Cryptocurrency All-in-One For Dummies E-Book

Kiana Danial

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 1271

Veröffentlichungsjahr: 2021

Beschreibung

Learn the skills to get in on the crypto craze

The world of cryptocurrency includes some of the coolest technologies and most lucrative investments available today. And you can jump right into the middle of the action with Cryptocurrency All-in-One For Dummies, a collection of simple and straightforward resources that will get you up to speed on cryptocurrency investing and mining, blockchain, Bitcoin, and Ethereum.

Stop scouring a million different places on the web and settle in with this one-stop compilation of up-to-date and reliable info on what's been called the "21st century gold rush." So, whether you're just looking for some fundamental knowledge about how cryptocurrency works, or you're ready to put some money into the markets, you'll find what you need in one of the five specially curated resources included in this book.

Cryptocurrency All-in-One For Dummies will help you:

• Gain an understanding of how cryptocurrency works and the blockchain technologies that power cryptocurrency
• Find out if you're ready to invest in the cryptocurrency market and how to make smart decisions with your cash
• Build a cryptocurrency mining rig out of optimized and specifically chosen computing hardware
• Dive into the details of leading cryptocurrencies like Bitcoin and Ethereum

Perfect for anyone curious and excited about the potential that's been unlocked by the latest in cryptocurrency tech, this book will give you the foundation you need to become a savvy cryptocurrency consumer, investor, or miner before you know it.

Leseprobe

Cryptocurrency All-in-One For Dummies®

Published by: John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, www.wiley.com

Copyright © 2022 by John Wiley & Sons, Inc., Hoboken, New Jersey

Published simultaneously in Canada

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the Publisher. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Trademarks: Wiley, For Dummies, the Dummies Man logo, Dummies.com, Making Everything Easier, and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc. and may not be used without written permission. All other trademarks are the property of their respective owners. John Wiley & Sons, Inc. is not associated with any product or vendor mentioned in this book.

LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: WHILE THE PUBLISHER AND AUTHORS HAVE USED THEIR BEST EFFORTS IN PREPARING THIS WORK, THEY MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CONTENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES REPRESENTATIVES, WRITTEN SALES MATERIALS OR PROMOTIONAL STATEMENTS FOR THIS WORK. THE FACT THAT AN ORGANIZATION, WEBSITE, OR PRODUCT IS REFERRED TO IN THIS WORK AS A CITATION AND/OR POTENTIAL SOURCE OF FURTHER INFORMATION DOES NOT MEAN THAT THE PUBLISHER AND AUTHORS ENDORSE THE INFORMATION OR SERVICES THE ORGANIZATION, WEBSITE, OR PRODUCT MAY PROVIDE OR RECOMMENDATIONS IT MAY MAKE. THIS WORK IS SOLD WITH THE UNDERSTANDING THAT THE PUBLISHER IS NOT ENGAGED IN RENDERING PROFESSIONAL SERVICES. THE ADVICE AND STRATEGIES CONTAINED HEREIN MAY NOT BE SUITABLE FOR YOUR SITUATION. YOU SHOULD CONSULT WITH A SPECIALIST WHERE APPROPRIATE. FURTHER, READERS SHOULD BE AWARE THAT WEBSITES LISTED IN THIS WORK MAY HAVE CHANGED OR DISAPPEARED BETWEEN WHEN THIS WORK WAS WRITTEN AND WHEN IT IS READ. NEITHER THE PUBLISHER NOR AUTHORS SHALL BE LIABLE FOR ANY LOSS OF PROFIT OR ANY OTHER COMMERCIAL DAMAGES, INCLUDING BUT NOT LIMITED TO SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR OTHER DAMAGES.

For general information on our other products and services, please contact our Customer Care Department within the U.S. at 877-762-2974, outside the U.S. at 317-572-3993, or fax [phone]. For technical support, please visit https://hub.wiley.com/community/support/dummies.

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

Library of Congress Control Number: 2021950430

ISBN 978-1-119-85580-4 (pbk); ISBN 978-1-119-85581-1 (ebk); ISBN 978-1-119-85582-8 (ebk)

Cryptocurrency All-in-One For Dummies®

To view this book's Cheat Sheet, simply go to www.dummies.com and search for “Cryptocurrency All-in-One For Dummies Cheat Sheet” in the Search box.

Table of Contents

Cover

Title Page

Copyright

Introduction

About This Book

Foolish Assumptions

Icons Used in This Book

Beyond the Book

Where to Go From Here

Book 1: Cryptocurrency Basics

Chapter 1: What Is a Cryptocurrency?

Beginning with the Basics of Cryptocurrencies

Gearing Up to Make Transactions

Making a Plan Before You Jump In

Chapter 2: How Cryptocurrencies Work

Explaining Basic Terms in the Cryptocurrency Process

Cruising through Other Important Crypto Concepts

Stick a Fork in It: Digging into Cryptocurrency Forks

Chapter 3: Introducing Cryptocurrency Wallets

Defining Cryptocurrency Wallets

Looking at Different Types of Wallets

Choosing a Crypto Wallet

Keeping Your Wallet Secure

Chapter 4: Different Types of Cryptocurrencies

Celebrating Celebrity Cryptocurrencies by Market Cap

Cryptocurrencies by Category

Book 2: Blockchain Basics

Chapter 1: Introducing Blockchain

Beginning at the Beginning: What Blockchains Are

The Structure of Blockchains

Blockchain Applications

The Blockchain Life Cycle

Consensus: The Driving Force of Blockchains

Blockchains in Use

Chapter 2: Picking a Blockchain

Where Blockchains Add Substance

Choosing a Solution

Chapter 3: Getting Your Hands on Blockchain

Diving into Blockchain Technology

Building a Private Blockchain with Docker and Ethereum

Chapter 4: Beholding the Bitcoin Blockchain

Getting a Brief History of the Bitcoin Blockchain

The New Bitcoin: Bitcoin Cash

Debunking Some Common Bitcoin Misconceptions

Bitcoin: The New Wild West

Mining for Bitcoins

Making Your First Paper Wallet

Chapter 5: Encountering the Ethereum Blockchain

Exploring the Brief History of Ethereum

Ethereum: The Open-Source World Wide Computer

Hacking a Blockchain

Getting Up and Running on Ethereum

Uncovering the Future of DAOs

Creating Your Own ERC-20 Token

Chapter 6: Getting Your Hands on Hyperledger

Getting to Know Hyperledger

Identifying Key Hyperledger Projects

Building Your System in Fabric

Building Asset Tracking with Hyperledger Composer

Working with Smart Contracts on Hyperledger

Chapter 7: Financial Technology

Hauling Out Your Crystal Ball: Future Banking Trends

Going International: Global Financial Products

Squeezing Out Fraud

Book 3: Bitcoin

Chapter 1: Bitcoin Tech Explained

Understanding That There Is No Bitcoin!

