1,000 + 5,000 +
NEW CRYPTOCURRENCIES CREATED LAST YEAR
RETURN ON INVESTMENT IN CRYPTO ASSETS
BLOCKCHAIN & CRYPTO 101 THE ULTIMATE BEGINNERS GUIDE TO UNDERSTANDING WHAT A CRYPTOCURRENCY AND A BLOCKCHAIN TECHNOLOGY IS.
2018 EDITION
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Table of content: Glossary of terms Quick facts How the blockchain works (basics) Use cases Where to buy, store and trade Ways to make money in crypto List of useful resources
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Glossary: Cryptography: Cryptography is a method of storing and transmitting encrypted data in a way that it stays private to only those for whom it is intended. Cryptocurrency: Type of digital/alternative/virtual currencies or assets used as medium of exchange. Cryptocurrencies use cryptography to authenticate transactions with the use of a private and a public key. The private key is known only to its holder and it is associated with a public key that holds the public information for the transaction and also authenticates that the owner of the private key triggered this transaction. Peer-to-peer: decentralized communications model in which each party (node) can function as both a client and server in the process of exchanging data, such as the peer to peer file sharing. Bitcoin: Cryptocurrency described as a peer-to-peer electronic cash system that verifies its transactions in a trust-less way and runs on a blockchain. Blockchain: Decentralized, peer to peer distributed digital ledger (history) of encrypted transactions that are unchangeable in time. Each transaction is stored in a separate block of information and is visible to all peers in the network at all times.
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Glossary: Mining: The way peers validate and order transactions on the blockchain utilizing their computing power and creating new coins in the process as a reward for every verified transaction. Mining pool: A group of miners who use their combined processing power to verify transactions. Mining together increases chance for success and a new bitcoin is split evenly between participants. 51% attack: An attack by a large mining pool that controls over 50% of the computing power and thus can corrupt the transactions. So far no such attack has been ever performed. In 2014 one mining pool (Ghash.io) reached the 51% breach and then withdrew its power, selflimiting itself to a maximum of 40% computing power. Cryptocurrency wallet: This is where you “store� your bitcoins and altcoins . It is not a real wallet but a software that keeps your private and public keys. Your private key is only visible to you and it shows your ownership of the associated public key. The public key is visible to the public and is associated with a certain amount of coins and also has the ledger of transactions.
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Glossary: Smart contract: A special protocol on the blockchain that executes the transaction ONLY if certain conditions are met. Smart contracts help peers exchange money, shares, assets etc. without a middleman in a transparent and a conflict-free way. Smart contracts exist on all blockchain but with different level of functionality. The Etherium blockchain is known for its best use of smart contracts, developed through the Etherium standards framework. A new competitor to Etherium to watch out for is called EOS (Etherium On Steroids). Altcoins: Cryptocurrencies alternative to Bitcoin that are usually less popular, less expensive and with a smaller market cap. There are thousands of altcoins as of today, many of them working on improving and innovating the blockchain technology used originally by Bitcoin. Alternative cryptocurrencies run on their own blockchains. Some popular altcoins are Etherium, LiteCoin, Dash, etc. These are also called Protocol Blockchain companies. Tokens: Tokens are digital assets created on top of an existing blockchain. Tokens usually represent an asset or a utility within a company such as digital coins, in-game assets, loyalty points etc. Tokens can be redeemable for a service that is about to be available in the future (utility token); they can be used as a share in a particular business model (securities / tokens). Companies creating their own tokens are also referred to as App Blockchain Companies.
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Glossary: ERC20 Tokens: These are tokens based on the Etherium blockchain protocol. Over 90% of all tokens are ERC20 Tokens. Essentially they are smart contracts executed on the Etherium blockchain. Initial Coin Offering (ICO): A startup raises capital as they pre-sale their new cryptocurrency or token in exchange for Bitcoin or other major crypto currencies already in use. The pre-sale is open to accredited investors as well as to the general public which makes it similar to a crowdfunding campaign. After the token sale is completed the issued tokens need to enter a crypto currency exchange where a lot of them see skyrocketing returns of 1,000% and more,and a lot of them also fail to deliver on their promises. Cryptocurrency exchanges: Also called Digital Currency Exchanges are platforms that allow users to trade cryptocurrencies for traditional money or other cryptocurrencies. ICO Whitepaper: The foundation of an initial coin offering. It describes what the project is about, what needs it will fulfill, how much money is needed to undertake the venture, what are the technical specifications and what is the business model behind it, how is the project going to be marketed etc.
