CRYPTOCURRENCY

CRYPTOCURRENCY
What is Cryptocurrency: Your
Complete Crypto ABC
Welcome to my complete beginner’s guide to What is Cryptocurrency.

The short and easy answer to the title question is that cryptocurrency is decentralized digital money.
But what exactly does that mean and how does it work?
In this guide, I will answer all the questions you have about cryptocurrency. I’m going to tell you when it
was invented, how it works and why it’s going to be so important in the future. By the end of this guide,
you’ll be able to answer the question, “what is a cryptocurrency?” for yourself.
The world of cryptocurrency moves fast so there’s no time to waste. Let’s get started!
When I hear a new word, I look up its definition in my dictionary. Cryptocurrency is a new word for most
people so let’s write a crypto definition…http://urlshortx.in/6XX7v
Table of Contents
● 1. How Does Cryptocurrency Work?
● 2. Crypto Definition
● 3. The Origin of Cryptocurrency
● 4. The Story of Bitcoin
● 5. What is Blockchain?
● 6. How Does Blockchain Work?
● 7. Cryptocurrency Mining
● 8. So, What is Cryptocurrency Mining For?
● 9. Using Cryptocurrencies
● 10. The Rise of Cryptocurrencies!
● 11. Cryptocurrency Trading
● 12. Can Cryptocurrency Save the World?
● 13. Final Thoughts: What is Cryptocurrency?

How Does Cryptocurrency Work?
MINING
Miners try to solve mathematical puzzles first to place the next block on the blockchain and claim a
reward.

EXCHANGE
An exchange is a business (usually a website) where you can buy, sell or trade cryptocurrencies.
WALLETS
Cryptocurrency wallets are software programs that store public and private keys and enable users to
send and receive digital currency and monitor their balance.
Crypto Definition
Below is a list of six things that every cryptocurrency must be in order for it to be called a
cryptocurrency;http://urlshortx.in/6XX7v
1. Digital: Cryptocurrency only exists on computers. There are no coins and no notes. There are no
reserves for crypto in Fort Knox or the Bank of England!
2. Decentralized: Cryptocurrencies don’t have a central computer or server. They are distributed
across a network of (typically) thousands of computers. Networks without a central server are
called decentralized networks.
3. Peer-to-Peer: Cryptocurrencies are passed from person to person online. Users don’t deal with
each other through banks, PayPal or Facebook. They deal with each other directly. Banks,
PayPal and Facebook are all trusted third parties. There are no trusted third parties in
cryptocurrency! Note: They are called trusted third parties because users have to trust them with
their personal information in order to use their services. For example, we trust the bank with our
money and we trust Facebook with our holiday photos!

4. Pseudonymous: This means that you don’t have to give any personal information to own and use
cryptocurrency. There are no rules about who can own or use cryptocurrencies. It’s like posting
on a website like 4chan.
5. Trustless: No trusted third parties means that users don’t have to trust the system for it to work.
Users are in complete control of their money and information at all times.
6. Encrypted: Each user has special codes that stop their information from being accessed by other
users. This is called cryptography and it’s nearly impossible to hack. It’s also where the crypto
part of the crypto definition comes from. Crypto means hidden. When information is hidden with
cryptography, it is encrypted.
7. Global: Countries have their own currencies called fiat currencies. Sending fiat currencies around
the world is difficult. Cryptocurrencies can be sent all over the world easily. Cryptocurrencies are
currencies without borders!
This crypto definition is a great start but you’re still a long way from understanding cryptocurrency.
Next, I want to tell you when cryptocurrency was created and why. I’ll also answer the question ‘what is
cryptocurrency trying to achieve?’http://urlshortx.in/6XX7v
The Origin of Cryptocurrency
In the early 1990s, most people were still struggling to understand the internet. However, there were
some very clever folks who had already realized what a powerful tool it is.
Some of these clever folks, called cypherpunks, thought that governments and corporations had too
much power over our lives. They wanted to use the internet to give the people of the world more freely.
Using cryptography, cypherpunks wanted to allow users of the internet to have more control over their
money and information. As you can tell, the cypherpunks didn’t like trusted third parties at all!
At the top of the cypherpunks, the to-do list was digital cash. DigiCash and Cybercash were both
attempts to create a digital money system. They both had some of the six things needed to be
cryptocurrencies but neither had all of them. By the end of the
the nineties, both had failed.

