Digital Currencies / Crypto Currency Training Guide

Version 1.0 Basic Information Digital Currencies 07.12.2016
Training Portfolio
Digital Currencies
(Cryptocurrencies)
1
© Avalon Life S.A. 2016

Content
Prolog.................................................................................................................................... 3
The Basic Story behind Bitcoin, Blockchain - the Origin of Digital Currencies.......................4
Bitcoin Founding Myths......................................................................................................4
Bitcoin is slowly driving up................................................................................................4
Short Excerpt from the Whitepaper...................................................................................5
What are Digital Currencies, and how are they generated?..................................................6
Proof of Work (POW)..........................................................................................................6
Proof of Stake (POS)...........................................................................................................7
Algorithms.........................................................................................................................7
Blockchain & the Possibilities, as well as Application Fields..................................................9
No mystery: Blockchain easily explained...........................................................................9
Key Child – Protection by Public and Private Keys............................................................11
Application Fields of Blockchain.......................................................................................11
Digital or Crypto-Currencies and their Meaning..................................................................13
What is a Cryptocurrency?...............................................................................................13
Wallets: Creation, Backup and Transfer of Digital Currencies..............................................15
Basics for New Users.......................................................................................................15
In the Beginning, there is always the Decision, which Wallet of which Provider?............16
Creation of a Blockchain.info Wallet................................................................................18
Where and how can I use Digital Wallets in Everyday Life?.............................................21
Examples:........................................................................................................................21
Exchanges & Marketprices..................................................................................................22
How and where can I check, if a Cryptocurrency is existing?..............................................24
Appendix............................................................................................................................. 25
Platforms, Links, Books....................................................................................................25
Glossary of important terms............................................................................................27
2

Prolog
We would like to provide you with various documents and information. This training is not
the official Avalon Life training for licensing partners.
We would like to know more about digital currencies, coins, mining, wallets, etc. Everyone
has already begun to deal with all this to a certain extent, but most of us did not get very
deep into the matter.
This half-knowledge is often not enough to bring others closer to the topic of "digital
currencies" and to inspire them to start using them.
Above all, it concerns the particularly close and practically relevant questions:
- How do I get Bitcoin, Dash, Ethereum and Co., and where can I use them?
- How exactly are these digital currencies produced, and what exactly happens?
- What is the blockchain technology, and what possibilities does it offer?
- How is security created, and how can I protect my assets best?
- What opportunities do the trade exchanges offer me?
- How can I check a digital currency for authenticity and relevance?
To answer these questions, or at least a large part of them, we have put together this
training and material. This is intended to teach you the fundamentals of blockchain
technology and digital currencies. It is aimed at all those who want to learn how to deal
with digital currencies, but also at those, who want to deepen their knowledge.
All of those who participate in this training should be able to deal safely with the topic of
"digital currencies", and also to bring this knowledge to others. Everyone should be able to
deal safely with Bitcoins, Dash, PVC & Co and increase their capital values.
Only a very small part of the world's population knows about the issue, and an even
smaller part knows how to use this knowledge efficiently. Avalon Life offers us a special
platform that opens up a new dimension for us and our lives. In future we will be able to
take advantage of the edge of knowledge we are given here to make the very best of our
chances and prospects.
Well - enough first words now. Time has come to take the road to future.
Pura Vida!
3

The Basic Story behind Bitcoin, Blockchain - the Origin of
Digital Currencies
Bitcoin Founding Myths
"The origin of the Bitcoin is mysterious. According to the legend, it was invented by
Satoshi Nakamoto in 2007. Whether Nakamoto is a real person or even a group is still
unclear. In March 2014 "Newsweek" revealed the alleged scoop: Dorian S. Nakamoto is to
be the inventor. He came to the USA as a child, graduated in physics and worked for
various clients on various projects, including the US government and arms. "
"After years of puzzling about the real identity of the Bitcoin inventor, the alleged
"Newsweek" coverage attracted much attention. The alleged inventor vehemently denied
his participation from the outset. A few days later an interview with "Associated Press"
appeared. "I got nothing to do with it," Nakamoto says. So back to the beginning: the
foundation remains a mystery. "
It is certain, that from 2008 onwards, Bitcoin was really going. On anonymousspeech.com
anonymous users registered the address Bitcoin.org in August. Under the author name
Satoshi Nakamoto the first publication to Bitcoin appeared in October. The White Paper is
entitled "Bitcoin: A Peer-to-Peer Electronic Cash System".
This brought a new track to investigative journalists from "The New Yorker" and
"Fastcompany". Just before the URL registration, a US patent with the name "Updating and
Distributing Encryption Keys" (# 20100042841) has been registered. The patent contains
the names of Neal King, Vladimir Oksman and Charles Bry. In spite of many possible links
between these domains and Bitcoin, the journalists did not find any conclusive evidence,
that it could be Satoshi Nakamoto.
Bitcoin is slowly driving up
In January 2009 the first Bitcoin was generated. Shortly thereafter, the first transaction
took place, but only once. Until the first time an actual item was purchased, more than a
year passed by. The Bitcoin-early-adder Laszlo Hanyecz offered 10.000 Bitcoins (BTC) for a
pizza in the forum BitcoinTalk. On 22 May 2010 he found somebody to make that deal.
Since then the date is also called the Bitcoin-Pizza-Day. Shortly after the first sale, the
course exploded formally and tenfold within 5 days.
Little by little Bitcoin got more and more attention, which raised the price.
4

