The Beginners Guide To Crypto: Difference between revisions

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=Crypto-Lingo=
Bitcoin


In this section we will learn some of the most important concepts to understand the cryptocurrency technology.
Historical overview and review of concepts.
BlockChain explorer.
Node Finder


==Introduction==
Let us dive directly into the world of cryptocurrency.
Let’s go where Bitcoin started.


Cryptocurrency is a totally new type of technology.
The idea was first published on a cryptography mailing list.
It is so useful that it is growing at an amazing speed.
You won't be able to ignore this for long.
Not knowing how does it work may put you in disadvantage, or expose you to new dangers and scams.


At the time of this writing there are thousands of cryptocurrencies, and the literature, videos, webinars, etc. About it
You can be a real insider! And behold the very place of birth of the famous cryptocurrency.
is enough to discourage most people from even trying to learn how does it work.


That is why we have prepared this introduction, as a step by step guide that provides you a hands on experience to discover
Let’s go and visit the place where all started>
by yourself the wonders of this new technology.


'''First some encouraging ideas:'''
Task> Visit the Mailing List. Read and discuss the words in the description.
Task> White Paper. Read and discuss the abstract. (same as above)


1) Even though there are thousands of cryptocurrencies, if you have a basic understanding of Bitcoin and Ethereum you will have the tools
Something about first sell of BTC for less than cents.
to understand any other crypto project.


2) The same way you don't need to be an engineer to operate a computer or a car, you don't need to understand everything
Blockchain Explorer
about cryptocurrencies. Using them will be as easy as using your phone.


'''Second, an encouraging warning:'''
Indtroduction and look for some famous transactions. First transaction and metadata.


With every great power comes a great responsibility.
First mint transaction with 50 BTC or so…
Current block, a mint transaction now…


Nowhere else is this more true than in crypto.


Node Explorer:


'''A great Power:'''
long time has elapsed since the humble beginnings of Bitcoin. The network has grown


Crypto puts in your hands the power to access markets where billions of dollars fly around.
Task> Find some info about nodes.
Imagine somebody gave you a free entrance ticket to the stock-market, or a pool full of sharks!


'''Great Responsibilities'''
Task> BTC Hashrate, statistics, energy consumption, etc.


Most people trading in these markets loose money. It is easy to be lured by the dream of making
Task> BTC Market Cap (Introduce CMC website, Explain coin market cap concept.)
lots of money in one lucky trade, which you may, but making consistent profits in the crypto or stock market is
an art of its own. But you can adopt low risk strategies that will create value over time.
Knowing more about the factors affecting a cryptocurrency's price will surely help a lot.


How to get Bitcoin: CEX


'''You are the Only one responsible for your crypto'''
CEX, credit card, examples. KYC


Cryptocurrency technology is designed to eliminate the need to trust in third parties to make transactions. But this also means that you are the only person
Bitcoin Halving.
responsible for your cryptos.


You can think of all cryptos to be associated with an special "password" called the Private Key. Only the person who has the Private Key can transfer the crypto.
Trading View graph.
If you loose your crypto, or send them to the wrong place, nobody in the world can help you recovering them.


Task> Logarithmic Graph. Halvings.


'''And the Ultimate and most important Warning in Crypto:'''


If you lose the Private Key you lose everything. There is no way to recover the crypto associated to that Private Key.
Tools:


Coin Market Cap
Coin Gecko
Trading View


Let us dive directly into the world of crypto.
We will need some tools to help us on the way.


'''To conclude:'''
Our first tool in the tool box


There are two basic types of cryptocurrency represented by Bitcoin and Ethereum.
Coin Gecko>
A basic understanding of the way they work is very important because:


1) Safety reasons,
Task> Crypto Market cap.
2) To maximize the benefits you can get from this technology.


We will talk about Ethereum on section X.
Before we get there we will be talking about Bitcoin-Type cryptocurrencies.
So when we say "cryptocurrency" you can think of Bitcoin as the most important example.