The world would have to wait until 2009 before the first fully
decentralized digital cash system was created. Its creator had seen the failure of the cypherpunks and
thought that they could do better. Their name was Satoshi Nakamoto and their creation was called
Bitcoin.
Understanding cryptocurrency means first understanding Bitcoin…
The Story of Bitcoin
http://urlshortx.in/LqACsofN
No one knows who Satoshi Nakamoto is. It could be a man, a woman or even a group of people.
Satoshi Nakamoto only ever spoke on crypto forums and through emails.
In late 2008, Nakamoto published the Bitcoin whitepaper. This was a description of what Bitcoin is and
how it works. It became the model for how other cryptocurrencies were designed in the future.
On January 12, 2009, Satoshi Nakamoto made the first Bitcoin transaction. They sent 10 BTC to a
coder named Hal Finney. By 2011, Satoshi Nakamoto was gone. What they left behind was the world’s
first cryptocurrency.
Bitcoin became more popular amongst users who saw how important it could become. In April 2011,
one Bitcoin was worth one US Dollar (USD).
By December 2017, one Bitcoin was worth more than twenty thousand US Dollars! Today, the price of
a single Bitcoin is 7,576.24 US Dollars. Which is still a pretty good return, right?

INTERESTING FACT
In 2010, a programmer bought two pizzas for 10,000 BTC in one of the first real-world bitcoin transactions
Today, 10,000 BTC is equal to roughly $38.1 million - a big price to pay for satisfying hunger pangs.
So, Bitcoin has succeeded where other digital cash systems failed. But why? What is cryptocurrency
doing differently? The thing that makes cryptocurrency different from fiat currencies and other attempts
at digital cash is blockchain technology. Let’s find out how it works…
What is Blockchain?
All cryptocurrencies use distributed ledger technology (DLT) to remove third parties from their systems.
DLTs are shared databases where transaction information is recorded. The DLT that most
cryptocurrencies use is called blockchain technology. The first blockchain was designed by Satoshi
Nakamoto for Bitcoin.
A blockchain is a database of every transaction that has ever happened using a particular
cryptocurrency. Groups of information called blocks are added to the database one by one and form a
very long list. So, a blockchain is a linear chain of blocks! Once information is added to the blockchain,
it can’t be deleted or changed. It stays on the blockchain forever and everyone can see it.
The whole database is stored on a network of thousands of computers called nodes. New information
can only be added to the blockchain if more than half of the nodes agree that it is valid and correct.
This is called consensus. The idea of consensus is one of the big differences between cryptocurrency
and normal banking.

At a normal bank, transaction data is stored inside the bank. Bank staff makes sure that no invalid
transactions are made. This is called verification. Let’s use an example;
George owes 10 USD to both Michael and Jackson. Unfortunately, George only has 10 USD in his
account. He decides to try to send 10 USD to Michael and 10 USD to Jackson at the same time. The
bank’s staff notice that George is trying to send money that he doesn’t have. They stop the transaction
from happening.
The bank stopped George from double spending which is a kind of fraud. Banks spend millions of
dollars to stop double spending from happening. What is cryptocurrency doing about double spending
and how do cryptocurrencies verify transactions? Remember, they don’t have stuff as the bank does!
’http://urlshortx.in/6XX7v
How Does Blockchain Work?
Cryptocurrency transactions are verified in a process called mining. So, what is cryptocurrency mining
and how does it work?
Cryptocurrency Mining

Cryptocurrency mining might sound like something you do with a shovel and a hard hat but it’s actually
more like accounting. Miners are nodes that perform a special task that makes transactions possible.
I’ll use an example to show you how it works using the Bitcoin network.
1. George owes Michael 10 BTC. George announces that he is sending Michael 10 BTC to the
Bitcoin network.
2. Miners take the information and encrypt it. This is called hashing. To this information, they add
other transaction information and hash that too. More and more information is added and hashed
until there is enough to form a block.
3. The miners now race against each other to guess the encrypted code or block hash that will be
given to the new block before it’s added to the blockchain. The lucky miner that guesses the right
code gets to add the new block to the blockchain.
4. Now, all the other nodes on the network verify the transaction information in the new block. They
check the whole blockchain to make sure that the new information matches. If it does, then the
new block is valid, and the winning miner can add the new block to the blockchain. This is called
confirmation.
5. Michael receives 10 BTC from George.
Mining cryptocurrency uses a lot of computer power, so miners are rewarded for the work they do. On
the Bitcoin network, miners who confirm new blocks of information are rewarded with 12.5 BTC of new
Bitcoin. This is why it’s called mining. Instead of mining for gold or coal crypto, miners are digging for
new Bitcoin!
So, What is Cryptocurrency Mining For?

