A Short Intro To Cryptocurrencies And Trading — Part 1
By Crypto Denada on Altcoin Academy
To many, cryptography and blockchain (explained further down in the text) are often something mysterious, cryptic (pun intended!).
But that’s just the technology part — things start to get really tricky when you add economy into the equation.
So if you are planning on investing in it, there actually is a reason to be afraid of the complexity of the blockchain world. This won’t be an ordinary glossary nor an ordinary post, it will be sorted by meaning rather than alphabetically. Still searchable if you hit “CTRL + F” though, so the order shouldn’t be a problem!
Bitcoin (BTC) — first cryptocurrency, created in 2009. The creator of Bitcoin is still anonymous, going by the name (pseudonym) of Satoshi Nakamoto.
In 2019, Bitcoin is still by far the most popular cryptocurrency, with a whopping 70% dominance, meaning that the market capitalization of Bitcoin is 70% of the entire crypto world market capitalization.
Market Capitalization — since there are people who are actually starting their investing career with crypto, this term should be explained as well. Oxford’s definition of market capitalization states that it is “the value of a company that is traded on the stock market, calculated by multiplying the total number of shares by the present share price.” In our case, it’s not the value of the company, but the value of an entire Bitcoin blockchain.
Blockchain — The technology on which Bitcoin and most of the altcoins are built. When we say “entire blockchain”, we usually mean an entire digital ledger of the Bitcoin network — which is an online network of computers that all have a consensus of transactions. Because of that consensus and pre-defined rules, most cryptocurrencies do not have a central authority. When no central authority is present, cryptocurrencies are decentralized.
Decentralization — One of the most important aspects of cryptocurrencies. Such networks don’t require a central banking system to validate transactions, so the fees exist only in the form of “miner’s fee”.
Mining — There are multiple types of cryptocurrencies, one of them being proof of work type (Bitcoin is proof of work or PoW). Every coin network requires some computing power in order to validate transactions, and that consumes some electricity and requires fast machines. People who make these transactions possible are called miners, and they get paid to validate transactions. You can earn PoW coins by mining them, but nowadays mining requires special equipment or expensive graphics cards. That activity isn’t really ecology-friendly (it is estimated that the mining of Bitcoin consumes as much energy as the entire Czech Republic, a country of 10.6 million people. (Source — Vox News). This is Bitcoin’s power consumption only, not counting altcoins.
Altcoins — any cryptocurrency other than Bitcoin. There are many altcoins (alternative coins), and their number is rising. They are more volatile than Bitcoin, therefore they are sometimes more preferable to traders (Similar to penny stocks).
Traders — Technically speaking, anyone who buys and sells coins to gain profit is a trader. But with the entire crypto ecosystem growing bigger and bigger, many people trade professionally — as their full-time job. These people are, naturally, more skilled and perform better than ordinary traders who are not so informed. That is the reason Denada exists — to bring you the expertise of those veterans and help you not lose your family heirloom on trading.
Most of the trading is done on exchanges.
Exchanges — Exchanges are used to trade cryptocurrencies for other cryptocurrencies or, or to trade cryptocurrencies for “fiat” (government-issued money like USD or EUR).
Wait — if cryptocurrencies are decentralized and don’t require middlemen — you may ask — why do we need exchanges to trade with other people then? — And that’s a great question.
In theory, you could trade solely by manually creating sophisticated smart contracts, but that trading at this point would only be available to programmers. You could also trade on decentralized exchanges or no-fee exchanges, but you will find that it’s simply worth it to pay that fee and trade on a for-profit exchange. At least at this moment.
Projects need funds to grow, and at this moment decentralized, non-profit exchanges can’t offer services as good as their for-profit peers do.
Many man-hours (which translate to funds) are spent to make exchanges secure, fast, and to make sure that enough people are trading at every given moment, and that is why, at least for now, most of the traders rely on big companies like Binance, Bitfinex, and Kraken.
Also, you need to convert your USD or EUR to Bitcoin first, and that should be done in an institution that was approved by the government.
From “$ ₹ €” to Bitcoin (Fiat to Crypto) — Unless you plan to offer your services for cryptocurrencies or mine it, you need to buy it with traditional currencies, like $, ₹, €. You can do it on Bitfinex, Gemini, Coinbase, among others. Local face-to-face fiat-to-crypto trading is also a valid solution.
Binance, Bitfinex, Kraken… — Each of the major trading exchanges will offer you all the basic features to trade. However, some of them are better suited toward beginners, while others have advanced features that may just confuse newcomers. Although packed with advanced features, a safe bet for beginners would be Bitfinex because it offers fiat-to-crypto conversion and over 150 altcoins to trade, all in one place.
Hackers and Your Computer Security — once you start trading, your computer is no longer just a gadget for looking at your friends’ photos from vacation on Facebook. It becomes your wallet and your banking account. That is why you should be concerned with the security of your system since some bad folks will try to steal from you.
There’s more than 50% chance that there is a pirated piece of software on your computer right now, with or without your knowledge. People who create “cracks” for software (a way to use paid software for free) usually don’t spend hundreds of hours of their life just to give away that software for free. There is usually a virus included with the pirated software, which can do anything from just slowing down your computer to stealing your identity, your credit card information and your cryptocurrencies.
That is why you should avoid pirated software at all costs. There are other reasons why you shouldn’t pirate software (it’s stealing), but let’s keep it practical.
So, how to avoid getting “hacked” on the internet?
First, make sure that your operating system (Windows, Mac) is genuine.
You can actually get Windows for free if you don’t mind the watermark telling you to buy the license. Just download it and install it, enjoy the watermark in the right bottom screen and enjoy the security of Microsoft!
If you absolutely hate watermarks and don’t want to deal with Windows, GNU Linux is here to the rescue. Remember what we said about for-profit companies offering better products and more advanced features? Linux is an exception to that rule. It is a collaborative project of thousands of people that spans almost three decades, and it is updated daily. Just install LinuxMint and don’t worry about viruses from pirated software or pirated operating systems.
However, you still need to take care of yourself on the internet — always choose a strong password (Example of a password so good, even you will forget it: “{F]ж[..%дЊf35v”), and don’t give it to anyone on the internet. Also, watch out for the security of your connections:
If you feel overwhelmed by all the information and new terms — that is perfectly normal. Join Denada’s Telegram community and feel free to ask anything you wish to know, we will do our best to help you out.
Bonus wisdom for crypto beginners:
- If something sounds too good to be true, it probably isn’t.
- Buy low, sell high.
- Trading is like medication — do not consume it with alcohol. Consult your p̶h̶a̶r̶m̶a̶c̶i̶s̶t̶ Denada leader before doing anything.
- Don’t forget to clap to this article and follow us for more!
- And most importantly — do not lose keys to your crypto wallets — Not even God will be able to recover your money.
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Author: Adam Radivojevic, CEO of Futuristicon
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