Cryptocurrency Beginner's Guide: Crypto Simplified!
Back in the early 2000s when I got my first email address from Rocketmail and browsed the Internet using Netscape, there was no way I, and millions around the world, could have foreseen the extent of our reliance on the Web. The dot-com boom bookmarked an important chapter in the history of Internet development. In the run-up leading to the crash, it seemed that anything with ".com" associated with it was a potential money-making machine, although it didn't much matter how the money was going to be made to many of those investing in it.
After the bust, where fortunes were lost and made, the Internet went through a low-profile period. Those who managed to catch a glimpse of the potential benefits it could bring continued building. Out of those ruins, gradually a few companies started to take shape. Fast forward to today, more than 20 years later, and the world has never seemed as vibrant and exciting as it is now.
Looking at the stock market today, tech stocks have been some of the biggest drivers in the S&P 500. If you had a penny for every time you heard someone say, "Gosh, if only I'd invested in Apple/Amazon/Microsoft/Oracle/[insert big tech company here]," you'd already be able to afford a thousand shares of any of those companies. For every success, the way is also paved with the corpses of those that didn't make it. It's not just about having the opportunity, but also a smidgen of luck involved. Even if you grabbed the chance to do something and lost, it's better than not having acted. After all, if things had worked out differently, who knows?
This brings me to today when I am faced with the birth of a new asset class known as digital assets. From computers to the Internet to smartphones and now to cryptocurrency, it's a continuation of where we came from and where we're heading to. I missed my chance to invest in the Internet back in the day because I didn't have much money and knew jack about investing. As I see what is happening in the crypto space, I think this is the closest God ever came to putting me in a time-machine capsule so that I could do something toward securing my own future. With the interest of sharing knowledge with anyone equally enthusiastic about the evolution of Web3, I hope you will find this Cryptocurrency Beginner's Guide helpful
And now, without further ado, I want to introduce you to the wild and colorful world of cryptocurrency.
What is Cryptocurrency in Simple Terms?
We all know what is currency, as in the wads of paper and coins that you use in your daily life. Each country has its own currency, which can only be used within its own borders other than for a few exceptions. The "crypto" part is a shortened form of the word "cryptography," meaning "the practice of creating and understanding codes that keep information secret," according to the Cambridge Dictionary.
In other words, coded currency. The word "currency" itself is also a bit of a misnomer because it's not just about money, even though that's how it got started, which we are going to look at later. However, we're just going to go with the flow and call it cryptocurrency, for now.
Cryptocurrency is, according to Monia Milutinović, “ a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. ”
In its early days, "cryptocurrency" usually meant things like coins, tokens, and another kind of asset known as non-fungible tokens (NFTs). Given that it's evolving at breakneck speed, it's gone on to include more than just "currency". If your head is starting to spin, I get you. I promise it'll get better and I'll also give more detailed explanations of these as we go along. For now, just think of cryptocurrency, or crypto shortened, as a form of money that exists without the backing of guns or land and is accepted worldwide.
Cryptocurrency, a new asset class. Image via Shutterstock
Is Cryptocurrency the Same as Blockchain?
The short answer is no. It's possible for blockchain technology to work without cryptocurrency but it would be difficult the other way around. Blockchain can, and often does, work completely independently without any need for cryptocurrencies, but cryptocurrency relies on some form of blockchain technology for its existence, whether that's a vanilla type of blockchain or rainbow variations of it.
Some examples of the rainbow variations are DAG, short for Directed Acyclic Graph (used by a project called IOTA) and hashgraph (used by Hedera Hashgraph). However, we won't get into them at this point as it's beyond our scope of discussion.
Since this article is all about cryptocurrency, we won't dwell too much on what is blockchain technology. I don't want your head to start hurting now. If you'd like to learn more about it, be sure to check out our article "What Is Blockchain?" for a comprehensive understanding of this technology.