==Basic Fundamental Principles==


We mention that cryptocurrency is a totally new technology. But money is nothing new, and most of the money we use everyday with credit and debit cards is digital,
Ethereum:
so what is new about crypto?


The groundbreaking innovation of Bitcoin is that it behaves like digital cash.
EVM
Smart contracts
Gas fees
EtherScan
DEX
Liquidity Pools
Price Impact


With electronic money like debit or credit cards, you have a balance with the bank and any transaction you make is processed by the bank,
Layer II
this system is "centralized" because the bank has to process all transactions and approve or deny them.
Polygon.
PolygonScan


The bank act as a "trusted third party"
Wrapped BTC
Wrapped tokens


With cash, If  you give a coin or a bill to somebody, you don't need any third party or approval. The money is physically transferred from one person to the other immediately.
WEB III


Therefore what is totally new about cryptocurrency is that it behaves like digital cash, you can transfer it from one person to another and don't need the approval of a central authority that functions as a trusted third party.
Test Drive
When you transfer cryptocurrency to other person it is similar to giving a coin or physical bill, the transaction is complete, you can't take it back, or cancel it. 


===Two Classes of Cryptocurrency===
Metamask
Website Integration
Ethereum / Polygon Chains (Explorers Transactions)
Token smart contracts.


Most cryptocurrencies fall on one of two fundamental types represented by Bitcoin and Ethereum.
Mint transactions.
 
Mining Pool
Bitcoin was designed to be digital cash.
GPU
 
BlackMiners
Ethereum was designed to be a decentralized virtual computer. 
Swaps
 
Uniswap liquidity pools
Here in these words is summarized all we need to know about cryptocurrency!
Token Pair Contracts
But we will spend some time understanding in depth the meaning of these sentences.
Price trackers
First let us talk about money.
Buy Sell
 
Farming
===Two classes of Money===
Creating a farm position NFT
 
Polygon Bridge
Bitcoin was designed to be like money, but there are fundamentally two types of money represented by Gold and Fiat.
Ways to make money with S.T
 
Trading Simulator Trade tokens for more tokens
====Gold====
Investors Club
 
Gold is a commodity, a physical object and it's price is determined by the balance of supply and demand, it's value is influenced by the cost of production,
the handling of the asset, transportation, storage, checking its purity, etc.
 
====Fiat====
 
Fiat is a form of money created by banks and adopted by a government to run a country. Its value is decided by the banks and governments,
and one of the most important features is that they can create it at will. This creation of money out of nowhere is the cause of inflation, which decreases the value
of the fiat currency. Another interesting fact about fiat money is that only 5% exists in the form of coins and bills, most of it is purely electronic money.
 
 
'''Gold 2.0'''
 
Bitcoin is a digital asset that behaves similar to a commodity like gold, for example. That is why you will hear it called Gold 2.0
 
Like gold, bitcoin has a cost of production, the process of producing bitcoin is called "proof of work mining" or simply mining, and requires energy and special equipment. The process of proof of work effectively
converts energy into currency. bitcoin's price is determined by the supply and demand of the digital asset.
 
Following Bitcoin's example there are other cryptocurrencies produced by proof of work, and so they have an intrinsic value given by the cost of production.
 
And there are cryptocurrencies that can be created out of thin air as well, without spending time or energy in creating them.
We are not going to talk about those in this introduction to cryptocurrency. And we advise you to stay away from them.
 
 
In the following sections we will be talking about digital assets that have a connection with the real economy given by their cost of production.
 
 
===Summary===
 
Bitcoin was designed to be Digital Cash.
The ground breaking Bitcoin innovation is that you don't need to trust third parties to make transactions.
(Bitcoin transactions are made trough a decentralized computer network that we will be discussing in section XYZ)
 
Bitcoin is very different from digital money like credit or debit cards that need a centralized database to process all transactions.
Bitcoin is closer to a physical coin than to a credit card.
 
