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Crypto Basics

 

Cryptocurrency is virtual currency, an exchange medium that uses cryptography in
order to control the creation of the system units and secure its transactions. Bitcoin was the first and remains the biggest crypto.

A Coin is a cryptocurrency that operates independently.

A Token is a cryptocurrency that depends on another cryptocurrency as a platform to operate. For example, ChronoLogic.Network has the DAY token, which is an ERC-20 compliant token launched on the Ethereum Blockchain. Ethereum has it’s own coin called “Ether”.

Check out the crypto tokens listings to view a list of tokens and their respective platforms. 

In order to buy or sell cryptos, many sites require you to identify yourself using a government ID. This may not be the case with peer to peer services.

Cryptocurrency is virtual currency, an exchange medium that uses cryptography in
order to control the creation of the system units and secure its transactions. Bitcoin was the first and remains the biggest crypto.

Yes! Cryptocurrency is a decentralized payment system. It allows its user to exchange without the involvement of a financial institution. It has a superb authentication system and unique design to send payment at almost an instant at the lowest cost anywhere in the world. Crypto is not limited by borders! 

The number of cryptocurrencies grows every day. They are divided into two groups: Bitcoin (that stands alone in one group) or Altcoins (all other cryptocurrencies). This is because the code of cryptocurrency is open source, this means anyone has the chance to create their own version of cryptocurrency by just adapting the code. Check CoinYou.Co/Prices for a nice list of cryptos with real-time prices and additional information.

1. Bitcoin: This cryptocurrency was the first in the ecosystem and the most commonly traded cryptocurrency today. In 2009 Satoshi Nakamoto, an anonymous person or group of persons, developed Bitcoin.

2. Ethereum: 2015 is the year Ethereum was born. A token based currency used in Ethereum blockchain, it is second in rank on the most valuable and popular cryptocurrency in the marketplace. Ethereum has smart contracts. See smart contracts definition below.

3. Ripple: A cryptocurrency for interbank transfers created in 2012. Ripple has a feature to track the type of transaction made, not just cryptocurrency. Ripple has been used by UBS and Santander.

4. Litecoin: Litecoin is a cryptocurrency that is similar to bitcoin, but it moves faster. This includes faster payments and processing more transactions at a time.

The value is determined by the going rate on exchanges, whatever parties agree to pay each other. This means, there is no fixed price. Price changes are based on supply and demand. 

The worst thing about crypto, or the worst for beginners, is the complexity of the matter in the first place. It takes some time for people who don´t know much about computation and the financial system/economics to start to appreciate the solutions that Bitcoin and Altcoins create. Some other potentially complicated things in this field relate to regulatory uncertainty and the technical problems in scaling the crypto systems in order for them to compete with current payment methods such as debit/credit cards. There are many challenges with cryptocurrencies, they are an emerging technology. 

Check this link to check the laws related to Bitcoin in your country: https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country_or_territory 

It is important to do your due diligence to research the stability and security of the tokens, wallets, and exchanges you use. In some ways cryptocurrency offers more security than regular money but in other ways it offers less protection. It is more secure because a bank or government cannot confiscate it. It has less protection because it has no fraud protection. One central safety issue is that you are responsible for the security of the funds in your possession, one does that by following best practices regarding security.  

Learn more about the benefits of low transaction fees, anonymity, and control/freedom in the following article/video: Click Here. 

Most currencies in the world exist as digital currency (numbers in bank accounts for example). Only a small percentage exist as physical cash. Cryptocurrency is also in a digital format, however it is not usually controlled by central authorities. An additional feature of crypto is that it uses cryptography to ensure security.  

 

Crypto Glossary

 

A cryptocurrency market and exchange are both services on the web, allowing cryptocurrency token holders to trade to other currencies. CoinYou recommends CEX.io, Changelly and Binance.

Market Capitalization is one way to rank the relative size of a cryptocurrency. It's
calculated by multiplying the Price by the Circulating Supply. Price X Circulating Supply. The total worth of all coins in circulation for a particular crypto.

Circulating Supply is the best approximation of the number of coins circulating in the market and in the general public's hands.
Total Supply is the total amount of coins in existence right now (minus any coins that have been verifiably burned).
Max Supply is the best approximation of the maximum amount of coins that will ever exist in the lifetime of the cryptocurrency.

FUD stands for Fear, Uncertainty, and Doubt. Whether it is based on legitimate concerns and is justified, or due to a lack of information or unreliable news made public with the calculated intent to harm the marlek. Often, when people that could be contributors or investors in cryptos have doubts, it is due to FUD.  

FOMO stands for Fear of Missing Out. When people are afraid that they will lose a chance to invest in a project before the price goes up, it is called FOMO. Ironically, when many people invest in a project due to this phenomenon, the price can go up and can cause a bubble that crashes causing the value of the investment to go down.

HODL has been said to stand for Hold On For Dear Life. It generally means to hold onto a crypto investment for long term gains. You can learn about the origin here: https://en.wikipedia.org/wiki/Hodl 

A whale is an investor with millions or billions of dollars worth of crypto, who is capable of manipulating market prices.

To pump a crypto is to increase it’s market value. To dump a crypto is to sell it. Some market manipulators cause a crypto to increase in value in order to sell for gains and then buy back at a lower price, repeating the cycle many times

Shilling is promoting a crypto, sometimes using false promises or lies.