What is Bitcoin? A Beginner's Overview
While blockchain technology has been around since 1991, it wasn't until Bitcoin came along that gave the technology its first real use case. When the Bitcoin white paper first appeared in 2008, it was about a protocol for “a new electronic cash system that’s fully peer-to-peer, with no trusted third party.” The white paper, published under the name of Satoshi Nakamoto, listed blockchain technology as the means to make this protocol a reality. We'll find out a bit more about how this is done later.
In the interest of keeping things moving, here are some salient points about Bitcoin for a basic grasp of what it is and what makes it so revolutionary:
- It has a finite supply of 21 million. This means money printing is not possible and runaway inflation cannot happen.
- It is the largest cryptocurrency in the market with a market capitalization ranging between $800 billion and $1 trillion and above.
- It can be sent anywhere globally within seconds to minutes for less than the price of the cheapest street food you can find. Innovations such as Bitcoin's Lightning Network has made this possible.
- Decentralized- the Bitcoin network can't be controlled by any government or influenced by lobbyists. It is immune to human corruption. Transactions on the network cannot be sanctioned. Since nobody owns the network, it is a much more levelled playing field between countries, corporations, and people.
- Bitcoin is transparent as its ledgers are as public as the advertising on a billboard, making it easy to trace. Smart criminals know not to use Bitcoin as transactions are viewable by anyone forever, and cryptocurrency forensic companies can easily track criminal activity.
- The Proof-of-Work consensus mechanism is one of the most secure ways of protecting the network from hacks and attacks. Not only is it nearly impossible to attack technologically, but it's also prohibitively expensive to do so.
- Billions of dollars worth of Bitcoin can be transported on something as small as a USB device, mobile phone, or even by a person simply memorizing their recovery phrase, making it ultra-portable. The same cannot be said of gold or cash.
- The Bitcoin network itself may have started off as a payment network, but it's got a lot more potential to be used in ways that can bring about significant change to the way society operates.
Image via medium/coinmonks
To learn more about bitcoin, we invite you to dive into our "What Is Bitcoin" article for a better understanding of its uses and potential.
Was Bitcoin the First Cryptocurrency?
Not quite. Nakamoto wasn't the first person to attempt some kind of digital cash system. There were others before who had a crack at it. All of them faced "the double spend" problem. This is best illustrated as: if I gave you one digital dollar, what stops me from spending again that dollar I just gave you? The first person who had a go was David Chaum with his eCash system in 1982. The idea was to use blind signatures and it allowed users to store digital cash on their own computers. However, this system relied on banks, which as we know, aren't always the most reliable in times of crisis.
After him came Adam Back with HashCash, which uses the Proof of Work algorithm in 1997. Ironically, there was no money involved in this. Instead, it was intended as a way to prevent spam emails and DDoS attacks. Users would need to solve a cryptographic puzzle before the email could be sent, along with a unique stamp that would be generated as a result. If the email was sent with a used stamp, the email wouldn't be sent. Adam used a double-spend database to do the checks.
In 1998 Wei Dai came up with B-Money and Nick Szabo with Bit Gold. Both are decentralised and anonymous ways to send money. Hal Finney, in 2004, also had an idea called Reusable Proof of Work (RPoW) added to the mix. None of these managed to get off the ground in any meaningful way due to the trade-offs or limitations involved. However, they were the inspiration for Nakamoto and the Bitcoin protocol.
What made the Bitcoin protocol successful where others had stumbled was the introduction of the Unspent Transaction Output (UTXO) concept. It basically keeps track of how much of a digital currency is left after a transaction occurs, like the change you get from a vending machine.
Why Do People Invest in Cryptocurrencies?
Everyone has their own reasons for undertaking anything. Investing in crypto is no exception. While the individual reasons may vary, if you were to do a survey and ask people why they invest in crypto, the answers you get can be grouped into a few categories.
Hedge Against Inflation
Most cryptocurrencies have a finite supply. As demand for it rises, there will be more dollars chasing the limited supply instead of the other way around. A great example of this is Bitcoin. Excessive money printing and irresponsible monetary and fiscal policy can lead to inflation, or worse, hyperinflation, as we are currently seeing in many nations around the world. With Bitcoin, run-away inflation is not possible as new supply cannot flood the system.