The blockchain technology, developed by the inventor Satoshi, is pioneering and probably
the invention of the century. It allows us to make transfers from one place to another,
without a third instance in between (peer to peer).
Max can send coins to Frida without interposing a bank, a financial institution, etc. that
carries out and supervises these transactions as well as charges fees for monitoring them.
The birth of the blockchain and of digital currencies was completed.
Short Excerpt from the Whitepaper
Satoshi Nakamoto has explained his motivation in hundreds of blog posts, which talk about
the fear of human error. "The core problem of conventional currencies is the amount of
confidence needed to make them work," Nakamoto once wrote. In 2011, he disappeared
with the hint, "he is now turning to other things."
5

What are Digital Currencies, and how are they generated?
In the meantime, there are the so-called Altcoins (Alternative Digital Currencies) in
addition to Bitcoin. They are all based on blockchain technology and are a modification or
development of Bitcoin.
On basis of these modifications and further developments, blockchains can always take on
new and more complex tasks and besides the coin transfer, have many other possibilities
of application.
In the production of a coin, we basically distinguish two methods: the Proof of Work (POW)
and the Proof of Stake (POS). There are other methods which are used rather rarely (POB,
POC).
Proof of Work (POW)
Idea
The idea of proof-of-work is, that a service user must first do some work by himself before
he can use the service - a kind of non-use. It was proposed for the first time in 1992 to
curb the sending of junk mail. An implementation of this method is Hashcash.
There are numerous tasks from areas, such as cryptology or numerics, where it is in fact
costly to calculate the solution, but easy to check for correctness later. The ideal tasks are
those, whose solving effort can be altered by slightly adjusting task assignment. This is a
way to adapt the performance the user has to provide, to circumstances, as the available
computing power for example.
Example
In 1999 Ari Juels and John Brainard, two employees of RSA Laboratories, suggested the
following task: The user receives the hash value of a string as well as an incomplete part
of the string. By use of the hash value he has to determine the missing characters
A broad-based modification of this method is also used, for example, in cryptography
Bitcoin: For a given string, a hash must be found, in which the first m bits are zeros. By
selecting the number m of these zero bits, the difficulty and thus also the duration of the
calculation can be controlled. In addition, there is a freely selectable value, the nonce, to
ensure that a solution can be found. In short: "proof of work (mining)"
Source: Wikipedia
Simply put, you need a computer for the POW. It checks the correctness of a transaction
and assigns all these transactions in a specific order (blockchain). These results are
summarized in so-called blocks in a blockchain. The miner receives a defined number of
coins for the solution of this task and the creation of this block as a reward. For these
calculations, it takes a huge amount of computing power and energy. In order to be able to
6

