A beginners introduction to the cryptoverse
First of all, this is not an official guide. I created this simply because an ever increasing number of friends and family kept asking the same questions. And what I realized is that the learning curve in cryptocurrency is still quite steep. In this article I will often build on top of other people’s work and video’s (why try inventing the wheel a second time when other people have already created sport cars?).
Hopefully this introduction and the links that it provides will give people a starting point in this new and truly amazing phenomena.
Why get into this info at all you might ask? Why spend your time reading this?
If there is such a steep learning curve, and experts are saying this will change the world anyhow, why not just wait until it is all part of our daily lives and you don’t have to think about how it actually works under the hood anymore?
Fair enough questions. And yes, in a way I even hope that this will happen as soon as possible, so that more people will benefit from all the advantages that blockchain will bring, without the masses having to really understand the inner details.
However, you have come this far. So I assume you are just plain curious. And whether you planned to or not, if you are reading this right now, it means you are not part of the masses. And you are still a potential early adopter.
Blockchain technology is revolutionary because it allows people to create a network in which they can send around data without having to trust each other to act truthfully. Until now we have always used intermediaries to make sure that data would not be compromised. With blockchain the days of (paid) third parties are over!
To get an idea of all the possibilities that blockchain technology has to offer, I came across this article and it is a perfect intro. For the people who rather listen than read new info, it also comes with a audio version.
For the people who like taking in new information by video, you could watch this Ted Talk: https://www.youtube.com/watch?v=k53LUZxUF50
Now we have established that blockchain technology is probably the future.
But this futuristic blockchain is not that well known yet. If I say I work with blockchain or cryptocurrencies, people look at me strange.
Then I say: “You know, things like Bitcoin.”
Most people nowadays still only have heard of the first application of this interesting new technology. It is only fitting to explain Bitcoin a little bit more now. There are real reasons why Bitcoin is so well known, and why it is still the biggest name in this ecosystem. Times are changing though, but we will get into that later on.
The hype we have heard so much about it. Some good. Some bad. Let’s see why we should care about this digital phenomena again. https://www.youtube.com/watch?v=9mBc0Zk1YWs&spfreload=10
Now that we have established the why, let’s look into the how.
All this new technology can feel really abstract. Luckily there are talented people out there trying to make this all more concrete for us newbies.
These two videos helped me visualize it a lot more when I started out.
If you want to dive deeper into it all but not want to get to technical yet, then this is another good explanation of Blockchain and Bitcoin in clear language:
https://www.bitcoin.com/ is a company that sells products for bitcoin but also has a lot of info for starters.
A nice 90 min documentary is The Rise and Rise of Bitcoin: https://m.youtube.com/watch?v=dmk6HmcBYJw definitely a recommendation.
Banking on bitcoin is another movie, from late 2016 and can be find online to stream. It’s less old than The Rise and Rise, and crypto changes fast, however there is still a lot of overlap in both films.
Bitcoin might be the most known software of blockchain technology. However, people have been experimenting with other ways of utilizing this technology. Some are currencies with little tweaks in the underlying technology. Others are completely different use cases.
Bitcoin has been surpassed in innovation in many ways by these other cryptocurrencies. There are already multiple reasons to not even invest in Bitcoin right now due to these ‘new kids on the block’. It might just be that Bitcoin becomes the Myspace of crypto and some other cryptocurrency will grow to become Facebook, to borrow from an often used analogy. Just as a quick foreshadowing of what I will talk about a bit later, some of these crypto’s might even become the actual new (decentralised!) Facebook ;)
If you want to learn more about the problems that plague Bitcoin at the moment you can google “Bitcoin Block Size Debate”. There has been written tons of articles about it. Don’t be to surprised when you en counter huge hot heads on forums, and shouting matches going on. This debate has been raging for 2 years now and is still undecided. So you can imagine people are getting tired of it all.
This is also a reason a lot of people have been leaving the Bitcoin community and why these alternative cryptocurrencies have popped up. People might be tired of Block Size Debates, but they are not tired of blockchains at all! Really innovative stuff is happening in these newly formed communities.
All these other cryptocurrencies outside Bitcoin are sometimes called ‘altcoins’, derived from the word alternative. I myself rather call altcoins and Bitcoin ‘cryptocurrencies’ altogether. Bitcoin might have a special place since it was the first, but we should never let that cloud our minds.
