Blockchain – Is a type of database storing records in a distributed manner. Think of it like an accounting spreadsheet that shows all transactions that include data like sender, receiver, how much funds sent, and when. You will know how much funds a person owns at any given time. It is distributed as the same database synced with many nodes(computers) all over the world to allow higher availability and redundancy.
Most blockchains are decentralized so there is no owner of the database and entries are written based on nodes that mine/mint a block at that point of time. A block is a considered a collection of transactions at that time and rewards are given to the owner of the block. Different chains use different mechanisms for this proof or ability to create this block. All records are immutable and finite meaning once it is written there is no way modify or delete these transactions in the database.
Cryptocurrency – A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation. https://www.investopedia.com/terms/c/cryptocurrency.asp
Wallet—A way to store your coins. The most important security aspect is your private keys which gives you the ability to send coins out of your wallet. These keys can be stored in a password protected format on your phone or computer but is not always recommended as these devices are always connected to the internet and considered hot. The more secure way of storing these keys is in a cold wallet or hardware wallet. The Ledger Nano X is a very common hardware wallet that people use. https://www.ledger.com/
It is recommended for anyone investing large amounts should buy a hardware wallet.
Bitcoin – BTC – Blockchain 1.0 – Is essentially the first virtual currency to take off and lots of other technologies have spawned from this. Bitcoin encompasses a Proof of Work(PoW) method on deciding who is the owner of the block at that time. In this system miners of very strong computers using lots of power try and guess the hash of the next block in the chain. Essentially the more computing power you have, will allow for the more guesses or chances to get this value. The winner gets to write the record of transactions in that block and receives rewards. These rewards are more BTC and that’s how more BTC gets injected into the network. There is a max of 21 million BTC total supply that can ever be mined. So no more BTC will ever be mined once we get to that number. Currently 18.7 million BTC has already been mined and the difficulty gets harder and harder to mine, while the rewards get smaller and smaller. Here is a good video on what is BTC and blockchain is https://youtu.be/EDyQEUZ0PlY
Ethereum – ETH – Blockchain 2.0 – Like BTC it currently uses a PoW mechanism, but there is no total supply of this coin. ETH is best known for its creation and use of smart contracts to this system. It basically allows the transfer of funds automatically based on predefined conditions that the parties have agreed too. Even though ETH is the most popular smart contract coin, it is the most saturated which makes it expensive with fees ranging from $50-$200. Here is a good article on Smart Contract use cases. https://101blockchains.com/smart-contract-use-cases/
Cardano- ADA- Blockchain 3.0- Incorporates Proof of Stake(PoS) method of run the blockchain. Cardano is one of the top coins using this system, but other coins are adopting this, and ETH is moving to this late next year. The benefit of PoS, it uses staking to secure the blockchain and decide on how blocks are minted, which requires exponential less computing power. This also allows the combination of users of the system with wallets to benefit because when a coin gets minted it goes to stakeholders, rather than just a computing system that mints blocks. The benefit to users is they will get more coin, for Cardano is about 4-6%. This is like interest in a bank or dividend from stocks. Smart contract functionality will soon be available on Cardano and will make this coin one of the most powerful cryptocurrencies in the world. Voting is also part of the upcoming releases for this coin. The total supply of Cardano ADA will be 45 billion and just over 32 billion has been minted so far. More can be found here http://www.cardano.org
Exchanges – This is where you can trade USD for crypto or crypto for crypto. One of the biggest and simplest exchange to use is Coinbase. The process for creating an account is pretty invasive as they will ask for your ID and picture of yourself because financial institutions are required to know your customer(KYC). These regulations the US puts in place for anti-money laundering(AML). You also don’t want to leave coin on exchanges as they own your keys are essentially your coin until you send to your own wallet.
First step: Signup here on Coinbase to get the account creation process started https://www.coinbase.com/join/5260607965b496b5470000aa
This link gives you $10 in free crypto after successfully signing up.
It normally takes some time for your account to get verified and a wire from your bank to process. There are some videos within Coinbase that you can watch to get free coins.
Second step: Buy ADA and send to a wallet to stake. Staking Cardano gives you around 4-6% annualized return. Here is my video on how to do it. https://youtu.be/-V9SZxvRaXc
BBHMM- Blockchain Better Have My Money – Is the stake pool I run on the Cardano network. When we mint blocks, it pays out to our delegates. bbhmm.net
Website used to research coins and prices – www.coingecko.com
In closing, this is a high-level simple view of cryptocurrency. Realistically these topics are way more advanced than just in this document. These technologies were created because of the need to create a better financial system in the world. Something that is fair, faster, cheaper, permissionless, distributed, and decentralized. These coins and technologies are more of an investment today, where business and personal uses are starting to get adopted globally. These coins will have many different use cases and technologies that will compete and replace a lot of outdated technologies that don’t work very well today. Blockchain and crypto is the way of the future.