, one of the most significant
exchanges for cryptocurrencies in existence.

If you’d like to purchase somewhere other than an exchange, then you can use
a digital currency ATM. Spread around the globe, you can use these machines to
pick up different cryptocurrencies like Bitcoin. Instead of walking away with
actual money, you’ll instead receive confirmation and the private keys that you
can use to sell or transfer your crypto funds at a later date. We’ve included this
link that will show you all of the cryptocurrency ATMs near you if you
want to buy some using this method.

Cryptocurrency and Online Gambling

One of the earliest mainstream adopters of cryptocurrency was the gambling
industry. What’s nice about this is that it allows online gamblers a broader
assortment of payment methods to select from when they are making deposits or
withdrawals from a betting site. We’ve included this section, as it’s the
primary focus of our website, and it’s something that we’re very passionate
about.

If you’re interested in betting on sports or casino games online using
cryptocurrencies, then don’t miss the links below. On these pages, we’ll provide
you with more information about how you can use these digital currencies for
your online gambling. Also included on the pages are our top picks for the best
online sites to use for Bitcoin. You can select below from a page dedicated to
sports betting sites or one dedicated to online casinos. Just click on the one
that you’d like to learn more about.

Other Things You Can Do with Cryptocurrency

Besides being able to do online gambling, there’s plenty of other things that
you can do with cryptocurrencies. In this section, we’ll detail some of the
alternatives that you’ll have at your fingertips if you decide to buy and hold
some of these digital currencies.

Purchase Cars

If you end up holding a substantial portfolio of cryptocurrencies, one of the
things that you can do is purchase a car with it. Instead of showing up and
paying with a loan or cash, some buyers have paid for cars in full using Bitcoin
and other alt coins. Lamborghinis have become immensely popular with
cryptocurrency millionaires that hit it big thanks to their crypto investments.

Around the globe, there’s a good list of car dealerships that will accept
cryptocurrencies as payment. If you’re in the market to purchase a new car using
cryptocurrency funds, or if you’d like to see which dealerships are out there
that accept digital currency, a simple Google search can provide you with a list
of dealerships near you that accept cryptocurrencies.

Buy Homes

Another option is to use cryptocurrency funds to purchase real estate. As
with the cars example above, you’ll need a pretty hefty crypto portfolio to
execute on buying a home. However, it has been done, and many real estate
sellers around the globe are now accepting digital currencies as a form of
payment. For those of you seeking to buy a home using your crypto funds, you can
use Google to locate properties around the world that can be purchased using
your digital currency.

Shopping

Trading Cryptocurrency For Beginners

If your crypto portfolio isn’t big enough yet to purchase homes or cars,
you’re still not out of luck. Something else that you can do is retail shopping
with your cryptocurrency funds. Currently, many online and traditional
brick-and-mortar retailers accept digital currencies as a form of payment.

In the online space, there are lots of web retailers that take
cryptocurrencies like Bitcoin and Ethereum. However, the majority of them are
smaller retailers that you’ve probably not heard of. Luckily, there are a couple
of major retailers that have stepped up to the cryptocurrency plate. Most
notably, both Overstock.com and Etsy.com will accept digital currency as a form
of payment in check-out. Unfortunately, Amazon hasn’t opened up to crypto
payments at this time.

If you don’t do all of your shopping online, then you may also be able to
spend some of your cryptocurrency funds in a brick-and-mortar retail shop.
Currently, the retailers accepting this form of payment are mostly smaller ones.
However, we expect that the number of retailers allowing customers to pay using
cryptocurrencies will continue to increase. You can use the following link to find a
map of all of the retailers near you willing to accept digital currency funds as
a form of payment.

Eat Out

Lastly, you can pay for your food with crypto funds. Similar to the
brick-and-mortar retailers, many restaurants globally are now accepting
cryptocurrency as a form of payment. Using the link above to CoinMap, you can
locate restaurants in your neighborhood that allow you to use digital currency
to check out.

The Benefits and Risks of Using Cryptocurrency

Another thing that we wanted to cover on this page relates to the benefits
and risks of using cryptocurrency. We’re here to give you a good look at both
sides of the coin so that you know both the potential good and bad that could
come with it. It’s vital that you check out this portion of the page so that you
understand precisely what you may be getting yourself into.

Up first, let’s take a look at some of the risks associated with
cryptocurrencies. One of the main dangers of digital currencies is that their
prices are very volatile, meaning that the prices can change rapidly in either
direction. In addition, there is always the possibility that the value of a
crypto can become worthless.