==Crypto-Currency==
 
The name comes from the fact that it is a form of digital money based on cryptography.
 
 
Traditionally Cryptography is used for two main things:
 
1) To send messages trough a public channel, but only the person who has the key to open it can read it.
Imagine you send a message but you need a password to read it. Only the person with the password can read it.
 
2) To sign a document with a special signature that only you can produce, but anybody with the key can confirm that it was signed by you.
 
There have been many attempts in the past to create a form of digital money using cryptography but Bitcoin was the first to achieve this without the need of trusted third parties.
 
The oldest forms of cryptography involve two persons that agree on a rule or "key" to substitute the symbols of a message.
Once they agree, person 1 can use the rule (key) to take a message and "encrypt" it, converting it into a different message, that only person 2 can recover or "decrypt" using the same rule (Key) used to encrypt it.
 
This form of cryptography has the disadvantage that person 1 and person 2 have to share in advance the key to encrypt and decrypt messages.
The only 100% safe way to do it is in person. Because using other means may reveal the key to other people.
 
For example if person 1 sends the key by mail, there is a chance that somebody can read the mail. etc.
 
Bitcoin uses another type of cryptography called Public and Private key cryptography. Otherwise you would have to know in person all people you want to send bitcoin to.
 
So let's have a closer look to Public and Private key cryptography.
 
==Public and Private Keys==
 
Public key cryptography involves a pair of keys: a public key, which can be shared openly, and a private key, which is kept secret. Information encrypted with the public key can only be decrypted with the corresponding private key, and vice versa. This method is widely used for secure communication and digital signatures.
 
So for example if person 1 wants to receive a secret message from person 2, then person 1 can send person 2 his public key.
Person 2 will use Person's 1 public key to encrypt the message. The message can be sent trough a public channel and be visible to all,
but only Person 1 will be able to decrypt it using his Private Key.
 
Person 1 can send a message to Person 2, and if Person 2 can decrypt the message with Person's 1 public key, then he knows the message
was created by somebody who has Person's 1 Private key.
 
That is why it has to be really private!! to make sure the message is from Person 1 if it was decrypted with Person's 1 Public key.
 
As you can see this method has the advantage that two unknown persons can send encrypted messages to each other by sharing their Public keys.
 
Public and Private Pairs of keys are the heart of cryptocurrency technology, they match each other like lock and key.
 
===Relation to Bitcoin:===
 
Roughly speaking, in Bitcoin, your Private Key will be associated with your "wallet", The Private Key can create many associated Public Keys that will be associated with your "Bitcoin Addresses".
 
When a new address is created it is empty, and then anybody with the address can send Bitcoin to it.
 
 
Every Bitcoin address contains either zero or some Bitcoin. Only the person who owns the private key that created the address can transfer the bitcoin in the address.
 
 
'''Bitcoin Transaction'''
 
Let's suppose that Person 1 transfers X BTC to Person 2.
 
Person 1 is the owner of X BTC in address 1.
Address 1 was created with Person's 1 Private Key. And only Person 1 can transfer the BTC at that address.
Person 2 owns an address 2 that was created with Person's 2 Private key.
 
In a (oversimplified) way, a bitcoin transaction is like a document or receipt where:
 
1) Person 1 transfers the ownership of X BTC at address 01 to Address 2.
 
2) Person 1 signs the transaction with it's Private key, authorizing the transfer from address 1 to address 2
 
==Double Spending==
 
The problem with this oversimplified analogy is that Person 1 can transfer the property of X BTC at address 01 document to more than one person.
 
This is the problem known as "double spending".
 
Let's picture an example to illustrate the problem:
 
Imagine Person 1 owns a house, and has a legal document that proves it. In Crypto your Private Key is what proves you own something.
 
Imagine Person 1 signs a contract saying I transfer the property of my house to Person 2, and sign it with Person's 1 Private key.
 
And then Person 1 signs another contract saying I transfer the property of my house to Person 3. And also signs with Person's 1 Private key.
 