It’s the way cryptocurrency networks like Bitcoin verify and confirm new transactions. It stops double
spending without the need to trust centralized accounting as banks do. Cryptocurrency blockchains
aren’t secured by trust or people. They are secured by math done by computers!
For more information, check out my Blockchain Explained guide.
Now you know how blockchains and crypto mining work. Next, I’ll tell you how you can join a
cryptocurrency network…
Using Cryptocurrencies
Using cryptocurrencies isn’t like using fiat currency. You can’t hold cryptocurrency in your hand and you
can’t open a cryptocurrency account. Cryptocurrency only exists on the blockchain. Users access their
cryptocurrency using codes called public and private keys.
It’s a bit like sending emails. If you want someone to send you an email, you tell them your email
address. Well, if you want someone to send you cryptocurrency, you tell them your public key.
Now, if you want to read your emails or send an email, you need to enter your email password. This is
how private keys work. Private keys are like passwords for cryptocurrency. Public keys can be seen by
anyone, but private keys should only be seen by you. If there is one paramount detail you should learn
from this What is Cryptocurrency guide, it’s that keeping your private keys safe is extremely important!
Private and public keys are kept in wallets. Crypto
wallets can be online, offline, software, hardware or even paper. Some can be downloaded for free or
are hosted by websites. Others are more expensive. For example, hardware wallets can cost around a
hundred US Dollars. You should use several different kinds of wallets when you use cryptocurrency.
Whoever has the private and public keys owns the cryptocurrency, so don’t lose your wallets!
Cryptocurrency is pseudonymous, remember? There is no way to prove your own cryptocurrency
unless you have the keys to it.

I’ve told you about how the first cryptocurrency was created and how it works. I’ve also told you about
how cryptocurrency is stored and used. Now, let’s look at some other cryptocurrencies that have been
created since Bitcoin…’http://urlshortx.in/6XX7v
The Rise of Cryptocurrencies!
Bitcoin changed the way people think about money. Hundreds of other cryptocurrencies have been
created since and they all want to change the world!
Check out a few of the cryptocurrencies that have come along since Bitcoin;
● Litecoin is a lot like Bitcoin but its transactions are processed four times faster. Litecoin mining is
easier than Bitcoin mining, so users with less powerful computers can become miners.
● Ethereum uses more advanced blockchain technology than Bitcoin. It’s sometimes called
Blockchain 2.0. Ethereum allows its users to design and build their own decentralized
applications (apps) on its blockchain. If Bitcoin wants to replace banks, then Ethereum wants to
replace everything else. Ethereum developers can build dApp versions of centralized apps like
Facebook, Amazon, Twitter or even Google! The platform is becoming bigger than just a
cryptocurrency. So, what is cryptocurrency when it’s not really cryptocurrency anymore? It’s
Ethereum! A platform that uses blockchain technology to build and host decentralized apps.
INTERESTING FACT
Ethereum has quickly skyrocketed in value since its introduction in 2015, and it is now the 2nd most
valuable cryptocurrency by market cap. It’s increased in value by 2,226% in just last year - a huge boon fo
early investors.

Would you like to know more about Ethereum? Check out my What is Ethereum guide.
● IOTA is a pretty special cryptocurrency, it doesn’t have a blockchain! IOTA uses a DLT called the
Tangle. Miners don’t confirm new transactions, users do...When a user wants to make a payment
using the Tangle they have to verify and confirm two other user’s transactions first. Only then will
their payment be processed. It’s like getting students to grade each other’s homework instead of
the teacher doing it. The Tangle is thought to be a lot faster than Bitcoin, Litecoin and Ethereum!
If you thought that was weird, check this out — IOTA isn’t even designed to be used by humans!
It’s designed for the Internet of Things. That’s any machine with an internet connection. IOTA will
help the IoT communicate with itself. IOTA actually means the Internet of Things Application.
Imagine that! In the future, your driverless car will use IOTA to go to the gas station, fill up with
gas and pay. All without any humans being involved.
Cryptocurrencies aren’t just for sending money without using a bank. They can do all kinds of cool
things. These cryptocurrencies and many others are available to buy and sell on crypto exchanges. So,
what is cryptocurrency trading?’http://urlshortx.in/6XX7v
Cryptocurrency Trading
Buying and selling cryptocurrencies has become a very big business. The total value of all the
cryptocurrencies in the world is more than 350 billion US Dollars. Just under 17 billion US Dollars’
worth of cryptocurrency was bought and sold today!

