Short Cryptocurrency Beginner Guides
Below you’ll find several short cryptocurrency beginner guides ranging from definitions of “crypto slang” to what exchanges are best.
If you want me to add something to this page, please let me know in my contact form on my contact page.
What is the Best Crypto Wallet?
Hardware Wallets:
This is the safest way to store your crypto. Hardware wallets are physical object that can be connected to a computer via an USB port.
You have full control over your private keys with these kinds of wallets.
They are not connected to the internet, and are therefore practically “unhackable”.
Hands Down the Best Wallet: Trezor.io
Hot Wallets:
Hot wallets are apps, both on your phone and computer that are connected to the internet, where you still control your private key.
These are more practical than hardware wallets, and free, but are less secure.
An example of this is Atomic Wallet.
What Are The Best Cryptocurrency Exchanges?
This depends on your needs. Choose the one that fits you from the list below:
For beginners (Super easy to use) You get $10 when you start using it:
The Best Exchange (Has tons of coins, and low fees)
Decentralized Exchange (Has all “ERC-20” tokens)
How Do I Keep Up With The Market?
There are several ways to do this. Some people like to watch videos, some like to read new, others just look at the prices.
Best YouTube channels:
Data Dash – Market updates and important news
TMI – All the latest news related to cryptocurrecies
Prices of all cryptocurrencies:
Websites for Cryptocurrency News:
You can also sign up to my newsletter:
In the letters we cover Bitcoin, Ethereum, Chainlink and Cardano. We also look at the Bitcoin dominance.
We cover the most important news, and try to predict where the market is going based on market sentiment, as well as technical analysis.
From time to time I also notify you when I buy or sell coins. Sign up today if you want to stay ahead of the market.
What Does “Market Cap” Mean?
Market capitalization is the value of all the coins combined.
It is calculated like this:
Price per coin * Number of coins = Market Cap
This is the right number to look at when you try to find the value of a project/network/company. Not the price per coins, but the price of all the coins combined.
If you want to find the market cap of a specific coin, you can look it up at coingecko.com
This is super useful when trying to predict the future price of coins. In fact, it’s what I used to make my Ethereum price prediction of $8000
Definition of “FOMO” and “FUD”?
FOMO is an acronym for “fear of missing out”.
It’s the feeling you get when you see the market, or a specific coin, go crazy without you benefiting from it.
If you see the price of Bitcoin increase, and it causes you to think “Oh no, I need to buy!” you’ve got FOMO.
FUD means Fear, Uncertainty and Doubt.
It’s the feeling you get when the market dips and every fiber in you body is telling you to sell everything.
For beginners, both FOMO and FUD are strong reactions. Over time you will learn how to control your emotions, and stay more rational.
The most important thing you can do is to create a strategy. This makes sure you act rationally even when you’re hit with the FOMO and FUD.
What Are “Stablecoins”?
Stablecoins are cryptocurrencies that are pegged to a FIAT currency (traditional currency like USD and EURO), meaning that the value of the stablecoin is locked to the value of the FIAT currency.
We have tons of different stablecoins, but the biggest are USDT, USDC and Dai.
The reason we need stablecoins is that blockchains (the system that crypto runs on) doesn’t understand what “one dollar” means. it has no concept of “traditional currency”.
We therefore need stablecoins to interact with cryptocurrency blockchains using USD coins.
In other words:
Telling the Ethereum network “Hey, could you get me fifty bucks worth of Ethereum, please?” wouldn’t work. However, change it to “Hey, could you get me fifty USDC worth of Ethereum, please?” it would work.
What Does “Altcoin” Mean?
Altcoins are “alternative coins”. as in alternative to Bitcoin.
Basically, it’s all cryptocurrencies other than Bitcoin.
What Does “Volume” Mean?
Volume is the amount of buying and selling that has been going down within a specified time period.
If the 24 hour Volume of Bitcoin is $50 000 000, it means that $50 million dollars worth of Bitcoin has been traded within the last 24 hours.
Volume is often used by traders to figure out if a price surge is sustainable:
If the price increases a lot, but the volume is low, it is usually a sign that we might fall back down.
If the volume is high, we say that the increase was sustainable, and that it is likely to increase more, or at least not fall back down in the short term.
What Does “Supply” Mean?
