Beginner
Cryptocurrency Guide
Disclaimer
This document is informational only.
Nothing included in this document is legal or financial advice.
Cryptocurrency markets are extremely volatile.
Only invest what you can afford to lose.
Be wary of scammers and phishing attempts.
Sharing this PDF with anyone is illegal.
(See Terms of Service Agreement)
Table Of Contents
Pg 1
Title Page
Pg 72-82
Security Steps
Pg 2
Disclaimer
Pg 83-89
Sending Cryptocurrency
Pg 3
Table of Contents
Pg 90-95
Receiving Cryptocurrency
Pg 4-12
What is Cryptocurrency
Pg 96-102
What is Bitcoin
Pg 13-18
What is Blockchain?
Pg 103-107 What are Altcoins
Pg 19-20
Ready To Begin
Pg 108-114 What are Stable Coins
Pg 21-25
Cryptocurrency Exchanges
Pg 115-119 Non-Fungible Tokens
Pg 26-32
Cryptocurrency Exchange Fees
Pg 120-124 Exchange Operations
Pg 33-45
Choosing an Exchange
Pg 125-134 Finding Resources
Pg 46-55
Cryptocurrency Exchange Accounts
Pg 135-147 Investing Tips/Tricks
Pg 56-71
Crypto Wallets
Pg 148-175 Cryptocurrency Terms
3
What Is Cryptocurrency
What Is Cryptocurrency
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Cryptocurrency is a decentralized digital currency. There is no physical money associated
with it; it is created on and only exists on the blockchain, so it is a virtual asset. Like most
financial assets, it gets its value based on the trust people put in it to be worth something
now and in the future, like shiny golden rocks called gold, or pieces of paper with the
picture of a president on them called dollars. Long ago, people used shells and beads as
financial assets.
Cryptocurrency gets its name from the word cryptography, the science of protecting
computer information using mathematics.
Cryptocurrency on the blockchain is assigned to an owner and is accessed via the
owner’s cryptocurrency wallet.
Bitcoin was the first cryptocurrency. It was originally designed to be used as a direct
peer-to-peer electronic cash system allowing users to hold a form of currency and make
transactions directly with each other without the need for a trusted third party such as a
bank or credit card company to be involved in the transaction.
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What Is Cryptocurrency
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There is no central authority controlling cryptocurrency holdings or transactions such as a
bank, credit card company or a government. They are unable to manipulate, interfere or
stop a blockchain on which cryptocurrencies operate.
Unlike government issued money (fiat currency) that has a stable value, most
cryptocurrencies have no stable value and are only worth what people are willing to pay
for them; therefore, their value is constantly fluctuating, sometimes wildly, due to the
speculative nature of the market. Some cryptocurrency, called stable coins, are pegged
1:1 with fiat currency, most commonly the US dollar. They are used to offer stability in
cryptocurrency valuation.
6
What Is Cryptocurrency
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Cryptocurrency can be used as a store of value. It is also often used as a means of
investing in projects seen as interesting and potentially valuable, similar to investing in
stocks. Some goods and services are available for purchase with digital currency. Some
cryptocurrency is created and used as a means of funding a future product or service,
currency, governance of the blockchain, as digital art, as collectibles, for use in gaming,
just for fun, etc.
Cryptocurrency needs to be purchased on a cryptocurrency exchange: You cannot
purchase cryptocurrency from a bank (at the time of writing), although more and more
financial institutions are setting up to participate in the cryptocurrency market.
7
Benefits of Cryptocurrency
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You don’t need to be rich to invest in cryptocurrencies.
Access to cryptocurrency is 24/7/365.
It is available to anyone in the world as long as they have access to the internet.
Since there is no central authority controlling access, anyone can participate in
cryptocurrency/blockchain activities.
There are usually little to no transaction fees, when compared to traditional banking.
International transactions take place much faster when compared to traditional
international banking transactions. The same is usually true for domestic transactions
since there is no such thing as a ‘business day’ in the world of cryptocurrency.
The blockchain on which cryptocurrencies operate make it nearly impossible to double
spend or counterfeit transactions.
Since cryptocurrencies run on a decentralized blockchains, there can’t be a central point
of failure such as might happen with a traditional banking system.
8
Risks of Cryptocurrency
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Cryptocurrencies are not yet considered to be widely accepted and are not designated as
legal tender in the United States and most other countries (at the time of writing).
However, cryptocurrency is starting to become more mainstream with some major
corporations announcing large investments in bitcoin. Some companies allow for
payment in cryptocurrency; you can now purchase a Tesla with bitcoin. Some financial
services companies are looking into or have started dealing in cryptocurrency.
Cryptocurrencies currently lack regulations and consumer protections that legal tender
(fiat) currencies have. For example, in the US, a credit card holder is only responsible for
up to $50 on unauthorized transactions, and bank depositors are insured up to $250,000.
The Federal Deposit Insurance Corporation (FDIC) does not provide any cryptocurrency
insurance.
It is difficult to know how future government regulations will impact cryptocurrencies.
The cryptocurrency environment is constantly evolving; what is true today may not be true
tomorrow.
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Risks of Cryptocurrency
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The value of cryptocurrencies can fluctuate greatly, sometimes from day to day. Below is
some history on the price of one bitcoin.
❏ 12/18/17 $19,114.20
❏ 12/17/18 $ 3,545.86
❏ 12/18/19 $ 7,276.80
❏ 12/18/20 $23,137.96
❏ 01/08/21 $40,797.61
❏ 01/27/21 $30,432.55
❏ 02/17/21 $52,079.20
❏ 02/28/21 $45,164.00
❏ 04/14/21 $62,980.40
❏ 04/25/21 $47,272.52
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Risks of Cryptocurrency
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This volatility in change of value makes purchasing goods and services with bitcoin
especially risky. On May 18, 2010, someone paid for two pizzas with 10,000 bitcoins. Had
they held on to those bitcoins, they would now be worth over 100 million dollars.
Due to its unregulated nature, anyone with the knowledge can create a cryptocurrency.
The odds are very high that many current and future cryptocurrency projects associated
with non-bitcoin blockchains are not going prosper or even survive; therefore, you should
only invest money you can afford lose.
Due to the decentralized, anonymous and regulation free environment of cryptocurrency,
it is difficult to difficult to track down scammers to get investors’ money back if they have
been scammed. When starting out, only invest in well-known and trusted
cryptocurrencies.
Just because a cryptocurrency is cheap does not mean it is a good investment.
11
Risks of Cryptocurrency
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Once a cryptocurrency transaction is made it is impossible to reverse or cancel it. This
is true even if you entered the wrong amount or destination address during the
transaction, or you have changed your mind.
Cryptocurrency also presents a new way for hackers and thieves to steal your assets. Be
aware there are many phishing emails and some scam websites pretending to be
cryptocurrency exchanges, etc. that attempt to get you to give them your logins,
passwords and mnemonic/recovery phrases. Always look at the URL of the website or
message sender address to try to ensure it is authentic. Phishing attempts can look quite
real and have become very sophisticated. Never give out your private information. Always
assume something suspicious is a scam, unless you are able to prove otherwise.
12
What is Blockchain
What Is Blockchain
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Blockchain is the underlying technology of bitcoin and other cryptocurrencies. It is based
on the science of cryptography - techniques of protecting information using
mathematics. This makes blockchains very secure and tamperproof.
Bitcoin was the first to implement large scale use of blockchain technology. The intention
was to create an online currency that would operate outside of the control of any
company, organization or government, was available to anyone, was borderless, and was
impossible to censor.
A cryptocurrency blockchain is essentially a public ledger of all transactions ever made
associated with that blockchain and it is maintained by an enormous network of
computers running blockchain specific software. No one computer holds the ledger; each
computer keeps a copy of and constantly updates the ledger, making these blockchains a
decentralized system. Because cryptocurrency blockchains are decentralized, they cannot
be controlled by a central authority like a government, bank or other corporation, and
there can be no central point of failure. The transaction
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What Is Blockchain
records are permanent, unchangeable, public and accessible to anyone for viewing. Users
don’t need to trust a central authority or anyone else because no one can cheat this
system, unlike traditional financial systems.
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The information (transactions) on the blockchain are grouped and stored together in
blocks, which are chained together in chronological order, thus the term blockchain. Each
new transaction and block must be verified by computers (called nodes) on the
blockchain network before being considered valid and added to the chain.
A vast amount of computing power and electricity is required by the nodes (also called
miners) on the blockchain system to execute the cryptographic functions needed to verify
transactions, and to secure and maintain the blockchain. To incentivize miners to perform
these functions, miners receive rewards and fees for their services. Fees are paid by
people using the blockchain that want their transaction processed. Fees are automatically
calculated based on a number of different factors by the blockchain being used. Any
required fees are shown at the time of the transaction. Fees on the
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What Is Blockchain
Ethereum blockchain are referred to as gas and are denoted in Gwei, a fraction of its
native currency, Ether.
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With the success of Bitcoin blockchain technology, people began looking at how to speed
up transaction time and also how to use blockchain’s decentralized, cryptographically
secure database for uses beyond just currency. However, the bitcoin blockchain is not
designed to handle anything but simple currency related transactions.
The Ethereum blockchain came into existence in 2014 as a more sophisticated
programmable blockchain with its own open-source software platform. It has its own
programming language and computer network on which you can build applications and
programs. Think of it as similar in function to the internet, which also has different
applications and programs built on top of it, but Ethereum has no central authority
controlling it. Yes, most of the internet is controlled by central authorities like Facebook,
Google, Amazon, eBay, etc. There is almost no activity on the internet that happens
without some sort of intermediary or 3rd party involvement. And, the government may
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What Is Blockchain
request personal information or try to shut down or censor internet content.
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After the inception of Ethereum, many other blockchains have been created: Ethereum
Classic; Litecoin; Cardano; Polkadot; Bitcoin Cash; Stellar; etc. In general, most new
blockchains are trying to compete against older predecessors with new innovation,
increased speed, scalability, security, and reduced cost of transactions.
Each blockchain has its own native digital currency which fuels its network (called gas on
Ethereum) and is also used as rewards for miners processing transactions and
maintaining that blockchain. People may invest in and trade these cryptocurrency:
Bitcoin’s native currency is Bitcoin (BTC); Ethereum native currency is Ether (ETH);
Polkadot’s native currency is DOT; Cardano’s native currency is ADA, etc.
Ethereum and many other blockchains that followed Bitcoin allow for the implementation
of dapps (decentralized applications) in the software layer on top of their blockchains.
Dapps on a blockchain are analogous to the internet with its many
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What Is Blockchain
applications and programs running on top of it. Some of the areas where dapps and
blockchain technology are being used or explored include the following: Banking and
finance; Lending and borrowing; Currency; Healthcare; Records of property; Governance;
Supply chain; Voting; Gaming; Collectables; Provenance and ownership; and many others.
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Dapps allow for the implementation of smart contracts. Smart contracts are
computerized transaction protocols that exactly execute the terms of the coded contract.
The transactions are traceable, transparent, and irreversible. They can be analyzed, are
guaranteed to execute in predictable ways, and operate without the need to trust a central
authority.
18
Ready to Begin
Before Beginning With Cryptocurrency
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Before engaging in the cryptocurrencies market, reread the section on the Risks of
Cryptocurrencies.
Know that the world of cryptocurrency is extremely different from the world of banks,
credit unions and the stock market. The cryptocurrency markets operate very differently:
there is no hotline or corporate headquarters to rescue you if you lose your passwords or
recover phrase (private key), make a mistake, or have had your assets are stolen.
It is up to you to use all the security measures available and to implement them properly.
There are hackers everywhere trying to steal your assets, so it is up to you to take the
necessary steps to protect them. As they say in the world of cryptocurrency, ‘you are your
own bank.’
Read all the information in this document through to page 82 before getting into the
cryptocurrency market. The most important section is the one on security.
20
Cryptocurrency
Exchanges
What Is A Cryptocurrency Exchange
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A cryptocurrency exchange is a website which serves as a fiat currency on-ramp from
which you can purchase and/or trade different cryptocurrencies. You will need to make an
account on one of the many centralized cryptocurrency exchanges that operate in
different regions of the world. In the United States, you may be restricted from using
some popular international cryptocurrency exchanges due to US regulations and laws.
Centralized exchanges allow you to exchange government issued money (fiat currency)
for cryptocurrency, trade one cryptocurrency to another cryptocurrency (for example,
Bitcoin to Ether), or to exchange cryptocurrency back to fiat currency. These exchanges
function as a trusted third-party to facilitate transactions between buyers and sellers.
These exchanges are accessed via the internet on a computer, and most also provide a
mobile app you can use with their website.
When you create an account on a centralized exchange you need to provide ID verification
including information such as your name, address, SSN, government issued identity card,
etc. You may hear this referred to as “KYC,” Know Your Customer.
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What Is A Cryptocurrency Exchange
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Centralized exchanges can also store your cryptocurrency assets for you in wallets on
their site. If you do so, you are trusting the exchange to be trustworthy and to keep your
assets secure. See page 56 for information on the various cryptocurrency wallets.
Cryptocurrency exchanges charge fees for transactions such as buying,
trading/converting or selling. Centralized exchanges do not charge a fee for storing your
cryptocurrency on their site, should you choose to do so.
A centralized exchange will not support all fiat currencies that exist. No exchange will
support all cryptocurrencies that exist. This will vary from exchange to exchange.
Therefore, you may need/want an account on more than one exchange in order to have
access to all the cryptocurrencies you wish to buy or trade.
There are two types of exchanges and they operate somewhat differently. So far in this
section talked about centralized exchanges (CEXs) as that is where you will make your
initial cryptocurrency purchase(s). Decentralized exchanges (DEXs) are used by more
experienced users to trade cryptocurrency; we will only touch upon those here.
