Cryptocurrency for beginners. How to start using Bitcoin
Everyone who has access to the Internet has heard about the “magic” world of cryptocurrencies. There, ordinary people become real investors and repeatedly increase their initial capital.
But there are those who climbed there indiscriminately: did not know what to buy, where to store and how to use. Such “investors” quickly lose all their savings and start shouting that Bitcoin is a hoax and generally an attempt by world freemasonry to make money from honest people.
Therefore, before you begin to use cryptocurrency, you must at least learn the basic principles of working with it. For example, read this article.
Cryptocurrency is a digital currency built on Blockchain . Cryptocurrency is also called "crypto", "digital coins", "virtual money" and any other combination of these words. The king of cryptocurrencies is Bitcoin, launched in 2009 by one Satoshi Nakamoto. The real name of this person (or group of people) is still unknown.
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Australian businessman and scholar Craig Stephen Wright has repeatedly hinted that he is Satoshi Nakamoto. Evidence of Wright does not inspire confidence.
To get a bitcoin, you need to mine it. Mining is a solution to complex mathematical problems on computers. In exchange for decisions, computer owners receive coins, which are stored as records on the blockchain. Blockchain is like a digital account book that is stored on all users' computers at the same time.
Blockchain can not be fooled or forged. Even if you start a computer with a fake record on the network, other computers will immediately compare it with theirs and refuse to accept it. For successful hacking, you need to fill the network with fakes more than half - and this is almost impossible.
Etherium and Ripple are the most popular altcoins.
The success of Bitcoin has led to the emergence of alternative cryptocurrencies (altcoins). The most important of them are Ethereum, Ripple, Litecoin and Monero. They are also based on the blockchain, but independent of the original algorithm. Therefore, they can use other types of encryption and process transactions faster.
As a rule, the prices of altcoins depend on the course of Bitcoin. In February 2017, when Bitcoin grew 18 times, altcoins also significantly increased in price. And when Bitcoin began to fall - they fell with it.
Altcoins are a common name for coin (except Bitcoin) and tokens. But the difference between them is still there.
Coin is a currency. They can earn (mine) and spend on goods and services. Coins are built exactly on Blockchain.
Tokens are rather securities (stocks) built on an auxiliary platform - for example, Etherium or Waves. They confirm the presence of a stake in any project, and their value depends on the success of the project. Tokens can not be namynit, you can only buy. You can’t spend it directly either; you can only sell it for another currency or exchange it for the services of the company that issued them.
Coin prices are stable relative to the market and correlate with it. To invest in coins is the same as investing in a market. As it grows, so will your savings. True, slowly.
Tokens are already stocks. Their cost is tied to the project they represent. If the project fires, the price of tokens can grow by several times over several hours. But if it falls apart, it will fall below the market.
Therefore, coins are worth buying for those who just want to use cryptocurrency and do not want to risk. And tokens will suit risk investors who want to make money quickly and immediately.
Most people believe that it is impossible to purchase real goods or services for Bitcoin. But this is no longer a problem. Cryptocurrency is accepted by Microsoft, PayPal, Subway, Shopify, Virgin Galactic and dozens of other large companies. Full list here .
Even if the company you need does not accept cryptocurrency, it can be exchanged for a hard fiat currency - for example, dollars. The easiest way to do this is with a special bank card for cryptocurrency.
But before you start using the card, you need a wallet.
Cryptocurrency wallet - an application, program or a separate device for sending, receiving or storing electronic money. Below are five types, with a short description of the advantages and disadvantages:
From all this, I advise you to choose an online wallet.
Most newbies on the crypto market choose online wallets. And that's why:
Online wallets do not store cryptocurrency. They only keep public and private keys to your money.
The public key is the address to which other users send money to you. By principle, it is similar to email.
The private key is a set of letters and numbers that allows you to access money. If the public key is email, then the private key is the password to it.
Some do not like the fact that the online wallet has their private key. But he is needed so that they can confirm your identity. It is the same as complaining that Google knows the password from your Gmail - how else can you prevent other users from reading your correspondence?
Getting an online wallet is a matter of a couple of minutes. But first you need to find a reliable service. One that will not lose the money of users or not run away with them to Thailand.
Make sure before you create the wallet that your coins will be stored in a “cold” wallet - a storage that is not connected to the Internet. This is harder to crack
Check out the company, its team, reviews about it. In the end, make sure you are willing to trust the money to a third party. And only then create a wallet.