Another risk associated with cryptocurrency is that there is a risk of your
coins being hacked. With everything being digitally based, there is always a
possibility that someone could gain access to your crypto funds and steal them.
To help reduce the likelihood of this, make sure that you’re using some form of
cryptocurrency wallet. We’ve got a link where you can learn more about wallets
in the next section of additional resources.

If you’d like a more expanded explanation of the risk of using
cryptocurrencies, we’ve built a page dedicated to just that. By using the link
below, you can gain a deeper understanding of all of the potential downsides
associated with using digital currencies.

Next, let’s focus on some of the benefits of cryptocurrency. One of the
significant benefits of cryptocurrencies is that they provide easy access for
many individuals and it can be spent globally. Unlike traditional currency
that’s only able to be used in a specific country or region, cryptos can be used
around the world.

Another great benefit of digital currencies is that they provide very fast
settlements. Compared to other payment forms like bank wires and checks,
cryptocurrency can settle transactions in as little as a matter of moments. This
helps speed up things for folks using cryptocurrencies to transact buying and
selling.

While we’ve highlighted some of the benefits of cryptocurrencies here, this
is not an all-inclusive list. To view more detail about the benefits of using
digital currency, be sure to check out the link below. Here, we’ll provide you
with a broader list of potential benefits.

Another benefit of cryptocurrency is that it is beginning to replace other
currencies. Much of this is thanks to the fact that cryptocurrencies can be sent
and spent around the globe, unlike traditional currencies which tend to be tied
to a specific country or region of the world. If you’d like to read more about
how digital currencies are replacing traditional currencies, don’t miss our
write up below. To read this interesting piece, click on the link below.

Additional Resources

In addition to all of the information we’ve already provided above, we also
wanted to bring you a lineup of additional resources about cryptocurrencies. By
using these guides below, you can broaden your knowledge and understanding of
cryptocurrency.

Cryptocurrency FAQ Page

If you still have questions after checking out this page, don’t miss our
cryptocurrency FAQ page. Here, you’ll find an expanded assortment of questions
that we commonly hear about cryptos. To view this list of additional questions,
click the link below.

Guide to Cryptocurrency Wallets

We’ve built out a detailed guide dedicated to cryptocurrency wallets. If
you’re wondering what they are or how you can go about finding one to use, then
you’ll definitely want to check this page out. Just click below to head over to
our cryptocurrency wallet guide.

How to Mine Cryptocurrency Guide

Many of you might be thinking about mining cryptocurrencies. Before you
purchase equipment to get things started, make sure that you view our guide on
how to mine cryptocurrency. Here, we’ll give you a full understanding of what
you can expect, from high electricity bills to the massive amount of heat
output.

Conclusion

We hope that you’ve gathered up a solid fundamental understanding of
cryptocurrencies using our beginner’s guide. If this is the first time that
you’ve visited our page, consider taking a minute to check out the other
valuable resources and guides that we have to offer. You’ll find a nice
collection of cryptocurrency and gambling-related information that you can use
to elevate your knowledge. Thanks for reading, and good luck in all of your
future cryptocurrency investing adventures!

Cryptocurrency Frequently Asked Questions

Hopefully, we’ve helped you answer all of your questions using the
information and resources above. Just in case, we’ve also included a handful of
FAQs below that readers have submitted about cryptocurrency. To view the answer
to one of the questions below, all you have to do is click on the question, and
the answer will appear for you.

What happens if I lose my private cryptocurrency keys?

Unfortunately, if you lose your private keys to your cryptocurrencies, then
you’ll lose access to them forever. These private keys are essential for you to
sell or transfer your coins. There is no way for anyone else to help you recover
them.

Because these keys play such a vital role, it’s crucial that you take the
proper steps to record and safely store your keys. Instead of saving them on
your computer where they could potentially be hacked, we’re big fans of using
old-school pen and paper. What we’d suggest is writing your private keys down on
a few pieces of paper and then storing them in different secure areas. That way,
if you misplace one, you’ll still have some others. You might consider placing
them in a safety deposit box, home safe, or other secure areas within your home.

An alternative for you is to use a cryptocurrency wallet. These come as
either software or hardware formats. In both forms, these wallets are designed
to help you securely store your private keys.

Is cryptocurrency a smart investment?

Unfortunately, we can’t give a global answer here, as everyone’s financial
situation is a bit different. What we can tell you is that investing in
cryptocurrencies is very risky. If you own some of these currencies, you should
expect to see large swings in the value of your coins on a regular basis. Many
people don’t like significant changes like this, and if you’re in that bucket,
then you may want to sit out on investing in cryptocurrencies.