I would like to take a moment to point out that not all crypto has a finite supply. Some have an infinite supply and yet manage to be deflationary at the same time. The example I'm thinking of is Ethereum, another cryptocurrency, ranked no. 2 in the crypto space after Bitcoin.
What makes it interesting is its potential to be deflationary. As rewards are generated and given out to network participants, a portion of the circulating amount is taken out of circulation through an action known as burning. In Ethereum's case, this occurs with every transaction occurring on the Ethereum blockchain as a portion of the fees get sent to a wallet address that cannot be accessed by anyone, effectively removing them from the total Ethereum supply. To find out more about Ethereum, it's potential, use cases, and what separates it from Bitcoin, feel free to check out our Ethereum Beginner's Guide.
Bitcoin has been the best-performing asset in a decade, producing an annualized return of 230%. Some believe it's an even better hedge against inflation than gold!
Inflation is the invisible money eater. Fight it with the Bitcoin beast. Image via Shutterstock
Store of Value
Some people see crypto as a store of value and choose to invest in it for that purpose. But wait, some people might ask: “that's not quite true. The price of the tokens I bought last week with cash, isn't the same as this week or even a year ago. What kind of value does it store?”
In this instance, I admit, the price goes up and down pretty drastically at times, just like the shares in the stock market. So the store of value narrative certainly isn't about the price, but what it might bring in the long run. Think about it: Why do people invest in property? With the expectation that the price of it will go up. The reason for the price going up has a lot less to do with any renovations you've made to it to increase its value. Rather, it's because, once again, there are more dollars chasing a finite supply of houses. Even if you didn't do any kind of improvement to the house, if you've got a good location, the price would most likely go up on its own.
When it comes to store of value, it's about using your money to buy something that retains its value over the years as more and more dollars come into the market and lose purchasing power. It's also why millionaires nowadays don't mean the same as they used to 20 or 30 years ago. We now think of billionaires the same way instead. Not because they made that much more money, but because money got cheap due to inflation.
In a capitalistic society, everyone needs capital. If you don't have it, you'll need to find a way to get it. Speculating in crypto is one of the quickest ways to grow or lose wealth. For every Dogecoin millionaire you hear about, there are many more who have lost a lot. There is potential to gain a small fortune in a very short time, but it's no easy climb to the top, so beware!
We all know about putting money in a fixed deposit account to earn interest. The interest earned is usually known as passive income. You didn't have to work for it and the money just appears like magic. The goal of every FIRE person and retiree is to live off passive income without having to put in a certain number of hours a day of labour in exchange for cash. Crypto offers lots of opportunities for anyone to earn passive income. The most common way to do so is through staking, a process where token holders can park their tokens into a staking pool or with validators to help them secure the blockchain network.
Read up on how staking works and see if you would like to give this a try.
Aside from staking, another way to earn passive income is by being a lender as you can collect interest from the borrower. You're essentially doing that when you put money in a bank. It's just that the bank is the one who decides how much interest you earn while they lend out your money to someone else for a higher rate of interest. It's always struck me as odd that the interest I get from my bank deposits is vastly different from the mortgage interest I pay to the bank. Why should the bank pocket all that difference?
This is what Decentralised Finance (DeFi) is all about. It gives everyone the opportunity to be their own lender and earn interest that they can pick and choose from, depending on how long they want to lend their money out. This happens through crypto protocols that act as the middleman to help lenders and borrowers find each other. Since there is no overhead or staff costs or shareholders to appease, the difference between the rate of interest charged to borrowers and paid to lenders is a lot less.
It's also a great equilibrium because it allows anyone with money to be a lender and anyone who needs money can be a borrower without having to fill out lots of forms or have a decent credit score or go through the whole process and even then, still not be sure that you can get that loan you're hoping for, even with collateral.
Hedge Against Risk
The banking system as we know it is incredibly fragile due to fractional reserve lending and many firms are susceptible to bank runs. This is because the bank always has less in its vaults than the actual deposits it collects because it wants to squeeze every bit of utility it can by investing the money into all sorts of financial instruments.
