The Beginners Guide To Crypto: Difference between revisions
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Every four years the reward is cut in half. This effectively doubles the cost of production overnight, leaving many miners out of business. This new scarcity puts an upward pressure on Bitcoin's price, | Every four years the reward is cut in half. This effectively doubles the cost of production overnight, leaving many miners out of business. This new scarcity puts an upward pressure on Bitcoin's price, | ||
and it is the cause of the periodic behavior in Bitcoin's price history. | and it is the cause of the periodic behavior in Bitcoin's price history. | ||
=Reading the Abstract in Bitcoin's White Paper= | |||
A video explaining the abstract of the white paper, with technical explanations of every line. Historic perspectives, precursors, cryptography, etc. | |||
An entertaining piece of information. | |||
Go over network maintenance, the reward system, decentralization. | |||
=The Block Chain= | =The Block Chain= | ||
Revision as of 03:39, 19 November 2024
Crypto Market Cap:
The Market Cap of a cryptocurrency is the amount of currency in the market multiplied by it's price in the market.
Quest: (Crypto Market Cap)
1) Visit the following website:
2) Find the Total Crypto Market Cap Chart.
Make sure to select the full range of the chart.
(insert image of total crypto market cap here with notes for legibility)
In the graph you can see that Coingecko has collected the information of 15239 different cryptocurrencies, sold across 1154 markets around the world. And the chart represents the sum of all market cap of those 15239 cryptocurrencies.
Task: What is the total crypto market cap?
(Ans: Text) Write down this value, we will use it in the next task.
Notice:
Notice that at the time of this writing the total market cap is about 3 Trillion dollars. A trillion is 10^12. A billion is 1000 Millions and a Trillion is 1000 Billions.
Quest: (Gold Market Cap)
Golds market cap is the price of gold per ounce multiplied by the amount of gold stored in the worlds reserves.
1) Visit this website:
Task: What is the Gold Market Cap?
(Ans: Text)
Exercise:
Compare the Gold Market Cap to the Total Crypto Market Cap. At the time of this writing Gold's market cap is around 17 Trillions. Therefore the Total Crypto Market Cap is over 17% of Gold's Market Cap, showing how important is this class of digital assets.
Quest: (Companies Market Cap)
The market cap of a company is the number of shares multiplied by the price of each share.
1) Visit this website:
Largest Companies by Market Cap
Task: What is the most valued company by Market Cap?
(Ans: text)
Exercise
Compare the Total Crypto Market Cap to the top valued companies in the world.
Notice that the most valued companies are related to computers. Cryptocurrency is a computer technology and it has achieved the same size as the largest companies in the world.
BTC Dominance Chart
Bitcoin is the major contributor to the Total Crypto Market Cap
Find the top 3 Cryptocurrencies by market cap.
Quest: (BTC Dominance Chart)
1) Visit the following website:
2) Find the Bitcoin Dominance Chart. Hover your mouse over the chart to display the top ten cryptocurrencies contributing to the Total Crypto Market Cap.
Task: What is the percentage of Bitcoin Market Cap. (Percent of the Total Crypto Market Cap)?
Bitcoin Price History
Bitcoin was released to public in 2009, but until 2000x didn't even have a price! This is the most important lesson in Cryptocurrency. Pay attention. There is a recurring pattern in Bitcoins price history. Every four years on average there is a bull run that brings Bitcoin's price to an all time high value. We will see why this happens in the next sections.
Quest: (View all Price History)
1) Visit this website:
(Insert image of btc price)
Select "MAX" as the range of data displayed.
Select Logarithmic scale in the price chart.
Task: Take a screenshot of the graph in logarithmic scale.
(Ans: Upload File)
Exercise:
Using a logarithmic scale on a data chart helps to manage large ranges of values by compressing the scale of higher values more than lower ones. This makes it easier to see patterns and compare data points across a wide range of magnitudes, highlighting trends that might be missed on a linear scale.
For example see the beginning of the BTC price chart, this large change in price was not visible compared to the larger more recent price spikes. And when you select log scale these price spikes are more visible.