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Quick facts: The entire cryptocurrency market capitalization has grown from around $20 billion at the start of 2017 to around $500 billion in the last few weeks of February 2018.
The first official documented purchase of goods using bitcoins was on 22 May 2010, when two Papa John’s Pizzas were exchanged for 10,000 BTC.
In August 2016, the World Economic Forum released a report calling blockchain technology a “mega-trend” that will shape society in the next decade, predicting that blockchains could store as much as 10% of global GDP by 2027.
2017 has truly been the year of Initial Coin Offerings with the investment volume of ICOs even surpassing venture capital funding.
Bitcoin now accounts for around 50% of the cryptocurrency market and surpasses the national GDP of several countries.
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How the blockchain works: * We’ll use Bitcoin as an example. ** You don’t need to fully grasp the technicality in order to invest in the technology, the same way you don’t need to understand how exactly a diesel engine works to drive your diesel car. So, look at the information below as just a short explainer for those of you who are curious how the basic concepts behind the technology work.
Essentially the blockchain may be referred to as a decentralized network that allows a group of computers to maintain a ledger of transactions. In formal centralized systems, such as banks for example, the ledger is maintained only by the bank centralized private computers. ***Transaction on the blockchain might not be monetary. Special mathematical instruments protect all aspects of the blockchain network and eliminate the need for “trust” because the network verifies automatically that: the transactions are authentic you have enough balance or an agreement to complete the transaction you cannot initiate the same transaction twice (double spending)
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How the blockchain works: Digital signatures encrypted with private and public keys ensure that each initiated transaction on the network is authentic. The way the network checks if you have sufficient funds in your account is a bit different than traditional balances. No track record of current balances is kept, instead, the ownership of funds is verified through a track record of previous transactions. For example if you want to send 5.0 BTC to someone, the other peers (nodes) in the network must crawl through all your past transactions and verify that all your previous inputs and outputs now equal 5.0 BTC or more. In this manner, ownership of Bitcoin is passed along in something like a chain where the validity of each transaction is dependant on the validity of all previous transactions. Another important aspect ensuring that no double spending of funds is performed is the order of transactions performed on the network. This is important because it eliminates the fraudulent transactions. For example: Anna buys a product from John for 5.0 BTC, then waits for the product to be shipped and revert (double-spend) the same output back to herself.
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How the blockchain works: To eliminate this double spending scenario the network distributes and orders the transactions by placing them in blocks, hence the name blockchain. Each block has a reference to the previous block and this is how the order in time is confirmed. All transactions in a particular block are considered to have happened at the same time. Transactions that are not yet inserted into a block are called “unconfirmed�. Any peer can collect bunch of unconfirmed transactions into a block and suggest it to the rest of the network as the next block in the chain. As we cannot rely on the order the block suggestions have arrived (same as the double spending problem above), the network requires peers to solve complex mathematical problems that become harder in complexity with time. Solving these mathematical problems determine the order of transactions added to the blocks and also creates Bitcoins for the peers performing the calculation. This is is called mining. Mining is the process of verifying the order of transactions while also creating digital coins as an incentive.
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What's the blockchain used for: The blockchain can be used not only for creation and exchange of cryptocurrency, but for all kinds of transactions. Enhanced by the smart contracts protocol, a blockchain can enforce transparency and accountability in many areas of our Lives. Here are some examples: Preventing voter fraud in elections Prevent government corruption Supply Chain transparency Decentralize record management systems, such as medical records, and thus make them more secure, enforcing confidentiality. Enforce ethical business practices Eliminate fund leaks in charities Incorporate with carbon credits and similar Green incentives Hybrid centralized/decentralized applications to address issues and optimize interactions. And more‌.
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Where to buy, store & trade cryptocurrencies: Bitcoin ATM - Bitcoin ATMs are becoming very popular - March 2018 tolls about 2,393 Bitcoin ATM machines worldwide, with a steady trend upwards. With these machines, the user shows up to a physical location and either A) buys Bitcoin using fiat currency and has it sent to a Bitcoin wallet or B) sells Bitcoin to the atm to withdraw fiat money in cash. These devices are extremely convenient and allow traders to not have to deal at all with the “trading� part of crypto.
