The beginner's introduction guide to crypto

Crypto adoption is growing at an exponential rate, this means that there will be an increasing number of new users that fall victim or miss important aspects that you need to keep in mind when been active within the crypto sphere. Here I'll give a brief overview and guide how crypto works, how you work crypto and how to avoid the biggest dangers.

at bottom.

• Intro/chapters
• Crypto basics
  • What is crypto?
  • What can you use crypto for?
  • What is a consensus protocol?
    • Proof-of-work
    • Proof-of-stake
    • Tendermint
• Crypto usage
  • Wallets and exchanges
    • Exchanges
  • What can you use crypto for? (cont.)
• How do I make money?
  • Marketcap
  • Price per coin
  • Growth potential
• What should I invest in?
• How do I stay safe?
  • Do it at home
  • Upgrade security
  • Different emails/passwords
  • Don't share and check!
• Tips and tricks
  • Liquidity
  • Stay updated
  • Use your crypto

Crypto basics

What is Crypto?

Digital money, not digital digital money. Fiat is what you're most likely using daily, dollars, euro, pounds, yen, etc. You can store these digitally at different places, such as at a bank, but you never have full control of it. Crypto works the same where the money is stored digitally and you can access it, however it is not managed by your bank or government, it is managed by everyone. If everyone went to withdraw their money from their banks, the world economy would collapse as there isn't enough money for everyone. If you do the same with Bitcoin, everyone gets how much Bitcoin they have, because everyone controls their crypto.

The most common method of crypto has transaction history stored in blocks that get created either after a set amount of time transactions take place. Everyone can access and make use of this blockchain/ledger, and it is kept secured by everyone agreeing on a consensus and running the blockchain. This creates a decentralized network that works together to run and manage people's money, instead of it all resting on a bank.

What can you use Crypto for?

What probably attracted you to crypto was the allure of money. An easy example is Bitcoin, if you have one of these bad boys today you are worth roughly $ (give or take a couple grand), 5 years ago that was few hundreds at most. It works as a store of value, buy one and watch the price change. Or use it to pay for things or services. This internet money is more safe with you than with your bank, and like most things on the internet, it stays there forever.

Although this allows for people with trust issues towards their banks, it might not seem all that revolutionary at first glance. After the first crypto was created, Bitcoin, there have been a ever growing number of new coins poping up, all doing something different. They offer more services other than doing simple payments. These range from passive income, apps running on blockchain & storage services. Essentially cryptos have been built to allow hosting of programs and code running on them, this essentially allows for apps, programs and services to be provided on top of a decentralized blockchain. A internet being run and created by everyone, instead of few central administrative bodies.

What is a consensus protocol?

Proof-of-Stake, Proof-of-Work, Byzantine fault tolerant?

Most people find doubt in how these blockchains are managed, who do they call or ask if they get your crypto stolen? There would be a big problem if everyone had access to a blockchain and was allowed to use it freely, it would invite chaos. A simple solution that all blockchains use one way or another is a consensus protocol. This sets the ground rules and what actually takes place on-chain. What you can do and what you can't, unless everyone says yes.

Proof-of-Work

This is the most famous consensus, used by (currently). Nodes can be run by anyone and they work on computing transactions and creating blocks, nodes are anything that can run the blockchain, usually computers or miners built specifically for it. They do this using a hashing algorithm which is meant to make block creation a tough and expensive task to prevent any attacks on the blockchain. 

Proof-of-Stake

Staking is the act of locking up coins to create new blocks, same as with Proof-of-Work. Nodes create new blocks and they hold more power based on the number of coins they have staked as opposed to which miner can hash the newest block first. This consensus protocol is less intensive than the Proof-of-Work, that also means it's , the coins you stake to hold more power over block creation are meant to mitigate this.

Tendermint

This one of the most common Proof-of-Stake methods and worth mentioning. With Tendermint, not everyone can run a node, instead there are delegated nodes that people can stake their tokens to. These nodes work as representatives and are responsible for block creation, their power, same as with regular Proof-of-Stake, is based off how many coins are staked with them.

There are almost as many consensus protocols for the amount of cryptos there are. Make sure you are aware of what type is used by your crypto if you feel like decentralization and security is important. 

Crypto usage

Wallets and exchanges

There are two ways to store your crypto, either in your personal wallet or at a managed exchange. In order to access your crypto you need private keys that prove that you own the coins. In your wallet these are stored safely behind a encrypted seed phrase password, exchanges manage these for you and provide easier use.