Quest (Analyzing the Bitcoin Price History Chart)
1) In this exercise we will use TradingView:
TradingView Bitcoin Price Chart
Using the ruler icon in the left hand side of the chart, we will measure the height of the last Bitcoin price spike from the bottom of the bear market That happened around November 2022. Click and drag the mouse from the bottom of the chart to the peak, as shown in the picture.
(Introduce a picture of the required result)
Task: Take a screenshot showing the percentage of price increase from the bottom of the last bear market to the present.
(Ans: upload file)
Exercise:
Introduce here the explanations of the various parts of the price action, halvings, bull runs, bear markets. (see brochure)
Trading View
Trading view has many useful functions to analyze markets. In this section we will use it to compare Bitcoin and Ethereum's price history. Notice how Ethereum's price follows the same pattern as the Bitcoin price. When bitcoin price rises, it causes other cryptocurrencies price to rise. This is called "alt-season". (alt-coins are all other cryptos except Bitcoin).
Quest (Comparing BTC and ETH Price History)
1) Sign in to Trading View. You can sign in with your Google account.
2) From the "Markets" tab select: Crypto.And From Crypto select Large Cap.
3) Right click on BTC and select: Add CRYPTO:BTCUSD to Watchlist > Select Watchlist or create a new list.
4) Right click on ETH and select: Add CRYPTO:ETHUSD to Watchlist > Select Watchlist or create a new list.
5) On the right hand side column you see your Watchlist. Select BTC to display Bitcoin's price chart.
6) Select Full Chart
7) Click on the Compare Button
8) Select ETHUSD notice that there are various markets available to see the price history. Choose the first one.
9) On the Gear icon at the bottom right select regular, not percent.
10) Notice that the difference in prices makes it difficult to compare the behavior of the prices. Select LOG scale
Task: Take a screenshot of your chart comparing Bitcoin to Ethereum
(Ans: Upload File)
Exercise
Notice how it was not easy to see the similarities in the regular chart. Changing the scale to a logarithmic scale made it possible to see that the Ethereum price chart looks very similar to Bitcoin's.
This is very important because we know that all other cryptos follow Bitcoin's behavior. And Bitcoin price action has a periodic behavior. Every 4 years there is a bull market leading to all time highs in prices, and then a bear market follows that can last up to 3 years.
Investors who know this can make significant profits with a long term view.
Summary / check point /
We have seen how much money is being invested in cryptocurrency, and compared to gold and the largest companies in the world. We observe that Bitcoin and Ethereum are the dominant cryptocurrencies. Ethereum's price history follows closely the movements of Bitcoin. Other cryptocurrencies experience a similar behavior. this is called an "alt-season" . We saw that there is a periodic behavir in Bitcoin price history. This is the KEY observation in cryptocurrency.
Now, in order to understand the origins of this periodic behavior we have to learn more about Bitcoin. In the following section we will take a closer look at Bitcoin and discover what causes these price oscillations.
Bitcoin
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.
Quest: (Visit the Cryptography Mailing List)
1) Visit this website:
This is the email where the mysterious author Satoshi Nakamoto announced the creation of Bitcoin. the concept was presented in the Bitcoin "white paper" an article explaining the invention.
Task: Take a screenshot showing the introduction of Bitcoin's white paper.
(Ans: Upload File)
Exercise:
The most important function of cryptocurrency is described in the introduction of the Bitcoin article: What is needed is an electronic payment system based on cryptographic proof instead of trust. Allowing any two willing parties to transact directly with each other without the need of a trusted third party.
Most of the money used today is digital money, only few percent of the total money supply exists in physical form. The majority of transactions are made digitally, and they are processed, verified and approved by financial institutions banks and credit card companies.
In bitcoin the transactions are processed by a peer to peer computer network. Peer to Peer means that all computers in the network are on equal footing, there are no special nodes in the network, any network node can join or leave the network at any time. All they need to be part of the network is to use the same communication protocol implemented by a piece of software called Bitcoin client.
Quest: Bitcoin Client Released
1) Read the email where the Bitcoin client was released:
https://www.bitcoin.com/satoshi-archive/emails/cryptography/16/
Task: Take a screenshot of the email, from the line that says: Total circulation will be... Until Satoshi Nakamoto's signature
Exercise:
The total number of Bitcoins will be 21 million. They are distributed to the Bitcoin network nodes when they add blocks (transactions are processed in blocks) with the amount cut in half every 4 years.