There are tons of individuals that have made a lot of money by investing in
cryptocurrencies. However, the majority of them bought coins in the early phase
of one of the cryptos. While it is possible to make money in the short term, you
might consider looking at things as a more long-term play. If you purchase some
coins now and hold onto them for a more extended period, there’s a chance that
they could be worth lots of money or nothing in the future. Unfortunately, we
don’t have a crystal ball that tells us what the future of digital currency
values will look like.

Do all online sportsbooks and casinos accept cryptocurrency?

No. Not all online sportsbooks and casino accept these digital currencies.
Luckily, plenty of them do. If you’d like to do your online gambling using
cryptocurrencies, check out the section above about online sites and
cryptocurrency. There, you’ll find more information and a link to a page where
you can see our recommended sites that allow you to transact using cryptos.

Can I lose money investing in cryptocurrency?

It is possible to lose money while investing in cryptocurrencies. As with
other investments like stocks and bonds, there is always a risk of losing some
or all of your investment. Unfortunately, there is no such thing as a sure bet.
If you decide that you’re going to invest in digital currencies, be sure to keep
this in mind as you make your buying choices. Due to the high-risk nature of
these investments, we’d suggest that you only allot a small portion of your
investment portfolio into cryptocurrencies while investing the remainder in more
stable investment options. In short, don’t put all of your eggs into a digital
currency basket.

Is cryptocurrency illegal?

Cryptocurrency For Beginners Pdf

At this point, cryptocurrencies are unregulated, meaning that they are not
illegal. Governments around the globe have yet to put in laws and rules
governing these digital currencies. However, we expect that will change sooner
rather than later. Unless you’re using cryptocurrency for something that’s
illegal such as drug trade or ransom requests, then you should not have any
problems.

Understanding Cryptocurrency For Beginners Beginner

The Simplest Way I can Describe Everything You Need to Know About Cryptocurrency

Here is a guide to cryptocurrency for beginners. We offer simple answers to questions like what is cryptocurrency, how does it work, what is Bitcoin, what is blockchain, how do I buy cryptocurrency, etc.

Metaphor: Cryptocurrency is a bit like online banking without a central bank. It is software-based, like an online banking platform. There is a ledger (called a blockchain), balances, and account numbers. You access your balances by using a password and can make transactions this way. Just like with online banking, you don’t need to know how it works under the hood to use it.

What is Cryptocurrency? Cryptocurrency is a type of digital asset that functions as a currency. The system that makes a cryptocurrency possible is based on cryptography (“crypto”) and a cryptocurrency is meant to be used like a currency (“currency”). With that in mind, not every digital crypto asset is meant to be used as a currency like the popular cryptocurrency Bitcoin is.

What is Bitcoin?Bitcoin is a software file stored on computers across the world that acts as a ledger of financial transactions called a “blockchain.” The ledger contains account numbers called “public addresses” associated with balances of Bitcoin. People can move around balances of Bitcoin if they have the passwords (or “private keys”) to those accounts using software called a “cryptocurrency wallet” (see description below). Bitcoin is the name of both this system and its unit of the currency. You can phrase it like this, “balances of Bitcoin tokens are moved around on the Bitcoin blockchain by creating transactions in Bitcoin wallets.”

What is Blockchain? Technically Blockchain is first and foremost a database protocol (a set of rules) for sorting data into “blocks,” but it’s easier to think of a Blockchain as a type of database. Essentially, it is a spreadsheet where data is stored in cells (or “blocks”) that are linked together in order by cryptographic codes called “hashes.” This database is generally decentralized and distributed on many computers instead of being stored in one central location or managed by one central entity. In Bitcoin, blockchain is generally used to describe both the public ledger where all transaction data is stored and technology (the protocol) behind the ledger. Many who aren’t believers in Bitcoin as a currency / digital asset are supporters of blockchain technology and its many applications both within finance and beyond.

On Being Decentralized and Distributed. Instead of Bitcoin being hosted on one computer or one company’s computers, Bitcoin is hosted on many computers by many different entities (it is distributed). Meanwhile, everything is either done democratically or is controlled by algorithms, so there isn’t a need for a “centralized” middle-man like a bank or government (it is decentralized). Bitcoin’s blockchain is in this sense both decentralized and distributed.

How is Cryptocurrency Different From Fiat Currency?Fiat currency, like the U.S. dollar, is controlled by central banks and controlled by states. It is legal tender and you can pay your taxes with it. Cryptocurrency, like Bitcoin, isn’t controlled by a central entity… but it isn’t legal tender and you can’t pay your taxes with it. Otherwise both fiat currencies and crypto currencies act as mediums of exchange and stores of value. With that in mind, some argue that cryptocurrency is a digital asset with exchange value, but not a true currency.