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What Is A Cryptocurrency Exchange
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Decentralized exchanges allow users to exchange with each other directly, on a
peer-to-peer basis, without needing a trusted third party, such as a centralized exchange.
Unlike a centralized exchange, you do not need to deposit your fiat or cryptocurrency on
the exchange; your cryptocurrency wallet is directly connected to the decentralized
exchange where the transaction is made. Most decentralized exchanges do not
implement Know Your Customer requirements, so you do not need to setup an account.
To date, you cannot trade between fiat currency and cryptocurrency on a decentralized
exchange.
On a decentralized exchange, cryptocurrencies can only be traded with other
cryptocurrencies: these are known as trading pairs.
More ‘rare’ cryptocurrencies may not be listed on the larger cryptocurrency exchanges. To
out which exchanges provide access to a particular cryptocurrency, rare or not, follow
these directions:
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What Is A Cryptocurrency Exchange
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Go to www.coingecko.com
Search for the cryptocurrency you want to buy in the search bar, or scroll down the list
provided. There are multiple pages of the list.
Click on the cryptocurrency you want to potentially buy.
Scroll down and click on ‘markets’
Listed are all exchanges where it is available, trading pairs accepted, and other
information.
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Cryptocurrency
Exchange Fees
Cryptocurrency Exchange Fees
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All cryptocurrency exchanges (CEXs) charge fees for their services. Fee structures vary
widely from exchange to exchange, so it is difficult to do a direct comparison between
them, and they can be confusing.
Some exchange fees will be flat fees, others will be a fee based on a percentage of the
transaction value, or a combination of both.
Expect to pay buying/selling fees, trading/converting fees and withdraw fees.
Fees vary not only from one exchange to the next but also within an individual CEX.
There are several factors that can affect how much you pay in fees. These can be things
like your geographic location, the type of fiat currency used to initially make a purchase,
the funding source, account verification status, the volume of trades you place per month,
the specific cryptocurrency you are trading, how busy the blockchain is at the time of the
transaction, the spread between the sell price and bid price of the cryptocurrency, etc.
27
Cryptocurrency Exchange Fees
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Some banks may charge additional fees for transfers to cryptocurrency exchanges.
Be sure to read the information provided by the exchange regarding all the fees they
charge.
To better understand how fees work, let’s take a look at how Coinbase operates.
Coinbase usually charges higher fees than other cryptocurrency exchanges; however, it is
a great exchange for beginners because it is very user-friendly and simple. After gaining
some experience on Coinbase, you can transfer your assets to Coinbase Pro, which
charges lower fees, or any other exchange you like that may charge lower fees.
Coinbase does not charge a fee to create or maintain your Coinbase account.
You may deposit fiat currency into a Coinbase USD wallet and buy cryptocurrency (such
as bitcoin or Ethereum, etc.) in a later transaction, if you so desire. You may only do this if
using an ACH bank transfer (no fee charged) or a wire transfer ($10 fee for deposits and a
$25 fee for withdraws), at the time of writing. This is not an option with debit cards.
Physical checks are never accepted by Coinbase.
28
Cryptocurrency Exchange Fees
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Coinbase charges buy/sell transaction fees. The fee structure is a combination of
elements that depend on two factors:
❏ There is a spread fee of about 0.5% added by Coinbase as determined by the
current exchange rate for buying and selling the specified cryptocurrency. The
spread fee may be higher or lower depending on market fluctuations. This fee is
rolled into the Coinbase quoted price for the cryptocurrency being bought or sold.
❏ Coinbase also charges a transaction fee which is the greater of either a flat fee or a
variable fee depending on your region, the amount bought or sold, and the payment
type. At the time of writing, these are the fees:
$10 or less: $0.99 flat fee
$10 to $25: $1.49 flat fee
$25 to $50: $1.99 flat fee
$50 to $200: $2.99 flat fee
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Cryptocurrency Exchange Fees
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Transaction amounts greater than $200 are subject to a variable fee. The amount is
determined by the source of the funds.
ACH bank transfers: 1.49%
Coinbase USD wallet: 1.49%
Visa or Mastercard Debit card (not credit card) deposits: 3.99%
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As an example, if you are in the US and wish to purchase $100 of bitcoin and pay with a
US bank account, the flat fee would be calculated as $2.99, as shown previously. A
variable percentage fee would be calculated as 1.49% of $100, or $1.49. Since the flat fee
is greater than 1.49% of the total transaction, you would be charged a fee of $2.99. If you
want to purchase $100 of bitcoin with a debit card instead, the flat fee would be
calculated as $2.99. However, the variable fee would be 3.99% of $100, or $3.99. Since the
variable fee is greater than the flat fee, you would be charged a fee of $3.99.
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Cryptocurrency Exchange Fees
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If you use Coinbase to execute a direct cryptocurrency conversion, for example
converting Bitcoin to Ethereum, you will be charged a spread margin fee of up to 2%. That
fee will vary due to market fluctuations. You will not be charged a transaction fee in
addition to the spread margin fee. Cryptocurrency conversions ending or starting via your
USD wallet are treated as cryptocurrency buys or sales and are charged a spread and
buy/sell transaction fee as previously explained.
When you are making any transaction on Coinbase the amount of your fee is
automatically deducted from the total amount of your order. For example, if you enter
$100 as the amount of bitcoin you want to purchase, your fee will be $2.99. That $2.99
will be deducted from the $100 and you will get $97.01 worth of bitcoin. If you want to
receive $100 worth of bitcoin, you need to enter $102.99 in the amount field ($100 for the
bitcoin, plus $2.99 for the fee that will be charged). You can change the number in the
amount field and Coinbase will recalculate the fees and the amount of crypto you will
receive. You can do this numerous times prior to confirming your transaction.
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Cryptocurrency Exchange Fees
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Bottom line: Coinbase will always display all fees (except the spread fee which is rolled
into the buy or sell price of the chosen cryptocurrency) and any other service fees that
apply to each transaction immediately prior to you confirming the transaction and in the
receipt issued immediately after each transaction. If you do not wish to continue with the
transaction, do not click on the Buy Now/Sell Now/Convert Now button.
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Choosing an
Exchange
Choosing A Cryptocurrency Exchange
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The first step to buying cryptocurrency is to figure out on which cryptocurrency exchange
you want to create an account. These are some things to consider:
1. Does the exchange accept users from your country or local area? Not all exchanges
accept users from everywhere in the world.
2. Are the cryptocurrencies you are interested in purchasing or trading available?
3. Is the user interface easy to use, especially for a beginner?
4. Does the exchange accept the payment method you want to use?
5. Are the fees associated with that exchange acceptable to you?
6. Is the exchange well known and considered to have a high level of security?
7. Is the daily deposit limit and size of trades limit acceptable to you?
8. Does the exchange allow you to withdraw your cryptocurrency investments to
another exchange or your own off-site wallet?
9. Does the exchange provide any type of asset insurance in case they are hacked?
10. Does the exchange provide a mobile app, if you are interested in that?
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Choosing A Cryptocurrency Exchange
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Researching the different exchanges on the internet should provide you with this type of
information.
Some exchanges offer discounted fees to new customers for a fixed promotional period,
a small amount of fiat currency or free Bitcoin, referral rewards, etc.
Despite the higher fees, we recommend new users take their first steps into the world of
cryptocurrency via Coinbase. This exchange is one of the most widely used exchanges
supporting many major fiat currencies and trusted cryptocurrencies. It is considered
trustworthy and secure. It has been designed for beginners and the steps to sign-up and
link your payment option are fairly easy. Coinbase also has a comprehensive Help Section
users may reference.
The following pages provide a list of some of the larger, safe, secure, and most popular
cryptocurrency exchanges. Although we recommend Coinbase for beginners, there are
many exchanges from which to choose. It is also easy to move to the Coinbase Pro
exchange. It charges lower fees but is more difficult to navigate for beginners.
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Most Popular Cryptocurrency Exchanges
Most Popular Worldwide Exchanges:
Most Popular US Supported Exchanges:
Binance
Coinbase
Kraken
Gemeni
Kucoin
Binance.US
*Note: After depositing money from your bank into
the exchange, there will be a verification/waiting time
period before you can withdraw your cryptocurrency
off the exchange and send it to another exchange or
wallet*
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United States
Exchanges
Coinbase
Create Account: Easy
KYC Needed: Yes
Selection of Cryptocurrencies: 40+
Direct Fiat On-Ramp: Yes (additional KYC required)
Beginner Friendliness: Simplest
Fee Rates: High
Referral Code: https://www.coinbase.com/join/chambe_ant
Copy & paste the link above into your browser to get $10 of Bitcoin free when you deposit $100
using our referral link above!
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Gemeni
Create Account: Easy
KYC Needed: Yes
Selection of Cryptocurrencies: 25+
Direct Fiat On-Ramp: Yes (additional KYC required)
Beginner Friendliness: Beginner to moderate
Fee Rates: Depends on amount being traded, moderate fees overall
Referral Code: https://www.gemini.com/share/e967ykse
Copy & paste the link above into your browser to get $10 of Bitcoin free when you deposit $100
using our referral link above!
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Binance.US
Create Account: Easy
KYC Needed: Yes
Selection of Cryptocurrencies: 50+
Direct Fiat On-Ramp: Yes
Beginner Friendliness: Beginner to moderate
Fee Rates: Very Low
Referral Code: 35028193
When creating an account, add our referral code ‘35028193’ to save 20% on your trading fees!
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International Exchanges
Binance
Create Account: Easy (No US residents not allowed)
KYC Needed: No
Selection of Cryptocurrencies: 300+
Direct Fiat On-Ramp: Yes (Only with KYC)
Beginner Friendliness: Best for intermediates & advanced
Fee Rates: Moderate
Referral Code: 45292202
When creating an account, add our referral code ‘4592202’ to save 20% on your trading fees!
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Kraken
Create Account: Moderately easy
KYC Needed: Yes
Selection of Cryptocurrencies: 50+
Direct Fiat On-Ramp: Yes
Beginner Friendliness: Best for intermediates & advanced
Fee Rates: Attractive fee rates
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Kucoin
Create Account: Easy
KYC Needed: No (Limited daily withdrawals)
Selection of Cryptocurrencies: 350+
Direct Fiat On-Ramp: Yes (Only with KYC)
Beginner Friendliness: Best for moderate
Fee Rates: Moderate
Referral Code: 2MeuaHy
When creating an account, add our referral code ‘2MeuaHy’ to save on your trading fees!
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Largest Cryptocurrency Exchange Hacks
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Centralized cryptocurrency exchanges are subject to potential hackers, exploiters or other
security issues. The largest cryptocurrency hacks on centralized exchanges are listed
below:
Coincheck - $534.8 million stolen (2018)
MT. Gox - $460 million stolen (2014)
Kucoin - $281 million stolen (2020)
Bitgrail - $195 million stolen (2018)
Bitfinex - $72 million stolen (2016)
While centralized exchanges are easy to use and have many benefits, they do not come
without any risks. The risks include potentially losing your funds and/or cryptocurrency
due to an exchange being hacked or going out of business. While that likelihood is small
with large well established central exchanges, many investors and traders store their
cryptocurrency assets on their own non-custodial wallet instead. Traders may also use a
decentralized exchange for trading directly from their own non-custodial wallets.
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Cryptocurrency
Exchange Account
Create Your Exchange Account
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Now that you have chosen the centralized exchange you wish to use, you need to create
an account on that exchange. You will likely need to provide the following:
❏ Proof you are at least 18 years old
❏ A government issued photo ID
❏ Personal information such as your name, date of birth, address, social security
number, etc.
❏ A computer or smartphone connected to the internet
❏ An email address to which you have access
❏ A phone number connected to your smartphone to receive SMS text messages
❏ Latest Coinbase App version, if that is what you are using. They don’t recommend
using Coinbase through a browser on your mobile device.
Each centralized exchange will have its own website or app and the user interface will be
different; however, they should have some degree of similarity and ask for much of the
same information.
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Create Your Exchange Account
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The following steps are required to create and fund an account on Coinbase. Setting up
an account on other centralized exchanges should be similar.
Sign up and create your account. Coinbase will send a verification email to your registered
email address. When you click on the verify address link in the email you will be taken
back to Coinbase.com. The email you receive should be sent from
no-reply@coinbase.com. You will need to sign back into your account using your email
and the password you created on Coinbase.
You will need the smartphone with phone number associated with your Coinbase account
in order to successfully complete 2-step verification. Click Send Code (computer) or
Continue (mobile) and Coinbase will text a seven-digit code to your phone number. Enter
this seven-digit code back into your Coinbase account then click Submit or Continue.
Enter the personal information Coinbase requires and select Continue to finish the
process. After that you need to link a way to fund your account.
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Funding Your Exchange Account
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The first step is to link a payment method to Coinbase to fund your account. Use the pull
down menu by clicking on your name in the upper right-hand corner. Select Settings and
then Payment Methods. Select Add a Payment Method. Select the type of account you
want to link. Follow the instructions to complete verification depending on the type of
account being linked.
To link a bank account select Add a Payment Method > Bank Account > Continue. Select
the financial institution you want to link. Most bank accounts can be linked quickly and
securely by providing your online banking username and password. Some banks may
send a code via SMS text to your smartphone that you will need to enter into Coinbase to
verify your identity to the bank.
Coinbase uses a company called Plaid to enable it to connect to users’ bank accounts. If
you do not want them to give them your bank username and password, or you if you
experience difficulty instantly linking your bank account, you may link your account
manually.
49
Funding Your Exchange Account
❏
To manually link your bank account select Add a Payment Method > Bank Account >
Continue. You will be presented with a screen that says Select Your Bank and you will see
bank logos displayed. Scroll down to the very bottom where you see Don’t See Your Bank?
