The Absolute Beginner’s Guide to Cryptocurrency: AMA Hosts uncover expert tips for investing in cryptocurrencies
Unless you’ve been living under a rock, you’ve no doubt heard about the trend that everyone’s talking about right now — cryptocurrency! Cryptocurrencies have seen a surge in interest in recent years and our cryptocurrency week is happening and calling all enthusiasts who are/want to be part of Blockchain eco-system. We are glad to bring you (from day to day) a lot of new hosts — cryptocurrency analysts, and traders who share their insights about global cryptocurrency users, wallets, markets and much more. Are you at on top of the cryptocurrency scene? Maybe you know something you want to share with others? AMA.feed gives you the opportunity to host your own AMA Event on our # CryptoAMA channel where you will have the opportunity to educate, collaborate and involve the masses about the latest trends in this cryptocurrency and blockchain space! Provide deeper insights, logical analysis, game-changing trends and business opportunities in the emerging cryptocurrency industry — AMA.feed is waiting for you!
However, maybe you don’t know anything about cryptocurrencies. Have you ever heard of digital currencies like bitcoin, ethereum, and buzzwords like blockchain, cryptocurrencies, and mining? Don’t know what it all means or how to get started? Don’t worry — you are NOT alone. Despite the massive investments from “the smart money”, all the newly minted millionaires and despite this exploding market… most people don’t even know what a cryptocurrency is. That’s why we break it all down in easy to understand terms and help you learn and earn in the age of cryptocurrencies. We explore the important AMA Events, your questions and rounded up host’s answers and tips behind the cybercash surge, the potential risks of investing in it and whether it is all just a bubble. So, here are some basic points.
21st-century unicorn — or the money of the future?
Cryptocurrency is a form of digital money that is designed to be secure and, in many cases, anonymous. It uses cryptography — a form of secret coding originating from the Second World War — to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency. Essentially, cryptocurrencies are limited entries in a database that no one can change unless specific conditions are fulfilled.
Unlike regular money, the cybercash has no physical presence and differs from regular transactions by using decentralized control as opposed to central banking systems. Normally in banking, corporate boards or governments control the supply of money by printing units of money or demanding additions to digital banking ledgers. But in the world of cryptocurrency, the production of currency is generally capped. Unlike regular currencies, they only live online and aren’t backed or controlled by banks and governments.
There are currently more than 900 cryptocurrencies available over the internet, and new cryptocurrency can be created anytime. Bitcoin, Ripple, Etherium, Litecoin, and Peercoin are some of today’s bigger players that you may have heard of.
Mark Dukas- Full-time Cryptocurrency Trader
The first cryptocurrency was bitcoin. A digital currency, created in 2009 by a mysterious figure using the alias Satoshi Nakamoto (and his Wikipedia entry suggests he may not actually be who he says he is), can be used to buy or sell items from people and companies that accept bitcoin as payment. It has a fixed maximum supply of coins and rules on how it operated. It was created to solve the problem that banks can be manipulated by governments and bankers alike, and also to give people freedom of privacy in their transactions, although all transactions are public on the ledger, provided sending/receiving addresses are kept private and new ones used for different transactions a certain degree of privacy can be expected.
Evander Smart — Founder of Bitcoin University
Released in 2012, Ripple is noted for a “consensus ledger” system that dramatically speeds up transaction confirmation and blockchain creation times — there’s no formal target time, but the average is every few seconds. Ripple is also more easily converted than other cryptocurrencies, with an in-house currency exchange that can convert Ripple units into U.S. dollars, yen, euros, and other common currencies.
At its simplest, Ethereum is an open software platform based on blockchain technology that enables developers to build and deploy decentralized applications. In the Ethereum blockchain, instead of mining for bitcoin, miners work to earn Ether, a type of crypto token that fuels the network. Beyond a tradeable cryptocurrency, Ether is also used by application developers to pay for transaction fees and services on the Ethereum network.
Released in 2011, Litecoin uses the same basic structure as Bitcoin. Key differences include a higher programmed supply limit (84 million units) and a shorter target blockchain creation time (two-and-a-half minutes). The encryption algorithm is slightly different as well. Litecoin is usually the second- or third-most popular cryptocurrency by market capitalization.
Peercoin was launched in 2012, one of the relatively early altcoins. Peercoin uses a hybrid proof of stake and proof of work where minters gain coins in relation to their holding and where miners gain coins in relation to the hashing power pointed at the network.
How does cryptocurrency differ from “regular” money?
- Digital currency affords users complete anonymity. Every time you swipe your credit or debit card, your personal information is attached, and businesses, banks, and governments can use this data to track your activities. Cryptocurrency transactions carry no personal information (unless you add it yourself). This privacy also dramatically decreases the chances of identity theft.
- Constant access to your accounts. Traditional accounts can be garnished or frozen, but since digital currency exists outside the regulations and laws that allow this to happen, it’s very rare to be unable to access your coins.
- No fraud! Individual cryptocurrencies are digital and cannot be counterfeited or reversed arbitrarily by the sender, as with credit card charge-backs
- Lower fees. Traditional banks charge fees to process transactions. With digital currency being exchanged over the internet, there are usually little or no transaction fees.
- Access to everyone. There are around 2.2 billion people with access to the Internet or smartphones who don’t have access to a traditional exchange. For these people, the cryptocurrency is perfect.
Crypto Kingz — Creator and co-founder of Crypto Kingz
What is a Blockchain?