Exchange

These are the easiest way to get crypto, you almost always need to do a where you verify your identity. Then to buy crypto you simply pay either with bank, credit card or other crypto. Here you can trade and move your crypto freely within the exchange and also be able to move it out of the exchange. However you don't have direct access to any coins you buy while they're at the exchange, if the exchange were to get hacked or terminate your account you would lose access your crypto.

A wallet that has the crypto's private keys stored either in a online hot wallet or an offline cold wallet. This is a step above exchanges as it provides greater security as any attacker needs your seed phrase, which is really hard to acquire as it has more than (try inputing that in a calculator) possible combinations, which is very hard to guess or brute force so you need the phrase, store it offline preferably on paper in a safe or similar and your wallet is safe from attacks. The negative is that you manage the security and keys which means if you're not careful it's easier to mess up and lose access.

Also write down the date or which version of the wallet you have as the seed phrase changes depending on that at times.

What can you use crypto for? (cont.)

There are very specific use cases for each crypto, the function as programs, apps or digital economies so the use case varies. Most basic features that you can do yourself is staking and earning passive income on PoS blockchains. But most cryptos fill very specific use cases. Chainlink allows you to get accurate data for your Dapp, Uniswap lets you swap crypto anonymously, AAVE, Celsius and Maker allows you to earn passive income by borrowing your crypto. THETA allows you to stream more effortlessly by using their network for bandwidth sharing.

There is a very wide use case for every single crypto and it's too much to get into here. Do some digging and you'll find crypto you might not want to invest in but actually use. One such case for me is BAT and PRE, a great browser and a great search engine. But I just use them, I don't have any money invested in them other than what I earned from using them.

How do I make money?

Ah yes, the question that caused most people to get into crypto. Don't get me wrong this is a perfectly valid reason to start, but don't lose sight of the amazing tech behind blockchains, consensus protocols, DAGs etc. The price of a crypto and the gains you can make depends on the same factors as when stock traders make money.

Marketcap

This tends to be tricky to some people for some reason. It is very easily calculated, you simply multiply the circulating/available supply with the price per coin at the time and you get a total marketcap value of all the coins combined. Available coins can be either by the tokenomics of the blockchain, such as Bitcoin where more coins are created when miners create and store information in blocks, or if coins are "burned". Burned is the action of removing coins from circulation, usually by sending it to a invalid wallet address so they can't be recovered. A chain allowing for the amount of tokens to be changed easily usually isn't a sound investment.

Price per coin

This also depends partly on marketcap, or more accurately the supply vs demand of a coin. If there are 100$ put into a crypto with 100 coins, the price per coin would simply be 1$. If another party puts in 200$, the total supply invest is now , making the coins be worth 3$ each so that it can be spread evenly amongst investors. This can be hard to keep track of accurately and different exchanges could have different price per coin. (there is a solution to this called , such as Chainlink, that keep track of the price for developers or investors)

Growth potential

SHIB reaching 1$ per coin is harder than it was for Bitcoin to reach 1$. Bitcoin's max supply is 21 million Bitcoin which means that there only ever needs to be a total of 21 million dollars invested to give it that price. SHIB, on the other hand, has 549 trillion circulating coins, this means that for SHIB to reach 1$ per token it would need to have more value invested into it than the entire world economy combined several times over, not very reasonable. One should keep an eye on marketcap as smaller marketcap coins swing wider than larger marketcaps, making them less stable and more prone to profit/loss.

So to summarize, for you to make money:

• Invest money into a crypto
• More people invest, thus raising the price per coin
• Your coins are now worth more per coin than when you bought them
• Sell or trade them and increase your total value
• Price per coin doesn't matter too much, marketcap does. 10% profit is 10% profit no matter where you hold your coins.

What should I invest in?

shouldn't invest in anything crypto related. You invest into any crypto and which ones are entirely up to you. The top 10 coins are completely different than what it was just a year ago, meaning that your investment can drop significantly for no other reason other than the market swinging. You shroud be aware of any risks and potential of a project you invest in so research the crypto at least before investing. Informing yourself is your responsibility.

I have an article that gives general pointers on the top 100 for you to get a better grasp.