Supply, in the crypto market, means the amount of coins.
We usually have a circulating supply, which is the number of coins currently being traded or held in wallets, as well as a max supply, which is the maximum number of coins there will ever be of this asset.
In Bitcoins case, there is a maximum supply of 21 million coins. This means that there will never be more than 21 million BTC in circulation, ever.
The circulating supply however, is around 18.6 million BTC, which means that there are a few million BTC that is unavailable right now.
These coins are “locked away”, meaning that no one owns them. They cant be bought of sold.
The only way to get them is the mine them. When Bitcoin miners validate transactions and secure the Bitcoin network, they get these coins as rewards.
In this way, the miners have an incentive to keep mining, without anyone having to pay them anything, because nobody owns the coins that they receive.
The fact that the Bitcoin supply is capped at 21 million BTC is part of the reason why I believe the price of Bitcoin will reach $100 000 in 2021.
What Does “Decentralized” Mean?
Decentralized is the opposite of centralized. It means that the power/authority is spread across several different actors/points.
In Bitcoins case, it means that no single miner can decide if a transaction is legit or not. We need a at least half of the miners to agree that a transaction is legit before it can be verified.
If the Bitcoin network was centralized, one single miner could verify transactions, regardless of what other miners think.
Centralization comes with the risk of “the deciding miner” failing to detect a faulty transaction, which might have been caught by other miners, and still verifying it because the other miners has no say in the matter.
It also forces everyone who uses Bitcoin to trust the miner who decides what transactions are legit, and what transactions are not. This miner might become corrupted by scammers who hack him, or pay him money to verify fake transactions.
Bitcoin was created to be a way of transacting without trusting a third party, and we therefore need decentralization.
In other words:
Decentralization, in Bitcoins case, can be understood as the spread/democratization of power/control over the verification process of transaction, making them trustless and resistant to corruption.
What is “DeFi”?
DeFi means “Decentralized Finance“. It’s a sector, in the crypto market, of applications that provides financial services like lending and earning interest in a decentralized manner.
Examples of projects within DeFi are Uniswap, AAVE and Compound.
All those projects operate in a decentralized way, in the sense that there is no central intermediary that you need to trust when using their services.
When you use AAVE to take out a loan, the money that you receive doesn’t come from a bank, it comes from the crypto that other people have contributed to a pool of liquidity.
There is nobody in the middle to decide if you’re going to get the loan or not, like banks can do. Everyone in the entire world is welcome to use DeFi.
The only thing you need to do it put up some crypto as collateral, and you’ll instantly get your loan.
If you do not pay the loan within time, your collateral will be taken from you, and put into the pool of liquidity to be loaned out to other people, or be payed as interest to the people putting their crypto into the pool.
“How Can This Work Without Anyone Actually pressing Buttons?“
It’s all automated using “smart contracts”. Smart contracts are digital contracts that execute automatically when the requirements are met.
A simplified example of a smart contract can look like this:
“If person A puts up $1000 worth of collateral, he will get $500 worth of USDC (a stable coin).”
Whenever person A puts up the collateral, the contract automatically executes, and the loan is given out to person A right away.
Smart contracts make it possible to automate financial processes.
In other words, DeFi can be understood as:
Applications using smart contracts to automate financial services, without middlemen that can censor out certain people, stop transactions or interfere with your actions.
DeFi has the potential to bring banking services to every corner of the word that has internet connection. All you need to do is to buy some crypto, and start using DeFi apps.
What Are “Crypto Wallets”?
Crypto wallets are digital places to keep your crypto. It’s like a wallet you keep cash in, but both the wallet and the cash is digital.
All wallets have an “address”, which is a string of letters and numbers unique to that specific wallet. Kind of like a fingerprint.
The address is technically called a “public key”.
Even though anybody can see your public key, you are the only person that has access to the wallet, and the funds inside it.
However, if someone else gets their hands on your “private key”, they can take control over your wallet.
The private key is a secret number used to decrypt messages/transactions sent to your public key. The holder of this key controls the wallet.
When you create a new wallet, you create new public and private keys. You need to write down the private key, and keep this safe.
If you lose your private key, you lose access to your wallet, and therefore your Bitcoin.
Read this great article about private and public keys to learn more.
(Disclaimer: Some of the links are referral links)
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