Search Instead. Click that and then click the X in the upper right-hand corner of the box. A
new box will appear where you will select Get Started. You will then be asked for you
bank’s routing number, your bank account number, your name as it appears on your bank
account and the type of account being linked (checking or savings). Next select Verify
Account. The deposit verification procedure will initiate two small test deposits into your
account. In general, the deposits should reach your account in 2-3 business days;
weekends and holidays are not business days. Once the deposits have reached your
account, return to Coinbase and select Payment Methods. You can verify the amounts by
selecting the Verify button for your bank account. Only enter the “cent” portion of the
amounts deposited. For example, if the amounts deposited were $1.10 and $1.20, you
would enter 10 and then 20.
50
Funding Your Exchange Account
❏
❏
To link a Visa or Mastercard debit card select Add a Payment Method > Debit card. A box
will open where you can Link Your Card. Note: Although the box says ‘credit/debit card,’
US residents are not allowed to link a credit card. Add your billing address information.
Enter the card information to link your card. Coinbase will initiate two small, temporary
test debits from your account. Once the debits have been made from your account, return
to Coinbase and select Payment Methods. You can verify the amounts by selecting the
Verify button for your debit card under Payment Methods.
A wire transfer is initiated somewhat differently. To set up a wire account on Coinbase,
select Add a Payment Method > Wire Transfers. Follow the step to enter the routing and
your account number for your financial institution. Once this payment method has been
set up, click on the Portfolio button on the left sidebar. Under Your Assets click on US
Dollar. In the box that opens on the screen to the right, choose Deposit. A new Deposit
USD box will display. Click on Wire Transfer. Follow the instructions on how to send a wire
transfer. Note: wire deposits are only available for amounts of $5,000, or more.
51
Funding Your Exchange Account
❏
❏
When you have successfully linked your payment method, you can transfer money you
want to invest into your exchange account via the Buy/Sell button. In Coinbase, this
transaction is considered a Buy. Clicking Buy in the box will provide a place for you to
enter the amount of money you want to invest; this is above a line where your maximum
allowed buy limit is specified. Below that is a Buy line that is likely pre-filled with Bitcoin.
Click the arrow to the right of that to see a menu of all your available Buy choices. The Pay
With line should be filled with the payment method you previously linked. If you have
linked more than one payment method, click the arrow to the right to see a menu of all
your available Pay With choices.
Buy transaction limits are determined by many factors including verification completed on
your account, your purchase history, payment type and more. Your limits are shown to
you at the time of a Buy transaction. You may also find them outlined in the Account
Limits section under System Settings.
52
Funding Your Exchange Account
❏
❏
When using bank transfers or wire transfer to fund your account/buy cryptocurrency, the
ACH bank transfer system/wire transfer system is used to send payments from your bank
account. This system typically takes 3-5 business days (which may be as many as 7-10
calendar days, depending on the timing of weekends and other bank holidays) to
complete the transfer. You may see the funds immediately debited from your bank
account when you initiate the transfer, but the funds will not be transferred to your
Coinbase account until your payment has finished moving between the banks and has
cleared in the Coinbase bank account. During this time you will not be able to move your
funds or cryptocurrency off of Coinbase. You will however be able to buy or convert
(trade) one type of cryptocurrency for another.
Coinbase will inform you when you can trade/convert one cryptocurrency for another
cryptocurrency and when your cryptocurrency can be sent off of Coinbase, should you so
desire.
53
Funding Your Exchange Account
❏
When you are transferring funds into your account there are two Buy type option.
❏ Buy USD Coin: Selecting this means you are putting money into your exchange
account that will be converted to a stable coin (a form of cryptocurrency) that is
pegged 1:1 with the US dollar. That money (in the form of a stable coin) can be used
to purchase other cryptocurrency on the exchange in a subsequent transaction of
your choosing. You may choose to do this if you know you want to invest in a
cryptocurrency but aren’t yet sure which one, or you are waiting for a cryptocurrency
to reach a specific price. You may also want to move your money (now in the form
of a cryptocurrency) to trade on an exchange that does not have a direct fiat
on-ramp, such as a DEX. Coinbase will let you know when you will be able to move
your USD Coin off of Coinbase, if you so desire. You may use a bank account to
directly buy USD Coin. Wire transfers will first be deposited into Coinbase as USD
Coin. You may not use a debit card to buy USD Coin.
54
Funding Your Exchange Account
❏
Buy a Cryptocurrency: You are putting money into your exchange account that will
immediately be used to buy the type cryptocurrency you specify you want to acquire. The
buy line is likely prefilled with Bitcoin. Click the arrow to the right of that to see a menu of
all your available cryptocurrency Buy choices. Click on the one you want to buy. Coinbase
will show you the exact price at which you are buying the cryptocurrency; once you click
Buy you are locked into that price even if the market price changes.You will automatically
be charged on your payment method for the amount you specified. The amount specified
will have any transaction fees removed from it and the balance will be converted into the
specified cryptocurrency. Coinbase will let you know when you will be able to move your
cryptocurrency off of Coinbase, if you so desire. You may use a bank account or debit
card to directly buy cryptocurrency. Wire transfers must first be deposited as USD Coin.
55
Crypto Wallets
Secure Your Crypto
What Is A Cryptocurrency Wallet
❏
❏
❏
❏
Cryptocurrency wallets are needed to provide users a way to securely access and
manage their personal cryptocurrency assets. Since cryptocurrencies are virtual assets
and have no physical form, the cryptocurrency itself does not reside in the wallet; it is
instead represented as data entries on the blockchain.
Cryptocurrency wallets interact with software that constructs transactions and connects
it to the blockchain allowing you to send, receive, store information about and monitor
balances for your cryptocurrency assets.
Wallets automatically generate and store information, in the form of a master private key,
and private and public key pairs, necessary to give you access to the cryptocurrency on
the blockchain that is associated with you via your wallet.
There are different types of cryptocurrency wallets. These wallets can exist on centralized
exchanges, mobile phones, laptops and desktops, or external hardware devices. Some are
more secure than others. It is common for users to have and use more than one type of
cryptocurrency wallet.
57
What Is A Cryptocurrency Wallet
❏
❏
Cryptocurrency wallets vary: they may support only one single type of cryptocurrency or
they may support many different types of cryptocurrencies. It is important to make sure
the wallet you plan to use supports the type of cryptocurrency you plan to buy. Wallet
storage capacity also varies. There are many, many different cryptocurrency wallets
available, all with their own user interface and available features, and they are changing
and evolving all the time.
Custodial wallets: When you purchase cryptocurrency, at least for the first time, it will end
up in a custodial centralized exchange (CEX) wallet. In this case, the exchange, such as
Coinbase, is your custodian and it holds the master private key associated with those
cryptocurrency assets. Some users choose to keep their crypto in a CEX wallet, which
means they are trusting the exchange to keep their master private key and cryptocurrency
assets secure. Since these exchanges are accessible via the internet, they can be
susceptible to being hacked. However, centralized exchanges now hold the vast majority
of their digital assets offline where they are not accessible to hackers.
58
What Is A Cryptocurrency Wallet
❏
❏
❏
They also implement extraordinary security measures in an attempt to keep their clients’
assets safe. Coinbase provides insurance for customer assets should the exchange itself
suffer a breach of its online storage. It is important to remember, they do not cover any
losses resulting from the compromise of anyone’s individual account. Most
cryptocurrency theft occurs as a result of users failing to properly secure their centralized
exchange accounts or all the means used to access their centralized exchange accounts.
A centralized exchange can only initiate trades of cryptocurrency for you if your
cryptocurrency is on their site. That means your cryptocurrency needs to be held in a
wallet on their site, or moved from your private non-custodial wallet onto their site to
conduct a transaction.
The benefit of a custodial wallet is you don’t need to worry about losing your wallet or the
master private key that provides access to your cryptocurrency as the exchange will be
the keeper of that information. Also, these wallets also provide easy and quick
59
What Is A Cryptocurrency Wallet
access to your cryptocurrency.
❏
❏
Non-custodial wallets: Many users prefer to hold and control their own cryptocurrency
assets in private, non-custodial wallets. There is a saying: Not your keys, not your wallet.
With non-custodial wallets, the user is responsible for securing the pin or password to
access the wallet and the master private key for the wallet. However, if you lose the pin,
password or master private key, wrote the associated mnemonic words down incorrectly,
or it is stolen, you will have lost access to all of the funds associated with the wallet that
uses that master private key. Non-custodial wallets may be hot wallets or they may be
cold wallets.
Hot wallets: A hot wallet is one that is connected to the internet. It may be custodial or
non-custodial. It may be one that resides on an online website, your laptop or desktop, or
mobile phone. Although these provide ease of use and quick access to your
cryptocurrency assets, they expose you to added risk due to possible centralized
exchange attacks, computer viruses and malware, personal login exploitations, and
60
What Is A Cryptocurrency Wallet
other possible security and hacking issues. You should do everything you can to mitigate
these security risks. Operating systems on mobile phones are far more secure than
laptops and desktops, so using a secure mobile phone is the better option for a hot wallet.
There are many hot wallets available free of charge.
❏
❏
Cold wallets: A cold wallet is one that is not left connected to the internet. It is always
non-custodial. It provides the highest level of security as it stores all your private keys
offline on the hardware device itself, even when it is connected to the internet for a
transaction. These cold wallet, hardware devices are similar in look to a USB device, but
with a screen and analog buttons. A pin of your choosing is needed to access the wallet.
They are less convenient to use than a hot wallet as they need to be powered on and then
connected a computer. These are widely used by people as a very secure place to store
their longer-term cryptocurrency holdings. The cost of these start around $59.00 US, and
can go as high as hundreds of dollars.
Paper wallets: You may have heard of paper wallets. Their use is not recommended due
the associated risk of losing money by not understanding exactly how they work.
61
What Is A Cryptocurrency Wallet
❏
❏
❏
Regardless of the type of cryptocurrency wallet you are using, every wallet should be
protected with a pin or a password of your choosing. You will use this pin or password
every time you want to gain access to the wallet to make a transaction, check your
balances, etc. That pin or password tells your wallet you are the owner of that wallet and
it will allow you access.
Cryptocurrency wallet functions: When initially accessed and configured, wallets
automatically produce a randomly generated string of alphanumeric characters which
function as the master private key for the wallet. All private and public key pairs needed in
the future for transactions are automatically and mathematically generated from this
number. The number, converted to hexadecimal, would look something like this:
6Psnml6wnmKm694bSjKbdY5x96SdwKI109MnlcKbdY5x96SdwKI109Mnlch28cGr
The actual master private key that is randomly created is a number so enormously large
(10^77) that the probability of any two wallets ever producing the same master private
62
What Is A Cryptocurrency Wallet
key (and, therefore, any private or public keys mathematically generated from this
number) is basically zero. To put it into perspective, there are roughly 10^18 grains of
sand on planet earth.
❏
❏
If you are using a custodial wallet, such as a wallet on a centralized exchange, you are not
given the master private key information for your wallet. That is held and managed by the
online custodian who is storing your cryptocurrency. You will have a password or pin to
gain access your account and cryptocurrency assets.
Users of non-custodial wallets will have complete control of their master private key and
cryptocurrency assets. To make this master private key (alphanumeric number) easier to
read and record, non-custodial wallets will convert it into a list of 24 human readable
words out of a specific dictionary. Some wallets use only 12 or 18 words. This list of
words can go by different names: recovery phrase, mnemonic phrase or seed phrase.
Many people simply refer to this list of words as your private keys. In this document, it will
be referred to as the master private key.
63
What Is A Cryptocurrency Wallet
❏
❏
This master private key ultimately controls access to all the cryptocurrency assets on the
blockchain associated with that wallet because this private master key is used to prove
ownership of those assets. Anyone who knows this private master key, even if they don’t
have the wallet itself, will be able to gain access to all the cryptocurrency assets
associated with it and can do with them what they please - like make them their own.
Therefore, it is extremely important to very accurately write these words down; any
error in spelling or word order will result in the loss of your cryptocurrency should you
need to use this list of words to move or recover your wallet, and therefore your
cryptocurrency.
There are other unique private keys generated by the wallet from this master private key
that are used as part of a digital signature during transactions. These keys are
automatically generated by the wallet. These private keys provide the rights for the user to
spend, transfer, withdraw or carry out any other transactions associated the
64
What Is A Cryptocurrency Wallet
cryptocurrency. Anyone who has access the master private key (and, therefore, the
associated private keys) and uses them is assumed to be the owner and is given access
to the cryptocurrency. The blockchain has no way of verifying if the private key being used
really belongs to the person using it. That is why it is very important to keep your master
private key secure and private.
❏
This 12, 18 or 24 word phrase (master private key) also serves as your backup if for any
reason your cryptocurrency wallet becomes unusable (due to damage to the device with
the wallet, purchase of a new phone or computer with the wallet, theft, etc.) or you choose
to move to a different wallet. This master private key can be used with any other
compatible wallet to gain access to the cryptocurrency that is associated with that
master private key. When starting over with your new wallet, you will have the option to
‘Restore from recovery phrase.’ After having correctly entered your 12, 18 or 24 words, the
new wallet will give you access to the exact same private/public key pairs and addresses
and, therefore, cryptocurrency as before.
65
What Is A Cryptocurrency Wallet
❏
❏
Although the wallet uses the master private key repeatedly, after writing it down and
securing the associated word phrase, you should only need the phrase in the future if for
any reason that cryptocurrency wallet becomes unusable, inaccessible, or your
cryptocurrency needs to be moved to a new wallet.