Discovering the Bitcoin Ledger

Looking at the Bitcoin Distributed, Peer-to-Peer Network

Using the Bitcoin Blockchain’s Blocks of Business

Finding Out How the Ledger Functions

Chapter 2: Buying, Using, and Selling Bitcoin

Finding the Price of Bitcoin

Your Options for Acquiring Bitcoin

“Bitcoin Back” on Credit and Debit Cards

Earning Your Bitcoin

Mining Bitcoin

Finding Bitcoin Everywhere

Selling Your Bitcoin

Chapter 3: Taking Control of Your Wallet (and Hodling Your Bitcoin)

What Is a Wallet?

Exploring Wallet Hardware

Finding a Wallet

Setting Up a Bitcoin Wallet

Using the Lightning Network

Chapter 4: Keeping Your Bitcoin Safe

Understanding How You Can Lose Control of Your Bitcoin

Grasping the Goal: Private Key and Seed Protection

Making a Choice: Custodial or Private Wallet?

Devising Your Cryptocurrency Safety Plan

Exploring More Ways to Protect Your Bitcoin (and Everything Else)

Knowing What Happens When You Kick the Bucket

Book 4: Ethereum

Chapter 1: Getting to Know Ethereum

Exploring Ethereum’s Consensus, Mining, and Smart Contracts

Buying, Spending, and Trading Ether

Getting Started with DAO and ICO

Delving into Development Tools

Chapter 2: Exploring Use Cases for Ethereum

Diving into Ethereum Applications

Exploring Financial Services

Establishing Digital Identity Management

Examining Industry Applications

Enabling Effective Governance

Chapter 3: Examining the Ethereum Ecosystem and Development Life cycle

Exploring the Ethereum Blockchain Block Structure

Describing Smart Contracts

Introducing Solidity, the Language of Smart Contracts

Working with the Ethereum Virtual Machine

Fueling Your Code with Gas

Surveying Tools for Developing, Testing, and Deploying Ethereum Apps

Describing the Ethereum Development Life cycle

Introducing Smart Contract Development Tools

Chapter 4: Getting and Configuring Ethereum Development Tools

Examining Why Multiple Ethereum Development Tools Are Available

Downloading, Installing, and Configuring All the Pieces

Chapter 5: Building Your First Ethereum Apps

Validating Your Ethereum Development Environment

Exploring the Ganache Test Environment

Designing Simple Smart Contracts

Coding Your First Smart Contract

Running Your First Smart Contract

Paying as You Go

Chapter 6: Discovering Smart Contracts

Introducing Supply Chain and Common Challenges

Examining How Blockchain Can Help Resolve Supply Chain Problems

Implementing a Blockchain Supply Chain Solution

Digging into Solidity

Describing Basic Smart Contract Syntax

Handling Data in Solidity

Finding Out about Computation and Gas

Exploring Access Modes and Visibility of Smart Contract Functions and Data

Controlling Execution Flow

Handling Errors and Exceptions

Chapter 7: Writing Your Own Smart Contracts with Solidity

Reviewing Supply Chain Design Specification

Creating New Smart Contracts

Coding Primary Functions

Using Events

Introducing Ownership

Designing for Security

Implementing Minimal Functionality

Chapter 8: Testing Ethereum Apps

Understanding Ethereum dApp Testing

Deploying a dApp to a Test Ethereum Blockchain

Writing Tests for Ethereum dApps

Logging and Handling Errors

Fixing Bugs in a dApp

Chapter 9: Deploying Ethereum Apps

Test Blockchain Options versus Live Blockchains

Anticipating Differences in Live Environments

Preparing Your Configuration for Deploying to Different Networks

Deploying a dApp

Book 5: Cryptocurrency Investing

Chapter 1: Why Invest in Cryptocurrencies?

Diversifying from Traditional Investments

Gaining Capital Appreciation

Increasing Income Potential

Fueling Ideological Empowerment

Chapter 2: Recognizing the Risks of Cryptocurrencies

Reviewing Cryptocurrency Returns

Risk: Flipping the Other Side of the Coin

Glimpsing Cryptocurrencies’ Reward versus Risk

Digging into Different Kinds of Risk

Exploring Risk Management Methods

Chapter 3: Cryptocurrency Exchanges and Brokers

Distinguishing Crypto Exchanges

Considering Brokers

Looking at Other Methods for Buying Cryptos

Chapter 4: Identifying Top-Performing Cryptocurrencies

Introducing the Invest Diva Diamond Analysis

Using Fundamental Analysis to Pick Cryptocurrencies

Choosing Cryptos with Sentimental Analysis

Trying Technical Analysis to Select Cryptos

Chapter 5: Diversification in Cryptocurrencies

Breaking Down Some Basics on Diversification

Using Cryptocurrencies in Long-Term Diversification

Tackling Diversification in Short-Term Trades

Chapter 6: Getting Ahead of the Crowd: Investing in ICOs

Understanding the Basics of Initial Coin Offerings

Investing in an ICO

So You Want to Start an ICO: Launching an ICO Yourself

Chapter 7: Stocks and Exchange-Traded Funds with Cryptocurrency Exposure

Looking for Stocks with Exposure to Cryptos

Considering Cryptocurrency and Blockchain ETFs

Chapter 8: Cryptocurrency Futures and Options

Focusing on the Fundamentals of Futures

Introducing the Basics of Options

Understanding Cryptocurrency Derivatives Trading

Chapter 9: Dealing with the Dollar and Other Fiat Currencies

Considering the World’s Reserve Currency: The U.S. Dollar

Examining the Euro and Other Major Currencies

Comparing the Forex Market and the Crypto Market

Chapter 10: Using Technical Analysis

Beginning with the Basics of Technical Analysis

Spotting the Key Levels

Picking Out Patterns on a Chart

Smoothing Charts Out with Moving Averages

Chapter 11: Short-Term Trading Strategies

Distinguishing Three Short-Term Time Frames

Trying Short-Term Analysis Methods

Managing Short-Term Trading Risk

Chapter 12: Long-Term Investing Strategies

Time Is on Your Side: Getting Started with Long-Term Investing

Creating Long-Term Strategies

Considering Limit and Stop-Loss Orders

Chapter 13: Minimizing Losses and Maximizing Gains

Keeping the Losses Down

Letting the Profits Rise

Chapter 14: Using Ichimoku and Fibonacci Techniques

Getting a Handle on Ichimoku Kinko Hyo

Introducing Fibonacci Retracement Levels

Combining Ichimoku and Fibonacci Techniques

Chapter 15: Taxes and Cryptocurrencies

Distinguishing Three Types of Crypto Taxes

Minimizing Your Crypto Taxes

Evaluating Taxable Income from Crypto Transactions

Book 6: Cryptocurrency Mining

Chapter 1: Understanding Cryptocurrency Mining

Understanding Decentralized Currencies

Exploring the Role of the Crypto Miner

Making Cryptocurrency Trustworthy

Reaching Agreement through Consensus Algorithms

Looking at the Cryptocurrency Miner

Making the Crypto World Go ’Round

Chapter 2: Exploring the Different Forms of Mining

Proof-of-Work Algorithms

Proof-of-Stake Algorithms

Hybrid Proof of Stake/Proof of Work

Delegated Proof of Stake

Delegated Byzantine Fault Tolerance

Proof of Burn

And MORE…

Chapter 3: Mining Made Simple: Finding a Pool and Preparing an Account

Understanding How Pool Mining Works

Choosing a Pool

Setting Up a Pool Account

Researching Mining Pools

Cloud Mining

Chapter 4: Picking a Cryptocurrency to Mine

Determining Your Goal

Mineable? PoW? PoS?