A shill is a person who promotes a crypto, sometimes when they are paid to do so. 

To moon is a verb which means a crypto price goes high like the moon. A lambo is often mentioned in crypto forums referring to the trend of instant crypto millionaires who buy lamborghinis.

DLT stands for Distributed Ledger Technology such as blockchain. A ledger is just an accounting of information. Distributed means it is stored in various places rather than in a central place. 

Any computer or computing device that connects to a network is called a node.

Central means one place. Decentralized means more than one point or node is used to store information for example. Distributed also means decentralized.

A shit coin is a coin that should not have monetary value because it does not provide any other kind of value to anyone.

This refers to whether or not a token serves a purpose other than speculation.

A security is like a public stock, it is a regulated monetary instrument intended for investment profit.

These are social media apps, often used for crypto information sharing.

Trading signals are timed investment advice for trading crypto.

BitConnect is a pyramid scheme scam that stole many peoples’ money with the promise of making them more money.

Tether is a crypto pegged to the USD. Exchanges use it instead of the USD to avoid regulation. It is unclear if Tether is actually a scam. New stable coins, which are more transparent are being created.

Google Authenticator is an app used for security purposes for crypto wallets.

An ERC-20 token is the most popular token for crypto projects to launch their own currency on the Ethereum Blockchain. Metamask is a wallet for storing ERC20 Tokens

ICO stands for Initial Coin Offering. Similar to a public stock Initial Public Offering, it is for projects to raise money by selling tokens in exchange for money or crypto.

Blockchains can create a copy of the protocol for various reasons such as creating similar cryptos or avoiding problems from past errors.

A DOS or Denial of Service attack is when hackers blast a website with visits to cause problems or steal money.

A remittance is a payment, usually it refers to a cross-border payment.

Github is a site for tech projects to store open or closed source code to share with their team or the tech community.

Immutable means you cannot change it...ever. You cannot change the records of Bitcoin transactions. They are stored permanently and cannot be altered.

When computers communicate with each other, there needs to be a common set of rules and instructions that each computer follows. A specific set of communication rules is called a protocol.

When you do not have to rely on trust, it is trustless. With DLT or blockchain transactions, you do not have to rely or trust a central authority to verify or store information.

A general increase in prices and fall in the purchasing value of money. When governments/central banks increase the money supply, it can cause the value of the money to fall.

Any money declared by a government to be legal tender. (valid money) US Dollars are Fiat currency.

Not after it meets the maximum supply of 21 million coins.

Since the economics differ from each coin it’s best to look at this generally speaking. Mining is a means to verify transactions done on a decentralized network and introduce new coins into the ecosystem. With mining, a miner has a cost of electricity they have to spend to solve a “mathematical problem” that is checked by other participants in the network to see if it’s correct or not. If it’s found to be incorrect the work that miner has done is eventually considered invalid and they are given no reward for their work, if it’s found to be valid they are rewarded with newly minted coins and some of the transaction fees from the network.

A smart contract is a programmable agreement between parties that will execute as expected without one needing to worry about outside influence

When a blockchain developer sets up a smart contract she can also connect an address to this contract. This is called a contract address. These kinds of addresses are different from a wallet address. It is important to understand this when you contribute to initial coin offerings on Ethereum, Neo, or other smart contract blockchains.

Cold storage refers to storage that is disconnected from the internet. Hot storage is a piece of hardware (smartphone, computers) that is connected to the Internet.

Cryptocurrency is represented by an entry in the blockchain associated to a public key, it's kind of like your account number or your address. In order to move currency around, exchange it, make a purchase with it, or convert it back to FIAT money, your private key is required to unlock it. Typically, your private key is stored within your wallet, or online. Its like your password or the key to your safe. If you lose your private key, your cryptocurrency is lost. Similar to losing the key to an impenetrable safe. This is why it is very important to consider how your private keys are stored.

A seed phrase is a private key that is a series of random words to restore and control your crypto account. You should not save it or share it to a device connected to the internet.

A multisig cryptocurrency wallet, also known as a “multi-signature” wallet, refers to a cryptocurrency wallets types that require input from multiple parties in order to complete a transaction. Consider types of cryptocurrency wallet that use multisig technology like a shared bank account, where all parties need to enter their PIN or order to complete a transaction.

Some wallets only hold one type of cryptocurrency, Multi-Currency wallets allow you to store multiple types of cryptocurrencies.

Online Wallets are cryptocurrency wallets that can be used with a web browser like Google Chrome or Firefox

Mobile wallets usually can be used with mobile devices. Therefore they provide additional features in comparison with completely internet-based wallets, but they also have additional security risks.

A desktop wallet is usually a software program on the computer where cryptocurrencies are stored. They are considered more secure than online and mobile wallets, but that also depends on the user’s commitment to security.

A hardware wallet is a device with which the user can store cryptocurrencies disconnected from the internet. This is one of the most secure ways to store crypto.
CoinYou recommends Trezor brand wallets. Learn more in our security courses.

A paper wallet is a wallet, where the private and public key is printed together on a paper, disconnected from the internet. Examples: BitAddress.org and Bitcoin Armory can help you create and print your paper wallet.

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