INTERESTING FACT
You can trade online with crypto exchanges like Binance, Bitstamp, and Coinbase. You can also arrange t
trade cryptocurrencies in-person with peer-to-peer sites like LocalBitcoins.com
You can trade online with crypto exchanges like Binance, Bitstamp, and Coinbase. You can also
arrange to trade cryptocurrencies in-person with peer-to-peer sites like LocalBitcoins.com.
A cryptocurrency market is an exciting place. Traders can make millions and then lose it all.
Cryptocurrencies are created overnight and then disappear just as fast. My advice to any newbie trader
out there is to only spend what you can afford to lose. I know I sound like your Grandma, but it’s true!
Crypto trading should be used as a way to support the technology and not as a quick way to get rich!
Since you started reading this guide, you’ve been getting closer and closer to understanding
cryptocurrency. There’s just one more question I’d like to answer. What is cryptocurrency going to do
for the world?
Can Cryptocurrency Save the World?
Cryptocurrency has a lot of critics. Some say that it’s all hype. Well, I have some bad news for those
people. Cryptocurrency is here to stay and it’s going to make the world a better place.
Centralized organizations have let us down.
● In 2008, banks cost taxpayers trillions of dollars and caused the world economy to fall apart.
● The credit checking agency, Equifax, lost more than 140,000,000 of its customers' personal
details in 2017.

● This year, Facebook was forced to apologize for selling its users’ personal data.

Cryptocurrencies offer the people of the world another choice.

The governments of Syria, Yemen, and Libya have all failed to protect their people from violent civil
wars.
What is cryptocurrency to the people of Syria? It’s hope. Thirty percent of UN Aid is lost to third-party
corruption so UNICEF has been using Ethereum to raise money for the children of Syria.
About 2 billion people around the world don’t have bank accounts. One in ten Afghanis are unbanked,
many of them women. What is the cryptocurrency to an Afghani woman? It’s freedom. Bitcoin is giving
women in Afghanistan financial freedom for the first time.
Blockchain technology could be used for elections in some of the most corrupt countries in the world.
What is cryptocurrency to the people of Sudan or Myanmar? It’s a voice. Free elections could be held
without fear of violence or intimidation.
Cryptocurrencies can help make the world a fairer, safer and more peaceful place for us all to live in.
The Most Trending Findings
Browse our collection of the most thorough Crypto Exchange related articles, guides & tutorials. Always
be in the know & make informed decisions!

COMPARISONS
FTX VS Binance: Pick the Best Exchange Option for Yourself
FTX VS Binance: Which of the two cryptocurrency exchanges will suit you best? Find out here!

COMPARISONS
FTX VS Coinbase: Pick the Best Crypto Exchange for Yourself
FTX VS Coinbase: Check out the facts, and choose the best cryptocurrency exchange!

TUTORIAL
What is Curve Finance, and How to Use it?
Learn all about Curve Finance, and how you can start using this DeFi platform today!
Final Thoughts: What is Cryptocurrency?
So far, you’ve learned what cryptocurrencies are and how they work. You also know how to store them
and where to trade them. However, understanding cryptocurrency is more than just understanding
blockchains and mining. Understanding cryptocurrency is about understanding what those technologies
can do for you.

Cryptocurrencies have the power to change our lives forever. They can help you take back control of
your money and your information. Some people will ignore them and hope they go away. Others will
join the party. Which will you be?
In this guide, I’ve told you everything you need to know about cryptocurrency.
Which cryptocurrency exchange is best for beginners?
Reading through various best crypto exchange reviews online, you’re bound to notice that one of the
things that most of these exchanges have in common is that they are very simple to use. While some
are more straightforward and beginner-friendly than others, you shouldn’t encounter any difficulties with
either of the top-rated exchanges. That said, many users believe that Coinbase is one of the simpler
exchanges on the current market.
How to pick the best crypto exchange for yourself?
Picking out the best crypto exchange for yourself, you should always focus on maintaining a balance
between the essential features that all top crypto exchanges should have, and those that are important
to you, personally. For example, all of the best exchanges should possess top-tier security features, but
if you’re looking to trade only the main cryptocurrencies, you probably don’t really care too much about
the variety of coins available on the exchange. It’s all a case-by-case scenario!
What is the difference between a crypto exchange and a brokerage?
In layman’s terms, a cryptocurrency exchange is a place where you meet and exchange
cryptocurrencies with another person. The exchange platform (i.e. Finance) acts as a middleman - it
connects you (your offer or request) with that other person (the seller or the buyer). With a brokerage,
however, there is no “other person” - you come and exchange your crypto coins or fiat money with the
platform in question, without the interference of any third party. When considering cryptocurrency
exchange rankings, though, both of these types of businesses (exchanges and brokerages) are usually
just thrown under the umbrella term - exchange. This is done for the sake of simplicity.
Are all the top cryptocurrency exchanges based in the United States?
No, definitely not! While some of the top cryptocurrency exchanges are, indeed, based in the United
States (i.e. Coinbase or Kraken), there are other very well-known industry leaders that are located all
over the world. For example, Finance is based in Tokyo, Japan, while Bittrex is located in Liechtenstein.
While there are many reasons for why an exchange would prefer to be based in one location over
another, most of them boil down to business intricacies, and usually have no effect on the user of the
platform.

Now, It's Yours Turn;’http://urlshortx.in/6XX7v

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