Many feel that owning Bitcoin helps hedge against the risks that exist in the financial system, similar to owning gold, which is why Bitcoin is often referred to as “digital gold.”
How Does Cryptocurrency Work?
In this section, we provide you with an overview of how cryptocurrency works, from how it's created all the way to the various use cases. We want to show you the potential for what it can bring in helping with the further development of society and civilisation. Let's get started!
How Cryptocurrency is Created
Generally speaking, there are two ways that cryptocurrency comes into being. The first is through cryptocurrency mining. The other way is through pre-mining, which is a slightly fancy way of saying “we created this out of thin air.”
What is Cryptocurrency Mining?
There are quite a lot of technicalities involved, which I will not go into detail, being a non-technical person myself. What I can do is provide you with a basic understanding of how it works.
The two most well-known cryptocurrency consensus mechanisms are Proof-of-Work and Proof-of-Stake. Of the two, the latter is more popular as it is more widely adopted by other projects than the former.
The most high-profile example of using the Proof-of-Work method is Bitcoin mining. This mining process requires a huge amount of computing power to solve complex mathematical problems in order to add a block to the blockchain. Coins are generated as a reward to the miners who need to invest a substantial amount of money to get machines with grunty graphics cards to participate in this activity.
Image via Shutterstock
This is what Proof-of-Work looks like:
I buy ice cream from you using 0.0002 BTC, or 20,000 satoshis (sats). That's about $5. I transfer the funds from my wallet to your wallet. Behind the scenes, here's what's happening:
- This transaction is broadcasted to all the miners (computers) across the network.
- Each node or miner is busy collecting enough new transactions to fill a block.
- Once done, they also need to crack that problem to include the answer in the block.
- When it manages to do so, it will broadcast the block to all the nodes in the network.
- The other miners check that all the transactions in that block is valid and nothing has been used.
- When the block is accepted to the blockchain, all the miners use the answer in this block to create a new block. And the process starts all over again.
At this point, you will see my 0.0002 BTC appear in your wallet.
The other way to generate rewards is called the Proof-of-Stake method, involving a process called Staking.
To qualify as a validator, which is what miners are called here, you need to have a minimum amount of tokens on hand. In Ethereum's case, the magic number is 32. The act of staking means that your node is backed by these tokens. They act as a "guarantor" of your credibility as a validator so that you are not incentivised to be a bad actor on the network. If you validate false transactions, your node is not always running, or you do anything to harm the network, then your tokens will get confiscated or "slashed."
A Look at Some of the Key Differences Between PoW and PoS
Validators are randomly selected to verify transactions and add to the blockchain. Those who manage to add a block will get rewards given by the protocol. The only thing you can do to increase your chances of being chosen is to hold more tokens than others. Fortunately, this can be done by having others join your staking pool. In return, you share whatever rewards you get with your contributors.
If you'd like to understand more about how these two consensus mechanisms compare with each other, I highly recommend reading our article on Proof-of-Work vs Proof-Of-Stake to get a more in-depth look. You can also watch Guy explain it if you prefer a more visual method.
The Way of the ICO
ICO is short for Initial Coin Offering. This is an action taken by blockchain projects to raise funds. Coins or tokens of the project were issued in exchange for cash to build the project. Back in 2017, there was an ICO boom, similar to the dot-com boom in the 2000s. The trajectory for both was also similar as the majority of the companies that got started this way went bust later on. It wasn't that ICOs don't work, it's just that there were too many half-thought-out projects that either didn't have a solid plan or were a solution looking for a problem.
Those who obtained the coins or tokens, most likely thought of them like shares in a company, even though that's not exactly accurate. With a company's shares, you partake in the profits and losses generated by the company based on what they're selling or offering. If you hold enough of them, you even get to have your say on how the company operates.