Cryptocurrency wallets also generate keep track of something called public keys. A
sophisticated algorithm is applied to a private key to generate an associated and unique
public key. The public key is also used as part of a digital signature to verify the validity of
the transaction. The public key is associated with an alphanumeric address or QR code
that is used to receive transactions. Unlike your private keys, a public key address may be
shared with other so they may send you cryptocurrency. Although private keys and public
keys are mathematically related, it is not possible to figure out the associated private key
by knowing a public key.
66
What Is A Cryptocurrency Wallet
❏
❏
Transactions occur when users send and receive cryptocurrency to each others’ public
key addresses; these are seen as inputs and outputs. Anyone can send cryptocurrency to
any public key address, but only the owner of the private key associated with that specific
address will be able to access the cryptocurrency sent there. Analogy: Anyone who knows
your email address can send you an email, and if your password is private and your
account is not hacked, only you can read the emails sent to that address.
If you choose to purchase a hardware wallet, make sure you purchase it directly from the
manufacturer. Never trust a hardware wallet you might be able to buy cheaper from
somewhere else. To purchase your own Ledger, you can use the link on our website,
Gettingintocrypto.com, under Beginner Essentials, and you will be supporting our mission
of spreading cryptocurrency knowledge to everyone!
67
What Are The Different Types Of Wallets
Hot wallets:
Cold wallets:
❏
❏
❏
❏
❏
Hot wallets are connected to the
internet.
Hot wallets are useful because of their
ease-of-use, but have major security
drawbacks due to being connected to
the internet.
Hot wallets can be either custodial or
non-custodial.
Cryptocurrency exchange wallets are
custodial hot wallets.
Examples:
❏
❏
❏
Desktop/laptop wallets
Mobile wallets
Exchange wallets
❏
❏
❏
Cold wallets are not connected to the
internet.
Cold wallets are considered a more
secure option, best suited for longer
term holding.
Cold wallets are all non-custodial.
The main drawback of a cold wallet is
it is impractical for repeated quick
transactions on a daily basis.
Examples:
❏
❏
Ledger (Nano S / X)
Trezor (Model T / One)
68
List Of Cryptocurrency Wallets
Smartphone wallets: (hot
wallet)
Trust wallet (free)
Mycelium (free)
Breadwallet (free)
Desktop wallets: (hot wallet)
Hardware wallets: (cold wallet)
Atomic wallet (free)
Ledger ($60-$120)
Electrum (free)
Trezor ($59-$180)
Exodus (free)
NGrave ($374-$650)
Note: Remember, not all
wallets support all available
cryptocurrencies.
Note: This is not a complete
list of all available wallets,
only very common wallets.
Cryptonator (free)
69
Comparing Ledger Models
Nano X
Nano S
Display: 128 x 64 pixels
Display: 128 x 32 pixels
Weight: 34g
Weight: 16.2g
Size: 57 x 17.4 x 9.1 mm
Size: 72 x 18.6 x 11.75 mm
Security: CC EAL5+ chip (Pin to open device)
Security: CC EAL5+ chip (Pin to open device)
Price: $119 USD
Price: $59 USD
App compatibility: Up to 100 apps
App compatibility: 3 to 20 apps
Interface: Bluetooth
Interface: No bluetooth
Connector: USB Type - C
Connector: USB Micro - B
Overall: A more advanced option for the
hardcore cryptocurrency investors.
Overall: A perfectly fine choice for any
cryptocurrency enthusiast.
70
Comparing Trezor Models
Model One
Model T
Display: No touch screen
Display: Touch screen
Weight: 12g
Weight: 22g
Size: 60 x 30 x 6 mm
Size: 64 x 39 x 10 mm
Security: CC EAL5+ chip (Pin to open device)
Security: CC EAL5+ chip (Pin to open device)
Price: $59.99 USD
Price: $170 USD
App compatibility: 1000 cryptocurrencies +
App compatibility: 1500 cryptocurrencies +
Interface: 2 buttons
Interface: Touch screen
Connector: USB- B connector
Connector: USB - C connector
Overall: The model one is a great beginner
hardware wallet, especially for the price.
Overall: The model T is one of the best on the
market. Simple, secure, and supports over
1,500 crypto assets.
71
Security Steps
Protect Your Investments
Security With Cryptocurrency
❏
❏
❏
With the rise in popularity of cryptocurrency comes an increase in the number of hackers
targeting cryptocurrency investors, especially beginners, who are less likely to know how
to secure their assets or might more easily be taken in by a scam. Remember, unlike your
past experience with banks and credit card companies, you are completely responsible
for all aspects of keeping your cryptocurrency assets safe and secure. If you lose your
pins, passwords or master private keys, there is no one to reset them for you. If someone
gets a hold of your master private key they can steal your assets and you will likely never
get them back.
The world of cryptocurrency is risky, volatile and unpredictable, so it is wise to only invest
what you can afford to lose. This is the wild west of money.
Remember, most cryptocurrency theft occurs as a result of users failing to properly
secure their computers, mobile devices, pins and passwords, master private keys and
centralized exchange accounts. And, people fall victim to phishing emails, fake social
media scams, fake websites, and the like.
73
Security With Cryptocurrency
❏
❏
The master private key for your cryptocurrency wallet is called private for a reason. It
should not be shared with anyone. It is what gives you access to your cryptocurrency on
the blockchain associated with that master private key. Also, should you lose your wallet,
or your computer or phone with your wallet breaks or needs to be replaced, your master
private key is your wallet backup. Entering the 12, 18 or 24 words into any new,
compatible wallet will allow you to access your cryptocurrency again. But this is a double
edged sword: The blockchain has no way of knowing who is the rightful user of the
backup words. If someone gets hold of your master private key, they can gain access to
and steal your cryptocurrency.
The safest way to store your 12, 18 or 24 word master private key is to write it down on a
piece of paper. Consider using a small notebook and include your name and phone
number so you stand a chance of it being returned to you should it be misplaced. After
you have neatly written down your 12, 18 or 24 words, double check the word order and
spelling. Go back and triple check it. This is also a good place to write down the pin or
password associated with access to your wallet.
74
Security With Cryptocurrency
❏
❏
You may want to keep two written copies of your pin/password and master private key,
with each copy in a different and secure location. It is also a good idea to store your
hardware wallet, if you have one, in a different location than your pin/password and
master private key. That way if someone takes your wallet they won’t have the
information necessary to gain access. And, if you see your wallet has been taken or
compromised, you will still have the information necessary to setup a new wallet.
Never store your pins, passwords, or master private key on any device connected to the
internet: it is too easy for hackers to find you and steal your digital information. Do not
text or email your private master key to yourself or anyone else. Do not take a digital
picture of your master private key. Do not let it upload to your cloud storage account. Do
not put it in your phone notes. Do not enter it into a Word or Excel document.
75
Security With Cryptocurrency
❏
❏
❏
You never know when you might experience a fire, hurricane, flood or other situation that
could destroy one of your copies. There are inexpensive fireproof safes and pouches
available for purchase. You may want to laminate the words. Find a safe place to store
this information under lock and key, if possible. Remember where you put it.
Although you should always keep your pin/password and master private key to yourself,
you may want to share the location of this information with someone you trust in the
event something happens to you and you want someone else to have access to your
cryptocurrency.
Make sure all your devices are clean and updated. This is good practice regardless of
whether you participate in the cryptocurrency market, or not. Keep your device updated
with all of the most recent operating system and security updates. Keep your web
browser and all other software programs up to date. Do not install and use browser
plug-ins or add-ons developed by unknown third parties.
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Security With Cryptocurrency
❏
❏
❏
Never click on suspicious or unknown links or download suspicious programs, especially
those ending in .exe. Utilize anti-virus and malware protection and scan your device
regularly. Enable a screen lock and use a password to gain access to your computer and
mobile devices.
If someone gains access to your email account they can request a password change on
any of your other accounts. They will then be able to access the reset link that is sent and
get into your other accounts as well. Keep your email account safe, and consider using a
separate email for cryptocurrency related business.
Never use the same password twice across any of your online accounts. The best
password is a long, random and unique string of alphanumeric and special characters.
Change your passwords regularly.
77
Security With Cryptocurrency
❏
Hackers have sophisticated ways to figure out passwords, so the best course to take is to
use a reputable password manager such as LastPass, 1Password, Keeper, etc., that
generates secure, random passwords for you and remembers them so you don’t have to;
you only have to remember the master password. Browser based password managers
are not secure and they don’t generate random passwords for you.
❏
Whenever possible, use a Time-based One Time Password (TOTP) with a mobile app
such as Google Authenticator. This form of two-factor authentication (2FA) drastically
reduces the chance of your accounts being compromised, and it is much more secure
than SMS (Short Message Service) that sends a code to your phone via text messaging.
Hackers have been able to trick carriers into porting a phone number to a new device in
what is called a SIM swap. Once a hacker has redirected your phone number, they no
longer need your physical phone in order to gain access to your SMS 2FA codes.
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Security With Cryptocurrency
If your text messages sync on your laptop or tablet, then a hacker could gain access to
your SMS 2FA codes by taking one of those. Two factor authentication can usually be
used with email accounts to keep them more secure as well.
❏
❏
To help protect against a SIM swap take the following steps.
❏ Call your mobile service provider and tell them that you’d like to place a port freeze
and SIM lock on your account.
❏ Ask them to create an account note requiring you to be in-store with a valid Photo
ID in order to port or transfer your phone number to a new device.
❏ Ask them to add or enable a PIN number to be used when making changes to your
account.
If you choose to purchase a hardware wallet, make sure to purchase it directly from the
manufacturer. Never trust a hardware wallet you might be able to buy cheaper from
somewhere else. Always check to make sure the tamper resistant seal is intact; do not
use the hardware wallet if the seal has been broken.
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Security With Cryptocurrency
❏
❏
Many of the security steps applicable to centralized exchanges have been outlined in the
previous security pages, so they will not be repeated here. Make sure you read those
pages. If your centralized exchange has this available, you want to activate the
anti-phishing code feature. It allows for the creation of a code that will be used when you
receive an email from that exchange. This allows you to know that the email is authentic
and is not a phishing attempt.
Whitelisting is a feature provided by some centralized exchanges. For example, Coinbase
does not offer this feature but Coinbase Pro does. It allow your account to only withdraw
or send cryptocurrency to the to addresses you have already designated in your address
book as trusted and secure. For security purposes, there is typically a 48 hold period after
entering an address before it can be used.
80
Security With Cryptocurrency
❏
❏
If you keep your cryptocurrency assets in a custodial wallet, check the activity of your
account frequently to view all connections and transactions. If you notice an unauthorized
application, session, or device, you should be able to revoke their access. If this should
happen, remember to change your exchange and email password immediately.
It is common practice for scammers to impersonate other people, businesses,
organizations, websites, etc. Therefore, pay close attention to the exact spelling of an
email sender’s address or website name. Sometimes the correct spelling will be off by
just one letter or number. A centralized exchange will never send you an email from a
Yahoo or gmail address, etc. It is a good practice to bookmark websites that you visit
frequently and always use the bookmark as the way to get to the site. The Site Identity
button (a padlock) appears in the address bar to the left of the web address when you
visit a website. You can quickly find out if the connection to the website you are visiting is
encrypted, and in some cases who owns the website. This should help you avoid
malicious websites that are trying to obtain your personal information.
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Security With Cryptocurrency
❏
❏
❏
❏
❏
Always be wary of people who direct messages you. Always assume something
suspicious is a scam, unless you are able to prove otherwise.
If it seems too good to be true - it is a scam.
If anyone says they can double your cryptocurrency if you (fill in the blank), it is a scam.
Beware of anyone promoting a trading groups or any type of cryptocurrency help on
Youtube or Instagram comment sections. These are scams using social media to lure
people in.
You need to always use common sense, good judgement and a lot of suspicion to avoid
falling victim to hackers and scammers.
82
Sending Crypto
Transfer Your Cryptocurrency
How To Send Crypto
❏
❏
❏
There are many cases where you may want to send cryptocurrency assets from one
wallet address to another. You may want to send your assets from the exchange wallet
currently holding your newly purchased cryptocurrency to any non-custodial wallet you
are personally responsible for keeping safe and secure. You may want to send
cryptocurrency to make a purchase, to give to another individual, or to use on a different
centralized exchange.
Different wallet types will have a different user interface. They may also use different
terminology, like withdraw instead of send, but the basic steps for this procedure should
be similar. The first step will always be opening your wallet. If you are using a hardware
wallet such as a Ledger or Trezor, the wallet will need to be turned on and plugged into
your computer so the device can connect to either Ledger Live or the Trezor wallet
interface which provide the software necessary to interact with the blockchain.
If you are sending cryptocurrency from one of your own wallets to another of your own
wallets, you will be sending on one wallet and receiving on the other.
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How To Send Crypto
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For the purpose of an example, we will be sending crypto from a Coinbase wallet.
After opening Coinbase, click the ‘Send/Receive’ icon in the upper right corner.
Click ‘Send’ in the box that has opened up.
It is best to first select what you want to send in the ‘Pay With’ field. That field will have
been automatically filled by the wallet. If you have more than one type of cryptocurrency
in your wallet and would like to send a different one, click the arrow to the right to select a
different cryptocurrency.
Enter the specific amount of cryptocurrency you want to send. You can toggle between a
USD amount or a cryptocurrency amount. Be aware of which you have selected - there is
a big difference between $3.50 USD and 3.5 bitcoin. You can also click ‘Send All’ to send
all of one type of cryptocurrency,
Remember you will be charged a fee for this transaction. The fee is automatically
deducted from the amount you have entered. You can change the number in the amount
field and Coinbase will recalculate the fees and the amount of crypto that will
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How To Send Crypto
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be sent. You can do this numerous times prior to confirming your transaction to ensure
the correct amount will be sent. For example, if you enter $81.00 as the amount to send,
the fee might be $9.18, resulting in you only sending $71.82. Fees can fluctuate
depending on the amount you are sending and blockchain congestion.