Researching Cryptocurrencies

Going Deep

Knowing That Decentralization Is a Good Thing

Finding Out It’s an Iterative Process

Chapter 5: Gathering Your Mining Gear

Selecting the Correct Computational Mining Hardware

Mining Equipment Manufacturers

Finding a Wallet to Store and Protect Your Private Keys

Where to Mine? Selecting a Viable Location

Chapter 6: Setting Up Your Mining Hardware

ASIC Mining Rigs

GPU Mining Rigs

CPU Mining

Mining Software

Chapter 7: Running the Numbers: Is It Worth It?

Factors That Determine Mining Profitability

Calculating Your ROI

Chapter 8: Reducing Negatives and Gaining an Edge

Profitability through Efficiency

Knowledge Is Power

Here Today, Gone Tomorrow

Evaluating Your Mining Resources

Chapter 9: Running Your Cryptocurrency Business

What to Do with Your Mined Cryptocurrency

Determining When to Sell

Dollar Cost Averaging

Tax and Your Mining Business

Scaling Up?

Index

About the Authors

Connect with Dummies

End User License Agreement

List of Tables

Book 1 Chapter 3

TABLE 3-1 Popular Web Wallets

TABLE 3-2 Popular Mobile Wallets

TABLE 3-3 Popular Desktop Wallets

TABLE 3-4 Popular Hardware Wallets

TABLE 3-5 Popular Paper Wallets

Book 1 Chapter 4

TABLE 4-1 Some Top Ten Cryptos As of 2021

TABLE 4-2 Some Top 100 Cryptos as of 2021

Book 2 Chapter 2

TABLE 2-1 Common Uses for Different Types of Blockchains

Book 3 Chapter 2

TABLE 2-1 $500 Trades Compared

Book 4 Chapter 3

TABLE 3-1 Ethereum Clients

TABLE 3-2 Ethereum Development and Testing Blockchains

TABLE 3-3 Ethereum Compilers and Testing Frameworks

TABLE 3-4 Source Code Editors/IDEs

Book 4 Chapter 6

TABLE 6-1 Supply Chain Obstacles

TABLE 6-2 Ethereum Solutions to Supply Chain Obstacles

TABLE 6-3 Connecting Physical Assets to Digital Assets

TABLE 6-4 Solidity Data Types

TABLE 6-5 Ethereum Gas Charges

TABLE 6-6 Solidity Visibility Modifiers

TABLE 6-7 Solidity Conditional and Iteration Statements

TABLE 6-8 Error-Handling Guard Functions

Book 4 Chapter 7

TABLE 7-1 Common Ethereum Security Mistakes

Book 4 Chapter 8

TABLE 8-1 Smart Contract Test Blockchain Options

List of Illustrations

Book 1 Chapter 2

FIGURE 2-1: An example of a hard fork.

FIGURE 2-2: An example of a soft fork.

Book 1 Chapter 3

FIGURE 3-1: Popular cryptocurrency wallet types.

Book 2 Chapter 1

FIGURE 1-1: The structure of the Bitcoin blockchain network.

FIGURE 1-2: How blockchains work.

FIGURE 1-3: The altcoin exchange platform.

Book 2 Chapter 3

FIGURE 3-1: Navigate to this page at GitHub.

FIGURE 3-2: Open with GitHub Desktop.

Book 2 Chapter 4

FIGURE 4-1: A Merkle tree.

FIGURE 4-2: A paper wallet.

Book 2 Chapter 5

FIGURE 5-1: The world’s first immortal digital game, Etheria.

FIGURE 5-2: Ethereum.org blockchain application depiction.

FIGURE 5-3: The Add Members box.

Book 3 Chapter 1

FIGURE 1-1: Each block’s hash is stored in the next block of data. The hashes c...

FIGURE 1-2: Your browser’s lock icon means that data submitted back to the web ...

FIGURE 1-3: An example of a blockchain explorer tool, found at

https://live.blo

...

FIGURE 1-4: The bitcoin is associated with an address in the blockchain; the ad...

Book 3 Chapter 2

FIGURE 2-1: You’re going to have to prove who you are.

FIGURE 2-2: The Coinme wallet.

FIGURE 2-3: The new address shown in the Blockchain.com blockchain explorer.

FIGURE 2-4: Sending Bitcoin from the Coinme web console and smartphone app.

FIGURE 2-5: Let’s buy!

FIGURE 2-6: You’re ready to buy; click Buy Now when you’re sure.

FIGURE 2-7: Sending money from Coinbase to somewhere else.

FIGURE 2-8: Your transaction, still pending.

FIGURE 2-9: Your transaction, in the blockchain explorer.

Book 3 Chapter 3

FIGURE 3-1: The Cryptotag metal wallet kit (

www.cryptotag.io

).

FIGURE 3-2: An Ellipal hardware wallet.

FIGURE 3-3: The Blue home screen.

FIGURE 3-4: Picking your wallet type and saving your seed.

FIGURE 3-5: Your wallet, ready for work.

FIGURE 3-6: Advanced options enable you to add more randomness.

FIGURE 3-7: The BlueWallet, ready for a transaction.

FIGURE 3-8: Tell Blue if you want to receive a notification when your Bitcoin a...

FIGURE 3-9: The Electrum connections.

FIGURE 3-10: Your wallet’s addresses.

FIGURE 3-11: The BlueWallet Send screen.

FIGURE 3-12: Choose your miner’s fee.

FIGURE 3-13: Your change addresses.

FIGURE 3-14: Checking out basic wallet info and the export info with a seed.

FIGURE 3-15: The wallet import box.

FIGURE 3-16: Choose an address to access its QR code.

FIGURE 3-17: Create a multi-sig wallet; you choose how many wallets in a group.

FIGURE 3-18: Setting up your vault wallet and getting your first wallet seed.

FIGURE 3-19: Your XPUB QR code.

FIGURE 3-20: The Import screen (on an Android device).

FIGURE 3-21: The Import screen.

FIGURE 3-22: The Import screen (on an Android device).

Book 3 Chapter 4

FIGURE 4-1: A warning from Coinbase.com?

FIGURE 4-2: What’s going on with the letter a?

FIGURE 4-3: The Google Authenticator app.

Book 4 Chapter 1

FIGURE 1-1: Purchasing Ether using coinbase.com.

FIGURE 1-2: Purchasing Ether with cash.

