A Complete Guide to Cryptocurrencies
A Complete Guide to Cryptocurrencies If you haven’t heard the terms “cryptocurrency,” “Bitcoin,” or “digital currency” in recent times, then you can’t have been paying attention. Cryptocurrencies are a MAJOR topic around almost the entire world right now. They have exploded in popularity over the last few years and can genuinely be considered a modern-day phenomenon.
What ARE cryptocurrencies, though? How do they work? Where you can buy them and what can you use them for?
These are all very common questions. Despite the incredible boom that cryptocurrencies have been experiencing, there are still lots of people who know very little about them. And this is not actually surprising.
They’re still relatively new, and although the basic concept is quite simple, there are a lot of complexities involved.
Learning about cryptocurrencies for the first time can be confusing, to say the least. The amount of information to take in can be truly overwhelming, but this shouldn’t put you off. If you want to take the plunge and get involved, we’re here to help.
We’ve taken a keen interest in cryptos (as they’re often shortened to) for a long time. This is partly because they’re a very exciting development that has real potential to change many aspects of our lives. And it’s partly because some cryptocurrencies provide excellent investment and trading opportunities.
The biggest reason for our interest, however, is the fact that cryptocurrencies have a significant role in online gambling. That role is likely to become even MORE significant in the future, too.
We provide full details on how cryptocurrencies can be used for online gambling within this guide. There’s also lots more information and advice about cryptocurrencies in general, how to buy and sell them, how to mine them, and how to use them for the purposes of investment and trading. Please see below for a complete breakdown of everything we cover.
A Complete Guide to Cryptocurrencies What Are Cryptocurrencies?
This is not an easy question to answer in simple terms. We’ll do our best, though. Let’s start with a formal definition, courtesy of Merriam-Webster. Any form of currency that only exists digitally, that usually has no central issuing or regulating authority but instead uses a decentralized system to record transactions and manage the issuance of new units, and that relies on cryptography to prevent counterfeiting and fraudulent transactions.Source – www.merriam-webster.com/dictionary/cryptocurrency
So, now you know what cryptocurrencies are. Okay, maybe not. As accurate as this definition is, it doesn’t exactly tell you EVERYTHING you need to know. We’ll try to explain more clearly by breaking things down.
There are three key points to take away from the above definition. These are as follows:
- Cryptocurrencies only exist digitally (or virtually)
- They are decentralized and not issued or regulated by a single authority or organization
- They use cryptography to secure transactions.
Let’s look at each of these points in a little more detail.
A Complete Guide to Cryptocurrencies Cryptocurrencies Are Digital Currency
A digital or virtual currency is one that does not exist in any tangible form. There are no physical bank notes or coins. The currency exists solely in digital form (essentially a string of numbers) and is stored on computers.
This doesn’t mean that a digital currency isn’t “real.” You can’t actually touch it or hold it, but it’s still there. A good way to think of it is like money stored in a PayPal account.
There’s nothing physically in a PayPal account per se – it’s just a RECORD of how much money is associated with the account.
Although this analogy may help you to understand the basic concept of cryptos, it’s important to recognize a key difference. Money in a PayPal account is always backed up by some form of traditional currency, so it has a real and inherent value. Cryptocurrencies are not backed up by anything, though. Their value is based solely on what the open market thinks they are worth and what people are prepared to pay for them.
Note that cryptocurrencies can be used as a “medium for exchange.” This means that they can be used for buying goods and services, providing the seller is prepared to accept a cryptocurrency as a means of payment.
As such, they can legitimately be considered a currency in their own right – albeit a different type of currency than the ones we are used to.
Cryptocurrencies Are Decentralized
Most of us are familiar with traditional currencies such as the United States Dollar, the British Pound, and the Euro. These are known as “fiat currencies,” and they are backed by a government and considered to be legal tender. Each currency is managed either directly by the government or by a government-appointed authority.
The relevant authority is responsible for controlling the supply of currency and can affect its value by creating more of it and/or adjusting the interest rates associated with the currency.
The Bank of England, for example, can choose when to print more British Pounds. This typically reduces the value of the currency, as there is more of it in supply. Cryptocurrencies are classified as decentralized because they have no such authority associated with them.
No single individual or organization has control of them, and their supply is determined by the rate at which they are created. They are all created in slightly different ways, but most of them rely on a process known as “mining.” We’ll explain more about that a little later.
Cryptocurrencies Use Cryptography
Cryptography is a form of digital encryption. It’s used to secure cryptocurrencies and also to verify and record associated transactions. This is where things start to get a little technical, but you don’t actually HAVE to understand cryptography in order to buy or use cryptos.
If you’re interested in learning more, however, we explain everything in more detail on the following page.
Bitcoin and Other Popular Cryptocurrencies
The crypto boom effectively got underway in 2009, when Bitcoin was launched by the mysterious Satoshi Nakamoto.
It wasn’t exactly an instant success, but it started to gain traction over time. It wasn’t long before terms such as “digital currency,” “cryptocurrency,” and “blockchain” entered the mainstream.