Participants of ICOs are usually venture capitalists (VCs) who see these projects as investing in a start-up. They put down large sums in exchange for the tokens and even provide guidance to ensure the project has a successful launch. Once the project's token gets listed on an exchange and trading begins, these VCs will be in a position to make their money back by selling their tokens in the market at a price point that's almost always higher than what they paid for. This is even before the project starts to turn a profit! The ones who are caught buying the tokens at a higher price are retail customers like you and me.
To prevent this from happening, projects started implementing a Vesting Schedule, which means that VCs won't be able to sell all their tokens at the same time. Instead, they can only sell them in tranches after a certain period of time has passed. To find out more about how ICOs work, here is an article that talks about them in detail.
For major networks like Ethereum, the ETH token is not only given out as a form of reward to the validators for their efforts as a participant in securing, validating, and keeping the blockchain running, but is also used as a form of payment for those who want their transactions recorded on the blockchain. You're basically paying for your transaction to take up space in the blockchain. If you're interested in how blockchains make money, check out our article on blockchain revenue to learn more.
The Way of the Airdrop
The founders of some crypto projects decided not to issue tokens to raise funds. Maybe they got a grant or seed money somewhere to start up their project, hence decided not to go the ICO route. As the project develops and garners users, the founders may decide to reward users for engaging with the project. The reward is usually in the form of a coin or token distributed to the users for free. This is known as an “airdrop.”
Not only is it to reward users, but these airdrop announcements, made in advance, are also used to promote the project so more people who hadn't engaged with it before will start to. Typically, these tokens will allow the holders a say in the governance of the project, and they will be used as a form of payment to further engage with the project.
Come one, come all, Get yer tokens! Image via Shutterstock
There are numerous examples of token airdrops. One of the more prominent ones is the Ethereum Name Service. This project offers users the ability to buy their own customised ".eth" domain, like the DNS ones for IP addresses, but on the Ethereum network.
Let's say I've bought one called "eateggs.eth". Now, I can also create a subdomain called "helpme.eateggs.eth" and use it for a different purpose than the main domain name.
With this domain name, you can use it for a new website you might be building or more commonly, link it to a wallet address that is used to store your cryptocurrency. That way, if you want to receive a crypto payment from someone, you can say "just send the money to eateggs.eth". You can learn more about blockchain domains and how they work in our Unstoppable Domains review.
The ENS token was airdropped to anyone who had bought a .eth domain name prior to Nov 9th 2021. Users had until May 2022 to claim their ENS tokens from the official website. This is known as a governance token which allows token holders to get to vote on the direction of where the project is going.
Immediately after the airdrop occurred, people were trading the tokens for as much as 120 at one point, before the price settled down a bit in the 80-dollar zone. Since then, it's gone way down to slightly less than $15 at the time of writing, which is less than the initial price when airdropped.
An example of the volatility of cryptocurrencies. Image via TradingView
Types of Cryptocurrency
How many cryptocurrencies are there? Not as many stars as there are in the sky but squarely in the 4-digit territory. Most of them fall into one of these buckets below:
Coins - this is the reward given out for participating in the network and helping to secure the blockchain. The reward is a native token of an individual blockchain. Bitcoin, Ethereum, Cardano, and Solana are great examples of coins.
Tokens - these are virtual currencies that are issued by an application but it's not used to pay for space on the blockchain. Examples include AAVE, UNI (by Uniswap), APECOIN etc. A good explanation here is the Ethereum network. The Ethereum network has only one coin, which is Ethereum (ETH), but there are thousands of different tokens built on top of the Ethereum network.
Non-fungible tokens (NFTs) - unlike the coins and tokens previously mentioned, which are swappable, i.e. one ETH coin is much the same as the next ETH coin, these NFTs have unique characteristics that make them one-of-a-kind. Imagine Beanie Babies in a digital card format. Another selling point for NFTs is provenance as it's easy to see all its past and present owners. This is of the utmost importance because the majority of NFTs have no physical form. The only way to safeguard its uniqueness is the ability to prove that there is only one current owner at any given time.