Can I buy things with Cryptocurrency? Cryptocurrency can be used as a payment method for any good or service that accepts cryptocurrency. The most common cryptocurrency used as payment is Bitcoin. As time goes on, accepting Bitcoin and other cryptocurrencies as payment is becoming more common. Check out a list of things you can buy with Bitcoin.

Investing In Cryptocurrency For Beginners

What are the Benefits of Using Cryptocurrency as a payment method? There are a number of benefits of cryptocurrency as a payment method. The main benefits of cryptocurrency in this sense are the often low transaction costs and quick transaction fees compared to other payment systems. On a good day cryptocurrency is the quickest and cheapest way to send money around the globe (XRP is a great example of this). Cryptocurrency is also an easy way to make payments online, especially for peer-to-peer transactions. Another big benefit is that cryptocurrency doesn’t require trust, which removes potential worry for both the sending and receiving party. Meanwhile, for some people in some states, cryptocurrency can act as an alternative to a states’ currency (which can be good if that currency is suffering from rapid inflation for example).

How do I Buy / Sell Cryptocurrency? One can buy and sell cryptocurrencies like Bitcoin via online brokers or exchanges like Coinbase or GDAX. Exchanges are like digital stock exchanges, but for cryptocurrencies. Learn how to trade cryptocurrency or check out our cryptocurrency investing starter kit.

Is Cryptocurrency Legal? In general, cryptocurrency is legal in every respect in the U.S. and much of the world. The only rules of thumb are 1. you have to pay taxes on it and 2. anything that would be illegal otherwise is also illegal with cryptocurrency.

Is Cryptocurrency Taxable in the U.S.? Cryptocurrency is taxed as an investment property, that means you have to tally profits and losses at the current market value of a cryptocurrency when you sell it, use it, or trade it and then pay the capital gains tax on profits in a calendar year. Please take time to learn about the tax implications of cryptocurrency.

What is an ICO? An ICO is an initial coin offering, a way for a new coin to raise money by offering a pre-sale of an up-and-coming token. ICOs are controversial. On one hand, some ICOs have been scams, on the other hand some states have worried that ICOs are mimicking securities without following the securities rules. One should do extra research before participating in an ICO.

What is a token? Token is a word that has a few different meanings in cryptocurrency. In simple terms, it just describes a cryptocurrency and its unit of value (a cryptocurrency = a token). For example one could say “I have 10 Bitcoin tokens.” The term is also sometimes used to describe cryptocurrencies existing on other coin’s networks. For example, the KIN ICO is a token on the Ethereum network. Lastly, encrypted bits of data that don’t contain identifying information are also called “tokens,” this type of token is also used in cryptocurrencies. In other words, what the term means depends on context.

How Do Transactions Work? Software called a cryptocurrency wallet (see below) is used in conjunction with an account number and password (technically public address and private key). The private key (known only to its owner, like a password) is used to create a signature that allows the owner to move around funds on the blockchain. Transactions are then secured on the blockchain in sequential blocks by “miners” (see the next section). Almost all cryptocurrencies work like this.

How Do I Store Cryptocurrency? In overly simple terms, you essentially “store” cryptocurrency in cryptocurrency wallets (see the next point for the technical details). For long term, you’ll likely want a “cold wallet”(where you store your private keys offline). For short term use, you might use a range of options or even temporarily keep funds on an exchange (but be careful, if it is connected to the internet, it is a “hot target”).

What is a Cryptocurrency Wallet? A wallet can be thought of as software that allows one to store cryptocurrency and create cryptocurrency transactions. This is a simple way to think of a wallet even though cryptocurrency isn’t technically stored in a wallet (instead public addresses are associated with transactions recorded on the blockchain, and thus are associated with balances, which the wallet software can read and display for you). More technically then, a wallet is software that allows you to store your private keys, view balances associated with public addresses, and create and sign outgoing transactions. With that noted, one must differentiate between wallets where you control your private keys (like the Bitcoin Core wallet), and custodial wallets where third parties host the wallet for you and are in control of the private keys (like the wallets on Coinbase or GDAX).

What is a Node? Since cryptocurrency is distributed many computers around the world have to run the software. Any computer running a copy of the software is “a node.” A full node runs a full copy of the blockchain.