handle this effort, it requires global mining resources, which use 100s of computers to
solve these tasks and generate bitcoin, for example.
Proof of Stake (POS)
The POS is a much more energy-efficient process. It is even possible to dig these coins
with a cryptoaccount (wallet).
At the POS, all transactions, as well as with the POW method, are stored in the blockchain.
However, the transactions themselves are assigned to a block. To check the transactions,
all blocks are now checked and stored in the correct order.
Who holds a certain number of coins in his wallet and thus, simply said, slows down the
transaction flow, receives a certain amount of coins. The higher the number of coins held,
the greater the participation in these randomly distributed coins.
Example
Max gets 50 coins and stores them in his wallet. A block is created with the info Max 50
Coins. He now sends 5 coins to Vreni. Now Vreni gets a block with the info: Vreni 5 Coins
from Max. Max again receives a new block (quasi as "change money") with the info: Max
45 Coins.
The system now verifies and saves all these transactions.
If Max has got these 45 coins left in his wallet for more than 30 days, he will be entitled to
participate in coin distribution.
The chance to get coins from this variant increases with the number of coins. So Max will
have little chance with his 45 coins to get a coin within a short time. However, if he holds
an example of 45,000 coins in the wallet, the chance is very great to get new coins.
This is a simplified explanation! It is a lot more complex, but the exact programming and
process are not really important for us. If you would like to go deeper into this topic, you
will find corresponding technical literature and links.
Algorithms
The algorithm defines how the cryptological hash function is constructed. Simply put, the
"The encryption function of the hash values".
List of the mostly used algorithms for the mining process of cryptocurrencies:
SHA-256  The bitcoin algorithm, and thus the first one ever.
7

Scrypt  Originally a "password based key derivation function", which is also
used for mining.
X11  Uses 11 different algorithms to create the final hash.
X13  Uses 13 different algorithms to create the final hash.
X15  Uses (guess what?) 15 different algorithms to create the final hash.
There are many more, but these are the most common ones.
The new development of algorithms serves on the one hand to improve cryptological
procedures in order to increase security, and on the other hand, this makes mining again
profitable for "home miners".
Bitcoin (SHA-256) developed so-called ASIC miners. This is a sort of hardware, which can
only perform one function, but of course with less power. This technique makes "home-
mining" unprofitable, and the large mining companies with a lot of capital take over more
and more power. The second algorithm used, was the scrypt algorithm, which requires
very much memory space that is very difficult to implement in ASIC miners. Thus, "home
mining" was made profitable again by the scrypt algorithm.
8

Blockchain & the Possibilities, as well as Application Fields
No mystery: Blockchain easily explained
Blockchain - a term as bulky as a living room cabinet and as sticky as chewing gum. There
are many definitions, articles, tutorials about blockchain, but many of them are just a
series of buzzwords. A foreign word is explained by foreign words - that does not really
help. The simplified description that Blockchain is basically not more than a decentralized
database, may be correct, but is also not really helpful. Maik Klotz demystifies blockchain.
A must-read.
by Maik Klotz
In the article, you can find a quotation from a movie, spoken in one of the German
dialects, that we can only put down correspondingly in English:
„To tell in a foolish manner: A blockchain is a big black room with plenty of space. A lot of
stuff fits in. The stuff is always there and never goes down.“ In other words, blockchain is
basically a decentralized protocol for transactions between parties that transparently
captures every change.
Decentralized means that the log - a huge database - is not on a server or belonging to a
company, but is distributed across many computers. There is no one, to whom this journal
belongs. No authority, company or person has got power over this journal. Each
participant has the same access rights and possibilities. The blockchain is a neutral system
of information processing, which is not owned by anyone and cannot be manipulated or
hacked. The safety of this system could only then be threatened, when an attacker would
hold more than 50 percent of the entire network. In a decentralized system, such as
blockchain, there is no longer a central administrator, who says what is right and what is
wrong. Only majority tells the truth.
Transactions can be any kind of information. Blockchain is not limited to financial
transactions, but can be used for any type of information. Comparable with the spoken
word. If I say, for example, "You are stupid", it cannot be changed even once, in particular
when witnesses were present. This is the case with transactions within the blockchain.
With one difference: Within the blockchain, information can be tracked at any time - even
for new participants. This means that everyone knows that I said "You're stupid", and that
even applies to people who were not present at the time.
The parties are the participants of a block-based solution and follow the respective rules of
the blockchain. Blockchain allows transactions to be done directly between the
participants without the inclusion of a paid intermediary. This also prevents potential
friction (market dominating positions).
9

