Do you remember when crypto started really making sense to you? For me it was mind blowing, exciting, and a little hard to wrap my head around. Which made me just want to know more. I think it was when I truly realized what blockchain was. That’s what pulled me in, the possibilities. It hit me that it was so much more than just a way to accept payments. Which was all I had been using it for.
I remember when I first tried telling my friends and family about this enormous ecosystem, it flew right over their heads. Some didn’t listen to even a word. And that's part of why I decided to start this blog. It’s a way for me to talk about crypto and blockchain all I want without anyone objecting or being negative about it. Also I hope that something I say might be helpful.
I’m a firm believer that education is the key to the mass adoption of cryptocurrency but the start of that crypto learning curve can be steep, and a bit lonely. Sure there’s a lot of noise out there, but is it really helping? This is a place to hide from all the noise, spam, maxi’s and fiat sheep out there. Feel free to use the comments to ask questions or just chat. Please just make sure not to drop any of the previously mentioned content.
Concepts like blockchain mining and staking are hard to understand and even harder to explain in simple terms as I'm sure you’d agree. Is this a problem when you're trying to help your friends, family, and significant other? Well, I'm going to tell you how to explain complex crypto concepts in a way they will understand and even how to answer the questions and address the concerns you're likely to get. Really I just want to talk about it, but I really hope this helps. lol
The first question you probably get when you start talking about cryptocurrencies is “What the hell is cryptocurrency?” So, what exactly is crypto?
A cryptocurrency (or “crypto”) is a form of payment that can circulate without the need for a central monetary authority such as a government or bank. Instead, cryptocurrencies are created using cryptographic techniques that enable people to buy, sell or trade them securely. Well wtf is that?At its core, cryptocurrency is typically decentralized digital money designed to be used over the internet. Being secured by cryptography makes it nearly impossible to counterfeit or double-spend.
Sounds complicated but it's actually not far off from what we see with currencies today.Here's what I mean by that; Almost every physical money bill on the planet has a unique serial number. This serial number corresponds to information like when the bill was printed, where it was printed and so on. In theory a record of all money bills that have ever been printed and where they are is kept by a central bank, which shares this information with smaller banks and the government. If you have a debit card or credit card you'll know that you have an account number on there. As well you also have a password or pin number that you use to access the money in that account. Your bank branch knows your account number and your name because you had to provide your personal information to open an account. This info is also shared with the central bank and government.
Now let's say you have a 20 bill with the serial number abc and your bank account number is one two three. When you deposit that bill into your bank account your bank branch, the central bank, and the government will see and confirm that the 20 bill abc has been moved into bank account number one two three this is almost exactly how cryptocurrencies work. Each individual cryptocurrency coin is like the serial number you see on a physical bill just without the physical bill. Just like regular bills almost every cryptocurrency can be divided into smaller pieces. In the case of Bitcoin each $BTC can be divided into 100 million pieces called satoshi's., which are like cents to a dollar.
A cryptocurrency wallet address is like a bank account, except there’s no physical card that goes along with it. (Although that is changing rapidly, depending on what type of account you get.) With most wallets, it's just an account number because you don't need to provide any personal information to create a cryptocurrency wallet; this means that your identity is not attached to your crypto wallet like a bank account is. Most importantly any cryptocurrency held in your personal wallet is held directly by you not custodied by a bank like regular money in a bank account.
This means that nobody can shut down your cryptocurrency wallet or block your transactions because you have total control over that account at all times. Now the trade-off here is that if you lose access to your cryptocurrency wallet or forget to write down the recovery phrase you get when you make one well you'll lose your cryptocurrency forever.
Instead of banks and the government keeping track of everyone's bills and bank account balances these records are stored across all the computers connected to a cryptocurrency network. These transactions and account balances are public and can be viewed by anyone using something called a blockchain explorer. Because computers can earn cryptocurrency for processing transactions on a cryptocurrency network this incentivizes more computers to join the network to process transactions and earn cryptocurrency. This makes cryptocurrency networks secure because there is no single point of failure. This is called decentralization and it's the polar opposite of the centralized setups of governments and banks now in case you didn't put two and two together. That means the digital currencies banks around the world are creating are not cryptocurrencies, they're creating a seriously dystopian payment network.
At this point they might be done talking to you. lol Sometimes they crave more. So once you've blown their minds with that analogy, wait a minute. They may need a break. If they don’t, you'll probably get questions about Bitcoin and Dogecoin and any other cryptocurrencies they've heard about. Here's what I would say; While you've probably heard of Bitcoin and Dogecoin there are actually thousands of cryptocurrencies just like there are hundreds of different regular currencies. The crazy thing is that every cryptocurrency is different and not all of them are designed to be a currency you would actually use for everyday transactions.
Broadly speaking there are two types of cryptocurrencies: coins and tokens. Now cryptocurrency coins belong to cryptocurrency networks that were built from the ground up. And buy from the ground up. I mean that someone spent a lot of time and a lot of money putting together the code required to create a safe and reliable cryptocurrency network. Cryptocurrency coins are the cryptocurrencies given to computers when they process transactions for a cryptocurrency network. For example $BTC is a cryptocurrency coin because the Bitcoin network was built from the ground up and $BTC is given to the computers that process transactions for the Bitcoin network.
