- SUMMITS
- NEWS & MEDIA
Making sense of cryptocurrency, for beginners, in particular, can be a challenge. Not only are there so many cryptocurrencies out there, but understanding them also requires an understanding of the ideas, concepts, and infrastructure that runs them.
With that in mind, we have put together this crypto for beginners guide in which we’ll cover all the cryptocurrency basics, such as:
We’ll begin by explaining what cryptocurrency is using terms that are to understand, and finish with the top crypto to invest in 2024. So, let’s get on with our crypto 101 guide, shall we?
Cryptocurrency is a digital form of currency that uses cryptography for security, making it difficult to counterfeit. Built on blockchain technology, it operates independently of a central authority, enabling direct peer-to-peer transactions across the internet.
The first cryptocurrency was Bitcoin, which was introduced in 2009, along with blockchain. Since then, thousands of cryptocurrencies have been introduced, each with unique features and applications, and some have even improved on Bitcoin and its functionalities.
Thanks to its decentralized nature, cryptocurrencies can offer transparency and efficiency, reducing the need for traditional financial intermediaries. Despite being more volatile than physical currency, cryptocurrency has gained popularity for its potential to revolutionize financial transactions.
For more information on how cryptocurrencies work, make sure to check our video on the topic:
Cryptocurrency origins are traced to an individual or a group of people who go by the name of Satoshi Nakamoto, who created Bitcoin, the first cryptocurrency, in 2009. The true identity of Satoshi Nakamoto remains a mystery to this day.
The idea behind Bitcoin and cryptocurrencies was to create decentralized peer-to-peer electronic cash system that was secure, anonymous, and free from central authority control, like banks or governments.
Bitcoin introduced the first decentralized ledger technology, the blockchain, setting the foundation for thousands of subsequent cryptocurrencies. Over the years, cryptocurrencies have evolved from a novelty to a new asset class, sparking interest from investors, developers, and even governments.
The next in our cryptocurrency for beginners guide is to learn how cryptos work.
| 💡 Did You Know: | On May 22, 2010, a programmer named Laszlo Hanyecz made the first real-world transaction by buying two pizzas for 10,000 BTC. At the time, the transaction was worth about $41. This day is now celebrated as Bitcoin Pizza Day. |
Cryptocurrency operates on a technology called blockchain, a decentralized and distributed ledger that records all transactions across a network of computers. This technology ensures transparency, security, and date integrity without the need for a central governing institution.
This is what makes cryptocurrencies fundamentally different from traditional fiat currencies. How does it all work? Well, when a user initiates a cryptocurrency transaction, they send a digital currency unit to another user’s digital wallet.
This transaction is then verified by network participants, known as miners (in Proof of Work systems) or validators (in Proof of Stake systems), who use their computing power to solve complex cryptographic puzzles and validate the transaction.
After successful validation, the transaction is added to a block of other transactions, creating a new link in the blockchain. This process ensures that each transaction is immutable and cannot be altered or deleted, providing a secure and transparent transaction history.
Cryptocurrencies have evolved significantly since the inception of Bitcoin, branching out into different types that serve different purposes and utilize distinct technologies. Although we can categorize cryptocurrencies based on a number of factors, there are three main types of crypto:
Keeping in line with our cryptocurrency for beginners mantra, we’ll dissect each using simple terms.
Bitcoin is significant not just because it’s the first and most popular cryptocurrency, but also because it introduced the concept of a decentralized digital currency and the underlying blockchain technology. Bitcoin was designed as an alternative to traditional currencies.
Its creation sparked the development of the broader cryptocurrency movement and the introduction of coins and tokens which are used for many other purposes, as opposed ot being a means of payment.
Bitcoin remains the most recognized and valued cryptocurrency, and its influence on the crypto market is massive. For example, the much anticipated Bitcoin halving of 2024, which is set to occur on April 19, will impact not only the price of Bitcoin but also all other cryptocurrencies.
More on that in this video:
Altcoins, or alternative coins, are simply all other coins that aren’t Bitcoin. To explain this type of cryptocurrency for beginners, it’s probably best to start by describing some of the best-known altcoins and their features and uses:
Each altcoin has distinct features and uses. Ethereum’s platform for dApps and smart contracts has made it an essential cryptocurrency in the development of decentralized finance (DeFi) and non-fungible tokens (NFTs). Litecoin offers faster transaction confirmation times than Bitcoin, and Ripple’s XRP enables efficient cross-border transactions.
Now that we have altcoins explained, let’s move onto tokens.
Before we get into tokens, it’s important to make a distinction between coins and tokens as part of our cryptocurrency for beginners approach. Even though these two terms are often used interchangeably, they represent two fundamentally different concepts.
Key differences:
Because we now understand the difference between coins and tokens, we can learn more about the different types of tokens:
Because tokens don’t have their own blockchains but rather function on existing ones, they are created through a process known as an Initial Coin Offering (ICO) or a token generation event, where developers create a smart contract on a platform like Ethereum.
As is the case with revolutionary technologies, cryptocurrencies have their share of advantages and disadvantages. While it would take a long time to list all the pros and cons of crypto, we will focus on the most important ones for the purpose of this cryptocurrency for beginners guide.
| ⚠️ Note: | Around 20% of all Bitcoins are lost or inaccessible due to forgotten passwords, hard drive failures, or other issues. With Bitcoin’s capped supply, these lost coins reduce the total circulation. |
Cryptocurrencies beg a lot of question, which we have aimed to answer it this section of our cryptocurrency for beginners guide.
Investing in cryptocurrency involves a few key steps:
Making money with cryptocurrency can be achieved through various approches, each with its own level of risk and potential reward:
If mining is your method of voice, take a look at this explainer video on Bitcoin halving and its impact on mining:
This goes way beyond cryptocurrency for beginners and is reserved for advanced users and developers. This are some of the steps you should take:
You’ll also need to learn how to create a cryptocurrency by understanding the basics of smart contract programming, particularly if you choose a platform like Ethereum. This typically requiring knowledge of Solidity, the programming language used for Ethereum smart contracts.
After developing your coin or token, focus on security audits to ensure your code is safe from vulnerabilities. Finally, consider the legal and regulatory aspects of launching a cryptocurrency, and prepare a launch strategy that includes marketing and community building to gain user adoption.
Here is a list of the best crypto to buy right now, based on price, volatility, potential for growth and investor interest:
The world of cryptocurrency is extremely diverse and fascinating, and as such, it can be a bit overwhelming. Our cryptocurrency for beginners guide was designed to make your first steps into the world of crypto a lot easier.
Whether you are a novice looking to learn about cryptocurrencies, an expert, someone into top crypto to buy now, or even someone who is planning to create their own coin or token, you will find plenty of actionable and useful information.
Before investing in crypto, make sure to do your research and cover all the aspects of the cryptocurrency you are looking to invest in. Also, consider the impact of events such as Bitcoin halving which is expected to take place on April 19, 2024. For more info on that, check out this video on the subject:
And always keep in mind to do your own research on the cryptocurrency of your choice before making an investment. Good luck!