Finally, you need to enter the public address where the cryptocurrency will be sent in the
‘To’ field. The receiving party will need to provide you with that address, possibly by text or
email. If you want to send your cryptocurrency to a different wallet of your own, you
will get the send to address from the destination wallet when you execute the receive
function on that wallet. The address will be a long series of alphanumeric characters that
you will paste into the ‘To’ field on Coinbase, or it can be a QR code you will scan. (Read
How to Receive Crypto to understand how public addresses are created)
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How To Send Crypto
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Before continuing or sending, triple check the destination address to ensure it was copied
correctly. The address will be long, so at least check that the first 5 characters and last 5
characters match what you have copied. If they do, you can probably assume the ones in
the middle do as well.
Ensure the destination address you have received and are copying into the ‘To’ field is for
the type of cryptocurrency you are going to send. Bitcoin cannot be sent to an Ethereum
address, vice versa. This is true for other types of cryptocurrency as well. Most wallets
will flag you if you try to send cryptocurrency to the wrong type of address. However, if
cryptocurrency is sent to an invalid address, for whatever reason, it cannot be recovered
and is lost forever.
These transactions are irreversible, so first send a test transaction of trivial monetary
value. You don’t want to make a mistake with a large amount of cryptocurrency.
Prior to initiating the send, Coinbase will have you verify your identity with 2 factor
authentication.
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How To Send Crypto
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Coinbase will inform you when you when you will be able send newly purchased
cryptocurrency off of Coinbase, should you so desire, as there may be a waiting period.
Sending cryptocurrency to a wallet that is not on Coinbase will incur a fee as that
transaction will take place on the blockchain. Bitcoin blockchain transactions usually take
around 10 minutes to complete. Other blockchains will have different processing speeds.
Sometimes the centralized exchange will wait for multiple verifications before sending the
cryptocurrency; this can increase the wait time before the cryptocurrency shows up on
the destination wallet.
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How To Send Crypto
89
Receiving Crypto
Collecting Your Cryptocurrency
How To Receive Crypto
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There are many cases where you may want to receive cryptocurrency assets into your
wallet. You may want to receive assets from the centralized exchange wallet currently
holding your newly purchased cryptocurrency into your non-custodial wallet that you are
personally responsible for keeping safe and secure. You may want to receive
cryptocurrency from a different wallet you also own or from a an individual who wants to
send some to you.
Different wallet types will have a different user interface. They may also use different
terminology, like deposit instead of receive, but the basic steps for this procedure should
be similar. The first step will always be opening your wallet. If you are using a hardware
wallet such as a Ledger or Trezor, the wallet will need to be turned on and plugged into
your computer so the device can connect to either Ledger Live or the Trezor wallet
interface which provide the software necessary to interact with the blockchain.
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How To Receive Crypto
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If you are receiving cryptocurrency into one of your own wallets from another of your own
wallets, you will be receiving on one wallet and sending on the other.
For the purpose of an example, we will be receiving crypto into a Coinbase wallet.
After opening Coinbase, click the ‘Send/Receive’ icon in the upper right corner.
Click ‘Receive’ in the box that has opened up.
It will display a QR code on top. Below that will be a line that says ‘Address’ and one that
says ‘Asset.’ The address provided relates specifically to the type of asset
(cryptocurrency) that is specified in ‘Asset.’ You need to ensure that the ‘Asset’ field is set
to the exact type of cryptocurrency that you will receive/will be sent. If you have more
than one type of cryptocurrency in your wallet and would like to receive a different one
than is displayed, click the arrow to the right to select a different cryptocurrency.
Bitcoin cannot be received at an Ethereum address, vice versa. Different blockchains use
different address formats. If you give an incompatible address to the person sending the
cryptocurrency, their wallet will likely flag it as an error if they try to send
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How To Receive Crypto
cryptocurrency to the wrong type of address. If cryptocurrency is sent to an invalid
address, for whatever reason, it cannot be recovered and is lost forever.
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Once you have specified the type of cryptocurrency you will be receiving, the address your
wallet address created needs to be copied. There is usually a copy button to the right of
the address. On Coinbase, it looks like two sheets of paper on top of each other. This will
copy the address in full so you may paste it into a text or email to the sender. You may
also highlight and copy the address, but that has a higher probability part of the address
may not be copied. Prior to sending the alphanumeric address, triple check your receiving
address to ensure it was copied correctly. The address will be long, so at least check that
the first 5 characters and last 5 characters match what you have copied. If they do, you
can probably assume the ones in the middle do as well. Another option is to take a picture
of the QR code and text or email that to the sender. They can scan that into their wallet
software as the destination address.
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How To Receive Crypto
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Bitcoin blockchain transactions usually take around 10 minutes to complete. Other
blockchains will have different processing speeds. Sometimes the centralized exchange
will wait for multiple verifications before sending the cryptocurrency; this can increase the
wait time before showing up in your wallet.
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How to Receive Crypto
95
What Is Bitcoin
Digital Gold
What Is Bitcoin
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Prior to the inception of Bitcoin, the monetary system was completely institution based.
Governments decide how much local currency to print and issue, impacting its value.
Banks, credit card companies, etc. act as trusted third parties facilitating transactions and
recording them through their own private and centralized systems. Access to many
monetary transactions is often only on business days, usually Monday through Friday.
In addition, there are many people around the world that have no access to a bank or to
any of the financial services so many of us take for granted. Bitcoin is accessible to
anyone with access to the internet, there is no censoring or permission required.
Bitcoin was the first cryptocurrency. It was originally designed as a digital asset to be
used as a direct peer-to-peer electronic cash system. It allows users to hold a form of
currency and make transactions directly with each other without the need for a trusted
third party such as a bank or credit card company to be involved in the transaction. No
one can seize your bitcoin since it is not stored at any central bank or company. The
transactions are relatively fast and the fees are generally low cost.
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What Is Bitcoin
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The founder of Bitcoin is an anonymous person, or persons, going by the name Satoshi
Nakamoto. He/they authored the Bitcoin white paper designed to promote the product by
providing information, diagrams, statistics and other information to draw in investors.
Satoshi Nakamoto was very influential in the early days of Bitcoin, before he/they
mysteriously vanished in 2010 without a trace. No one has met Satoshi Nakamoto in
person, leaving the identify of the founder(s) shrouded in anonymity.
The original price of one bitcoin was under 0.01 cents, in USD value. On April 29, 2021,
one bitcoin was valued around $53,210.11.
You do not need to buy an entire bitcoin; you can buy a fraction of a bitcoin. Each bitcoin
can be split into 100,000,000 pieces. In other words, it can be divided down to 8 decimal
place as the following example shows: 1, 0.1, 0.01, 0.001 -> 0.00000001 bitcoin.
There will only ever be 21 million bitcoins created, as written in the source code. Bitcoin
are generated at a predictable rate. This limited supply makes bitcoin a hedge against
inflation.
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What Is Bitcoin
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As previously discussed, bitcoin runs on the first public, decentralized blockchain called
the Bitcoin blockchain that operates 24/7/365. It employs a “proof of work” consensus
mechanism that uses extremely complex mathematical algorithms to verify transactions.
Proof of work requires extensive use of computational power & electricity.
There are computers (called nodes) on the blockchain that are referred to as miners.
Bitcoin miners are responsible for minting new bitcoin, or bringing new bitcoin into
circulation. Bitcoin miners receive bitcoin as a reward for completing “blocks” of verified
transactions which are added to the blockchain. A block is verified approximately every 10
minutes. Miners also receive fees paid by users for processing transactions.
Every four years, the size of the reward miners get for validating a block is cut in half. This
will occur every four years until all the bitcoin available has been mined. The last bitcoin is
expected to be mined in the year 2140. Halving events can lead to an increase in bitcoin
price as less bitcoin is coming to market. After 2140, miners will only receive
compensation for maintaining the blockchain with fees received for transactions.
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Bitcoin Price Halving Chart
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Bitcoin Mining Operation
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Should You Buy Bitcoin
Cons:
Pros:
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Hedge against inflation
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Very accessible
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Potential for high returns
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You always control your own
cryptocurrency
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Volatility
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Not fully regulated
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Potential for loss of capital
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Impossible to reverse an incorrect
transaction
Can not regulated or censored by a
third party or government
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What Are Altcoins
Non Bitcoin Cryptos
What Are Altcoins - Coins
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Altcoins (alternative to bitcoin) are considered to be any cryptocurrency that is not
Bitcoin.
Ethereum, Polkadot, Litecoin, Stellar and many other cryptocurrencies are not Bitcoin. The
altcoin examples listed above, and others, run on their own blockchain. These
blockchains have their own native digital currency which fuels their network (called gas
on Ethereum) and is also used as rewards for miners processing transactions and
maintaining that blockchain. Ethereum’s native currency is Ether (ETH); Polkadot’s native
currency is DOT; Litecoin’s native currency is LTC; Stellar’s native currency is XLM, etc.
These are also referred to as coins.
These coins can also be used as digital currency. People may invest in, trade and store
these altcoins, similar to the way they do with Bitcoin. Just like bitcoin, you do not need to
buy an entire coin; you can buy a fraction of these altcoins.
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What Are Altcoins - Tokens
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There is another category of altcoins called tokens. While coins are native to their own
blockchain, tokens are built on top of another blockchain like Ethereum. Tokens built on
Ethereum are often referred to as ERC-20 tokens, as they are built to a standard that
allows interoperability with other ERC-20 tokens and compatible services.
Tokens are built on the open-source software of existing blockchains saving dapp and
token developers the time, resources and expense of creating their own distributed and
secure blockchain. Fees need to be paid in the blockchain native currency for the creation
of the token and any token transactions.
Most tokens are created to work with dapps (decentralized applications) and are used to
activate features and functions of the application they were designed for. Tokens are a
representation of a particular asset, utility or application.
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What Are Altcoins - Tokens
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Some of the areas where tokens are being used include the following: Banking and
finance; Lending and borrowing; Currency; Healthcare; Records of property; Governance;
Supply chain; Voting; Gaming; Collectables; Provenance and ownership; Data storage;
Loyalty rewards, Fundraising, and many others.
Altcoin projects are designed to address needs that exist for many different industries
with each project promising to use blockchain and decentralized applications to make
revolutionary changes that will solve different real life problems. While many projects will
succeed, a far, far, far greater number will fail.
Cryptocurrency tokens are created and brought to market through something called an
ICO (Initial Coin Offering). An ICO is similar in concept to an IPO (Initial Public Offering)
that is used with the introduction of a publicly traded stock. Token sales are used to
facilitate the crowdfunding needed to finance a cryptocurrency project.
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What Are Altcoins - Tokens
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Because the cryptocurrency blockchain is unregulated and open-source, anyone can
create a token and claim to be starting a project. Beware that scams are rampant in the
world of ICOs. Billions of dollars worth of cryptocurrency has been lost to fraud, exit
scams (where the project shuts down its operation and the scammers vanish with the
liquidy, leaving the tokens worthless) and hacking due to poor software design.
Some ICOs are used as a pump and dump scheme. Scammers talk up the value of the
ICO in order to generate interest and drive up the value of the tokens, then they quickly sell
the tokens for a profit.
As a beginner, stick with well established cryptocurrencies. There are plenty of ‘shit coins’
out there.
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What Are Stablecoins?
Usually equivalent to $1 USD
What is a Stablecoin
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Stablecoins are a form of cryptocurrency that attempts to provide price stability by
pegging their market value to some external reference. They are usually pegged 1:1 with a
fiat currency, the US dollar being most common. They can also be pegged to the price of
silver, gold, or other cryptocurrencies.
Bitcoin was originally created as a decentralized, peer-to-peer payment system. Due to its
extreme volatility and constant change in value, sometimes from one minute to the next,
it is no longer suitable for that purpose.
Stablecoins are a type cryptocurrency that take advantage of blockchain technology and
provide predictability and stability. They bridge the gap between fiat currency and most
other cryptocurrencies. They offer accessibility, fast transactions, low transaction fees,
security and privacy with predictable stability in value. This encourages the use of
cryptocurrency as a medium of exchange. They also provide a way of holding and
controlling personal funds for individuals that are under-banked or have no bank, or who
risk bank failures or government seizure of their assets in their country.
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What is a Stablecoin
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Most stable coins have a backing of collateral in the form of assets held in reserve. For
example, if a stablecoin is pegged to the US dollar, its developers would need to have
banked $1 for every stablecoin they issue. Some stablecoins use other cryptocurrencies
as collateral. Due to the volatile nature of other cryptocurrencies, they may hold $2 worth
of other cryptocurrencies for each $1 of their stablecoin. Some stablecoins do not have
collaterals; they rely on smart contracts to monitor the supply and demand of their
stablecoin. Based on that, they increase or decrease the supply of the stablecoins so that
their value remains stable.
Stablecoins can also be used as a way to hold the value of the capital received from
selling a cryptocurrency while keeping it in the cryptocurrency market. In this instance,
convert the cryptocurrency you want to sell into stablecoins. Once converted to
stablecoins, the value will not fluctuate. The stablecoins can be held and then quickly
converted into a difference cryptocurrency or fiat currency at a later time. Using
stablecoins removes the extra cost and delays of converting between cryptocurrency
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What is a Stablecoin
and fiat currency. Also, stablecoins do not experience volatility during the transfer from
one exchange to another, unlike other cryptocurrencies.