It also wasn’t long before alternatives to Bitcoin were being launched. Namecoin was one of the first cryptocurrencies to follow Bitcoin, but it never really took off.
Several others were launched without any real success, too, as they typically failed to improve upon Bitcoin in any way. Some of the early alternatives are still around today, though.
These alternatives to Bitcoin became known as “altcoins,” and there are new ones being launched all the time. It’s difficult, if not impossible, to know which ones will stand the test of time, but it appears that there’s room in the market for more than just one cryptocurrency.
As it stands right now, the following altcoins are among the best known and most widely used. Any one of them could collapse completely at any time, but they’re reasonably well established and definitely have the potential to succeed.
Although Bitcoin remains the leading crypto, for now, that could easily change in the future. If you plan on getting involved with cryptocurrency on any level, we strongly recommend staying up to date with the leading altcoins. The following page will help with this and is a part of our guide that will be regularly updated.
How to Buy Cryptocurrencies
Buying cryptocurrencies is not as complicated as you might expect it to be. It’s no more difficult than buying traditional currency, really, it’s just that the process is not quite the same. The biggest difference is that you can’t simply walk into a bank or exchange bureau and buy it on the spot. All transactions are handled online, and you’ll need the following to get started:
- A cryptocurrency wallet
- An account with a cryptocurrency exchange
Don’t worry if you have no idea what these things are – we’re about to explain.
Cryptocurrencies may not exist in tangible form, but they still have to be stored somewhere. This is where wallets come in. Cryptocurrency wallets are basically a type of software program that stores the information and code relating to any digital currency you own. They interact with the public record of transactions to enable you to monitor your balance and send and receive digital coins and tokens. We explain more about wallets on the following page, where we also list our recommendations for the best ones to use.
Cryptocurrency exchanges are online platforms where you can buy and sell cryptocurrency. They are typically “peer-to-peer” networks, which means you’ll be transacting with other individuals rather than the exchange itself. The exchange is effectively just the middleman. Exchanges usually allow you to buy or sell a cryptocurrency using traditional currencies or alternative cryptocurrencies. For example, you could choose to buy Bitcoin with US dollars, and then sell it in exchange for Ethereum. For more information on exchanges, including a list of the best ones to use, please see the following pages.
Something you should know about cryptocurrencies is that buying them is not the ONLY way to get your hands on them. You can also create them using a process known as mining. This involves using computing power to solve equations and/or record and verify transactions. In exchange for this, you earn some cryptocurrency to sell, keep, or use. We explain all about the mining process on the following page, which also includes additional details on the processes involved with buying and selling cryptocurrency.
Gambling Online with Cryptocurrencies
We mentioned right at the start of this page that cryptocurrencies have a significant role in online gambling. This is because an increasing number of gambling sites have started to accept cryptocurrency deposits for users to gamble with. This has HUGE implications for the online gambling industry. There are several reasons why this is, but one, in particular, is already making a major difference for gamblers all over the world. Cryptocurrencies can make depositing and withdrawing at gambling sites MUCH faster and easier than traditional banking options.
Transactions involving cryptocurrency can typically be processed instantly. There are no complications such as needing confirmation from a payment provider or approval from a bank. Any cryptocurrency you own can be sent to anyone, anywhere, with just a few keystrokes. So, in theory at least, any online gambling deposits you make using cryptocurrency should be available for you to gamble with immediately.
Perhaps more importantly, the gambling sites are able to send you any cryptocurrency withdrawals just as soon as they’re processed and approved. This is a really big deal in regions where online gambling is illegal – or at least not explicitly legal. In the United States, for example, it can be difficult to make deposits using credit cards or bank cards. Financial institutions are governed by a piece of legislation known as the UIGEA, which prohibits the processing of online gambling transactions despite it not technically being illegal to gamble online.
There are no financial institutions involved in the transfer of cryptocurrency, though, so UIGEA is effectively rendered irrelevant. We explain more about the role of cryptocurrency in online gambling on the following page. We also explain how to use cryptocurrency at online gambling sites and provide some useful tips and advice. And, if you’ve come to this page looking for somewhere to gamble with cryptocurrency RIGHT NOW, you’ll be pleased to learn we have you covered. The page also includes a list of our top recommendations for gambling sites that accept deposits using cryptocurrency. These are all top-quality sites that have proved to be reputable and trustworthy.
Useful Cryptocurrency Resources
We’ve made sure that our cryptocurrency guide is a comprehensive resource that covers everything you HAVE to know to get started. We’ll be regularly updating it and expanding it, too, to make it even better. However, it’s not the ONLY cryptocurrency resource you should use. There are lots of other resources that can help you in different ways and also various tools that can be useful. Here are some examples:
- General information sites
- News sites
- Mining tools
- Value trackers
- Analysis and other investment tools
- Security tools
- Training courses
- Mobile apps
As part of making our cryptocurrency as valuable as possible, we’ve included a page where we list the best resources and tools in all of the above categories (and more). We strongly recommend checking it out.