The transparency of the blockchain, that is the journal or database, results from the fact
that the journal is constantly controlled by a network of so-called miners. These miners
verify the stored information block by block and share it in the network, in which each
participant has access to the same blockchain.
Mining workers - the accountants of the blockchain.
Source: Financial Times (online): 01.11.2015
For illustrative purposes only
Blockchain stores information in so-called blocks. The type of information is secondary
and can be anything fitting into 40 byte: a financial transaction, a contract, a will, a share,
a purchase contract or a hash. A block always contains a (transaction) history. Each new
block is connected to the previous block and contains the history in the form of a
checksum of the previous block. In addition to this checksum, a block also always contains
the checksum of the entire chain.
Each block is verified and sealed by the mining. Once verified, the block and the
information contained in it are immutable for all eternity and stored visible for everyone.
As stored information is available to everyone in the original, blockchain is correspondingly
transparent. Corruption and manipulation is not provided in the system. Those who verify
blocks are miners, who do nothing but provide computational power to verify the blocks.
The Miners act as a kind of accountant.
An example: Joe Sixpack buys a plot. Joe is registered as the owner in the document. This
information is stored in the blockchain. The information is verified by the mining and is
now tamper-proof for all eternity and can be seen by everyone.
10

Key Child – Protection by Public and Private Keys
In order to participate in a block-based system, access software is required. This access
software, the so-called wallet, is based on a key pair, consisting of a private key and a
public key. The public key is visible to everyone. The private key is secret and comparable
to a password. Any transaction or movement within the blockchain is signed using the
private key. Without signature, the transaction is invalid. The key pair is based on
asymmetric encryption, thus it is impossible to guess the private key only by using the
public key.
Application Fields of Blockchain
Various fields of application are conceivable for blockchain. For example in music industry
when it is about managing rights. In terms of contracting or tax law and everywhere else
where transparency and traceability is required. In the financial sector international
transfers, settlement of securities or settlement of transfers between banks could be
handled via blockchain. The financial sector is intensively dealing with Blockchain. The CITI
bank is reportedly working on more than forty blockchain projects, the New York Stock
Exchange is considering to make stock trading more efficient by blockchain, and according
to a study by Santander, banks could save € 20 billion annually.
SmartContracts: In a car purchase, which is processed via blockchain, the digital car key
for the new owner is automatically unlocked, after the defined amount has been entered
into the seller's account. In the absence of an installment payment, the car will stay
locked. Contracts are executed as value-neutral, exactly as they were originally defined. A
SmartContract in general, is an executable program code in the form of an if-then
condition: as soon as an event with direct reference to a contract content has occurred, it
triggers the corresponding action. The digital contract communicates directly with the
object - for example a car - via blockchain without an intermediary. E.g. Ethereum
Blockchain is offering this opportunity.
Banking the Unbanked: Giving developing countries access to a financial infrastructure
can also be represented via blockchain. With a currency, based on blockchain, formal
admission criteria are no longer required, because with digital currencies, everyone can
open up an account in form of a wallet and be the master of their finances, not depending
on time or place.
Banking infrastructure: The structure of banks has been unchanged for decades. The
process of transferring values with banks as intermediary has been the same for more
than 150 years. Blockchain can change this fundamentally. The handling of transactions
and the transfer of values in the blockchain does not take several days any more, but only
a few minutes.
11

Micro Payments: Since cryptocurrency payments, such as by Bitcoin, can be arbitrarily
pounded, and the fee incurring in a transaction is only about 1 percent, they are
predestined for micropayments of digital goods, such as news articles, apps or music
tracks.
Music industry: A block-based music service is a public, decentralized music store that
does not require recordings anymore, and artists manage the rights of their own music, as
well as the conditions for using it. The relationship between fan and artist changes
dramatically in a system like this. Fans could support the artists and spread the music, and
thus be part of their success. Bit Block Music
Voting systems: A block-based voting system would not only be protected against
manipulation, but also anonymous and secure. Above all, votes can be given from home
without going to an electoral vote. Errors in counting are impossible. BitCongress
Insurances: The same way SmartContracts work, insurance companies could. Insurance
and policyholders agree on a set of rules and the blockchain implements these rules fairly
and neutrally. Driving behavior is analyzed via blockchain and contributions are adjusted
automatically. Careful drivers are rewarded, risky drivers pay more. A rule set in the
blockchain, converts this system autonomously and value-neutrally.
Conclusion: Blockchain manages and transfers data and information decentrally
and autonomously.
Maik Klotz works as Head of Business Development in Mobile Loyalty and Payment. He is a
consultant, speaker and author on the topics of banking, payment and retail. For many
years he has advised companies on customer-oriented innovation methods and focus on
the user. Maik is born in 1975. You can find Maik Klotz on XING and Twitter.
The state of Honduras would like to transfer all land register entries to blockchain, thus
counteracting corruption and illegal expropriations. In Estonia you can already deposit
your marriage certificate in blockchain, and the Nasdaq has created “Linq” - a blockchain-
based trading platform. In Switzerland, a consortium of 40 banks - including the Swiss UBS
and Credit Suisse - is currently testing a range of blockchain solutions. With blockchain,
information on common property and control by people is not required.
Blockchain has the potential to become a revolution similar to the Internet in the early
1990s. Just as today the TCP / IP protocol is the technical basis for all applications on the
Internet, Blockchain can be the technical basis for more applications than "only" Bitcoin. At
the beginning of the Internet, there were no applications apart of internet pages and e-
mail. Today, our cars, houses, equipment and last but not least we ourselves are all
networked. Therefore, it is difficult to say, in which direction blockchain will be developing,
but there is potential and many uses are already conceivable today.
Source: IT Finanzmagazin
12