Within the NFT sub-asset class are various kinds like artworks, digital certificates, identities, virtual land deeds etc which we won't get into in detail. If you'd like to learn more, feel free to give this Fundamental Analysis on NFTs a read.
Frosties NFTs On OpenSea
Stablecoins - these are cryptocurrencies pegged to a fiat currency, usually on a 1:1 ratio, and backed by some form of asset, although there have been instances where it's backed by an algorithm. You can see them as a kind of avatar for the fiat currencies they represent. Relative to other cryptos, it is a stable asset as its price is designed to remain within the $1 zone more or less. The most common examples of this are USDC and USDT, two cryptocurrencies that are pegged $1 to $1 with the United States Dollar, and PAXG, a cryptocurrency pegged to the price of gold.
Assuming you've taken the plunge and gotten yourself some cryptocurrencies, the next big thing to consider is where to store them. This is where the concept of wallets comes into the picture.
Unlike a regular wallet that you put your cash in, a crypto wallet doesn't store your crypto as it's already stored on the blockchain as information. Instead, a crypto wallet contains keys that grant you access to the crypto that's on the blockchain that you can use.
Broadly speaking, there are two kinds of wallets: cold and hot wallets. A cold / hardware wallet is like the safe you install in your own home. It's disconnected from the internet and no one can access it except you. A hot wallet is like renting a storage unit from a storage company. You have the keys to your stuff in the unit, but you rely on the storage company to help keep things safe for everyone.
To learn more about wallets and how they work, please read our article on hardware wallets for further insight.
How Much Money Do I Need to Start Investing in Cryptocurrency
The beauty of cryptocurrency investment is that you don't need any sizable amount of money to start off with. Just like buying fractional shares, you can buy a fraction of a cryptocurrency or whole units of them for those that are at a reasonable price. It's whatever you can afford to lose if things go pear-shaped.
How Can I Invest in Bitcoin?
Bitcoin is one of the most well-known cryptocurrencies and there are numerous ways to get your hands on some. The most common way is either through apps like Paypal using your credit card, online crypto shops like EasyCrypto, or through a cryptocurrency exchange like Binance or Coinbase. There is also Swissborg, a crypto investment platform that is definitely worth checking out.
If you buy through an exchange, you will be required to open an account with them. Some of them might require that you undergo a KYC process by asking for ID or other proofs as part of regulatory processes before they allow you to deposit cash or make crypto purchases. When you have the cash, just trade it for Bitcoin or any other kind of crypto, and bingo, you're in!
You can also invest in Bitcoin indirectly by buying shares of Bitcoin-mining companies or companies that provide equipment to mine Bitcoin such as Nvidia which supplies the graphic cards used in mining Bitcoin.
Other Ways to Invest in Cryptocurrency?
Aside from buying cryptocurrency directly, there are other ways to invest in cryptocurrencies that is less risky (but not risk-free). The popularity of NFTs has been surging so buying them can be a good investment, if you know how to gauge their value. When it comes to art NFTs, it's a bit like buying artwork. A lot of the value is subjective, and in this case, highly speculative.
One option you can consider is investing in an Exchange-Traded Fund (ETF) that comprises of blockchain companies. Some examples include iShares Blockchain Technology UCITS ETF, iShares Future Metaverse Tech and Communication ETF, or even ARK Innovation ETF (ARKK) which has Coinbase, one of the top crypto exchanges, as one of its top holdings.
Are Cryptocurrencies a Good Investment?
Of course, we cannot give investment advice and "Good" is a subjective term, with its definition being measured against a number of criteria, but many crypto enthusiasts and financial thought leaders in the space feel that it is something worth considering having as part of a diversified portfolio. As cryptocurrency is quite volatile, it is common for investors to start by only exposing 1-5% of their net worth to crypto assets, and, as with any investment, only investing what they can afford to lose.
Pros & Cons of Cryptocurrency
- Decentralisation: There is no central or single entity controlling the blockchain networks where cryptocurrencies reside, unlike fiat currencies which are 100% controlled by the government and central banks. You can have access to your funds without fear of seizure.