Some tips:

• Stay safe until you get experience. Don't stray to far away from the top 10, BTC and ETH are perfect places to dip your toes in.
• Avoid lower marketcap coins unless you are ready to lose everything you put in, by this I mean any coins lower than top 200, maybe even top 100.
• DON'T invest in new coins you don't trust. You can catch a top 100 coins when it's new and make ALOT of money. This is very rare however point 2 still stands for this one as well.
• Hold coins related to projects you like. Like streaming? Theta might be up your alley. Want to value for your buck by borrowing crypto? Check out MAKER or AAVE.
• Don't invest money you will see yourself needing/wanting in the next 3 months.
• Try to always have an exit strategy, a plan for if a coin spikes in price and how you get your money out.
• Don't get too attached, HODLing is heavily favored by be prepared to jump ship if a coin drops significantly in value.
• You'll never do anything correct. You should always have not sold, or you always should've, be ready to be wrong.

How do I stay safe?

2FA (app)

Get yourself Google authenticator on your phone or something similar. Activate this under users > settings > security where ever you make an account that will have value in it. This is a code that is updated every 30 sec you need to log in or perform actions, makes your account 10x harder to hack and steal money from. Don't settle for an SMS authentication as that is unsafe in comparison.

Don't check your crypto on a computer outside your home

Work computers, laptops or phones can very easily result in your account being compromised. It's easier to get access to a company's IT system and then target your indirectly account and targeting you directly (usually). This can also easily lead to you forgetting to log out or saving passwords (which you shouldn't do). Just avoid doing this if possible, the less exposed your accounts are the better.

Move your crypto if the portfolio value starts climbing

If you were to lose all your crypto you hold on an exchange, how would it affect you? If it would ruin your afternoon, it's probably time to upgrade to a wallet. Worried about keeping your seed phrase on your phone? In fact, you shouldn't do that at all, keep it pure analog, paper and pen. If you're still worried about your portfolio you should move that paper somewhere safe or split it up into smaller parts. You usually only need it when importing your wallet to a new device.

Use different passwords (optionally: emails also)

If you used your passwords for club penguin and then it gets hacked, the hackers can easily use the password to get into your accounts. 2FA will you from this, but it never hurts to be too safe. As an example I use : 1 main for people to contact me, alt email for signing up to companies and services and a third one STRICTLY for crypto. Also use the "+" sign just before your @ to make notes to keep track if anyone leaked or sold your info. Such as [email protected]. Also an offline password manager could be worth looking into.

Never share! Double check adresses

Don't share anything about you or your crypto to someone you don't trust double check wallet addresses when sending crypto to be sure you don't have any malware targeting your clipboard or similar. I usually check the of any address before transaction. If you send your crypto to the wrong adress, it is most likely lost forever.

Tips and tricks:

I'll finish of this guide on a positive note, as crypto can be scary. It's also a great passive income and giving you more power over things you own.

Stake your crypto

This means using your crypto to grant greater security ot the network, this does come with some risk. You should be fine starting out by staking on exchanges. Once you move over to a wallet you should know which cryptos who's staking could result in of crypto for faulty validators. Staking just gives you an extra income on crypto you are holding anyway.

Swap, liquidity pools and liquidity mining

Some of these functions you can find at major exchanges. Similar to staking; you borrow your crypto to be used by others or a fill purpose and you get some rewards in return. Most of these are more complicated than staking so be careful starting out with these until you have some experience. 

Keep some value in different coins, that helps mitigate market swings and could allow you to make more gains. Just don't over-diversify. Invest in alt coins and when they climb in value, sell off some and put them into Bitcoin, Ethereum or stablecoins. Those are the solid long-term safety plans currently in crypto.

Stay updated

It doesn't surprise me at all that Polkadot has been performing very well recently. I knew this because I was aware of their upcoming parachain auctions. Being aware of events or happenings that directly or indirectly affect crypto in your bag could give you more power. Follow some good sources of info, there are several really good creators right here on Publish0x! (myself excluded). I don't leave my house in the morning before checking the weather. I also do the same for crypto.

Actually use your crypto

This can be for anything, and everything crypto related. I hold some , I can use that to pay for services or refill my data on a payphone. I am using BRAVE browser, the I get every month helps me grow a nice bag and avoid ads. I have a large bag of Ethereum, why not borrow it and earn some passive APY or put it into the ETH2.0 stake? It might seem like very little, but it adds up over time. Maybe not the best examples just for you, but they still apply to somewhat. You should keep an eye out for use cases that could be fitting for you.

Did I miss anything? Should I add or remove something? Feedback is welcome below!

If you didn't read this, you probably shouldn't get into crypto. You'll most likely lose more than you should, if not everything. If just few minutes of your time isn't worth it to keep yourself informed, crypto isn't for you. Bookmark this page or comeback later, I tried to make this as simple as possible while giving you insight into how crypto works. If stuff is still confusing drop a comment below and I'll do my best to help further.