Digital or Crypto-Currencies and their Meaning
Coin money and bank notes are becoming less and less important. In France and Italy,
cash transactions in an amount higher than 1000,- € are already forbidden.
To date, banks are organizing payment transactions, providing the necessary systems and
charging their customers for these. As the money system is becoming ever more complex,
more confusing and unstable, the costs of these services will increase too.
The European Central Bank guarantees that euro notes and coins are accepted as means
of payment. But caused by inflation that is driven with a flood of money, goods become
more expensive and money keeps losing worth. Right now, only 10% of all money existing
in the world is money in cash.
Since 2009, there is an alternative to our current money system:
Cryptocurrencies!
The group or person - still unknown until today - named Satoshi Nakamato, brought a
revolution to the world. They came to the conclusion that there could be some better
means of payment in the digital world. They created the name “Cryptocurrency”.
What is a Cryptocurrency?
The name cryptocurrency comes from cryptography. Cryptography is the science of
encrypting or protecting information or data.
Cryptocurrencies are produced by their members, the so-called miners.
How do the members create a cryptocurrency?
Cryptocurrencies have to be calculated by powerful computers. The basis for this is a non-
modifiable algorithm.
An algorithm is a way to solve a task. In the case of cryptocurrencies, the solution of a
computing task yields a coin.
Instead of a banknote or a coin for the payment of goods or services, you own a patent of
a computing solution for a cryptocurrency.
Actually cryptcurrencies are limited in amount of coins. In case of Bitcoin, the maximum
amount will be 21 million coins. Cryptocurrencies are all limited in their maximum number
of coins by an algorithm that cannot be altered. Therefore, cryptocurrencies are the “gold
of the Internet” and are not affected by inflation.
13

Digital currencies, like any other means of payment, are given their value only by our
belief in them. In our current money system, there are national states, central banks or
federations like the EU, which strengthen our faith in "state” currencies with their gigantic
institutions.
As far as cryptocurrencies are concerned, it is the members of a certain cryptocurrency
who create faith in it and determine its value through supply and demand. Banks or
institutions are not needed in the area of digital or cryptic currencies.
Digital or crypto-currencies are independent of states and banks and are
created by people themselves or by their computers and computing power!
This is why digital currencies work without banks or financial institutions. Like an e-mail,
coins of a digital currency can be sent within minutes from person A to person B.
Users have control over their assets at all times through their own account. No bank or
government can block or freeze the account. Thanks to the public accounting system
called Blockchain, users of a digital currency always have an overview of what happens
within the system of each cryptocurrency.
14

Wallets: Creation, Backup and Transfer of Digital Currencies
Basics for New Users
Even as a new user, you can get started using and managing your bitcoins without
understanding the technical details. Once you've installed your wallet, it generates your
first Bitcoin address and you can create more, when you need more. You can exchange
one of your Bitcoin addresses with your friends to send and receive coins. In fact, this is
similar to e-mail, except the fact that Bitcoin addresses can only be used once.
Account balance on the Blockchain
The blockchain is a shared public booking system based on the entire Bitcoin network. All
confirmed bookings are stored in the blockchain. In this way, bitcoin wallets can calculate
their account margins, and new transactions can only be executed, if the bitcoins actually
belong to the sender. The integrity and the chronological order of the blockchain are
ensured by cryptography.
Transactions - private key
A transaction is a transfer of a certain sum between bitcoin wallets that is entered into the
blockchain. Bitcoin wallets have a secret data block called "private key" or "seed". This is
used to sign transactions by providing a mathematical proof that is sent by the owner of
the wallet. In addition, this signature prevents the transaction from being altered by
anybody after having been sent. All transactions are distributed among the users and
within 10 minutes the network will start confirming them by a process called Mining.
The Process of Mining
Mining is a distributed consensus system used to confirm waiting transactions by
integrating them into the blockchain. It enforces a chronological order of the blockchain,
protects the neutrality of the network, and allows different computers to agree to the
status of the system. To be confirmed, transactions must be packed into a block. This block
has to comply with very strict cryptographic rules, which are verified by the network.
These rules prevent previous blocks from being altered because a change would invalidate
all following blocks. Mining also creates the equivalent of a lottery with strong competition
thus preventing any individual from simply inserting new blocks into the block chain
successively. This ensures that no individuals can control what is inserted into the block
chain, or modify parts of the block chain to reverse their own expenses.
Source: Bitcoin.org
15