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Stablecoins are not without any potential risks. Tether, the largest stablecoin by market
cap, has faced accusations of being unable to provide audits to prove they really have the
collateral they claim to have to support their USDT stablecoin. The failed stablecoin
NuBits could not maintain its 1:1 peg with the US dollar due to volatility in bitcoin affecting
the supply and demand for Nubits and Nubits not having sufficient reserves.
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Available Stablecoins
Some of the most popular stablecoins:
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Tether (USDT)
USD Coin (USDC)
DAI (DAI)
Paxos Standard Token (PAX)
Binance USD (BUSD)
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Sending Stablecoins
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Stablecoins are bought, traded/converted, sent, received and sold on an exchange like
other cryptocurrencies.
NOTE: Stablecoins can be built on more than one blockchain. Tether (USDT) is a
stablecoin built on Ethereum, which is most commonly used, but it also exists on EOS,
Tron, Algorand, BCH, OMNI, Liquid Network and Solana blockchains. When you send or
receive USDT you must ensure it is sent to and from the same blockchain. If you use the
wrong blockchain address you might lose your assets. For example, if you try to send
your Omni USDT to an Ethereum USDT address, your USDT will likely be lost and not
recoverable. Remember, wallets do not support every type of cryptocurrency, that
includes stablecoins.
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Types Of Stablecoins
114
Non-Fungible Tokens
What are NFT’S
What Are Non-Fungible Tokens
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NFTs, non-fungible tokens, are a type of cryptocurrency. Each NFT has its own individual
properties, value and characteristics. It is not divisible or interchangeable for other items.
Each NFT shows ownership of a unique item. NTFs are created or ‘minted’ and can
represent both tangible and intangible items.
Bitcoin, on the other hand, is considered to be fungible. One bitcoin is completely
interchangeable with any other bitcoin. Their value defines them, not unique properties.
NFTs have a number of common attributes. They are unique, and their properties are
stored in the token’s metadata. They are provably scarce, and the number of tokens can
be verified on the blockchain. They are indivisible and cannot be split into smaller
denominations. You cannot buy or transfer a fraction of the NFT.
NFTs guarantee ownership of the associated asset, they are easily transferable, and they
are fraud proof. Since these exist on the blockchain, transaction fees apply.
Although NFTs have been around since 2014, they really spiked in interest in 2021 when a
number of high profile sales were made, especially in the area of digital art. A famous
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Non-Fungible Tokens
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digital artist, known as Beeples, sold his digital collage Everydays: The First 5000 Days for
$69.3 million, on March 11, 2021.
The Beeples digital collage is an example of an NFT where it is the only one like it that
exists. Many NFTs may be similar to other NFTs in appearance but they are uniquely
distinguished by a certain characteristic. One example is by which number they are in the
series of a specific NFT, such as number 2 out of 54 minted. The token creator decides
the characteristics of the NFT and how many tokens to mint.
Opensea.oi, Rarible.com, Foundation.app, Super Rare.co, NBA Top Shot.com, are some of
the available NFT marketplaces.
Popular uses for NFTs include: digital art; collectibles; games; music; film; sports; fashion;
virtual avatars; tickets; GIFs, and so on. The uses for NFTs will expand over time as more
real-world objects are tokenized and NFTs are used in increasing complex applications,
such as DeFi (decentralized finance).
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Non-Fungible Tokens
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The vast majority of NFTs are built on the Ethereum blockchain, using the ERC-721, and
the more recent ERC-1155, token standard. NFTs can be supported on any blockchain
using smart contracts.
NFTs have risk associated with them. They are fairly new, so their future is uncertain. An
NFT is only worth what someone is willing to pay for it, so it may resell for less than what
someone paid for it, or no one may want to buy it at all.
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Examples Of NFT Art Sales
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CryptoPunk #7804, an NFT, sold for a
cool 4,200 Ethereum in 2018, at the
time worth $7.5 million USD.
CryptoPunks are a randomly generated
set of 10,000 unique digital characters,
and are some of the early examples of
non-fungible tokens released on the
Ethereum blockchain.
119
Exchange Features
Some Exchanges Offer These Features
Exchange Features
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Many exchanges offer more advanced features for people who have moved beyond being
a beginner to a cryptocurrency trader. In this section we will provide just the highlights of
three regularly used features. As a beginner, you will be most familiar with a market order.
A limit order and stop-limit order are more sophisticated. There are different variations of
limit orders and reasons why and when they would be used as part of your overall
cryptocurrency financial strategy.
Exchanges operate off of something called an order book. An orderbook is a list
containing all the buy or sell orders for cryptocurrency assets, organized by price level and
time of entry. The exchange’s matching engine pairs up buy orders (bids) and sell orders
(asks) with market buy/sell orders, resulting in a trade. The way the order book and and
these features operate is dependant on a number of variables that can be quite complex
affecting the fees you pay, whether your order gets filled, how much of your order gets
filled, at what price it gets filled, etc.
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Market Order - Buy/Sell
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A market order is a request to quickly buy or sell at the current best available price. The
price paid or received depends on a number of variables such as the available liquidly on
the exchange, the filling of orders placed before your’s, and market volatility.
Market orders are used when you are not experienced with using other types of trading
orders (because market orders are far easier to understand and use) or when you are
more concerned about making the buy/sell than you are about the specific price.
When you place a market order, you are matched up with one or more buyers and sellers
(depending on your transaction type) by the exchange until your order is filled, at or
around the current market price. If the market is especially volatile, you could end up
buying at a higher price or selling at a lower price than you expected.
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Limit Order - Buy/Sell
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A limit order is a request to automatically buy or sell at a price specified by you. It places
an order on the order book in hopes of being filled by someone else’s order. The order
remains open until the market price on the exchange reaches the price you specified. You
also specify the amount of cryptocurrency you want to buy or sell.
You may use a limit order to attempt to buy a cryptocurrency at a price lower than the
current market price. As an example, bitcoin is currently selling at $58,000 and you place
a limit order to buy bitcoin at $55,000. If the market price of bitcoin on the exchange
drops to $55,000, the exchange will attempt to fill your order and buy bitcoin for $55,000.
You can also use a limit order to sell a cryptocurrency at a price either above the current
market price or below the current market price. As the price of a cryptocurrency you hold
is rising in price, you may want to sell some of your holdings to secure your profits. For
example, you bought bitcoin at $40,000 and it has now risen above $55,000. You decide
to set a limit order to sell your bitcoin at $58,000. If the market price rises to $58,000, your
limit order will execute giving you $18,000 in profit per bitcoin (less fees), if your bitcoin
sells.
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Limit Order - Buy/Sell
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Or conversely, a limit order can be used to protect your capital when you believe a
cryptocurrency is losing value. If the price of a cryptocurrency you hold is declining in
price and you believe this trend will continue, you may want to sell some or all of your
holdings to protect the money you have already invested. Let’s say you bought bitcoin at
$48,000. The current market price has dropped from $60,000 to $58,000 to $54,000, and
you believe it will continue to drop. You may choose to set a limit order to sell your bitcoin
at $52,000 (or whatever you choose). If the current market price drops to $52,000, the
limit order will execute and the exchange will attempt to sell your bitcoin. If the price does
not drop to $52,000, the limit sell order will not execute. If the bitcoin continues to drop,
you will have secured your initial investment of $48,000, plus a profit of $4,000 per bitcoin
(less fees).
The price paid or received depends on a number of variables such as the available liquidly
on the exchange, the filling of orders placed before your’s, and market volatility.
These orders can stay open for a few minutes or much longer before filling depending on
the direction the market is moving and the filling of orders placed before your’s.
124
Finding Resources
Build Your Knowledge
Where To Begin Finding Information
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Finding cryptocurrency resources and news can often be a challenging task. There is a
ton of information online, but it is cluttered with scams, misinformation, unuseful
information, and paid promotions among other things. You also need to be very careful of
scams.
This section is designed to promote the most respected cryptocurrency related
companies and people in the space. There are cryptocurrency new sources, websites you
should bookmark for researching new cryptocurrencies, official Telegram cryptocurrency
groups, Twitter influencers or Youtube news and personalities.
There are plenty of other awesome resources available that may not have made this short
list. If you check out related videos, related Twitter influencers and related news sources,
you can further your own knowledge while finding credible and reliable resources.
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Etherscan.io
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Etherscan.io is the leading website for blockchain explorer, search, API and analytics
platform for Ethereum, a decentralized smart contracts platform.
Etherscan allows you to view all publicly available information about the Ethereum
blockchain, as well as the tokens that are built on the Ethereum blockchain.
Etherscan allows you to view many useful analytics such as exploring transactions,
prices, addresses, tokens, and all other activities on the Ethereum blockchain.
You can see which Ethereum wallet address hold certain tokens that are built on
Ethereum. This gives you the ability to see what ‘whales’ are investing in.
Etherscan is a free application. Anyone can use it, you do not need to create an account.
127
CoinGecko
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Coingecko, https://www.coingecko.com, is a great resource for researching
cryptocurrencies of interest to you. The Coingecko website should be bookmarked as you
may likely be using it on a regular basis. There is also a mobile phone app.
Coingecko provides a ton of information on different cryptocurrencies. There are
thousands of cryptocurrencies listed. There is information on cryptocurrency markets like
market cap, circulating supply, total supply, current market price, price history and so
much more. It also has information on the DeFi markets, cryptocurrency exchanges and
their liquidity, supported assets, listed trading pairs, and more specific information
regarding exchanges. They also have a portal to track your own portfolio, if you want to
keep track of daily gains or loses of your personal cryptocurrency investments. They also
have a list of helpful news, tools and resources.
CoinGecko is a free application. Anyone can use it, you do not need to create an account.
128
Blockfolio Mobile App
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Blockfolio is a free, incredibly useful mobile phone application. You can download it on
Android or IOS phones.
Blockfolio is an application that allows you to enter and then keep track of your personal
cryptocurrency portfolio. It allows you to access information by cryptocurrency type such
as when a purchase was made, the price of the purchase, any fees paid, any transactions,
and net profit over time.
You can access the latest cryptocurrency news. It also provides useful graphs and other
insightful information relating to cryptocurrency.
If you turn on push notifications, it will alert you when new news comes out about a
cryptocurrency that you are invested in.
Blockfolio can also be used to buy and sell cryptocurrency. If you would like to do that as
well, you will need to set up an account with them. There are many other central
exchanges that are a better choice for that type of activity.
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Get Connected - Twitter
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Twitter is an online community where you can interact with traders, holders, investors,
cryptocurrency hedge fund managers, official crypto project Twitter handles, and so much
more. I highly recommend making a Twitter account.
❏ When in the search bar, you can search for $Link or $Btc to find tweets that talk
about Chainlink or Bitcoin to get more exposure.
Twitter is a great source of information to find breaking news articles, learn about what is
happening in the cryptocurrency space, or just follow some of the brightest minds in the
entire space.
Twitter is one of the most useful websites/phone apps to learn about cryptocurrency.
However, it has lots of scammers and phishing attempts. Be careful about clicking on any
link or anyone offering you free ‘help’.
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Get Connected - Twitter
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The following Twitter accounts will get you access to great insight and information:
1. https://twitter.com/CoinDesk
2. https://twitter.com/BTCTN
3. https://twitter.com/Delphi_Digital
4. https://twitter.com/MessariCrypto
5. https://twitter.com/TheBlockRes
6. https://twitter.com/TheBlock__
7. https://twitter.com/zhusu
8. https://twitter.com/coinmetrics
9. https://twitter.com/CoinTelegrap
10. https://twitter.com/CryptoGodJohn
131
Get Connected - Telegram
❏
❏
Telegram Message is an encrypted Whatsapp spin-off. Use it to keep up with crypto news
channels and the teams of projects you're interested in. There's also a lot of free or paid
trade groups on Telegram. It is best to stay on the official Telegram groups of projects you
are interested in.
❏ Be aware of scammers who try to impersonate moderators!
Telegram groups can be useful for learning about new cryptocurrency projects that you
are considering investing in. You can talk to the moderators on the Telegram, the
community members and even possibly the founders of the project to learn more about
their vision, team, tokenomics, and more.
132
Get Connected - Youtube
❏
❏
❏
❏
Youtube is also a great resource to learn more about cryptocurrencies.
There are many Youtubers who create exceptionally informative content that is easy to
follow and not filled with extra ‘fluff’. They get straight to the point without wasting any
time.
Be aware that on Youtube there is also lots of misinformation, clickbait titles, bad advice,
and generally bad videos. You should always do your own research after watching videos
to confirm that the information provided is correct and up to date.
The comment sections on Youtube are fertile ground for scammers. Beware of any type
of solicitation to help you with investing your cryptocurrency. You need to always use
common sense, good judgement and a lot of suspicion to avoid falling victim to hackers
and scammers.
133
Get Connected - Youtube
❏
These content creators are highly recommended for beginners:
1. Crypto Casey
2. 99 Bitcoins (provides information related to many other cryptocurrencies)
3. Binance Academy has some good beginner videos
❏
These content creators are highly recommended to gain more advanced information:
4. Aantonop (Andreas Antonopoulous)
5. Lark Davis
6. Coin Bureau
7. Altcoin Daily
8. Charlie Chang
9. Chico Crypto
134
Investing Tips/Tricks
How To Be Successful
Investing Tips/Tricks Introduction
❏
❏
The most important thing you can do to invest soundly, protect your money and avoid
worry and stress is to actually do research into the cryptocurrency projects that you want
to invest money in. When you want to venture away from the tried and true
cryptocurrencies into something less known and speculative, you need to understand the
vision, the team, the backers, the token allocation, the tokenomics, and involve yourself in
the community; only then will you increase your understanding and investing expertise.