FIGURE 1-3: Current cryptocurrency prices.

Book 4 Chapter 3

FIGURE 3-1: Ethereum block header.

FIGURE 3-2: Contents of an Ethereum transaction.

FIGURE 3-3: Smart contract software development life cycle.

Book 4 Chapter 4

FIGURE 4-1: The Go Ethereum (Geth) download webpage.

FIGURE 4-2: The Geth Setup — Installation Options window.

FIGURE 4-3: Geth light node start-up command.

FIGURE 4-4: Geth runtime messages.

FIGURE 4-5: The Ganache Download webpage.

FIGURE 4-6: The Support Ganache Analytics window.

FIGURE 4-7: The Ganache Accounts window.

FIGURE 4-8: The Ganache Settings window’s Server tab.

FIGURE 4-9: Truffle installation requirements.

FIGURE 4-10: Error message in PowerShell when NodeJS isn’t installed.

FIGURE 4-11: The NodeJS Download webpage.

FIGURE 4-12: NodeJS version message.

FIGURE 4-13: Installing Truffle.

FIGURE 4-14: Initializing a new Truffle project.

FIGURE 4-15: The Microsoft Visual Studio Code download webpage.

FIGURE 4-16: The Visual Studio Code install options window.

FIGURE 4-17: The Visual Studio Code IDE desktop.

FIGURE 4-18: The Visual Studio Code IDE with the Solidity extension.

Book 4 Chapter 5

FIGURE 5-1: Initiating a Truffle project.

FIGURE 5-2: The Ganache Settings window.

FIGURE 5-3: Visual Studio Code in myProject.

FIGURE 5-4: The modified Truffle project configuration file.

FIGURE 5-5: Ganache accounts list.

FIGURE 5-6: Truffle deployment results.

FIGURE 5-7: Ganache blocks after deploying smart contracts.

FIGURE 5-8: Contents of a smart contract block.

FIGURE 5-9: Smart contract instance information.

Book 4 Chapter 6

FIGURE 6-1: Ethereum supply chain flow.

FIGURE 6-2: Smart contract return values.

FIGURE 6-3: Recommended gas prices.

Book 4 Chapter 7

FIGURE 7-1: Supply chain starting smart contracts in VS Code.

FIGURE 7-2: Editing

SupplyChain.sol

in VS Code.

FIGURE 7-3: Defining an event in VS Code.

FIGURE 7-4: Compiler output.

Book 4 Chapter 8

FIGURE 8-1: The Ganache settings window.

FIGURE 8-2: Modified Truffle project configuration file.

FIGURE 8-3: Deployment output.

FIGURE 8-4: Ganache accounts list.

FIGURE 8-5: Results of

getParticipantDetails()

.

FIGURE 8-6: Truffle test results.

Book 4 Chapter 9

FIGURE 9-1: Ganache settings window with Automine disabled.

FIGURE 9-2: Ropsten network Ethereum faucet.

FIGURE 9-3: Rinkeby network Ethereum faucet.

FIGURE 9-4: Kovan network Ethereum faucet.

FIGURE 9-5: MetaMask Ethereum network choices.

FIGURE 9-6: MetaMask Copy Address to Clipboard option.

FIGURE 9-7: Kovan account balance in MetaMask.

FIGURE 9-8: The result of the Truffle

deploy

command.

Book 5 Chapter 1

FIGURE 1-1: Dow Jones 70-year historical chart by year.

FIGURE 1-2: Forex metaphor — the Australian dollar dancing against the U.S. dol...

FIGURE 1-3: Bitcoin price between 2013 and January 2017.

FIGURE 1-4: Bitcoin price between 2016 and October 2021.

Book 5 Chapter 2

FIGURE 2-1: Bitcoin’s price action versus the U.S. dollar from 2017 to 2018.

FIGURE 2-2: Demonstrating why patience is a profitable virtue.

Book 5 Chapter 4

FIGURE 4-1: Five points of the Invest Diva Diamond Analysis.

Book 5 Chapter 5

FIGURE 5-1: Binance exchange cryptocurrency pairing options.

FIGURE 5-2: Correlation between the top 12 cryptocurrencies and Bitcoin as BTC ...

FIGURE 5-3: Correlation between the top 17 cryptocurrencies and Bitcoin as BTC ...

FIGURE 5-4: The top 17 cryptocurrencies are less correlated in the seven-day ti...

Book 5 Chapter 7

FIGURE 7-1: OSTK share prices throughout 2018 show correlation to Bitcoin price...

FIGURE 7-2: The stock price of Interactive Brokers (IBKR) dropped on December 1...

FIGURE 7-3: BLOK, BLCN, and KOIN ETF comparison in 2018.

Book 5 Chapter 9

FIGURE 9-1: U.S. Dollar Index (DXY) price action compared to BTC/USD.

FIGURE 9-2: Trading GBP/JPY between key support and resistance levels of 144.85...

Book 5 Chapter 10

FIGURE 10-1: Line chart of BTC/USD over one day.

FIGURE 10-2: Bullish and bearish bars.

FIGURE 10-3: Candlesticks showing the general market movement in a chart.

FIGURE 10-4: Daily candlestick chart of ETH/USD.

FIGURE 10-5: Bitcoin’s key support level at around $30,000 for the first three ...

FIGURE 10-6: Bitcoin’s key resistance levels in October 2021.

FIGURE 10-7: How to draw uptrends and downtrends.

FIGURE 10-8: Basic forms of channels.

FIGURE 10-9: Examples of bullish reversal chart patterns.

FIGURE 10-10: Examples of bearish reversal chart patterns.

Book 5 Chapter 11

FIGURE 11-1: Cryptocurrency trading sessions based on international time zones....

FIGURE 11-2: A simplified range-trading strategy.

FIGURE 11-3: Buying at the pullback in an uptrend market, and taking profit at ...

FIGURE 11-4: BTC/USD 30-minute chart on September 5, 2018.

FIGURE 11-5: BTC/USD hourly chart on September 5, 2018.

FIGURE 11-6: BTC/USD four-hour chart on September 5, 2018.

FIGURE 11-7: BTC/USD four-hour chart strategy performance.

Book 5 Chapter 13

FIGURE 13-1: An example of a cryptocurrency investment log.

FIGURE 13-2: Using the Ichimoku-Fibonacci combo to identify bottoms.

FIGURE 13-3: A double bottom chart pattern forming on an XRP/USD daily chart.

FIGURE 13-4: A double bottom chart pattern confirms, and XRP reaches profit tar...

Book 5 Chapter 14

FIGURE 14-1: Ichimoku Kinko Hyo components.

FIGURE 14-2: Ichimoku Kinko Hyo applied to the XRP/BTC four-hour chart.

FIGURE 14-3: Fibonacci retracement levels applied to an uptrend on the XLM/BTC ...

FIGURE 14-4: Using Ichimoku and Fibonacci to create a bearish trading strategy....