A wallet is just like a purse. But it is not placed in the rear trouser bag or in a
lady’s handbag. A wallet is a digital tool, online or offline.
You don’t need a doctors title or to study to create one.
In the Beginning, there is always the Decision, which Wallet of which
Provider?
We recommend splitting your owned coins and setting up several wallets, depending on
task and amount.
Coins, which are for daily use, are best stored in an online wallet in the Internet that is
accessible at all times. Coins that are deposited as assets and are not used for a long
period should be placed in an offline wallet (not accessible by network).
As online wallet, we recommend Blockchain.info.
This wallet is online on a PC, but also available as app on a smartphone or tablet.
Blockchain.Info is a pure wallet. A function for buying and selling coins is NOT available.
You can only send and receive coins (digital money). The security tools are very
comprehensive, compared to other online wallets.
There are two varieties of offline-wallets (cold storage) we recommend:
The so-called paperwallet can be generated on a website. Here you get 2 keys on a
printable sheet. This sheet contains the public key (wallet address) and the private key
(recovery key).
You transfer your coins to the public key. The transaction is stored in the blockchain. Now
you can put this sheet in a safe, locker, or similar. Access is not possible online. With the
private key, you can later integrate this wallet into an online wallet and so have access to
your coins again.
16

Watch out!
Whoever holds this piece of paper in his hands, is the owner of the coins and can use them
at any time. So make sure that this "document" does not get into the wrong hands.
The second variant is an offline wallet in the form of a hardware device. We personally use
the USB stick of Ledger Nano or Nano S. On this stick, you also have a public key address,
to which the coins can be transferred and stored.
These coins are protected by additional passwords. After connecting the wallet to a PC, the
coins can be used again and transferred to an online wallet. The advantage of this variant
is that the hardware is additionally protected by a password and a keycard.
Paper-Wallet
Ledger Nano – Hardwarewallet
17

Creation of a Blockchain.info Wallet
Go to Webseite: www.blockchain.info
18
Choose “Wallet“,
above on the right
side
Create new account
Give in your email-
address and password
Caution! The more
complicated the
password – the more
secure is your wallet!
Ready to
receive
bitcoins!

19
Afterwards click on the
activation link you received
by email
Subsequently click on
«Wallet» above on the
right side, then
«Login» and put in
your
login-number and
password
Click on the login-
confirmation-link in your
email-account.
Don’t forget to
configurate and activate
the security tools!

20
Blockchain is also available as app
for your smartphone or tablet.
For further details concerning
handling and registration, please go
to our infoweb, Youtube or the Avalon
Life Facebook group.
To send and receive
Bitcoin, click on the
corresponding button.
In order to receive BTC,
you can scan the QR Code
or copy the walletcode.

Where and how can I use Digital Wallets in Everyday Life?
Today bitcoin is already recognized as a means of payment. There are various dealers,
onlineshops, restaurants and many more that accept Bitcoins.
In the canton of Zug/Switzerland people can pay their tax by bitcoins.
In future there will be an increasing number of dealers and acceptance points all over the
world, where we can pay with our bitcoins and other cryptocurrencies.
http://bitcoin-einfach.de/akzeptanzstellen
https://99bitcoins.com/who-accepts-bitcoins-payment-companies-stores-take-bitcoins/
https://en.bitcoin.it/wiki/Trade
These are two of many websites that keep you informed about the current BTC-accepting
dealers worldwide.
Examples:
21

Exchanges & Marketprices
In addition to various wallet platforms and acceptance points, there are the coin trading
exchanges (Exchanges).
These are digital marketplaces for trading only with digital currencies, comparable to stock
exchanges (Deutsche Börse, NYSE, etc.).
The current prices of different digital currencies can be viewed on different platforms. For
example, at www.worldcoinindex.com or www.coinmarketcap.com you can see all the
information and courses of the officially listed digital currencies.
22
In the details
window of each
coin, you can
find all
information on
course,
background, web
pages, and also
on exchanges
and much more.