Many of these crypto’s besides Bitcoin have practical use cases and something going for them. A lot however are just being used to jump the blockchain hype and speculate. These can end up in so called ‘pump and dumps’. This is when a coin has a low trade volume and so called ‘whales’, aka big players with a lot of money, can manipulate the price.
Remember, cryptocurrencies are relatively new and you could call it the new Wild Wild West. There are almost no regulations in place and it is therefor your own responsibility to do your homework and to know the difference between an ‘altcoin’ and a ‘shitcoin’.
After Bitcoin, Ethereum is the biggest and most promising in crypto country. Why is this the case? Well Ethereum isn’t only a currency, but also a platform for (future) decentralized applications, aka dapps. The list of potential and already actual working dapps is growing everyday. You can scroll through the list over here https://dapps.ethercasts.com/
The dapps can be realised by so called smart contracts. These are lines of code that will execute if certain objectives have been met. In this sense they are not that smart at all. Just computers doing exactly what you told them to do. It does however allow smart people to create contracts without knowing or trusting the other party. At the moment Ethereum is looked at as THE platform on which all blockchain applications will be build upon and tested. A lot of independent projects are already migrating towards Ethereum to do just that. To read a more extensive explination you can read https://blog.coinbase.com/a-beginners-guide-to-ethereum-46dd486ceecf#.20u4ut21t
You can also find a lot of informative links for beginners on the frontpage of the Ethereum subreddit https://www.reddit.com/r/ethereum/comments/61y5ix/welcome_to_rethereum_the_reddit_front_page_of_the/
A nice article about what is to come and what might happen with the Ethereum Platform
The founder of Ethereum, Vitalik Buterin, used to be a writer for Bitcoinmagazine and still writes regularly. These pieces can be about Ethereum but often they are about the whole blockchain sphere in general. This one about what we mean with the word decentralization is a real recommendation:
Now Ethereum looks nice at the moment. But even Ethereum could of course become a Myspace. There are many competitors with the same smart contract aspects coming on to the scene already.
Privacy is still one of the strong selling points of cryptocurrencies. Now that cash is rapidly losing terrain compared to pin and credit cards, privacy coins try to bring back the elegance of cash. No one needs to write down all kinds of personal information and store that securely each time they do a transaction with you. No outside parties checking what you are buying with your hard earned money. And it’s even more secure than having cash in your wallet or stashed under your bed.
Some are better at this feature then others and Bitcoin itself is actually not 100% private. Three of the biggest and most known private coins are:
Generally, when people start talking about private coins, Monero is the first mentioned. On https://getmonero.org/home they explain why it is the most secure, private and untraceable coin out there.
Works through something called Zero-Knowledge Proofs. Due to the project being open source, many other coins have started to implement this type of private sending. Ethereum for instance wants to incorporagte Z-K Proofs and is being helped to do this by the Zcash team.
Dash is a crypto with many different features. It is a Decentralised Autonomous Organisation, aka a DAO, which means they do not have a classic corporate structure, every Dash holder is part owner. One of the features of Dash is called Private Send. A lot of Monero fanboys keep saying that Dash is not as private as Monero or even Zcash. And although this might be factually true. You do have to wonder how much privacy you need. Where Monero has like 99.99999999% chance that no one will be able to trace it, Dash might have a score of 99.99999998%. I’d say, all three are pretty darn private.
However, what Dash has, and which almost no other crypto does, is a Self Funding Blockchain. And this is quite an interesting feature.
It works like this: each blockchain gives their miners (the computers that keep the blockchain secure) a reward each time a new block is added to the chain. With Dash they have decided that they will not only give the miners a reward but also the nodes (the computers that verify if the miners are doing their job). This is something that has been implemented by other crypto’s as well to incentivise people to run nodes.
But here comes Dash it’s special extra: 45% of the block reward goes to the miners, 45% to the nodes and 10% goes to a treasury. The funds that are being collected in this treasury can be used to further the development of Dash and to bring it’s name to the greater public. How these funds are to be spent is being voted on by the community itself.
So what happens is that the people that invest in Dash can vote on a budget created by the blockchain itself and then through that budget try to make the project (and their own investments) grow bigger. This budget will make sure that Dash will grow in value which in turn will make the block reward be more valuable which then makes the spendable budget more valuable etc. A very powerful feedback loop.