Book 6 Chapter 1

FIGURE 1-1: The block subsidy and transaction fees being paid to a miner, from ...

Book 6 Chapter 3

FIGURE 3-1: The statistics page at Slush Pool, showing information from the cur...

FIGURE 3-2: A historical graph of each pool’s hash rate contributions to the Bi...

FIGURE 3-3: Genesis Mining sells hash rate packages. Dash starts at 5,000 MH/s ...

Book 6 Chapter 4

FIGURE 4-1: The WhatToMine.com profitability comparison site.

FIGURE 4-2: CoinWarz.com, another very popular profitability comparison site.

FIGURE 4-3: The top of the CoinWarz.com page, where you enter your hash rate in...

FIGURE 4-4: Crypto-Coinz.net actually provides hashing power information for so...

FIGURE 4-5: A cryptocurrency details page on WhatToMine.com.

FIGURE 4-6: The Bitcoin calculator at CryptoCompare.com.

FIGURE 4-7: Bitcoin’s GitHub page.

FIGURE 4-8: The Dogecoin Wikipedia page.

FIGURE 4-9: BitInfoCharts.com’s hash-rate comparison page.

FIGURE 4-10: The spectrum of decentralization.

FIGURE 4-11: Chart from GitHub depicting the coin issuance schedule and inflati...

FIGURE 4-12: Coinmetrics.io compares active-address quantities between differen...

Book 6 Chapter 5

FIGURE 5-1: A graph showing the highest hash-rate SHA-256 mining equipment bein...

FIGURE 5-2: Power consumption for a range of SHA-256 ASICs for Bitcoin hashing.

FIGURE 5-3: You can find your electricity cost from your utility bill.

FIGURE 5-4: SHA-256 Bitcoin network ASIC mining hardware, ranked by efficiency ...

FIGURE 5-5: X11 DASH ASIC mining hardware, ranked by efficiency in terms of jou...

FIGURE 5-6: Scrypt Litecoin network ASIC mining hardware, ranked by efficiency ...

FIGURE 5-7: Equihash Zcash network ASIC mining hardware, ranked by efficiency i...

FIGURE 5-8: Ethash Ethereum network ASIC mining hardware, ranked by efficiency ...

FIGURE 5-9: A PDU manufactured by CyberPower.

FIGURE 5-10: A PSU sold by Bitmain, a major ASIC manufacturer, for its line of ...

Book 6 Chapter 6

FIGURE 6-1: A typical ASIC size and shape; the Antminer S9k.

FIGURE 6-2: A Gray Matter Industries shelf designed to hold, and rack mount, th...

FIGURE 6-3: A Bitmain power supply, designed for use with the company’s Antmine...

FIGURE 6-4: The Antminer Z9 ASIC documentation showing the power connections.

FIGURE 6-5: A typical PDU.

FIGURE 6-6: Bitmain Antminer’s IP Report button on the ASIC, which reports the ...

FIGURE 6-7: The Bitmain ASIC configuration settings screen where you can set th...

FIGURE 6-8: A preconfigured 8-GPU mining rig.

FIGURE 6-9: The MiningSky V1 GPU Mining Rig — everything you need but the GPU c...

FIGURE 6-10: The Rosewill 6U Dual PSU Aluminum Mining Case.

FIGURE 6-11: An open-air GPU mining frame, shown after all the equipment has be...

FIGURE 6-12: The ASUS B250 Mining Expert motherboard, which can handle up to 19...

FIGURE 6-13: An AMD CPU that would be suitable to run a GPU mining rig. This CP...

FIGURE 6-14: A CPU heat sink with built-in fan (from Cooler Master). The pad sh...

FIGURE 6-15: GPU cards are popular among certain miners.

FIGURE 6-16: Average price of popular GPUs for cryptocurrency mining in 2019.

FIGURE 6-17: A riser card designed to connect a single GPU card to a motherboar...

FIGURE 6-18: To ASIC mine with NiceHash, pick an algorithm and server location,...

Book 6 Chapter 7

FIGURE 7-1: Purchase cost in U.S. dollars, in 2019, of some of the latest and m...

FIGURE 7-2: Purchase cost of SHA-256 mining ASICs, in U.S. dollars per hash rat...

FIGURE 7-3: A snapshot of an Amazon page showing ratings of various ASIC mining...

FIGURE 7-4: Hash rates for a range of common GPU cards in 2019, mining Ether us...

FIGURE 7-5: A comparison of efficiency (in J/MH/s) of various GPUs mining the E...

FIGURE 7-6: Estimated power consumption of a variety of popular GPUs on the mar...

FIGURE 7-7: A cryptocurrency calculator at WhatToMine.com.

FIGURE 7-8: An example of the Bitcoin network rolling hash rate percentage calc...

Book 6 Chapter 8

FIGURE 8-1: EIA data on average winter heating costs from propane, heating oil,...

FIGURE 8-2: Average electricity cost per kWh by state compiled from EIA data pr...

FIGURE 8-3: A

BitInfoCharts

.com chart showing how miners switched their hash ra...

FIGURE 8-4: A

CoinMarketCap

.com chart showing Zcash’s wild pricing ride the fir...

FIGURE 8-5: A logarithmic chart showing the Bitcoin mining profitability of 1 T...

FIGURE 8-6: The linear chart showing the Bitcoin mining profitability of 1 TH/s...

Book 6 Chapter 9

FIGURE 9-1: Coinbase, a large exchange, lets you spend your cryptocurrency usin...

FIGURE 9-2: A graph of various types of network value estimations for the Bitco...

FIGURE 9-3: The Woobull NVT Ratio chart, an indication of activity in the Bitco...

FIGURE 9-4: A Coinmetrics NVT chart, showing data for two different cryptocurre...