We recommend Bittrex.com
Handling and trading are made very simple and clear on this platform.
Avalon Life will shortly produce and provide access to detailed training videos.
23

How and where can I check, whether a Cryptocurrency is
authentic?
Back to the information platforms:
Officially listed cryptos can be found, for example at www.worldcoinindex.com or
www.coinmarketcap.com.
All coins, which are in mining, but are not listed, can be found at www.blockexperts.com.
There you can find every coin with the corresponding mining data.
24

Appendix
Platforms, Links, Books
Marketprices
https://www.worldcoinindex.com/ All officially listed digital currencies at a glance
https://coinmarketcap.com/ All officially listed digital currencies at a glance
https://www.blockexperts.com/ All digital currencies currently being mined, but not
listed
https://www.ico-list.com List of digital currencies that are in the stage of
crowdfunding
Creation of Wallets/Accounts
https://blockchain.info/de Our recommendation – pure wallet/smartphone-app
https://www.bitstamp.net/ Best provider for EU-bank-transfers und EU
customers
https://www.circle.com/de Buy Bitcoin, easy handling and transfer
https://www.coinbase.com/ The Big Player, very good for US-customers /
banktransfers
https://xapo.com/ High security-level, provides cloud-vault
https://www.myetherwallet.com/ Ether-wallet
https://www.dash.org/wallet/ Dash-wallet / smartphone-app
https://bitpay.com/ Very good platform for BTC-accepting retailers
Offline-Wallets
https://bitcoinpaperwallet.com/ Creation of offline-paper-wallets
https://www.ledgerwallet.com/ Offline-wallets for BTC & ETH (USB Stick)
http://bitcointrezor.com/ Most expensive variety of BTC-securing by hardware
Purchase and selling of Digital Currencies
https://www.bitpanda.com/ Big exchanger, located in Austria
http://www.bitcoinsuisse.ch Exchanger located in Zug/Switzerland – operating
several ATMs
http://www.sbb.ch Selling BTC at their ticketautomates since Nov. 2016
https://coinmate.io/de/home BTC Exchanger
https://cubits.com/ BTC Exchanger, easy to handle, buy small amounts
of BTC without verification
https://btcdirect.eu/de BTC- & ETH-exchanger
25

Trading Platforms for Digital Currencies (Exchanges)
https://bittrex.com/ Digital Currency Exchange, we recommend
https://www.kraken.com/ Digital Currency Exchange
https://poloniex.com/ Digital Currency Exchange
Important Websites informing about Cryptocurrencies
https://www.btc-echo.de/ Very good website with information, instructions,
courses, analyzes, etc. (German)
http://www.coindesk.com/ Information and analyzes
https://bitcoin.org/en/ Information about BTC
http://cryptomining-blog.com Blog about mining-hard- and software
http://whattomine.com Comparison of mining power
http://cryptocompare.com Information about digital currencies and mining
Books, Ebooks in German
Die Bitcoin Bibel / Dr. Philipp Giese Buy at Amazon, Weltbild, etc. (book & ebook)
Bitcoin / Daniel Kerscher Buy at Amazon, Weltbild, etc. (book & ebook)
Bitcoin Kurz & Gut / Jörg Platzer Buy at Amazon, Weltbild, etc. (book & ebook)
Bitcoin Geld ohne Staat / Aaron Koenig Buy at Amazon, Weltbild, etc. (book & ebook)
Das Bitcoin Handbuch / Felix Mago Buy at Amazon, Weltbild, etc. (book & ebook)
Literature on Bitcoin and Cryptos in English (www.amazon.com)
Mastering Bitcoin: Unlocking Digital Cryptocurrencies / Andreas M. Antonopoulos
Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent
Money / N. Popper
Bitcoin For Dummies / Prypto
The Age of Cryptocurrency: How Bitcoin and the Blockchain Are Challenging the Global
Economic Order / Paul Vigna and Michael J. Casey
The Internet of Money / Andreas M. Antonopoulos
26