Due to its relative newness, compared to fiat currency and its financial institutions and
organizations, the world of cryptocurrency is the wild, wild west. It is unregulated, volatile,
uninsured and requires investors to navigate things that are new to them and have great
financial impact to them. There is rarely someone there to hold your hand through the
process.
136
Investing Tips/Tricks Introduction
❏
❏
❏
People often expect to get rich overnight when investing in cryptocurrency: That is not the
case. The market is volatile and can rise and fall rapidly at any given time. Investments
take time to mature and grow. You make the most profits when you think big picture over
a longer time frame. If you are too impatient and cannot handle being negative on your
investment for a while (because that is bound to happen), you should reconsider whether
investing into cryptocurrency is right for you.
There can be extreme financial gains and extreme financial loses in this market.
Investing in the cryptocurrency market can invoke a lot of emotions. You might possibly
feel fear, greed, sadness, confusion and frustration. In order to be successful, you need to
be able to control your emotions, think critically not reactively, and search out help from a
reliable source when needed. Remember, the website Gettingintocrypto.com is there to
help.
137
Diversification Tips
❏
❏
❏
Don’t place all your eggs in one basket! This refers to general Investment wisdom and is
applicable when it comes to cryptocurrency investment: diversify. Diversification is key
for any healthy cryptocurrency portfolio.
Cryptocurrency has come a long way since the inception of bitcoin. Putting money into
bitcoin is the main goal for most new and seasoned investors. There are now many
altcoins that are considered trusted, reliable and worth investing in: Ethereum; Chainlink;
Litecoin; Stellar; Polkadot; and many others. Do your research and also consider investing
in different market sectors for diversification.
You should also diversify by dividing and putting your cryptocurrency holdings in more
than one wallet. Then, if one of your wallets gets compromised, say your master private
key for a wallet (mnemonic phrase) is lost or stolen, you will only lose the cryptocurrency
associated with the compromised wallet; the cryptocurrency associated with your other
wallet(s) will be safe.
138
Make A Investing Plan
The key to success is to make a plan. Do not wing it! You first need to decide:
1.
2.
3.
4.
5.
6.
7.
How much money do you want to invest?
How consistently you want to invest?
How much are you prepared to lose?
How long do you want to hold on it for?
How do you plan to diversify?
Are you willing to research before investing?
Can you stick to your plan?
❏
It is not wise go all in on one cryptocurrency investment. If it fails you will lose everything.
139
Implement Dollar Cost Average
❏
❏
DCA, otherwise known as dollar cost averaging, is a method where you invest a certain
percentage or dollar value of your cryptocurrency funds every day, week, month, or some
particular time period. Investing this way allows you to get a more ‘average’ price for your
cryptocurrency purchases as your investment is spread out over time. It can be set up on
an exchange to occur automatically so you don’t need to worry about following the
market and trying to decide the best time to buy. DCA is beneficial when a market is
constantly going up and down in price.
Let’s say you have $5,000 dollars you wanted to invest in Ethereum. You could either put
all $5,000 in at one time, or you could dollar cost average. If you DCA, you could buy
$1,000 worth of Ethereum, 1 time per week, over the course of 5 weeks. This would give
you a more ‘average’ buy price as you have bought over a longer period of time as
compared to all at one time.
140
Understanding Risk Tolerance
❏
❏
❏
Everyone has different risk tolerance when it comes to investing, this is true when
investing into cryptocurrencies as well.
When you invest in the cryptocurrency market, which is already considered high risk, you
may choose to invest into more well established cryptocurrencies. These well established
cryptocurrencies have a larger market cap, more users, more investors, a larger
community, more developers, etc. This makes them a lower risk cryptocurrency
investment as they are already established over a longer period of time. Examples would
be cryptocurrencies in the top 10 market cap such as Bitcoin, Ethereum, Chainlink, etc.
These cryptocurrencies are lower risk on the scale.
These would be investments for someone who wants to protect their money and invest in
‘safer’ assets. These assets will not return 20x, 50x, or higher returns in the near term like
many of the extremely higher risk cryptocurrencies, but they provide an attractive
investment opportunity.
141
Understanding Risk Tolerance
❏
❏
❏
You may also choose to invest in higher risk cryptocurrency assets. These higher risk
assets typically have a lower market cap, meaning they have less money invested in the
project. They are newer, unproven projects and, therefore, are much riskier and likely to
fail.
This higher risk could (and that is a very big could) lead to greater reward. If you find a
newer project you think will be successful in the long term, you have the potential to make
more money in this type of investment due to the smaller market cap of that
cryptocurrency at the time you buy in.
Investing in cryptocurrencies with a smaller market cap gives higher potential for returns
due to the relatively smaller amount of money needed to double the market cap, and thus
the price.
142
Understanding Bitcoin Dominance
❏
❏
❏
❏
Bitcoin is the world’s largest cryptocurrency by market cap and commands a large portion
of the trading volume in the cryptocurrency markets.
If we look at the summative market capitalizations of all the existing cryptocurrencies,
then we can arrive at a total market cap valuation for the entire cryptocurrency space.
Therefore, the Bitcoin dominance is described as the ratio between the market cap of
Bitcoin to the rest of the cryptocurrency markets.
Bitcoin dominance is often affected by the so-called “alt seasons”, in which altcoins gain
market share relative to Bitcoin, thus reducing Bitcoin’s dominance.
Note: Bitcoin dominance is not always directly affected by bull or bear markets because it
is a ratio. This means that if Bitcoin falls in price, but the rest of the cryptocurrency market
falls at a similar rate, then Bitcoin dominance is likely to remain the same.
143
Cryptocurrency Market Cycles
144
Cryptocurrency Market Cycles
❏
❏
❏
❏
The cryptocurrency market functions similar to traditional market cycles: You have times
when the price is rising, a bull market. You have times when the price is consistently going
lower, a bear market.
In stocks, the general consensus is that a bull market lasts 8 years, while a bear market
lasting 1-2 years. Cryptocurrency is different.
Cryptocurrency cycles are normally cyclicacle. When Bitcoin undergoes a ‘halving’, ta bull
market typically materializes and lasts for 1 to 1.5 years.
After this increase in price, the markets cool off and falls back into a bear market for the
next 2.5 to 3 years, while Bitcoin waits to undergo another halving in the block rewards.
145
Identifying Good Crypto Investments
❏
When looking to invest into a new cryptocurrency project, always research the project to
determine if it is a good short, medium or long term investment. These are different
aspects you should consider researching and understanding before deciding to invest
money into a cryptocurrency project:
1.
2.
3.
4.
5.
6.
7.
8.
Read the white paper (Does it cover all aspects of the project)
What problem does the project solve? (What is the purpose)
What stage are they in? (Have they released anything in the market)
Who is funding the crypto project? (Who are the financial backers/VC investors)
How are the tokens distributed? (Vesting period, lockup for developers, total supply)
How do the tokenomics operate? (Does the token accrue value)
Do they have a large community online? (Who is promoting it)
What are the similar projects that they are ‘competing’ with? (What makes this project
unique?)
What is the current market cap? (Who holds the coins)
9.
146
Helpful Tips To Remember
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❏
❏
❏
❏
❏
❏
You can long and short cryptocurrency. There is money to be made in both directions.
Keep money on the side to buy dips, when they come.
Don’t panic when there is a dip in the market and sell for a loss: Buy low, sell high.
You can trade coins in USDT pairs, as well as Ethereum (Eth) & Bitcoin (Btc) pairs.
Don’t panic over the small daily price movements. If you intend to hold for a longer time
frame, don’t check the price daily. You need to think big picture.
Remember that anyone that asks you to join a Telegram group, offers to double your
coins, or asks for your private keys is a scammer. Stay aware of phishing scams.
There is always money to be made in the cryptocurrency markets, you just need to learn
where to look.
147
Cryptocurrency Terms
Introduction Into Crypto Terms
❏
Cryptocurrency is almost a second language to many people. In the following slides, we
have provided a mixture of cryptocurrency specific terms, common investing terms, and
general slang terms that are commonly used within different cryptocurrency communities
on Twitter, Telegram, Discord, etc.
❏
When you understand these terms it will make reading, researching, and interacting with
individuals in the cryptocurrency space more understandable, especially as they might
use these terms.
❏
The following cryptocurrency terms are organized alphabetically.
149
Common Terms
ACH: Automated Clearing House (ACH) is an
electronic network for direct bank-to-bank
financial transactions of credits and debits in
the USA. An ACH transaction may take more
than three days to complete. A US bank
account is required.
Airdrop: A way to promote cryptocurrencies
by sending some free tokens to traders.
Altcoins: Any cryptocurrency that is not
Bitcoin
Altseason: It is said to be an ‘altseason’
when the total market cap of altcoins is
increasing at a greater rate than the total
market cap of Bitcoin.
Aping: ‘Aping’ is when you buy into a
cryptocurrency project without doing your
due diligence or research.
APY: Annual Percentage Yield (APY) is
commonly used when describing the annual
profit from staking returns or lending returns.
150
Common Terms
ATH: All Time High (ATH) is commonly used
when describing the price of a
cryptocurrency that is currently trading at its
highest price ever.
ATL: All Time Low (ATL) is commonly used
when describing the price of a
cryptocurrency that is currently trading at its
lowest price ever.
Arbitrage: Arbitrage is when a trader
purchases an asset on one exchange and
sells it on a different exchange, profiting from
the deviation between the two prices on each
exchange.
Bag-holder: Is used to describe a person
who holds a specific cryptocurrency when
the price of that crypto is rapidly declining.
Blockchain: A blockchain is essentially a
database that strings together information
and chains it together. New transaction data
is verified then added to a block and then
chained to previous blocks in chronological
order; creating a blockchain.
Blocks: Blocks each contain a cryptographic
hash of the previous block, a timestamp, and
the transaction data. Blocks of transactions
are strung together, creating the blockchain.
151
Common Terms
Bull Market: A bull market refers to the
upward trend of financial markets, such as
the cryptocurrency market.
Bear Market: A bear market refers to the
downward trend of a financial market, such
as the cryptocurrency market.
Bullish: A ‘bullish’ market means that the
entire market of cryptocurrency is trending
upward.
Bearish: A ‘bearish’ market means that the
entire market of cryptocurrency is trending
downward.
Bull Trap: A bull trap is a situation where the
price goes upward and then sharply back
down “trapping” bullish speculators who
bought their cryptocurrency at a higher price.
Bear Trap: A bear trap is a situation where
the price goes downward and then sharply
back up “trapping” bearish speculators who
sold their cryptocurrency, therefore losing out
on the potential profit.
152
Common Terms
BTFD: BTFD stands for ‘buy the freaking dip’.
BTFD is commonly used when referring a
buying opportunity based on the drop of
price in a cryptocurrency market.
CBDC: It is a central bank digital currency. It
is government backed and does not operate
on a blockchain.
Centralized: An organization structure
wherein a small handful of actors have
control over the entire network.
CEX: A CEX is a centralized exchange for
cryptocurrencies. They are used to buy or
exchange cryptocurrencies or other
blockchain based assets. They are
considered centralized because they
ultimately have control of access to
purchasing, selling, and potentially storage of
your cryptocurrency via the account you
setup on their exchange.
Ex: Binance, Coinbase, etc.
153
Common Terms
Circulating Supply: An approximation of the
number of coins that are currently not locked
and available for public transactions.
Cold Wallet: Cold wallets are hardware
devices that need to be purchased. These
wallets are not connected to the internet, so
they are more secure. Examples of cold
wallets would be Ledger or Trezor.
Coin Burn: Coin burning is the process by
which digital currency miners and developers
can remove tokens or coins from circulation,
thereby slowing down inflation rates or
reducing the total circulating supply of coins
Consensus: A consensus mechanism is a
fault-tolerant mechanism that is used in
blockchains to achieve the necessary
agreement on a single data value or a single
state of the network among the
decentralized network operators of the
blockchain.
There are different types of consensus
algorithms:
Proof of Work
Proof of Stake
Proof of History
Proof of Capacity
154
Common Terms
Cryptocurrency: A form of digital currency
that utilizes cryptographic protocols to
record ownership and prevent counterfeiting
CT: CT stands for ‘crypto Twitter’
CT is commonly used when referring to the
cryptocurrency community on Twitter.
Dapp: A Dapp is a decentralized application,
that runs on a blockchain. Dapps have been
popularized by distributed ledger
technologies (DLT) such as the Ethereum
blockchain.
DCA: ‘DCA’ stands for dollar cost averaging.
It is an investment strategy in which an
investor divides up the total amount to be
invested across periodic purchases of a
targeted asset in an effort to reduce the
impact of volatility on the overall purchase.
Decentralized: A system where there are no
centralized points of failure (eg. a pillar that
holds an entire structure up), or an
organization that has no central authority
figure. Bitcoin is an example of a
decentralized system.
155
Common Terms
Decryption: The process of decrypting data
that was previously encrypted (made
unreadable) back to a readable form.
Dump: A common term used to describe
downward market movement, or to describe
the action of selling an individual's holdings.
Defi: ‘Defi’ is short for ‘decentralized finance’,
an umbrella term for a variety of financial
applications which run on decentralized
blockchain technology, usually Ethereum.
DYOR: DYOR stands for ‘Do your own
research’
DYOR is commonly used when referring to
questions about a new cryptocurrency
project.
Example: “I just bought this new project, but
DYOR!”
DEX: A DEX is a decentralized exchange for
cryptocurrencies where you can swap (but
not purchase) cryptocurrencies or other
blockchain based assets without a
centralized agency or intermediary.
Ex: Uniswap, SushiSwap, etc.
156
Common Terms
Encryption: Encryption is a process of
encoding the original form of information
into a secret code that hides the
informations true meaning.
Fiat Currency: Fiat money is any money that
is accepted by a government for paying
taxes or debt, but is not pegged to or backed
directly by gold and other valuables.
