Looking for detailed introduction to cryptocurrency

Almighty_Denny

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Hi!

I'm looking for a detailed and straightforwad intruduction to Cryptocurrency in general.
How to use it, risks and benefits, mining and its technical workarounds, etc

I'm a beginner in this topic, so I would like to know how Cryptocurrency actually works for someone who has never used it. 😕
 
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Entelechy

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As a few really basic answers to you questions..

"How to use it":

Cryptocurrencies are just digital representations of value that can be stored in "addresses". A certain address could have 10 bitcoin in it and another one could have 5 and you can transfer amounts of bitcoin between them.

Addresses can be contained within a wallet, which is really just a security-protected address. You can have software wallets (like blockchain.com) or you can have hardware wallets (like Trezor). Hardware wallets are physical cryptocurrency storage devices, software wallets are just websites mostly.

You can buy cryptocurrency from another person direct, or from a broker, or from an exchange. Once you purchase it, you are free to leave it in the address that you bought it with, or you can withdraw or transfer it to another address.

On websites like coinmarketcap.com you can see the value of any cryptocurrency (most of them), and for each exchange that lists the cryptocurrency there will normally be slightly different prices which are continually going up and down.

"Risks and Benefits":

Risks:

- cryptocurrency is much more volatile than traditional assets like stocks, and so losing greater amounts of money can be easier than with other investments.

- cryptocurrency is widely manipulated by users with large amounts called 'whales', which can put normal traders at a disadvantage if they aren't very experienced.

- the cryptocurrency industry has attracted a large number of scammers in the past who use the pseudo-anonymity of crypto to steal money and get away with it.

Benefits:

- because of its volatily, there is a greater potential to generate larger short term profits with cryptocurrency than other assets.

- the cryptocurrency industry is maturing all the time, and there are generally less scams floating around today than there were in the past.

- cryptocurrency is a cutting-edge technology, and by understanding crypto often you develop a solid understanding of blockchain as well. Blockchain technology has wide and profound applications throughout a huge number of industries and there is a lot of opportunity within blockchain today.

"Mining":

In order for cryptocurrency to function properly it needs to be managed by mathematical algorithms instead of a central controlling authority (like a central bank). Mining is the process where members of the community all take part in a process which decides which transactions are confirmed next and rewards miners based on a combination of randomness and their mining power.

Mining solved a bunch of different complicated computer science and cryptography problems at once - well some of them were already solved, but it incorporated them in a way that solved all major problems simultaneously - which hadn't been achieved until then.

We've got an article on Bitcoin in 2019 which covers the history of Bitcoin, where it's at today and how blockchain tech works here: https://stadivm.com/cc/bitcoin-guide/

** Let me know if the colour scheme on this article makes it difficult to read and I'll change it to a white background!
 
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letschat6

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As a few really basic answers to you questions..

"How to use it":

Cryptocurrencies are just digital representations of value that can be stored in "addresses". A certain address could have 10 bitcoin in it and another one could have 5 and you can transfer amounts of bitcoin between them.

Addresses can be contained within a wallet, which is really just a security-protected address. You can have software wallets (like blockchain.com) or you can have hardware wallets (like Trezor). Hardware wallets are physical cryptocurrency storage devices, software wallets are just websites mostly.

You can buy cryptocurrency from another person direct, or from a broker, or from an exchange. Once you purchase it, you are free to leave it in the address that you bought it with, or you can withdraw or transfer it to another address.

On websites like coinmarketcap.com you can see the value of any cryptocurrency (most of them), and for each exchange that lists the cryptocurrency there will normally be slightly different prices which are continually going up and down.

"Risks and Benefits":

Risks:

- cryptocurrency is much more volatile than traditional assets like stocks, and so losing greater amounts of money can be easier than with other investments.

- cryptocurrency is widely manipulated by users with large amounts called 'whales', which can put normal traders at a disadvantage if they aren't very experienced.

- the cryptocurrency industry has attracted a large number of scammers in the past who use the pseudo-anonymity of crypto to steal money and get away with it.

Benefits:

- because of its volatily, there is a greater potential to generate larger short term profits with cryptocurrency than other assets.

- the cryptocurrency industry is maturing all the time, and there are generally less scams floating around today than there were in the past.

- cryptocurrency is a cutting-edge technology, and by understanding crypto often you develop a solid understanding of blockchain as well. Blockchain technology has wide and profound applications throughout a huge number of industries and there is a lot of opportunity within blockchain today.

Mining:

In order for cryptocurrency to function properly it needs to be managed by mathematical algorithms instead of a central controlling authority (like a central bank). Mining is the process where members of the community all take part in a process which decides which transactions are confirmed next and rewards miners based on a combination of randomness and their mining power.

Mining solved a bunch of different complicated computer science and cryptography problems at once - well some of them were already solved, but it incorporated them in a way that solved all major problems simultaneously - which hadn't been achieved until then.

We've got an article on Bitcoin in 2019 which covers the history of Bitcoin, where it's at today and how blockchain tech works here: https://stadivm.com/cc/bitcoin-guide/

** Let me know if the colour scheme on this article makes it difficult to read and I'll change it to a white background!
This is really well written for a summary! Thanks for the information.
 
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Tilly_bebe

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The linked "bitcoin guide" is awesome! I'm getting loads of praise for sharing it on FB. Thanks for making me look smart and cool 🆒 haha
 
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