Guide

Cover

Title Page

Copyright

Table of Contents

Begin Reading

Index

About the Authors

Pages

i

ii

1

2

3

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

73

74

75

76

77

78

79

81

82

83

84

85

86

87

88

89

91

92

93

94

95

96

97

98

99

100

101

102

103

104

105

106

107

108

109

110

111

112

113

114

115

116

117

118

119

120

121

122

123

124

125

126

127

128

129

130

131

132

133

134

135

136

137

138

139

140

141

142

143

144

145

146

147

148

149

150

151

152

153

155

156

157

158

159

160

161

162

163

164

165

166

167

168

169

170

171

172

173

174

175

176

177

178

179

180

181

182

183

184

185

186

187

188

189

191

192

193

194

195

196

197

198

199

200

201

202

203

204

205

206

207

208

209

210

211

212

213

214

215

216

217

218

219

220

221

222

223

224

225

226

227

228

229

230

231

232

233

234

235

236

237

238

239

240

241

242

243

244

245

246

247

248

249

250

251

252

253

254

255

256

257

258

259

260

261

262

263

264

265

266

267

268

269

270

271

272

273

274

275

276

277

278

279

280

281

282

283

284

285

286

287

288

289

290

291

292

293

294

295

296

297

298

299

300

301

302

303

304

305

306

307

309

310

311

312

313

314

315

316

317

318

319

320

321

322

323

324

325

326

327

328

329

330

331

332

333

334

335

336

337

338

339

340

341

342

343

344

345

346

347

348

349

350

351

352

353

354

355

356

357

358

359

360

361

362

363

364

365

366

367

368

369

370

371

373

374

375

376

377

378

379

380

381

382

383

384

385

386

387

388

389

391

392

393

394

395

396

397

398

399

400

401

402

403

404

405

406

407

408

409

410

411

412

413

414

415

416

417

418

419

420

421

423

424

425

426

427

428

429

430

431

432

433

434

435

436

437

438

439

440

441

442

443

444

445

446

447

448

449

450

451

452

453

454

455

456

457

458

459

460

461

462

463

464

465

466

467

468

469

470

471

472

473

474

475

476

477

479

480

481

482

483

484

485

486

487

488

489

491

492

493

494

495

496

497

498

499

500

501

502

503

504

505

507

508

509

510

511

512

513

514

515

516

517

518

519

520

521

522

523

524

525

526

527

528

529

530

531

532

533

534

535

536

537

538

539

540

541

543

544

545

546

547

548

549

550

551

552

553

554

555

556

557

558

559

561

562

563

564

565

566

567

568

569

570

571

572

573

574

575

576

577

578

579

580

581

582

583

584

585

586

587

589

590

591

592

593

594

595

596

597

598

599

600

601

602

603

604

605

606

607

609

610

611

612

613

614

615

616

617

618

619

620

621

622

623

624

625

626

627

629

630

631

632

633

634

635

636

637

638

639

640

641

642

643

644

645

646

647

648

649

650

651

652

653

654

655

656

657

658

659

660

661

662

663

664

665

666

667

668

669

670

671

672

673

674

675

676

677

678

679

681

682

683

684

685

686

687

688

689

690

691

692

693

694

695

696

697

698

699

700

701

702

703

704

705

706

707

708

709

710

711

712

713

714

715

716

717

718

719

720

721

722

723

724

725

726

727

728

729

730

731

732

733

734

735

736

737

738

739

740

741

742

743

744

745

746

747

748

749

750

751

753

754

755

756

757

758

759

760

761

762

763

764

765

766

767

768

769

770

771

772

773

775

776

777

778

779

780

781

782

783

784

785

786

787

788

789

790

791

793

794

795

Introduction

The foundation of cryptocurrencies such as Bitcoin lies in a new technology called the blockchain; it’s the infrastructure that cryptocurrencies are built on. Blockchain is a disruptive technology that many argue is bigger than the advent of the Internet. The applications of blockchain don’t end with cryptocurrencies, though, just like the applications of the Internet don’t end with email. If you want to find out what blockchains are, the basics of how to use them, which cryptocurrencies are lucrative investments, and what hardware is needed for cryptocurrency mining, this is the book for you.

About This Book

In this book, you find helpful advice for navigating the blockchain world and cryptocurrencies that run them — from the ins and outs of wallets, exchanges, Bitcoin, and Ethereum to investing in cryptocurrencies and even mining your own.

You don’t have to read the book cover to cover. Just flip to the subject that you’re interested in.

As you dip into and out of this book, feel free to skip the sidebars (shaded boxes) and the paragraphs marked with the Technical Stuff icon. They contain interesting but nonessential information.

Within this book, you may note that some web addresses break across two lines of text. If you’re reading this book in print and want to visit one of these web pages, simply key in the web address exactly as it’s noted in the text, pretending as though the line break doesn’t exist. If you’re reading this as an e-book, you’ve got it easy — just click the web address to be taken directly to the webpage.

Some of the web addresses are affiliate links, meaning that if you click them and start using a company’s services through that specific web address, the author may earn an affiliate payment for making the introduction.

Foolish Assumptions

We didn’t want to make too many assumptions about you and your experience with cryptocurrency, blockchains, mining, and legal matters, but we do assume the following:

You have a computer, a smartphone, and access to the Internet.

You know the basics of using your computer and the Internet, and how to download and install programs.

You know how to navigate through menus within programs, how to find files on your computer, and how to create folders.

You’re new to blockchain and you aren’t a skilled programmer. (Of course, if you are a skilled programmer, you can still get a lot out of this book — you just may be able to breeze past some of the step-by-step guidelines.)

You may have heard of, or even purchased, some cryptocurrencies (like Bitcoin or Ether, for example), but you don’t really know how they work.

Although you may have invested in other markets like the stock market before, you aren’t necessarily familiar with the terminology and the technical aspects of trading and investing in cryptocurrencies.

You are unfamiliar with cryptocurrency mining but are interested to know more and determine whether it’s something you want to undertake.

Note: If you don’t have high-speed access to the Internet, you may want to get it before diving into this book. You need high-speed access to be able to work with many of the valuable online tools that we recommend.

Icons Used in This Book

Throughout the margins of this book are icons drawing your attention to certain bits of information. Here’s what those icons mean.

The Tip icon marks tips and shortcuts that you can use to make your life with cryptocurrency easier.

The Remember icon marks the information that’s especially important to know — the stuff you’ll want to commit to memory.

When you see this icon, you know the information is of a highly technical nature. You can skip over these icons without missing the main point of the topic at hand.

Watch out when you see this icon! It marks critical information that may save you headaches — or tokens.

Beyond the Book

In addition to the material in the print or e-book you’re reading right now, this product also comes with some access-anywhere content on the web. Check out the free Cheat Sheet for more on the topics covered in the book. To get this Cheat Sheet, simply go to www.dummies.com and type Cryptocurrency All-in-One For Dummies Cheat Sheet in the Search box.

Where to Go From Here

The Dummies series tells you what you need to know and how to do the things you need to do to get the results you want. Readers don’t have to read the entire book to learn about a topic. Like all good reference tools, this book is designed to be read when needed and it’s divided into several parts.

If you’re interested in investing, for example, you can head to Book 5 to learn about risk management, strategy development, and the whole industry in general. Book 1 provides an overview of the world of cryptocurrencies, and Book 2 is your gateway to the blockchain technology.

Book 3 takes a deep dive into Bitcoin, which is the oldest cryptocurrency and probably the most well-known. Book 4 lays the foundation of Ethereum and teaches you, in clear language, how to design and write your own software for the Ethereum blockchain environment.

If you want to delve into cryptocurrency mining, check out Book 6, which can help you decide if and how you’re going to begin mining, including which is the right cryptocurrency for you to mine.

Book 1

Cryptocurrency Basics

Contents at a Glance

Chapter 1: What Is a Cryptocurrency?