Escrow: An escrow is a trusted third party.
An escrow company will hold an asset, in
this case a cryptocurrency, not releasing it
until the specified conditions are met by both
the seller and the buyer to protect the
transaction requirements.
Fomo: Fomo means ‘fear of missing out’.
Fomo is commonly used when talking about
missing out on a buying opportunity during a
rise in price or a the start of a new
cryptocurrency project.
Erc-20: Erc-20 is a design standard for
tokens on the Ethereum blockchain. It allows
for interoperability of tokens.
Fork: A fork is a split in a blockchain that
introduces changes to the protocol creating
two versions of the blockchain.
157
Common Terms
FUD: FUD stands for ‘fear, uncertainty &
doubt’. FUD is commonly used when
referring to negative news articles or
negative information.
Gas Limit: A term refers to the maximum
amount of units of gas user's willingness to
spend on a transaction on Ethereum
blockchain.
Gas: A unit of measurement of the
computational effort in conducting
transactions or smart contracts on Ethereum
blockchain. A fee charged to users for
processing transactions.
Genesis Block: A genesis block is first ever
block of a specific blockchain. Genesis
blocks are often hardcoded into the
blockchain.
Gwei: The monetary denomination of gas,
involving Ether on the Ethereum blockchain.
It is a very small amount of Ether; one Ether
is worth 1 billion gwei.
158
Common Terms
Halving: Halving is a process that happens
on a scheduled timeframe in which the value
of block mining rewards are reduced by half.
This halving of the reward given for mining
blocks, commonly associated with Bitcoin
mining, happens every 4 year.
*Not all cryptocurrencies have halvings*
Hard Fork: A hard is when nodes of the new
blockchain no longer accept the older
versions of the blockchain. This creates a
permanent divergence by creating a new
blockchain.
Ex: Ethereum -> Hard Fork -> Ethereum
Classic blockchain & Ethereum blockchain
HODL: ‘HODL’ is a misspelling of the word
hold and refers to a buy and hold strategy in
the context of cryptocurrencies.
Hot Wallet: Hot wallets are generally free
desktop, cellphone or crypto exchange
interface wallets. These types of wallets are
connected to the internet, so they are more
susceptible to getting exploited.
159
Common Terms
ICO: An ‘ICO’, initial coin offering, is the
equivalent to an IPO, or initial public offering.
A project that is looking to raise money to
create a new token, or service, launches an
ICO to raise funds.
*US residents are not legally allowed to
participant in ICO’s*
IEO: Initial Exchange Offering (IEO) is a
spin-off of Initial Coin Offering (ICO), where
the sales of tokens are conducted on an
exchange rather than privately by the coin
team themselves.
Interoperability: Interoperability refers to the
property of product/systems that are able to
work with products/systems that are
different without any restrictions.
KYC: ‘KYC’ stands for ‘know your customer’.
KYC is used when exchanges request
identity verification. This is meant to help
prevent fraud or illegal activity.
A driver's license number, SSN, passport
information, or other information may be
required prior to being allowed to create an
account.
160
Common Terms
Layer 1: Layer 1 is a term that refers to the
underlying main blockchain architecture.
Primary examples of layer 1 blockchains are
Ethereum and Bitcoin.
Layer 2: Layer 2 is a term that refers to an
overlaying network architecture that is on top
of an underlying blockchain. Primary
examples of this are Matic or Xdai on the
Ethereum network, and the ‘lighting network’
for Bitcoin.
These layer 2 networks serve to increase
scalability and speed of the underlying
blockchains.
Ledger: A record of all financial transactions
that cannot be changed, only appended with
new transactions. In crypto space, it's a
record of all transactions done on the
blockchain.
Lightning Network: It is the "second layer" or
an off-chain of payment protocol that
operates on top of a blockchain. Payments
on this network do not need block
confirmation and will be instant.
161
Common Terms
Liquidity: The ability of a cryptocurrency to
be easily converted into cash or other coins.
Liquidity Providing (LP): A liquidity provider
is a user who funds a liquidity pool with
cryptocurrencies they own to facilitate a
trading platform and earn passive income on
their cryptocurrency via fees for
transactions. When funding the pool, the
providers are usually required to pool two
different assets to enable traders in the pool
to swap assets from one to the other.
Popular platforms to provide liquidity are
Uniswap & SushiSwap.
Long: The term long position describes what
an investor has purchased when they buy
and hold a cryptocurrency with the
expectation that it will rise in value.
Mainnet: Mainnet is the live, operating
network, whereby actual transactions take
place on a distributed ledger.
162
Common Terms
Market Cap: In crypto, market cap is
measured by multiplication of the circulating
supply of cryptocurrency and its current price
per unit to give you the total value of that
market.
Mining: Cryptocurrency mining serves two
functions. The first is verifying, adding
transactions to and securing the blockchain.
The second is to create new tokens via the
mined blocks during proof-of-work protocols,
or PoW.
Mnemonic Phrase: A mnemonic phrase
(also known as mnemonic seed, seed
phrase, or master private key in this
document) is a list of words used in
sequence to access or restore your
cryptocurrency assets.
Moon: A ‘moon’ refers to an extreme spike in
the price of a specific cryptocurrency.
Multi-Sig: They are wallets that require more
than one key for transactions to be
authorized.
163
Common Terms
Node: Within the blockchain network, the
nodes are computers that connect to the
network and have an updated copy of the
blockchain. Some nodes may perform
mining functions.
Non-Custodial: It is a decentralized
type-of-wallet, where the users owns the
private keys to the wallet.
Non-Fungible Token: They are
cryptocurrencies within the Ethereum
blockchain under ERC-721, where each token
refers to a single element that has certain
characteristics. They represent something
unique. In other words, no two non-fungible
tokens are exactly the same.
164
Common Terms
Off Chain: It refers to transactions occurring
outside the blockchain and executed
instantly.
Open-Source: Open-source software is a
type of software released under a license in
which the copyright holder grants users the
rights to study, change, and distribute the
software to anyone and for any purpose.
Oracles: In the context of cryptocurrency,
oracles refers to services which verify and
provide real-world data to blockchains/smart
contracts.
Order Book: An electronic list of all buy and
sell orders in an exchange.
Over The Counter (OTC): Refers to the
process of cryptocurrencies are being traded
outside of an exchange directly between two
parties.
Parabolic: Parabolic is derived from the
mathematical term ‘parabola’.
A parabolic move is when the price, in this
instance of a cryptocurrency, starts slowly
and over time increases faster, causing a
parabola shape on the price history chart.
Peer-to-Peer: A communication protocol
that does not require a central hub.
165
Common Terms
Permissioned Blockchain: It is a private
blockchain where the nodes must be
previously authorized by a central entity.
Ponzi Scheme: A Ponzi scheme is also
referred to as pyramid scheme. It typically
takes the form of an investment scheme
which pays existing investors with funds
collected from new investors.
Portfolio: A portfolio contains information
about all of someone’s current
cryptocurrency holdings in one place.
Pre-Sale: A typically exclusive token sale
event preceding a public ICO.
Privacy Coins: Cryptocurrencies that are
designed to work on their own blockchain
with transaction anonymity and user privacy
in mind.
Private Key: A private key is the 12, 18 or 24
randomized word sequence that is
automatically generated by a wallet, also
called mnemonic phrase or seed words. It is
used to access your crypto if you are
attempting to access it on a new device.
*Note: Do NOT share your private master key
with anyone on the internet.*
166
Common Terms
Proof-of-Work (PoW): An algorithm that
rewards the first person that solves a
computational problem (i.e. mining) to
achieve distributed consensus. Miners
compete to solve difficult cryptographic
puzzles in order to add the next block on the
blockchain.
Proof-of-Stake (PoS): POS was initially
designed to address the massive energy
consumption used in PoW. Rather than
requiring miners / validators to spend
resources on an energy computational
infrastructure, Proof of Stake is a consensus
algorithm that elects block validators to sign
blocks based on the stake weight (an
aggregate of tokens staked and the length of
time staked) of each validator.
167
Common Terms
Protocol: The set of rules that define
interactions on a network, usually involving
consensus, transaction validation, and
network participation on a blockchain.
Public Blockchain: An open sourced
blockchain where participation is public and
permissionless.
Public Key: A public key is used as a means
of identifying wallet addresses. It is an
alphanumeric sequence (address) that is
used to transfer crypto out of or into the
correct wallet destination. Each
cryptocurrency type will have its own
address in the wallet.
Pump & Dump: A market manipulation
method to drive up the price of an asset then
taking profits by selling.
168
Common Terms
Rekt: The term ‘rekt’ is used to refer to
people who make very poor trades or lose
money due to a poor decision.
Resistance Levels: Resistance level is when
the price reaches resistance, meaning that
the buyers are less inclined to buy coins at
this price level and those who hold the
cryptocurrency or bought it earlier find the
price attractive enough to sell.
ROI: ‘ROI’ stands for ‘return on investment’.
ROI is commonly used when talking about
how much profit or loss you made on a
certain investment.
Example: My ROI on Bitcoin is 150%.
Rugpull: A ‘Rugpull’ is essentially a scheme
designed to steal investor assets. This more
commonly occurs on platforms such
Uniswap where investments can be made
into new unproven projects that may scams.
169
Common Terms
Safu: ‘Safu’ means ‘safe’ in cryptocurrency
lingo. If an exchange goes under
maintenance, or is attacked, the CEO might
tweet on Twitter that the funds are safu.
Satoshi: A satoshi (sat) is the smallest
amount of Bitcoin. It is named after the
creator, Satoshi Nakamoto.
A satoshi is equal to 0.00000001 Bitcoin.
Sat: ‘Sat’ is the abbreviation for Satoshi
Seed Words: Seed words, also known as the
master private key, are the 12, 18 or 24
randomized word sequence that is
automatically generated by a wallet. They are
used to access your cryptocurrency if you
are attempting to access it on a new wallet.
*Note: Do NOT share your master private key
(seed words) with anyone on the internet.*
Shilling: Shilling is when someone is
promoting a cryptocurrency project, either
because they personally hold it or they are
paid to promote that cryptocurrency.
170
Common Terms
Shitcoin: A cryptocurrency with no obvious
potential or use case. A waste of money.
Short: A short, or a short position, is created
when a trader sells a cryptocurrency first
with the intention of repurchasing it or
covering it later at a lower price.
Shorting is a strategy used when an investor
anticipates the price of a security will fall in
the short term.
Smart Contracts: Self executing contracts
on the blockchain not needing human
executors or permission.
Staking: Staking is an alternative consensus
mechanism (way to verify and secure
transactions the blockchain) that allows the
validators (similar to miners in PoW) to help
secure the blockchain and earn rewards. For
staking, cryptocurrency is locked up (staked)
in a smart contract. Validators stake their
coins so they can be randomly selected by
the protocol to create a block and be
rewarded. Validators are selected based on
the number of coins they are staking - more
coins means a greater chance. If validators
fail to maintain the network security they are
at risk of losing their stake.
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Common Terms
Support Level: Support is a price level at
which the cryptocurrency price tends to
bounce back up after a down period. At this
level the demand usually picks up and
prevents prices from falling down further as
the buyers find the price attractive enough to
buy and sellers are less willing to sell.
Swing: Swing trading is a style of trading in
which the trader attempts to capture gains in
a relatively short period of time. As an
example, if you anticipate news coming that
will increase the value of a cryptocurrency,
you purchase that cryptocurrency before that
news is announced. After the news is
announced and the value of the
cryptocurrency increases, you sell and take
the profits.
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Common Terms
TA: Technical Analysis is the process of
examining current price charts of a specific
cryptocurrency in order to predict the price
movement.
Testnet: Testnets are useful for developers
or people who want to experiment with
transactions and smart contracts in a test
environment prior to launching on the live
Mainnet.
Ticker: A ticker is a stock or asset symbol
that abbreviates the asset name and it can
be used as an identifier of the asset. Bitcoin’s
ticker is BTC.
Token: Blockchain based unit of value issued
by an organization. It represents something
of value.
Total Supply: All the tokens and coins that
will exist in a cryptocurrency network.
Trading Pairs: These are assets that can be
traded for each other on an exchange — for
example Ethereum/USDT (ETH/USDT).
Trading pairs lets you compare costs
between different cryptocurrencies.
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Common Terms
Trading Volume: The amount of a
cryptocurrency that has been traded in the
last 24 hours.
TPS: Transactions Per Second (TSP). For
example, if there are 10 transactions of
Bitcoin done in 1 minute, the TPS would be
10 transactions/60 seconds = ~0.17 TPS.
Trustless: Refers to a system that is entirely
verifiable.There is no need to trust an action
will be done completely and in good faith.
You know it will because of the way the
system is designed.
Utility Token: A cryptocurrency token that
allows usage of something on a network.
They are also used as means of funding and
investment.
Validator: A block-signing participant of a
Proof of Stake blockchain network, who has
significant tokens staked on the network.
They receive rewards for validating
transactions on the blockchain.
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Common Terms
Wallet: Software or software/hardware client
that handles storage of cryptocurrencies and
allows users to make cryptocurrency
transactions.
Wallet Address: The address is where
cryptocurrency can be stored, sent to and
received from.
Whale: A ‘whale’ is someone or some entity
that owns a large amount of a certain supply
of a cryptocurrency project.
Whitepaper: A whitepaper is an official
document published by the founders or
development team of a cryptocurrency
project that talks about their technology,
team, methodology, product, tokenomics,
vesting schedule, and much more.
Investors read these white papers to learn
about a cryptocurrency and decide if they
wish to invest into that project.
Yield Farming: Yield farming is the act of
leveraging DeFi protocols and products to
generate high rates of return.
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