Fiat money is ordinary, hard money issued by any state. For example, a dollar or a ruble. And since many services do not accept cryptocurrency yet, we still need fiat money.
There are three main ways to transfer money from crypto to Fiat:
Maps are currently unavailable for countries in Europe and the CIS, because the only provider of maps in Europe has ceased to exist. But many companies promise to release new ones in the next few months.
Trading platforms are very safe. But only at first glance. In fact, this is the most risky method of working with cryptocurrencies.
There have already been cases when thieves received bitcoins and did not send a transfer with fiat - and vice versa. Or they used someone else's cards for this and the real owner later challenged the transfer. And during a personal meeting, the users were instructed by a gun and forced to transfer Bitcoins for free.
Therefore, cryptocurrency trading platforms are the last place to change currency.
The world is just trying to understand what kind of animal it is - “cryptocurrency”. Therefore it is necessary to prepare for the various surprises. The whole market is frankly unstable, and prices change hourly.
For example, in February 2014, when Mt.Gox fell, the price of bitcoin dropped by almost half from $ 837 to $ 439 during the month. And in December 2017, the price of Bitcoin increased from $ 10,000 to $ 19,000, thanks to HYIP and high demand. In both cases there were players who made this fortune - but there were also those who became bankrupt.
On the thirtieth anniversary of Black Monday - the day when the stock market fell by 28% - Alexander Tapscott said: "On the crypto market, they would call it simply Monday."
The price of cryptocurrency is very dependent on the media. Regulatory news, quotes from famous personalities and other publications strongly influence the market rate. For example, the negative comments of the Minister of Finance of India led to a fall of $ 500 .
Even the so-called "experts" are often mistaken. Therefore, it is important to have your own opinion and deeply analyze everything that happens in the market.
Before entering the market, I advise you to read a couple of books in order to understand why cryptocurrencies are created, how key figures in this area work, and who work. One of these books is Digital Gold by Nathaniel Popper. This book is notable for the fact that it is easy to read and tells a fascinating story about how and why everything began almost ten years ago, and who those people were at the origin of Bitcoin.
Also choose the tools that will help you stay informed: news sites ( Forklog , Bits.media ), mobile applications for easily finding information and tracking market changes ( Blockfolio , CoinCap ), charts and statistics ( Coinmarketcap ).
A few useful rules to help keep funds safe:
Cryptocurrency is not just money, but technology, innovation and business. Blockchain gives us an amazing technology, the potential of which we have yet to discover. It gives us the opportunity to build an absolutely new world, where freedom, privacy and the protection of the rights of people are indispensable components of everyday life. Investing in cryptocurrency can be a reasonable step towards such a future.
But there are those who climbed there indiscriminately: did not know what to buy, where to store and how to use. Such “investors” quickly lose all their savings and start shouting that Bitcoin is a hoax and generally an attempt by world freemasonry to make money from honest people.
Therefore, before you begin to use cryptocurrency, you must at least learn the basic principles of working with it. For example, read this article.
Types of cryptocurrency
Cryptocurrency is a digital currency built on Blockchain . Cryptocurrency is also called "crypto", "digital coins", "virtual money" and any other combination of these words. The king of cryptocurrencies is Bitcoin, launched in 2009 by one Satoshi Nakamoto. The real name of this person (or group of people) is still unknown.
')
Australian businessman and scholar Craig Stephen Wright has repeatedly hinted that he is Satoshi Nakamoto. Evidence of Wright does not inspire confidence.
To get a bitcoin, you need to mine it. Mining is a solution to complex mathematical problems on computers. In exchange for decisions, computer owners receive coins, which are stored as records on the blockchain. Blockchain is like a digital account book that is stored on all users' computers at the same time.
Blockchain can not be fooled or forged. Even if you start a computer with a fake record on the network, other computers will immediately compare it with theirs and refuse to accept it. For successful hacking, you need to fill the network with fakes more than half - and this is almost impossible.
What is Altcoin
Etherium and Ripple are the most popular altcoins.
The success of Bitcoin has led to the emergence of alternative cryptocurrencies (altcoins). The most important of them are Ethereum, Ripple, Litecoin and Monero. They are also based on the blockchain, but independent of the original algorithm. Therefore, they can use other types of encryption and process transactions faster.