 
Both Person 2 and Person 3 have the proof that Person 1 owns the house and has agreed to transfer the property (because the transaction was signed with Person's 1 Private Key).
 
 
In practice, after Person 1 gave the house to Person 2, he is no longer the owner and it is illegal to give the house to Person 3.
 
 
One way to prevent this situation to happen, where the same Bitcoin can be used more than once, is to have the transactions time stamped,
 
and the first transaction that arrives is final, when a second transaction arrives spending the same Bitcoin, the transaction fails making sure that the first transaction to arrive is the valid one.
 
 
'''To Summarize'''
 
Bitcoin solution to the problem of double spending is to have the transactions time-stamped.
 
However this requires to have the record of all transactions and their time stamps. So that if two transactions arrive and both claim to transfer the same Bitcoin to different addresses,
the earliest transaction will be valid and the latest will fail.
 
How to keep this record without the need of trust in third parties is the great achievement of Bitcoin  technology.
The decentralized database that accomplishes this task is called the block chain, because it processes and time stamps transactions in blocks.
A complete understanding of block chain technology is not necessary to operate Bitcoin, but we need to talk more about this to learn more concepts that you will hear all the time in this business.
 
==Bitcoin==
 
Think of Bitcoin as a form of digital cash.
 
In the sense that it behaves similarly to coins and bills.
 
Cash is different than digital money such as we use with credit or debit cards.
 
A cash transaction is direct and final, between two persons. A digital transference has to be processed and verified by the bank system.
 
You can transfer Bitcoin to another person without need of a third party for review or approval of the transaction.
And your transaction is totally private. Only you and the person you sent the Bitcoin are aware of it.
 
==Bitcoin Network==
 
==Proof of Work==
 
==Bitcoin Halving==
 
==Blockchain Explorer==
 
==Ethereum==
 
==Layer II Polygon==
 
==Coin Market Cap==
 
==Centralized Exchanges CEX==
 
==Decentralized Exchanges DEX Uniswap==

Revision as of 16:02, 1 October 2024

Bitcoin

Historical overview and review of concepts. BlockChain explorer. Node Finder

Let us dive directly into the world of cryptocurrency. Let’s go where Bitcoin started.

The idea was first published on a cryptography mailing list.

You can be a real insider! And behold the very place of birth of the famous cryptocurrency.

Let’s go and visit the place where all started>

Task> Visit the Mailing List. Read and discuss the words in the description. Task> White Paper. Read and discuss the abstract. (same as above)

Something about first sell of BTC for less than cents.

Blockchain Explorer

Indtroduction and look for some famous transactions. First transaction and metadata.

First mint transaction with 50 BTC or so… Current block, a mint transaction now…


Node Explorer:

long time has elapsed since the humble beginnings of Bitcoin. The network has grown

Task> Find some info about nodes.

Task> BTC Hashrate, statistics, energy consumption, etc.

Task> BTC Market Cap (Introduce CMC website, Explain coin market cap concept.)

How to get Bitcoin: CEX

CEX, credit card, examples. KYC

Bitcoin Halving.

Trading View graph.

Task> Logarithmic Graph. Halvings.


Tools:

Coin Market Cap Coin Gecko Trading View

Let us dive directly into the world of crypto. We will need some tools to help us on the way.

Our first tool in the tool box

Coin Gecko>

Task> Crypto Market cap.



Ethereum:

EVM Smart contracts Gas fees EtherScan DEX Liquidity Pools Price Impact

Layer II Polygon. PolygonScan

Wrapped BTC Wrapped tokens

WEB III

Test Drive

Metamask Website Integration Ethereum / Polygon Chains (Explorers Transactions) Token smart contracts.

Mint transactions. Mining Pool GPU BlackMiners Swaps Uniswap liquidity pools Token Pair Contracts Price trackers Buy Sell Farming Creating a farm position NFT Polygon Bridge Ways to make money with S.T Trading Simulator Trade tokens for more tokens Investors Club

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