Simply put, a blockchain is a database. However, there is one huge difference between how you probably currently think of a database and how a blockchain database works. Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain. Information held on a blockchain exists as a shared — and continually reconciled — database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.
Vladimir Goloborodko — AMA about Crypto Payment System
How to buy cryptocurrencies?
You can buy them through exchanges, making sure that you first set up a cryptocurrency wallet. When you buy or receive cryptocurrency, you are given a digital key to the address of that currency. You can use this key to access and validate or approve transactions. You need a place to keep your key safe, which is where a cryptocurrency wallet comes in.
How do wallets work?
A wallet is similar to a bank account in that it is a place where you store your cryptocurrency. Wallets can be held online, or in some cases, in a physical form like a USB stick for extra security. Once you have a wallet, you have the ability to make purchases on a cryptocurrency exchange.
What happens if I lose my Bitcoins somehow?
Aziz Zainuddin — Cryptocurrency | Blockchain Evangelist/Educator/Investor
Once you own cryptocurrency … what do you actually do with it?
Okay, it is not like you can walk to your local grocery store and exchange your bitcoins for a banana. But the good news for crypto enthusiasts is that the list of merchants that accept bitcoin is expanding. The use of cryptocurrency is on the rise as it has many benefits, such as security, speed, minimal transaction fees, easy to store and manage and relevance in the digital era. It is evident that we won’t have to wait very long to see cryptocurrency as a globally accepted means of payment. There are many other small e-commerce stores that accept cryptocurrency for purchases. Some industries even have custom cryptocurrencies, which serve as means of payment between parties.
Depending on the type of cryptocurrency, “miners” are required to process and validate blockchain transactions. Without going into heavy technical details, the mining process basically ensures the transaction has not been tampered-with through the use of cryptographic challenges and is validated before it becomes an official “link” in the block “chain” ledger. In return, miners are rewarded with a small cryptocurrency processing fee. For example, if you are mining Bytecoin, you would be rewarded with Bytecoin depending on how many transactions you helped validate.
MinerGate is one of the easiest ways for beginners to start mining cryptocurrency using their laptop, smartphone, or tablet. This free cryptocurrency mining program takes less than a minute to signup and absolutely no setup or configuration is required. Literally, anyone can mine cryptocurrency with MinerGate in a matter of minutes.
Many people believe that cryptocurrencies are the hottest investment opportunity currently available. Indeed, there are many stories of people becoming millionaires through their Bitcoin investments. As with any other investment, you need to pay close attention to the cryptocurrencies’ market value and to any news related to them. Coinmarketcap is a one-stop solution for tracking the price, volume, circulation supply and a market cap of most existing cryptocurrencies.
Jason Kraus — A co-founder of the Crypto analytics platform Mattervest and an organizer of the Boston ICO meetup
Depending on a jurisdiction you live in, once you’ve made a profit or a loss investing in cryptocurrencies, you might need to include it in your tax report. In terms of taxation, cryptocurrencies are treated very differently from country to country.
Accept as payment (for your business)
If you happen to own a business and if you’re looking for potential new customers, accepting cryptocurrencies as a form of payment may be a solution for you. Cryptocurrency solutions for online businesses are plentiful these days. One popular solution comes from a payment processor that many business owners are already familiar with: Stripe. Stripe’s Bitcoin payment gateway can be integrated with just a few lines of code. Other popular cryptocurrency payment providers include BitPay and Cryptonator, with the latter supporting 11 cryptocurrencies, including Litecoin, Zcash, Dash, and, of course, Bitcoin.
Also, a mobile wallet is an excellent, no-cost method how to accept cryptocurrencies from customers using nothing but a smartphone or tablet. Most mobile cryptocurrency wallets work roughly the same way: you input how much you want the customer to pay you, your mobile wallet generates a QR code, the customer scans the code using his mobile wallet, and confirms the transaction to finalize the payment. You can then optionally send your customer a receipt to his or her email address.
What are some negative sides of investing in cryptocurrencies?
Hosam Mazawi — Cryptocurrency Consultant
What is the future of cryptocurrency?
Cryptocurrencies are still a relatively new phenomenon, and governments and economists around the world are still struggling to make sense of how digital currencies will affect the world in the future. While the number of merchants who accept cryptocurrencies has steadily increased, they are still very much in the minority. For cryptocurrencies to become more widely used, they have to first gain widespread acceptance among consumers. However, their relative complexity compared to conventional currencies will likely deter most people, except for the technologically adept.
Navroop Sahdev — AMA about the implications of blockchain technologies and how it can transform our economies and societies
With advancements in technology, cryptocurrencies are more likely to become the mainstream currency for transactions in the coming years. Central banks may decide to circulate their own cryptocurrencies with their proprietary algorithms and controls and may choose to decentralize the management of cryptocurrencies among the public through a shared ledger while retaining some regulatory controls with themselves. Alternatively, they may decide to endorse bitcoin along with some mechanisms for cross-border collaboration and economic control.
However, digital currency news, just like its prices, changes on a day-to-day, or sometimes minute-to-minute basis. This is one of the many reasons why investing in this asset class is not for the faint-hearted. With stocks, prices are prone to fluctuate, but nowhere near as dramatically on a day to day basis, as a rule. Keep this in mind when evaluating becoming a crypto investor.
Written by our genius blogger Tina based on advice from our great Hosts in www.CryptoAMA.com and originally published on www.AMAfeed.com