As a rule, the prices of altcoins depend on the course of Bitcoin. In February 2017, when Bitcoin grew 18 times, altcoins also significantly increased in price. And when Bitcoin began to fall - they fell with it.
What are Coins and Tokens?
Altcoins are a common name for coin (except Bitcoin) and tokens. But the difference between them is still there.
Coin is a currency. They can earn (mine) and spend on goods and services. Coins are built exactly on Blockchain.
Tokens are rather securities (stocks) built on an auxiliary platform - for example, Etherium or Waves. They confirm the presence of a stake in any project, and their value depends on the success of the project. Tokens can not be namynit, you can only buy. You can’t spend it directly either; you can only sell it for another currency or exchange it for the services of the company that issued them.
Why are tokens no worse than coin?
Coin prices are stable relative to the market and correlate with it. To invest in coins is the same as investing in a market. As it grows, so will your savings. True, slowly.
Tokens are already stocks. Their cost is tied to the project they represent. If the project fires, the price of tokens can grow by several times over several hours. But if it falls apart, it will fall below the market.
Therefore, coins are worth buying for those who just want to use cryptocurrency and do not want to risk. And tokens will suit risk investors who want to make money quickly and immediately.
How to spend cryptocurrency
Most people believe that it is impossible to purchase real goods or services for Bitcoin. But this is no longer a problem. Cryptocurrency is accepted by Microsoft, PayPal, Subway, Shopify, Virgin Galactic and dozens of other large companies. Full list here .
Even if the company you need does not accept cryptocurrency, it can be exchanged for a hard fiat currency - for example, dollars. The easiest way to do this is with a special bank card for cryptocurrency.
But before you start using the card, you need a wallet.
Choosing a wallet
Cryptocurrency wallet - an application, program or a separate device for sending, receiving or storing electronic money. Below are five types, with a short description of the advantages and disadvantages:
- Software wallet ( Bitcoin Core , Exodus ). These wallets store crypto right on your computer. And it takes quite a lot of space for this. For example, to install Bitcoin Core in minimum, you need at least 145 GB on your hard drive - and this is only for one currency;
- Online wallet ( Blockchain , Wirex ). These wallets keep your coins in the cloud. You can use them from any device, even from the phone. But you need to choose a wallet carefully - if someone hacks it, you lose all the money. Therefore, carefully read the reviews of other customers before the final decision.
- Hardware wallet ( Trezor , Ledger ). These wallets are separate devices, so they are much more difficult to crack than a regular computer. But you need to constantly carry them with you, as well as remember the PIN. And do not forget, and you will be like Marc Fraunfelder !
- Mobile application ( MyCelium , Breadwallet ). An application for smartphones on Android or IOS, which allows you to manage your funds. Convenient, easy and fast storage, but with a low level of security. In addition, if the phone is stolen, the thieves will get full access to the wallet.
- Paper Wallet ( WalletGenerator. Net or MyEtherWallet. Com ). The private and public key generated using a special website that can be printed or written down. It should be remembered that, in addition to the sheet of paper on which the keys are written, they are not found anywhere else, so a loss is equivalent to losing all the money that is in such a wallet.
From all this, I advise you to choose an online wallet.
Why online wallets are better
Most newbies on the crypto market choose online wallets. And that's why:
- No need to store hundreds of gigabytes of history on your device.
- The interface is convenient and clear, you do not need to study it further.
- Security level is usually higher than in mobile wallets.
- You can use both from a PC and from a mobile phone.
How does online wallet work
Online wallets do not store cryptocurrency. They only keep public and private keys to your money.
The public key is the address to which other users send money to you. By principle, it is similar to email.
The private key is a set of letters and numbers that allows you to access money. If the public key is email, then the private key is the password to it.
Some do not like the fact that the online wallet has their private key. But he is needed so that they can confirm your identity. It is the same as complaining that Google knows the password from your Gmail - how else can you prevent other users from reading your correspondence?
How to choose an online wallet
Getting an online wallet is a matter of a couple of minutes. But first you need to find a reliable service. One that will not lose the money of users or not run away with them to Thailand.
Make sure before you create the wallet that your coins will be stored in a “cold” wallet - a storage that is not connected to the Internet. This is harder to crack
Check out the company, its team, reviews about it. In the end, make sure you are willing to trust the money to a third party. And only then create a wallet.