Because cryptocurrency networks are so hard to make from scratch only a few dozen cryptocurrencies are actually coins, the rest are cryptocurrency tokens. In contrast to cryptocurrency coins, crypto tokens are easy to make and can often be created in a matter of minutes with little to no effort. This is why there are tens of thousands of tokens. The NFTs you keep hearing about are actually cryptocurrency tokens. They are like digital certificates of
ownership for physical or digital art pieces. NFTs are just the tip of the iceberg of what you can do with tokens. For example there's a company called circle that issues a cryptocurrency token called $USDC. $USDC is fully backed by real $USD. Which means that for every one USDC in circulation Circle has one US Dollar in the bank. You can create $USDC by giving them your dollars and redeem your dollars with $USDC. Another company called Paxos issues a
cryptocurrency token called $PAXG. Each $PAXG token is backed by one troy
ounce of gold kept in a vault in London. You can redeem $PAXG tokens for real physical gold or US Dollars. The best part is that both Circle and Paxos are fully regulated in the United States and regularly audited to make sure they have the appropriate number of reserves on hand, backing their tokens. How's that for security?
Now speaking of security, the most important thing to remember about cryptocurrency tokens is that a lot of them are nothing more than fun, and some can be scams. This happens because cryptocurrency tokens are so easy to create. All a scammer needs to do is create a token, set up a fancy website, pay for a few ads on social media, pay a few news outlets to feature their coin, and they can get rich off crypto noobs overnight.
Of course this leads to a very popular series of questions. Topics the mainstream media like to fan furiously, also a timeless classic. “Are cryptocurrencies safe?”
I'm sure you've heard things like, it's all a scam, a pyramid scheme, run by shadowy super coders. Scary right? Here's the thing. With it being something that's new, and not a lot of the main population has put much effort into finding out exactly what it is. And the fear of it creates some really cool ghost stories.
As a developer, I'd like to first address "shadowy super coders". These are the types of people who develop the sites and apps you love and use each and every day. Lets just call them super coders (if they need an adjective) and go ahead and thank them for all the ways they make your lives easier. I know I sure do!
Are there scams in crypto? Sure. Is crypto a scam? No. Would you call searching for a job a scam? What about getting a new cell phone number? Right now you can't apply for jobs or even set up cell phone service without getting hit with a number of scams. This isn't crypto, it's human nature. As long as there are people willing to risk everything for the chance of getting rich quickly or easily, scams will exist. Would you bar yourself from emails because you might get phished?
The thing is, it's a technical topic with a bit of a learning curve. People get curious, start to look at it, and are hit with a bunch of individuals that are trying to teach you what they don't even understand themselves. So yeah, it's confusing and frustrating to some. Others fall for some get rich scheme, lose their money, and scream loudly about how it's anyone else's fault but their own. These things lead to some disgruntled individuals. You have to understand, like much of life, this should be an individual journey.
“Well, how do we know!?!” Usually comes next if they are truly interested. This is usually my response to these sorts of questions and comments. Whether a cryptocurrency is safe or not ultimately depends on the context. For starters not all cryptocurrencies are created equal, some cryptocurrencies are built to prioritize speed over security and usually the consequences of that play out quite quickly. Luckily, or not, for us there are always hackers somewhere looking to crack cryptocurrency networks so they can; either trick them into creating new coins or tokens out of thin air to sell for a fancy profit, or report the issue to a bounty program for a reward, or bounty.
Now this might sound scary, but I need to tell you that most of the time when individuals are compromised, it's the user that created this problem. You have to protect your information. Do not give out your passwords or seed phrases, do not follow links you do not know, or connect your services to others you aren't sure about. Protect your information and accounts. This is no different that traditional banking. It's also no different to what happens to banks and corporations on a daily basis. You see we’ve had a security issue for decades that corporations and banks refuse to address. Why? It costs them money and they have to hire people that don't fit into their pretty little corporate boxes. More simply put, no one is making them secure that information, most often, your information. And to be honest, the typical consumer doesn't really care to understand security either so it’s not considered important until something happens. When hackers succeed the affected company usually beefs up its cyber security.. hopefully.
The same goes for cryptocurrencie, with the exception that they have something to prove, so they typically do better. This means that most cryptos that have been around for years are robustly battle tested as a consequence of being under attack by bad actors. If you're not convinced, consider this; as I mentioned earlier, some cryptocurrency networks are made up of computers spread out around the world that are constantly double checking transaction histories and account balances. If you wanted to corrupt a cryptocurrency network you would have to hack more than half of all the computers connected to the network at the same time in order to do it. This is impossible to do if you have a cryptocurrency network like Bitcoin that has millions of computers spread around the world. That said, some cryptocurrency networks have fewer computers processing transactions and are therefore more vulnerable to attack.
The same rule applies to centralized cryptocurrency services like cryptocurrency exchanges which is where most crypto hacks have happened. These are much easier and more lucrative to exploit than an individual's cryptocurrency wallet which is insanely secure. That's why you should always keep any crypto you plan to hold in your own personal wallet wherever possible. Only keep it on an exchange when you're trading. It’s ok to keep crypto you plan to move or have in trades on an exchange. You don’t want to eat it up in fees moving it back and forth. There are also suites of services that make learning all of this easier. Coinbase, for example, has an entire ecosystem of services that allow a user the opportunity to learn how to use exchanges and both custody, and non-custodial wallets. I do need to say, if you use my Coinbase link to sign up, we both get $10 in $BTC when you buy or sell $100 of $BTC after setting up your account. Not to mention they will pay you in crypto to learn about crypto. Yep, I said free crypto. I used my earns to practice trading, I have a blog post coming on that too.
Now I’m not even close to finished with this topic, but this post is already so long! I could honestly geek out on crypto for days, weeks even. It truly fascinates me. This is just the beginning of my crypto ramblings, so make sure to check back for more. Not only do I love to talk about it, I love to learn about it too. So make sure to come follow me on Twitter so we can geek out together. If you’ve found me here via my personal account, you already know where to find Her Highness. If you don’t know, I have to warn you, we are crazy af there. I shitpost on the regular. If you’re looking for a more professional account please think about following my Design Studio RBF Grafix. Please feel free to leave any comments or questions below. I'd love to hear from you.
Part two of this series can be found here.