Projects besides currencies
Not all crypto’s are trying to revolutionize money. Many try to cut out middleman in all kinds of sectors.
For instance Steemit, which is a reddit kind of social news platform where you will get paid for creating content (instead of Reddit/Facebook getting all the revenue).
There are crypto’s and projects that aim at decentralising Youtube or Netflix (SingularDTV), decentralise prediction markets, the possibility to put assets on blockchains, decentralizing sharing economies instead of Uber and airBnB (one of these is called Swarm City), decentralized exchanges, a decentralized system to make notaries redundant (Factom for instance) and many other decentralized apps.
A list with possible sectors that are bound to be disrupted by blockchain innovation can be found here (again really brings home the possibilities):
How can you find out about all these projects you may ask? A nice list of most crypto’s out there and their value can be found at www.coinmarketcap.com
This is a website that is being watched daily by most traders to see what’s happening on the markets. But when you click on one of the coins, on the right side you will have some info, for instance their website. So you can look for more info that way.
Using crypto for purchases
While a lot of people are speculating with crypto’s and are “hodling” aka holding onto their coins, crypto’s are still money. So it would be weird if you couldn’t spend it. The possibilities to do so grow each day.
The list is quite long these days, I myself live in Holland where it now includes things like Thuisbezorgd.nl (a kind of uber eats) deonlinedrogist (a big webstore for medicine), but also restaurants like De Waag in Central Amsterdam. Now that cryptocurrencies have become legal in places like Japan, the sky’s the limit.
Through the use of gift card companies that accept Bitcoin it has become possible to buy products on amazon, often with discounts. Providers like Pockio let you buy gift cards with a multitude of crypto’s that are being accepted at a wide range of stores.
There are also debit cards that work with Visa or Mastercard unto which you can load up crypto and then spend it at any place that accepts Visa or Mastercard.
These days it is even possible to pay your travels with Bitcoin. Expedia, Holiday Inn are examples that offer you the choice to pay with Bitcoin. AirBnB has also promised to include this choice of payment.
For the future crypto millionaires in our midst there are websites like Bitpremier.com for high end aircraft, yachts — anything and everything for a super rich audience or a Bitcoin Billionaire.
One of the many websites that try to map all stores that accept bitcoin is https://coinmap.org/#/map/52.38078629/4.90277767/15
What about selling crypto for traditional money?
If you don’t want to spend your coins but want to exchange them back into fiat (euros, dollars, yen) there are many ways to do so.
Exchanges like Kraken will withdraw your euro’s straight back to your bank account. Websites like Bitonic and Litebit do not only sell Bitcoins and other crypto but also buy them back. Localbitcoins can also be a (more private and personal) possibility.
That’s it for now!
This was my introduction into Cryptocurrencies. I hope you liked it and that it helped you get a basis to build upon. If you yourself now want to start and get some more links and information, you can read my other articles. For instance “Starting your own portfolio” in which I explain how to begin and what to be careful of. The ecosystem is large and the best way to get familiar with it, is to go out there and do research yourself.
The one take away from this post is that you should not trust third parties after all ;)
If you ever think, wait a minute, which crypto was Monero again? Who was Vitalik? What does Hash Functions mean? I created a document that I regularly update (in part to help my own memory a bit), it’s called Cryptocurrency Wiki. This document has 4 parts;
and last but certainly not least:
It explains who/what they are, with whom they work together etc. The way I go through it when I want to search something is by pushing command/control (depends if you are on a pc or a mac) + F on your keyboard and then type in the thing you are looking for.
It could very well be that I have written something about it. This is often way quicker than scanning all those forums, websites, wiki’s and blogs.
You can find all these documents at https://drive.google.com/open?id=0BwMY5c2YLl8mblBnT04zc1ZIbm8
Please don’t get mad at me if I got something wrong, I’m only human. Better yet, if you do find some wrong or inconclusive info, let me know!
Send me an email at email@example.com or comment underneat this post. The wisdom of the crowd at work :)
Found this helpful? Want me to continue?
Knowledge empowers us all and will help us get closer to the decentralised world we all want to live in.
Making these documents is fun but takes effort and time.
If you have enjoyed reading, a donations is very much appreciated :) This will help me to keep expanding this archive of information.
You can donate crypto to any of these addresses:
ETH and all ERC20 tokens (GNT, REP, etc.): 0x2736F5d632fD6920dEA5F8AfAE7323287f5212fA