How are New coins Created? When a transaction is created in a wallet it is broadcast to everyone in the Bitcoin network. For that transaction to be added to the ledger, users running mining software must solve cryptographic puzzles that let them add a block of transactions to the blockchain. The reward for adding a block is newly minted cryptocurrency. Thus “mining” is cracking puzzles to play digital accountant, and new coins are minted as rewards for mining transaction blocks.

How is Bitcoin Secure? Bitcoin is secure for two main reasons. 1. It uses a lot of one-way encryption that makes everything that is encrypted next to impossible to hack (it requires a ton of work). 2. It is distributed and so there is no central software to hack.

How does the cryptography aspect of Bitcoin work? At the core of Bitcoin, in terms of cryptography, is cryptographic hash functions. Key concepts include public-key cryptography and proof-of-work functions. If you want a crash course in the cryptography behind those terms, clicks those links and try reading the Bitcoin white paper: Bitcoin: A Peer-to-Peer Electronic Cash System.

What Happens If I Lose My Keys or if Someone Steals My Cryptocurrency? If you lose your private key, you lose access to the balances associated with it. If someone gets access to your crypto and they steal it, there is generally no way to resolve this issue. However, if you use a third party platform, like an exchange, and the exchange and not your account is hacked, then you might have recourse. The major exchanges tend to be good about reimbursing users in the case of a hack.

How Can I better Secure My Cryptocurrency? Since losing your keys and theft are real issues, it makes sense to follow some best practices of basic internet security. Keep your keys backed up offline (learn more about secure cold wallets), don’t store all your crypto in one location, be careful about URLs (make sure the URL is the real one), use a browser dedicated to crypto, use two factor authentication on any account you can, choose strong unique passwords, and don’t use your public email to log into your accounts. Taking just a few of these steps will go a long way to protecting you, taking none of these steps is asking for trouble. As a rule of thumb two-factor authentication is a must, so make sure it is enabled on all platforms that allow it! TIP: Although there are exceptions to this rule, the main security risk with the major cryptos isn’t the software (the software takes a ton of work to hack) or the major exchanges (the major ones are ensured, keep most of their funds in cold storage, and have security teams), it is people not taking care to secure their accounts.

Is Bitcoin Anonymous? Bitcoin is pseudo-anonymous. Every transaction is recorded on the public ledger (the blockchain), but no identifying data is used. Everyone can see the transaction and the public wallet address associated with it, but no one knows who made the transaction (unless that person or entity makes that information public). Other cryptocurrencies have more or less focus on privacy than Bitcoin. Some cryptocurrencies, like Monero are truly anonymous (in theory). With Monero, not even transaction data is public.

What is a smart contract? A smart contract is exactly what it sounds like, a “smart” (software-based and programable) “contract” (a set of conditions that when met execute the terms of the contract). Smart contracts can be written to a cryptocurrency’s blockchain to create a trustless contract (a peer-to-peer contract that doesn’t require a middle-man or trust). Unlike paper contracts a software contract can execute any function that can be executed by the software once conditions are met. This means in theory smart contracts can replace real contracts, but also do anything software can do. Ethereum’s system relies heavily on smart contracts, anyone can create a smart contract on Ethereum if they have the native Ether token to pay the fee for using the system. TIP: Bitcoin transactions are smart financial contracts, but Ethereum allows for smart contracts for much more than just financial transactions. Ethereum’s contracts can distribute new tokens, double as insurance contracts, or anything you can think of.

On Being Peer-to-Peer and Trustless. An important feature of cryptocurrency is that it is trustless. The encryption, code, blockchain, etc all comes together to allow for a trustless peer-to-peer distributed and decentralized system. That sentence might sound jargon-y, but it contains some important points. At the core, the idea is that all the aspects of cryptocurrency come together to create a system that doesn’t rely on trusting your peers or trusting a middle-man. Contracts written to the blockchain are written in stone, there is no need for trust or middle-men to ensure the execution of a contract once its conditions are met!

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Crypto Terms: “FOMO” is fear of missing out (an emotional response to seeing the price move a lot and wanting in). FUD is fear, uncertainty, and doubt that can affect prices of assets. “HODL” is a misspelling of hold from an old forum post (it today means “hold on for dear life during big price movements”). A “hard fork” is like a fork in the road, a copy and paste of software that allows each copy to branch off in a different direction (when this happens with Bitcoin the ledger is duplicated along with balances, meaning people get the newly forked coins for free). An “Airdrop” is a method of distributing newly minted coins to the wallet addresses of current coin holders. See a list of crypto jargon.

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Did I miss something or do you need something clarified? Just ask me a question in the comments below and I’ll answer it.