The network nodes receive Bitcoin as economic incentive to process transactions and keep the database. It is anticipated that when the rewards are not enough to pay for the operation of network nodes, the system will live out of transaction fees established by open market competition, possibly with some nodes willing to process transactions for free.
Task: During the first 4 years of operation, the nodes received 50 Bitcoin per block. find out what is the current bitcoin reward per block
(Ans: Text)
Exercise
Every four years the reward is cut in half. This effectively doubles the cost of production overnight, leaving many miners out of business. This new scarcity puts an upward pressure on Bitcoin's price, and it is the cause of the periodic behavior in Bitcoin's price history.
Reading the Abstract in Bitcoin's White Paper
A video explaining the abstract of the white paper, with technical explanations of every line. Historic perspectives, precursors, cryptography, etc. An entertaining piece of information.
Go over network maintenance, the reward system, decentralization.
The Block Chain
We have seen that the major technical breakthrough in Bitcoin is to eliminate the need to trust a third party to make a transaction. Most of the Fiat money used today is electronic, the difference with cryptocurrency technology is that Fiat transactions are processed by financial institutions, banks and credit card companies, whereas cryptocurrency transactions are processed by a Peer to Peer computer network.
The record of all transactions is stored in a public database called the Block Chain, because new transactions are stored in blocks produced every 10 minutes on average.
Every computer in the network stores a copy of the Block Chain, and it is receiving the new transactions made since the last block was added to the block chain.
Quest: Peer to Peer Computer Network
In a peer to peer computer network, all nodes are on equal footing, all run the "Bitcoin client" software that allows computers to communicate with each other.
Task: Node Finder
Quest: How Secure is Bitcoin?
Visit some famous wallets:
It has 80K BTC since 2011, everybody knows the BTC are there, and yet, nobody has ever succeeded at hacking the wallet.
This is how secure a Bitcoin address is, even if everybody knows the public address, nobody can get the funds. And be sure that a bounty prize of 7 Billion dollars is very attractive.
Quest: Blockchain Explorer
Indtroduction. look for some famous transactions. First transaction and metadata.
Look for wallet with lots of BTC and not moving. address security in this way. It is public, everybody knows about it, but nobody has taken the money in 15 years.
First mint transaction with 50 BTC or so… Current block, a mint transaction now…
First transaction Hash
000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26f
First transaction between 2 persons> Satoshi to Hal Finney:
Hash ID f4184fc596403b9d638783cf57adfe4c75c605f6356fbc91338530e9831e9e16
First Bitcoin Sold
The latest Block mined
Observe the BTC reward. And Fees.
https://www.blockchain.com/explorer/blocks/btc/864924
Exploring an Address
Look up an address that has been dormant for years, with lots of money in it. to discuss some features, differences from a transaction address, and the fact that nobody has moved the money, even if the fact that it contains millions of dollars is public.
Node Explorer:
Bitnodes.io
Task> Number of reachable nodes on Bitnodes.io
Task> Nodes per country.
https://newhedge.io/terminal/bitcoin/node-map
Hashrate and price
https://newhedge.io/terminal/bitcoin/hashrate-vs-price
How to get Bitcoin: CEX
CEX, credit card, examples. KYC
Top Cryptocurrency Exchanges:
https://coinmarketcap.com/rankings/exchanges/
CMC Liquidity score 0 to 1000
Bitcoin Halving.
Trading View graph.
Task> Logarithmic Graph. Halvings.
Ethereum:
EVM
Smart contracts
Gas fees
https://milkroad.com/ethereum/gas/
https://etherscan.io/gastracker#chart_gasprice
EtherScan
DEX
https://coinmarketcap.com/rankings/exchanges/dex/?type=spot
Examples, explanations on Uniswap V3
Liquidity Pools:
Examples and explanations of features.
Price Impact
Try a swap and see.
Layer II
Polygon.
PolygonScan
Compare features to Etherscan
Wrapped BTC
https://www.kraken.com/learn/what-is-wrapped-bitcoin-wbtc
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