Cryptocurrency: The Inevitable Currency System "Soon" to Take Over

  1. Cryptocurrency Fundamentals
    1. What is Cryptocurrency?
    2. The Importance of Cryptocurrency
  2. Proof of Work (PoW/Mining)
    1. PoW Fundamentals
    2. Currently Mineable Cryptocurrencies
  3. Proof of Stake (PoS)
    1. PoW Fundamentals
    2. Currently Stakeable Cryptocurrencies
  4. Main Cryptocurrencies on the Market
  5. Types of Cryptocurrency
    1. Coins
    2. Tokens
  6. Wallets & Security
  7. Helpful Web Resources
  8. My Plans Heading Forward
    1. What I Plan to Hold
    2. What I Plan to Scalp

Cryptocurrency Fundamentals

Cryptocurrency at its "popular" inception in 2009 with Bitcoin (by Satoshi Nakamoto) was designed to be a decentralized form of currency. What Satoshi sought out to do was have lower fees and quicker transaction times than that of typical banks or financial institutions. Essentially Bitcoin was a work around to quickly transferring funds that could be transformed into various legal tender and back again.

They utilize digital exchanges like Uniswap to transform them into other cryptocurrencies. Otherwise, what most people do is use a site like Kraken or Coinbase Pro to use their legal tender (USD etc.) to buy a certain amount of coins/tokens of their choice directly. The collective market cap for most coins and tokens together is over 3 trillion USD at the moment, hence why cryptocurrency is a well developing and volatile market.

In my opinion, and many others, cryptocurrencies are a truly important creation in the digital age. This is primarily due to its relation to privacy going away in the hindsight of things like Google or Facebook (FB). Due to its decentralization and non-regulated state major corporations or governments can do little to nothing to influence the exchange of currency and data.

Proof of Work (PoW/Mining)

PoW is a consensus protocol that allows all nodes connected to the network to agree on the state of all information on it. PoW is what determines the Network Difficulty (the complexity of each block on the chain). For instance, if a block is supposed to be mined once every 10 seconds and there are 100 workers online, the difficulty will be drastically lower than if say 1M workers were online. The act of mining is the process of creating a block of transactions to the blockchain. Some currently available coins to be mined are: ETH, ETC, RVN, ZEC, XMR, DOGE, GRIN, BEAM, VTC, AE, BTG, and BTC to name a few.

Proof of Stake (PoS/Staking)

In most of the cryptocurrency world PoS is seen as drastically better than PoW primarily for four reasons: (1) economical impact is non-existent as you don't need other computers mining to validate the blockchain's dynamics (2) no barrier to entry other than having enough tokens or capital to start staking (3) stronger resistant to centralization by 51% attacks (4) strong support for shard chains (common practice in computer science to reduce server loads). What staking essentially does is use validators (the stakers) to create blocks and confirm bulk market transactions from blocks that they don't create. Some coins available to stake are ALGO, ADA, BNB, AKT, XTZ, DASH, NEO, DOT, XLM, and ATOM to name a few.

Main Cryptocurrencies on the Market

The biggest cryptocurrencies on the market are BTC (and other Bitcoin related BTC coins like BCH), ETH, LTC, ADA, DOT, XLM, LINK, BNB, USDT, and XMR. Bitcoin as it sits is the king of cryptocurrencies even if other coins have many features BTC doesn't. ETH set out to spawn a decentralized global financial system like BTC. This aspect in general is important to people who may or may not have access financial products or banks and crypto-enthusiasts too. DOT is a unique PoS coin that provides interoperability between other blockchains. Chainlink is a decentralized oracle network that bridges the gap between smart contracts and data outside of it. USDT is one of the first of a group of stablecoins. USDT’s price is tied directly to the price of the US dollar. The system allows users to more easily make transfers from other cryptocurrencies back to US dollars in a more timely manner than actually converting to normal currency. XMR is a secure, private, and untraceable currency. Some politicians have even accused it of hiding criminal organization's financial affairs due to it.