Online Exchanges: If you want to buy some of the major coins as a long term asset investment, coinbase is very easy to use. You do need to verify your identity www.coinbase.com
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Where to buy, store & trade cryptocurrencies: If you’d like to purchase a diverse basket of coins and tokens you can do that in some of the other exchanges offering a large variety of coins. Please note there are over 280 exchanges as of March 2018 and none of them offers ALL of the coins and tokens available on the market. Below are names and links with just a few of the most trusted ones with the largest variety of coins and the highest trading volume (liquidity) as of March 2018. www.binance.com www.okex.com www.huobi.com Now that you purchased some crypto it may not be a smart idea to keep it in your exchange wallet. It is strongly recommended that you transfer your crypto to a separate software wallet and the best to do really is to transfer it to a hardware wallet. Some people use paper wallets, which simply means that you write down your private key digits to a piece of paper. Some go even as far as relying on mental wallets or in other words to remember their private key. Loosing your private key equals losing your coins, there is no way back.
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Where to buy, store & trade cryptocurrencies: Here is a list of some trusted wallets: Ledger NANO: One of the leading providers of hardware wallets. It stores your private key offline, on a small device, therefore protects it from hackers. It supports a large variety of coins and can also be connected to My Ether Wallet for full support of any ERC20 tokens. KeepKey: Is the latest crypto hardware wallet with advanced features and easy to use . Blockchain info wallet: Hybrid wallet that does not have access to your private key but it is still stored and loaded on their server and therefore relies on their security. It supports bitcoin (BTC), bitcoin cash (BCH), and ether (ETH). Do not send any other cryptocurrencies to Blockchain wallet addresses; you will not be able to access those funds if you do. Mycelium wallet: Mobile only wallet app with advanced security and privacy features. It supports bitcoin only (BTC) and it also allows you to buy and sell bitcoin for fiat currencies directly through their platform. My Ether Wallet: It creates your wallet on your computer and relies on your computer safety. It supports ether and any ERC20 tokens.
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Ways to make money with crypto: ICO Bounties - You can join an ICO launch team and perform small tasks for the project in exchange of their token. The risk is similar to investing your money in ICOs, as in the end the project needs to be successful so that your tokens have any value. Typical bounty tasks might be: social media sharing, article writing, translation, bug reports etc. Be aware that bounties currently fall under the SEC radar and all bounty promoted tokens are considered securities. List of ICO bounties Day Trading - The crypto market is a very volatile place Major rule number one is to never put in more than you can afford to lose. We will cover a lot of the day trading basics during The Online Crypto Summit, including soma working strategies and how to use automated trading tools.To get started you need to create an account in any of the existing exchanges (I listed some of the well known above). Here is a good automated trading tool that you can use to get started: Haas Online Mining - It is still possible to mine some coins from individual computers but don't expect to make a fortune from that. Here is an article about possible coins to mine in 2018. You can as well join a mining pool but be aware that there are many scams out there so do your research. We will cover this topic during the Online Crypto Summit.
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Ways to make money with crypto: Investing - You can either invest long term in popular crypto assets (TOP 10 to TOP 20 coins), or you can go the crowdfunding route by investing in Initial Coin Offerings. ICOs nowadays typically have a lock period, in which you cannot exchange the new coins. At the same time risk remains that the funded team will not execute as expected and this could prevent the new coin being accepted on a freely traded exchange. Always do your research and do not take guarantees from anyone, even from a certified professional ‌ and even so there is always a risk of devaluation. During the summit we will talk a lot about how to choose and evaluate an ICO to invest in.
Accept Bitcoin in your shop - No matter which profession you are into, you can safely guess that cryptocurrency financial transactions will be more and more common with the quick adoption of the technology. Whatever the professional services you sell, cryptocurrencies open up so much more potential for engagement. This means easier access to clients, funds, loans, other services, even tools and machines in the future. Shopify has integrated bitcoin payment gateway.
Freelance for bitcoin - www.bitwage.com
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Cool tools: Upcoming ICO watch lists: www.ico-map.io www.tokenmarket.net Monitor how funded ICOs perform www.icostats.com Follow investment trends www.walletinvestor.com Follow crypto market trends www.coinmarketcap.com Follow ICO ratings www.icorating.com www.icobench.com Stay informed from leading industry insiders www.TheOnlineCryptoSummit.com
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