YourCryptoLibrary firmly believes it is of the utmost importance to learn about the basics of cryptocurrency before investing your hard earned money. By providing informative content of the highest quality we will try to help you start with your cryptocurrency journey!
On this page we help newbies who have absolutely no idea of what cryptocurrency is or can be used for. We offer a short introduction into the cryptoworld. If you already have some basic knowledge about the space, feel free to check out our advanced section, where we explain the topics -listed below, in more detail and with more nuance.
What is cryptocurrency?
One thing is clear, you decided to open this guide. This means you are interested in cryptocurrency. But, what exactly is ‘cryptocurrency’?
''A cryptocurrency is a digital currency/currency that uses digital encryption techniques to produce new currency units and verify transactions, independent of a central bank.''
Cryptocurrencies emerged as a byproduct of one of the most important discoveries of the internet age, namely: Bitcoin.
The Inventor of Bitcoin, Satoshi Nakamoto (a pseudonym); who to this day remains anonymous, intended to create a new electronic payment system that uses a peer-to-peer network to address the problem of “double spending” (being able to spend digital currency multiple times).
To simplify
Try to imagine your bank account. Maybe it’s big, maybe it isn’t. But what exactly do you visualize? Right, nothing more than a number, a number in a database that only can be changed under certain circumstances, right?
Cryptocurrencies are exactly the same. Like any form of money, it must be verified in some kind of database, where you arrive at a certain balance and a number of transactions. With traditional money, this database resides with an authority such as the ING or Rabobank (in the Netherlands).
In the case of cryptocurrencies this database is shared and verified decentrally across the world in an encrypted manner using the blockchain. What blockchain is and what benefits it brings can be read here.
In summary, cryptocurrency is nothing more than a decentralized and encrypted version of traditional money; therefore, there is no central computer server or authority behind it. Besides Bitcoin and Ethereum, there are thousands of other types of cryptocurrencies, each with their own use case. But first we’ll take a look at the two major ones; Bitcoin and Ethereum.
What is Bitcoin?
Bitcoin is an invention of one or more anonymous individuals, who operated under the pseudonym Satoshi Nakamoto. The idea was to develop a medium of exchange that would allow transactions to be made over the Internet. All without relying on central agencies such as banks. Bitcoin is characterized by direct, secure, verifiable and immutable transactions between two individuals.
Unlike traditional money such as the dollar or the euro, the number of Bitcoins is not determined by banks. The amount is fixed in the way Bitcoin is coded. Only a limited number are released each day, and distributed to anyone who uses computer power to contribute to the network.
Would you like to learn more about the details, advantages and disadvantages of Bitcoin?
What is Ethereum?
Ethereum was founded by a Russian-born Canadian programmer, named Vitalik Buterin. His fascination with blockchain led him to start developing his own project in 2014, what we know today as Ethereum.
Buterin developed a decentralized platform that, like Bitcoin, uses blockchain technology. Despite this, Ethereum is vastly different from Bitcoin. Indeed, Bitcoin’s functionality is focused on transferring value, while Ethereum can serve as the basis for decentralized applications and smart contracts.
For a long time Ethereum has been the second largest cryptocurrency in today’s crypto market after Bitcoin. The total value of Ethereum (ETH) represents about 10% of the total market. ETH, like BTC, is a digital currency that you can send to anyone in the world in no time.
Should you be interested in learning more about Ethereum – ETH?
How to buy cryptocurrency?
There are currently over 400 different exchanges where you can buy and sell cryptocurrency. When choosing one that fits your needs, you need to consider things like the fees, their cryptocurrency offering and products as well as their user experience.
It can be difficult to know where to start if you are completely new to the game. Therefore we are happy to help you by presenting our research regarding cryptocurrency exchanges and brokers.
What is DeFi?
Decentralized Finance, abbreviated DeFi, is a set of new financial instruments based on the decentralized blockchain features. The main goal of DeFi is to create a new financial system that is self-contained and independent of centralized institutions.
DeFi platforms enable savings, loans and insurance to be carried out anywhere and anytime. All that is required is an internet connection that provides access to the decentralized applications.
These decentralized applications make use of so-called smart contracts. Through these it is possible to take care of all the above mentioned without using an intermediary. DeFi gives people without a bank access to financial services through the blockchain technology. To learn more about DeFi visit our DeFi page or watch the video below.
How do I keep my cryptocurrency safe?
Buying cryptocurrency is one thing, but storing it safely is another. Therefore it is extremely important to learn about storing it in the safest way possible.
All cryptocurrencies can be stored in a online, digital or hardware wallet. But it is also possible to store your crypto on an exchange, however we advise against this. We recommend owning the keys to your wallet at all times. Do not trust your whole stack of your cryptocurrencies to any exchange!
"Not your keys, not your crypto"
When you create a wallet, you receive a public address and a private address. The public address can be seen as your public bank account number, which you can send to other people in order to receive cryptocurrency into your account. This address is publicly visible for everyone who knows how to use exploring tools.
Your private address or ‘keys’ can be seen as your unique pin-code. These are the ones you could never share with anyone and have to keep safe at all times.
Trading and investing in cryptocurrencies (also called digital or virtual currencies, altcoins) involves a substantial risk of loss and is not suitable for every investor. You are solely responsible for the risk and financial resources you use to trade crypto. The content on this website is primarily for informational purposes and does not constitute financial advice.