How to exchange cryptocurrency for fiat money
Fiat money is ordinary, hard money issued by any state. For example, a dollar or a ruble. And since many services do not accept cryptocurrency yet, we still need fiat money.
There are three main ways to transfer money from crypto to Fiat:
- Cryptocurrency exchangers ( Coinbase , GDAX ). Choose an exchanger is as careful as an online wallet. Check the security, read reviews and reviews of other people who understand this. One unpleasant story that happened with the large Mt.Gox exchange was already discussed in Habré.
- Cryptocurrency trading platforms. At these sites, sellers can find buyers - and vice versa. After the initial “meeting” on the site, users themselves decide how they will transfer funds to each other. Usually found in person or using bank transfers.
- Cryptocurrency cards ( Bonpay , Spectrocoin ). Special bank cards to pay directly or withdraw money from an ATM.
Maps are currently unavailable for countries in Europe and the CIS, because the only provider of maps in Europe has ceased to exist. But many companies promise to release new ones in the next few months.
Why you shouldn’t believe the marketplaces
Trading platforms are very safe. But only at first glance. In fact, this is the most risky method of working with cryptocurrencies.
There have already been cases when thieves received bitcoins and did not send a transfer with fiat - and vice versa. Or they used someone else's cards for this and the real owner later challenged the transfer. And during a personal meeting, the users were instructed by a gun and forced to transfer Bitcoins for free.
Therefore, cryptocurrency trading platforms are the last place to change currency.
What you need to know before entering the cryptocurrency market
The world is just trying to understand what kind of animal it is - “cryptocurrency”. Therefore it is necessary to prepare for the various surprises. The whole market is frankly unstable, and prices change hourly.
For example, in February 2014, when Mt.Gox fell, the price of bitcoin dropped by almost half from $ 837 to $ 439 during the month. And in December 2017, the price of Bitcoin increased from $ 10,000 to $ 19,000, thanks to HYIP and high demand. In both cases there were players who made this fortune - but there were also those who became bankrupt.
On the thirtieth anniversary of Black Monday - the day when the stock market fell by 28% - Alexander Tapscott said: "On the crypto market, they would call it simply Monday."
The price of cryptocurrency is very dependent on the media. Regulatory news, quotes from famous personalities and other publications strongly influence the market rate. For example, the negative comments of the Minister of Finance of India led to a fall of $ 500 .
Even the so-called "experts" are often mistaken. Therefore, it is important to have your own opinion and deeply analyze everything that happens in the market.
How to learn more about cryptocurrency
Before entering the market, I advise you to read a couple of books in order to understand why cryptocurrencies are created, how key figures in this area work, and who work. One of these books is Digital Gold by Nathaniel Popper. This book is notable for the fact that it is easy to read and tells a fascinating story about how and why everything began almost ten years ago, and who those people were at the origin of Bitcoin.
Also choose the tools that will help you stay informed: news sites ( Forklog , Bits.media ), mobile applications for easily finding information and tracking market changes ( Blockfolio , CoinCap ), charts and statistics ( Coinmarketcap ).
How to safely store cryptocurrency
A few useful rules to help keep funds safe:
- Always back up your private key. You can store it on a USB flash drive, but be careful, since there are many cases when such a flash drive was lost or damaged due to children or pets. Or write the private key on paper (it is not recommended to use the printer and print it), but again, keep such a record in a safe place. The Winklevoss brothers , famous crypto billionaires used this method, but in a more sophisticated form: they cut the key printed on paper and kept it in different cells in a bank.
- Usually, private keys can be restored using a keyword phrase that consists of 12 or 24 words. Also make a copy of this phrase.
- Create a mailbox that you will use only for this wallet. Only for this purse.
- Use two-factor authentication wherever possible. Just install the application that will generate a password for your accounts and enjoy another level of protection.
- Choose reliable exchanges and exchangers with a good reputation to avoid unpleasant consequences.
- Update software regularly and install the latest version of the wallet you use.
Conclusion
Cryptocurrency is not just money, but technology, innovation and business. Blockchain gives us an amazing technology, the potential of which we have yet to discover. It gives us the opportunity to build an absolutely new world, where freedom, privacy and the protection of the rights of people are indispensable components of everyday life. Investing in cryptocurrency can be a reasonable step towards such a future.
Source: https://habr.com/ru/post/352974/
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