- Security: Advanced encryption techniques are used to secure cryptocurrency transactions, which keeps the funds safe.
- Anonymity: No personal information is necessary to perform a crypto transaction. Cryptocurrencies such as Monero are great for those who value privacy.
- Transparency: Public blockchains have ledgers that are publicly available for anyone to access them. The transactions recorded are pseudonymous, with only a wallet address as a reference for each transaction that occurred.
- Immutability: Once a transaction is recorded on the blockchain, it cannot be altered or deleted in any way. This makes falsifying records an impossibility.
- Efficient: No intermediaries of any sort are required to transfer money from one party to another. Not only does this speed up efficiency, it also greatly lowers any fees incurred.
- Total ownership control: Users can be their own bank by having 100% custody of their own funds by storing their crypto in cold wallets.
- Irreversibility: Transactions made in error cannot be reversed. This includes sending tokens through the wrong network or using the wrong wallet address. These results in lost funds that are usually irretrievable. In this sense, crypto is very unforgiving.
- Volatility: Cryptocurrency prices can fluctuate sharply from one day to the next. Changes of 10% and above either way is a frequent occurrence.
- Lack of regulation: Little regulatory oversight in the cryptocurrency space gives room for fraud, scams, and other illegal activities to thrive.
- Steep learning curve: There's a lot of new knowledge to learn, and it's not easy for many people to understand, thus limiting adoption.
- Strong sense of accountability: Users are highly encouraged to have custody over their own funds. This can be a big pressure for those who are used to having others be the custodian of their assets.
- Security risks: Some cryptocurrencies are susceptible to cyber-attacks and hacks. In addition, poorly-written code or misconfiguration can also lead to loss of funds.
- Energy hungry: Proof-of-work mining has often been criticised as the least eco-friendly way to generate mining rewards due to the large demand for electricity to power the machines. However, innovations are being made to harness the energy generated by the machines to be the source for other activities that benefit mankind, such as powering greenhouses to grow food.
- Lack of customer support: When something goes wrong, it's not possible to find the blockchain's support center to seek help or address an issue. This inconvenience is mitigated by the community support for the blockchain, which is often found on social media channels.
I hope that by the end of this article, I have laid out enough facts about cryptocurrencies to satisfy at least a bit of your curiosity about cryptocurrencies. For the skeptics, I hope that you've read enough to put aside some of that skepticism and agree to delve just a little bit deeper to understand more about this new budding technology that could potentially take the world by storm.
It is one of the grandest wishes of fervent cryptocurrency believers that 1 Bitcoin = 1 Bitcoin. This means that, if purchases are priced in Bitcoin, Bitcoin's purchasing power will be unaffected by the rise and fall of its value against any type of fiat currency. The only way for this to happen is for enough people to accept Bitcoin as a form of payment on its own merits. If that happens, the world would've undergone a seismic shift not only in economics, but also in "the affairs of humans" as politics is known. This shift could very well mark a change and revolution in society.
We are just beginning to explore the various ways they can be incorporated into our lives. While many of today's winners may not be around in a decade or so, there are countless as-yet-unborn entities that could end up as tomorrow's champions. Regardless of how things will turn out in the current situation, the introduction of cryptocurrencies will certainly mark the dawn of a new milestone for human civilisation.
Crypto Beginner's Guide FAQs
What Cryptocurrency Should a Beginner Buy?
Most beginners start with Bitcoin as it is the least risky and most well-established. It is highly liquid, holds the largest market cap, and is the one crypto representing all of crypto to those outside of the crypto industry. You may not see huge gains compared to some of the riskier tokens out there, but when compared against equities, its growth has been nothing short of remarkable.
How to Learn Crypto for Beginners?
Thanks to the internet, there is no shortage of information one can look up to learn more about crypto. Consuming quality content, such as Coin Bureau's YouTube channel or listening to crypto podcasts aimed at crypto beginners can be a good start. If you prefer to learn in a more systematic fashion, you can sign-up for courses on educational platforms such as Coursera or EdX.org.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.