Types of Cryptocurrency

There are two different types of cryptocurrency: coins and tokens. Coins are composed of Bitcoin, Altcoins, Memecoins, and Stablecoins. Altcoins, incase anyone needed an explanation, are any coin alternative to Bitcoin that also aren't a Stablecoin. Unlike coins, tokens are created and given out through an Initial Coin Offering (ICO) very much like a stock offering.

Wallets & Security

Cryptocurrencies require a place to put them. These places are called wallets and are typically long form strings of numbers and letters. Typically two or even three levels of security are present at all times to protect cryptocurrencies. You have (1) the correct address is hard to find (2) 2FA is universally used in apps and web interfaces that buy/sell cryptocurrency (3) email confirmation of trading and funding on top of 2FA (4) you'd need to hack the entire blockchain instantly so that it doesn't out a transaction error which is like hacking all of Google's files hundreds of times over or more conservatively. (4) is what has kept cryptocurrency at the forefront of cryptocurrency system genesis.

To my knowledge no one has hacked the blockchain yet directly, rather gone through an app or web interface to steal someone's data and cryptocurrency with it. 51% attacks are the main "nightmare scenario" cryptocurrency faces, but other than that it is one of the safest systems around. MIT published an article detailing some potential holes in cryptocurrency if you want to read it here.

Helpful Web Resources

The internet is full of people spouting this and that about cryptocurrency. Crypto-influencers (like BitBoy Crypto) have even emerged mimicing social media influencer's success. Do not listen to them. I tell people all the time when speaking critically about crypto-news that most online chatter is worthless and you shouldn't listen to it. That being said there are several places across the web I do trust to a good degree.

Focusing on YouTube (YT) Son of a Tech is a great channel for helping people learn how to mine and how various new projects in cryptocurrency can impact mining operations. Bits be Trippin is usually called the grandfather of mining on YT and typically has very detailed videos and models to back up his claims. With the coming EIP-1559 and ETH2, his input is going to be very helpful in the massive mining shift.

For crypto-news people like The Bitcoin Express and Benson Crypto are very good at showing how the bigger picture (crypto-projects) relate to price changes and the future of cryptocurrency as a whole. With the potential ADA price explosion I'd watch them. Alex Becker is another good channel, but he is very "asshole-ish" in terms of presentation if that makes sense. If you can deal with that he typically gives pretty accurate price predictions and speaks about crypto-projects.

For places where you can buy/sell/trade cryptocurrencies I'd recommend: Coinbase Pro (do not use regular Coinbase for literally anything other than to get staking rewards since you can't get it on the pro version), Kraken, Binance, or Crypto.com (app only ironically).

For watching cryptocurrency stocks I would specifically recommend learning how to use the charts on tradingview.com. They have practically every cryptocurrency on their system, minus some smaller niche ones. To do so the YT channels Data Trader and The Secret Mindset are perfect. I have compiled a good chunk of relevant trading videos in this playlist if you don't want to search around.

If you need to get a mining rig set up these are the channels I'd recommend: Crypto Miner Tips, Red Fox Crypto, and Mining Chamber.

My Plans Heading Forward

With regards to what I'm going to hold onto is ADA primarily. The amount of projects they have lined up is huge. With that said 74% of the total supply is currently staked so as demand rises and supply decreases the price will rise. I currently have over 4k USD invested and plan to invest more over time. As well, UNI and DOT are associated with many of their projects so they will likely rise with it. I have also found a way to get a 20% APY account via Anchor Protocol (Dad please use this) so I'll likely put 10k USD in there to reap the rewards.

This leaves me with roughly 5k USD to use for anything and my bi-monthly salary totaling between 1.6-2k USD as well. I plan to scalp the crypto-market using the strategies I linked above with Coinbase Pro and occasionally stake some ALGO (using Coinbase) for that dope 6% APY that gives daily rewards. If I find any crazy staking options I'll write another article to let ya'll know.

This article was primarily written to help out my immediate social circle understand the small and bigger picture of cryptocurrency. Hope it helps!

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.