Glossary of important terms
Begrif Erläuterung
altcoin(s) Collective term for all other cryptocurrencies except
Bitcoin. Stands for "alternative" coin(s).
Bitcoin Cryptographic currency, based on a decentralized data
exchange system. It is the first and "oldest" digital
cryptography-based digital currency. There are neither
bills nor coins. The currency consists of calculated,
encrypted data blocks. The name is an artificial word
composed of "bit" (smallest memory unit in the
computer) and "coin.
Blockchain Blockchain is the "cash book" for so-called
cryptocurrencies. This process is their technical basis. It
is an online booking system that records all executed
transactions in chronological order. As the blockchain is
administered decentralized, it cannot be manipulated.
The blockchain of Bitcoin is the oldest blockchain.
DAO = Decentralized Autonomous Organization, Internet-
based computer program to create a framework for
contracts of all kinds, e.g. business start-ups, bank
transactions, etc. A DAO is not susceptible to
manipulation, free from emotions and does not allow
any abuse of power. DAOs are the next step in
machine-to-machine business (M2M).
Ethereum Ethereum is meant to be a "world computer", a
network of countless computers worlwide. The result is
a reliable, transparent and secure computer network.
Ether Ether is the cryptocurrency of the Ethereum-
Blockchain. Since the market capitalization, a total
value of about 1 billion has accumulated. This means
that Ether is already ranked on second place among
the cryptos right behind Bitcoin.
halfing An action executed at intervals of 4 years (last July for
the second time) at Bitcoin, by which the payment per
mined block is divided in half. This is done to reduce
supply. In 2016 mining rate went down from 25 BTC to
12.5 BTC.
hash By encrypting transactions a hash is generated.
Approximately every 10 minutes one hash (block) is
27

generated at Bitcoin. This is a term from cryptography
and it is used in modern encryption technology. Each
hash is unique. If only one character in the block is
changed, the entire hash will change.
hash functions There are several different hash functions. Bitcoin and
a few cryptos use "SHA-256", Litecoin and other
cryptos are mined with the "Scrypt" algorithm.
Therefore, these two are the most often used hash
functions. However, there are more functions like
"Scrypt-N" and "x11".
hash rate / hash power Mining power is measured in hashes per second. A
system with a computer power of 1kH/s scales at a rate
of 1,000 hashs per second, 1MH/s means one million
hashes per second and a GH/s system works with one
billion hashes per second.
cryptocurrencie(s) Cryptocurrency is electricity, converted into computer
codes with a monetary value. In simple terms, cryptics
are blockchain-based digital money. Principles of
cryptography are used to implement a distributed,
decentralized and secure digital payment system.
Unlike today's central bank money, it is exclusively
created by private individuals (from Wikipedia).
mempool Abbreviation for "Memory Pool", the intermediate
stadium of unconfirmed transaction blocks during
mining until the actual confirmation and insertion into
the blockchain is done.
miner Individuals or groups, who live in a worldwide network
of independent computers, e.g. using the Bitcoin
software and thus create more bitcoins.
mining “Production” of cryptocurrencies. This system is used to
validate waiting transactions by including them into the
blockchain. Without mining, no community can be
created around a cryptocurrency.
node This is the link point of transmission paths in the
process of mining cryptocurrencies. Nodes store the
current blockchain of all transactions of a specific
cryptocurrency, an important service in the monetary
network.
Peer2Peer system Person A sends values to person B without needing a
third party (e.g., a bank) - beyond borders all over the
28

world and without charges.
Proof of Stake (PoS) A "proof of stake" (POS) system allows you to invest
according to the amount of currency units, you own.
Simply put, someone who holds 5% of a currency rated
for "proof of stake", can earn 5% of the blocks of that
currency.
Proof of Work (PoW) The cryptocurrency Bitcoin is based on a "proof of
work" (POW) system in which the mining of a block is
connected to the amount of work done by the miner.
Depending on the particular coin, the miner requires
computers or processors with very high working
performance.
wallet Electronic wallet (like an account), however: only you
have access to it (via PC, Tablet, Cell phone)
paper-wallet The account for the coins is not stored on a PC. The
access data is printed on paper that can be stored
safely in a safe.
Hardware-Wallet As in the Paper Wallet, the account is saved offline.
There are different hardware solutions, e.g. a USB stick.
Since both variants are offline, theft cannot be
committed by hackers, password theft, etc., and the
coins are kept safely.
All statements without guarantee
29

Digital Currencies / Crypto Currency Training Guide

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Digital Currencies / Crypto Currency Training Guide

Similar to Digital Currencies / Crypto Currency Training Guide (20)

Recently uploaded

Recently uploaded (20)

Digital Currencies / Crypto Currency Training Guide