Beginning with the Basics of Cryptocurrencies

Gearing Up to Make Transactions

Making a Plan Before You Jump In

Chapter 2: How Cryptocurrencies Work

Explaining Basic Terms in the Cryptocurrency Process

Cruising through Other Important Crypto Concepts

Stick a Fork in It: Digging into Cryptocurrency Forks

Chapter 3: Introducing Cryptocurrency Wallets

Defining Cryptocurrency Wallets

Looking at Different Types of Wallets

Choosing a Crypto Wallet

Keeping Your Wallet Secure

Chapter 4: Different Types of Cryptocurrencies

Celebrating Celebrity Cryptocurrencies by Market Cap

Cryptocurrencies by Category

Chapter 1

What Is a Cryptocurrency?

IN THIS CHAPTER

Looking at the what, why, and how of the advent of cryptocurrencies

Getting an overview of your first steps before starting your crypto journey

So you’ve picked up this book, and your first question is probably this: “What the heck is a cryptocurrency, anyway?” Simply stated, a cryptocurrency is a new form of digital money. You can transfer your traditional, non-cryptocurrency money like the U.S. dollar digitally, but that’s not quite the same as how cryptocurrencies work. When cryptocurrencies become mainstream, you may be able to use them to pay for stuff electronically, just like you do with traditional currencies.

However, what sets cryptocurrencies apart is the technology behind them. You may say, “Who cares about the technology behind my money? I only care about how much of it there is in my wallet!” The issue is that the world’s current money systems have a bunch of problems. Here are some examples:

Payment systems such as credit cards and wire transfers are outdated.

In most cases, a bunch of middlemen like banks and brokers take a cut in the process, making transactions expensive and slow.

Financial inequality is growing around the globe.

Around three billion unbanked or underbanked people can’t access financial services. That’s approximately half the population on the planet!

Cryptocurrencies aim to solve some of these problems, if not more. This chapter introduces you to crypto fundamentals.

Beginning with the Basics of Cryptocurrencies

You know how your everyday, government-based currency is reserved in banks? And that you need an ATM or a connection to a bank to get more of it or transfer it to other people? Well, with cryptocurrencies, you may be able to get rid of banks and other centralized middlemen altogether. That’s because cryptocurrencies rely on a technology called blockchain, which is decentralized (meaning no single entity is in charge of it). Instead, every computer in the network confirms the transactions. Flip to Book 2 to find out more about the blockchain technology that enables cool things like cryptocurrencies.

The following sections cover the basics of cryptocurrencies: their background, benefits, and more.

The definition of money

Before getting into the nitty-gritty of cryptocurrencies, you need to understand the definition of money itself. The philosophy behind money is a bit like the whole “which came first: the chicken or the egg?” thing. In order for money to be valuable, it must have a number of characteristics, such as the following:

Enough people must have it.

Merchants must accept it as a form of payment.

Society must trust that it’s valuable and that it will remain valuable in the future.

Of course, in the old days, when you traded your chicken for shoes, the values of the exchanged materials were inherent to their nature. But when coins, cash, and credit cards came into play, the definition of money and, more importantly, the trust model of money changed.

Another key change in money has been its ease of transaction. The hassle of carrying a ton of gold bars from one country to another was one of the main reasons cash was invented. Then, when people got even lazier, credit cards were invented. But credit cards carry the money that your government controls. As the world becomes more interconnected and more concerned about authorities who may or may not have people’s best interests in mind, cryptocurrencies may offer a valuable alternative.

Here’s a fun fact: Your normal, government-backed currency, such as the U.S. dollar, must go by its fancy name, fiat currency, now that cryptocurrencies are around. Fiat is described as a legal tender like coins and banknotes that have value only because the government says so. Get the scoop on fiat currencies in Book 5, Chapter 9.

Some cryptocurrency history

The first ever cryptocurrency was (drumroll please) Bitcoin! You probably have heard of Bitcoin more than any other thing in the crypto industry. Bitcoin was the first product of the first blockchain developed by some anonymous entity who went by the name Satoshi Nakamoto. Satoshi released the idea of Bitcoin in 2008 and described it as a “purely peer-to-peer version” of electronic money.

Bitcoin was the first established cryptocurrency, but many attempts at creating digital currencies occurred years before Bitcoin was formally introduced.

Cryptocurrencies like Bitcoin are created through a process called mining. Very different than mining ore, mining cryptocurrencies involves powerful computers solving complicated problems. Book 6 covers mining, but flip to Book 6, Chapter 1 for an introduction to cryptocurrency mining.

Bitcoin remained the only cryptocurrency until 2011. Then Bitcoin enthusiasts started noticing flaws in it, so they decided to create alternative coins, also known as altcoins, to improve Bitcoin’s design for things like speed, security, anonymity, and more. Among the first altcoins was Litecoin, which aimed to become the silver to Bitcoin’s gold. But at the time of this writing, over 5,000 cryptocurrencies are available, and the number is expected to increase in the future. Check out Chapter 4 of this minibook for just a sampling of cryptocurrencies that are available now.

Key crypto benefits

Still not convinced that cryptocurrencies (or any other sort of decentralized money) are a better solution than traditional government-based money? Here are a number of solutions that cryptocurrencies may be able to provide through their decentralized nature:

Reducing corruption:

With great power comes great responsibility. But when you give a ton of power to only one person or entity, the chances of their abusing that power increase. The 19th-century British politician Lord Acton said it best: “Power tends to corrupt, and absolute power corrupts absolutely.” Cryptocurrencies aim to resolve the issue of absolute power by distributing power among many people or, better yet, among all the members of the network. That’s the key idea behind blockchain technology, anyway (see

Book 2

).

Eliminating extreme money printing: Governments have central banks, and central banks have the ability to simply print money when they’re faced with a serious economic problem. This process is also called quantitative easing. By printing more money, a government may be able to bail out debt or devalue its currency. However, this approach is like putting a bandage on a broken leg. Not only does it rarely solve the problem, but the negative side effects can also sometimes surpass the original issue.

For example, when a country like Iran or Venezuela prints too much money, the value of its currency drops so much that inflation skyrockets and people can’t even afford to buy everyday goods and services. Their cash becomes barely as valuable as rolls of toilet paper. Most cryptocurrencies have a limited, set amount of coins available. When all those coins are in circulation, a central entity or the company behind the blockchain has no easy way to simply create more coins or add on to its supply.

Giving people charge of their own money:

With traditional cash, you’re basically giving away all your control to central banks and the government. If you trust your government, that’s great, but keep in mind that at any point, your government is able to simply freeze your bank account and deny you access to your funds. For example, in the United States, if you don’t have a legal will and own a business, the government has the right to all your assets if you pass away. Some governments can even simply abolish bank notes the way India did in 2016. With cryptocurrencies, you and only you can access your funds. (Unless someone steals them from you, that is. To find out how to secure your crypto assets, flip to

Chapter 3

of this minibook.)

Cutting out the middleman:

With traditional money, every time you make a transfer, a middleman like your bank or a digital payment service takes a cut. With cryptocurrencies, all the network members in the blockchain are that middleman; their compensation is formulated differently from that of fiat money middlemen and therefore is minimal in comparison. Check out

Chapter 2

of this minibook for more on how cryptocurrencies work.

