Welcome to block chain for beginners. Here in this section we will be learning about blockchain and cryptocurrency at an entry level.
So, starting from the top.
What is cryptocurrency?
Cryptocurrency is a an online digital currency that is peer to peer. The moment you generate a new wallet address, you become your own bank. The reason for this is because Bitcoin and other cryptocurrencies are borderless, frictionless and decentralized. There is no bank or central authority that can stop you or regulate you in your dealings with cryptocurrency.
Transactions are processed by “miners” who, using mining machines, hash out transactions. Anyone who chooses to be a miner can do so if they wish. This is what makes the crypto market inclusive. Anyone can participate. These participants who mine Bitcoin by processing transactions earn bitcoin for doing so.
Before you buy Bitcoin (or any cryptocurrency) you must have a wallet generated. To do this, download a wallet for your phone or computer. There are also other methods such as paper wallets and hardware wallets, these we will cover in another post. There are many wallets you can choose from, theres a good list of them here: https://bitcoin.org/en/choose-your-wallet
For mobile wallets, we recommend BRD Wallet: https://brd.com/
Now that you have a wallet installed, you can follow the steps provided by the app, remember to back up the seed key! And store it in a save place, seed keys/private keys are private, only you should have access to them. Never store them online or in a place where it can be accessed by anyone else. If someone else gets your private key they can access your funds on the block chain.
After everything is set up you will have a public address/public key. This is the address you may send to others to have BTC sent to you. (BRD wallet allows you to generate addresses for various other coins as well).
You can acquire Bitcoin in different ways. Like regular money, you can earn them from working for them, mining them or trading other ALT coins, buying and selling these ALTs to earn more Bitcoin. You can also buy Bitcoin, Ethereum and other top tier cryptocurrencies with fiat money (US Dollar or dollar from your country). This can be done on exchanges like Binance (binance.com), kucoin (kucoin.com) via credit card.
Alternatively you can buy coins through cryptocurrency brokers.
If you are buying from a broker they will ask you for your public key, this will be a string of letters and numbers, or a QR code. They will scan the QR code and the coins will be sent to you. If you buy on an exchange, the coins will be transferred into your wallet on the exchange. You should only store coins on the exchange when you are trading. So from here you should move the coins to your wallet if you do not plan on trading them.
On the exchange go to the withdraw option and paste your public address into the coin of choice and withdraw the coins. After this they will appear in your wallet.
Where are the coins?
At this point, you might be asking, where are the coins actually stored? The coins are not stored in your phone, the way that a block chain works is that it’s a distributed ledger. The network is comprised of devices that are connected to the network and accessing the block chain. Seeing as the network is a distributed ledger, everyone has a copy of it. This ledger is just a record of who has what.
The “coins” are more like a record of “bob has X amount of bitcoin” to put it simply, and your private key is what grants you access to your records on the distributed ledger. This is the same way in essence that your bank works, but with a bank, you do not hold your own private key, the bank does.
Now you can store and use your crypto as you wish. Transactions can be sent to anyone, anywhere, anytime. You are now your own bank!
One common misconception is that people think you have to buy 1 coin. However, Bitcoin can be divided up to 8 Decimals. You can buy 0.0001000 of a Bitcoin (at the time of writing this is worth around $1.17 USD). At first it may be hard to wrap your head around this conceptually but after a while you will get used to it. Other crypto currencies may be divisible by 18 decimals and there are other cryptos that are trying to combat this by playing with token metrics to engineer coins that don’t have decimal places like this in order to better resemble currency as most know it.
Categorised in: Education
This post was written by BlockAdvisor