Serving the unbanked:

A vast portion of the world’s citizens has no access or limited access to payment systems like banks. Cryptocurrencies aim to resolve this issue by spreading digital commerce around the globe so that anyone with a mobile phone can start making payments. And yes, more people have access to mobile phones than to banks. In fact, more people have mobile phones than have toilets, but at this point the blockchain technology may not be able to resolve the latter issue. (Flip to Book 5,

Chapter 1

for more on the social good that can come from cryptocurrencies and blockchain technology.)

Common crypto and blockchain myths

During the 2017 Bitcoin hype, a lot of misconceptions about the whole industry started to circulate. These myths may have played a role in the cryptocurrency crash that followed the surge. The important thing to remember is that both the blockchain technology and its byproduct, the cryptocurrency market, are still in their infancy, and things are rapidly changing. So let’s get some of the most common misunderstandings out of the way:

Cryptocurrencies are good only for criminals.

Some cryptocurrencies boast anonymity as one of their key features. That means your identity isn’t revealed when you’re making transactions. Other cryptocurrencies are based on a decentralized blockchain, meaning a central government isn’t the sole power behind them. These features do make such cryptocurrencies attractive for criminals; however, law-abiding citizens in corrupt countries can also benefit from them. For example, if you don’t trust your local bank or country because of corruption and political instability, the best way to store your money may be through blockchain and cryptocurrency assets.

You can make anonymous transactions using all cryptocurrencies.

For some reason, many people equate Bitcoin with anonymity. But Bitcoin, along with many other cryptocurrencies, doesn’t incorporate anonymity at all. All transactions made using such cryptocurrencies are made on public blockchain. Some cryptocurrencies, such as Monero, do prioritize privacy, meaning no outsider can find the source, amount, or destination of transactions. However, most other cryptocurrencies, including Bitcoin, don’t operate that way.

The only application of blockchain is Bitcoin.

This idea couldn’t be further from the truth. Bitcoin and other cryptocurrencies are a tiny byproduct of the blockchain revolution. Many believe Satoshi created Bitcoin simply to provide an example of how the blockchain technology can work. Almost every industry and business in the world can use the blockchain technology in its specific field.

All blockchain activity is private.

Many people falsely believe that the blockchain technology isn’t open to the public and is accessible only to its network of common users. Although some companies create their own private blockchains to be used only among employees and business partners, the majority of the blockchains behind famous cryptocurrencies such as Bitcoin are accessible by the public. Literally anyone with a computer can access the transactions in real time. For example, you can view the real-time Bitcoin transactions at

www.blockchain.com

.

Risks

Just like anything else in life, cryptocurrencies come with their own risks. Whether you trade cryptos, invest in them, or simply hold on to them for the future, you must assess and understand the risks beforehand. Some of the most talked-about cryptocurrency risks include their volatility and lack of regulation. Volatility got especially out of hand in 2017, when the price of most major cryptocurrencies, including Bitcoin, skyrocketed above 1,000 percent and then came crashing down. However, as the cryptocurrency hype has calmed down, the price fluctuations have become more predictable and followed similar patterns to stocks and other financial assets.

Regulations are another major topic in the industry. The funny thing is that both lack of regulation and exposure to regulations can turn into risk events for cryptocurrency investors. See Book 5, Chapter 2 to explore these and other types of risks, as well as methods of managing them.

Gearing Up to Make Transactions

Cryptocurrencies are here to make transactions easier and faster. But before you take advantage of these benefits, you must gear up with crypto gadgets, discover where you can get your hands on different cryptocurrencies, and get to know the cryptocurrency community. Some of the essentials include cryptocurrency wallets and exchanges.

Wallets

Some cryptocurrency wallets, which hold your purchased cryptos, are similar to digital payment services like Apple Pay and PayPal. But generally, they’re different from traditional wallets and come in different formats and levels of security.

You can’t get involved in the cryptocurrency market without a crypto wallet. Get the most secure type of wallet, such as hardware or paper wallets, instead of using the convenient online ones. Flip to Chapter 3 of this minibook to explore how these wallets work and how you can get them.

Exchanges

After you get yourself a crypto wallet (see the preceding section), you’re ready to go crypto shopping, and one of the best destinations is a cryptocurrency exchange. These online web services are where you can transfer your traditional money to buy cryptocurrencies, exchange different types of cryptocurrencies, or even store your cryptocurrencies.

Storing your cryptocurrencies on an exchange is considered high risk because many such exchanges have been exposed to hacking attacks and scams in the past. When you’re done with your transactions, your best bet is to move your new digital assets to your personal, secure wallet.

Exchanges come in different shapes and forms. Some are like traditional stock exchanges and act as a middleman — something crypto enthusiasts believe is a slap in the face of the cryptocurrency market, which is trying to remove a centralized middleman. Others are decentralized and provide a service where buyers and sellers come together and transact in a peer-to-peer manner, but these exchanges come with their own sets of problems, like the risk of locking yourself out. A third type of crypto exchange is called hybrid, and it merges the benefits of the other two types to create a better, more secure experience for users. Flip to Book 5, Chapter 3 to review the pros and cons of all these types of exchanges and get to know other places where you can go cryptocurrency shopping.

Communities

Getting to know the crypto community can be the next step as you’re finding your way in the market. The web has plenty of chat rooms and support groups to give you a sense of the market and what people are talking about. Here are some ways to get involved:

Crypto-specific Telegram groups.

Many cryptocurrencies have their very own channels on the Telegram app. To join them, you first need to download the Telegram app on your smartphone or computer; it’s available for iOS and Android.

Crypto chat rooms on BitcoinTalk or Reddit:

BitcoinTalk (

https://bitcointalk.org/

) and Reddit (

www.reddit.com/

) have some of the oldest crypto chat rooms around. You can view some topics without signing up, but if you want to get involved, you need to log in. (Of course, Reddit isn’t exclusive to cryptos, but you can search for a variety of cryptocurrency topics.)

TradingView chat room:

One of the best trading platforms out there, TradingView (

www.tradingview.com/

) also has a social service where traders and investors of all sorts come together and share their thoughts, questions, and ideas.

Invest Diva’s Premium Investing Group:

If you’re looking for a less crowded and more investment/trading-focused place to get support, you can join Kiana’s investment group (and chat directly with her as a perk) at

https://learn.investdiva.com/join-group

.

On the flip side, many scammers also target these kinds of platforms to advertise and lure members into trouble. Keep your wits about you.

Making a Plan Before You Jump In

If you’re interested in cryptocurrency investing, you may just want to buy some cryptocurrencies and save them for their potential growth in the future. Or you may want to become more of an active investor and buy or sell cryptocurrencies more regularly to maximize profit and revenue. As discussed in Book 5, Chapter 4, you can select cryptocurrencies based on factors like category, popularity, ideology, the management behind the blockchain, and its economic model.

Even if your transaction is a one-time event and you don’t want to hear anything about your crypto assets for the next ten years, you still must gain the knowledge necessary to make the following decisions:

What to buy