Cryptocurrency Glossary and FAQ：
There are lots of words and phrases associated with cryptocurrency that you may not fully understand as a beginner. Here’s a list of some of the most common ones you’ll want to be familiar with, along with a brief definition of each one.
- Altcoin – Derived from “alternative coin,” altcoin refers to any cryptocurrency other than Bitcoin.
- ATH – An acronym for “all-time high,” which refers to the highest price/value a cryptocurrency has reached.
- Block – A package of data that records cryptocurrency transactions that have been made.
- Blockchain – A blockchain is made up of individual blocks that record transactions. It effectively serves as a shared ledger that permanently records all transactions for a specific cryptocurrency.
- Block Explore – An online tool that “explores” the blockchain in order to display information on past transactions.
- Block Reward – An incentive paid to a person or organization for verifying cryptocurrency transactions and recording them in a block.
- Circulating Supply – The total amount of coins or tokens of a cryptocurrency that exist in the public market.
- Cold Storage – A method for keeping cryptocurrency offline to protect it from being hacked or stolen.
- Decentralized – A market structure where there is no central authority or organization with ultimate control.
- Digital Currency – A currency that does not exist in tangible form. It exists only as digital code, which is effectively just a string of numbers.
- Fork – The act of a blockchain splitting into two separate chains to create a new currency or a derivative of an existing one.
- Hardware Wallet – This type of crypto wallet is a physical device that can securely store digital currency.
- Hash – The act of converting an input of data into an encrypted data output. Used to record transactions on a blockchain.
- Hash Rate – Measures the performance of a computer or mining rig used for mining cryptos.
- ICOShort for initial coin offering. A fundraising mechanism is used by new cryptocurrencies, where the new currency is offered in exchange for existing currencies.
- Market Capitalization – Often shortened to market cap. The total value of the circulating supply of a specific cryptocurrency.
- Maximum Supply – The maximum amount of a cryptocurrency that will ever exist/be created.
- Mining Rig – A computer (or network of computers) set up specifically to mine cryptocurrency.
- Private Key – A string of data/code that allows you to access the currency stored in your software wallet.
- Proof of Stake – An algorithm that rewards crypto miners for solving computational puzzles/problems/equations. Rewards are based on how much existing currency they own.
- Proof of Work – An algorithm that rewards crypto miners based on being the first to solve a computational puzzle/problem/equation.
- Software Wallet – A type of cryptocurrency wallet that exists solely as files on a computer.
You’ll find more detailed descriptions of these terms (and many others) throughout our cryptocurrency guide. Now here are a few fairly basic questions that we often get asked by beginners to cryptocurrency, along with our answers.
The creation of a true digital currency had been attempted long before Bitcoin ever came about. None of them were ever successful, though, and it’s Bitcoin that is widely accepted as the first ever cryptocurrency. Launched in 2009 and still going today, Bitcoin was effectively the start of cryptocurrencies as we know them today.
There’s no point in answering this question. Counting up the number of cryptocurrencies in existence right now would take a significant amount of time and also be futile.There are currently well over 1,000, and that number continues to grow. There are new ones being launched on an almost daily basis, which makes it almost impossible to keep track of things.
This depends on where you live. A lot of countries have not yet introduced legislation to deal with the use of cryptocurrencies, so it’s often something of a grey area. It may not be explicitly legal, but it’s not explicitly illegal, either.Where this is the case, you can probably use cryptos without the fear of repercussions. Please don’t consider this legal advice, though, as we’re not qualified to offer that.Some countries HAVE passed laws which make the legal status of cryptocurrencies clear, so if you live in one of those, then there’ll be defined rules about what you can and can’t do. We couldn’t possibly list all the relevant laws for every single country here, though, so our best advice is to check your local laws for yourself.
Cryptocurrency is safe in the sense that you can take steps to secure any currency you own. If you use reputable wallets and exchanges and protect your computer and mobile devices against unwanted intrusion, then there’s no reason why your currency shouldn’t be safe.Whether it’s a safe INVESTMENT is another question entirely, and not one we can answer. In fact, it’s not one that ANYONE can answer. Nobody knows for certain what will happen to the value of cryptocurrencies in the future, in the same way that nobody knows for certain what will happen to the value of traditional investments such as stocks, gold, and property.It’s fair to say that some cryptos could be considered safer than others, but there’s always the risk of loss. As we mentioned earlier, this is something you MUST keep in mind when buying or investing in digital currencies.
Cryptocurrency transactions are widely described as being anonymous, but a better description would be PSEUDONYMOUS. In some ways, making financial transactions using cryptos can be likened to an author writing under a pseudonym (a false name).All transactions made by a person or an organization are technically traceable, but only to the digital address used by that person or organization. That digital address is private, and there is no obvious or easy way to determine the person or organization behind it.There is no personally-identifying information directly associated with a digital address used to send and receive cryptocurrencies.In theory, though, it could be hacked or discovered by some other method.
simple answer, but there ARE other factors that can have an effect, too. The publicity surrounding a currency, how easy it is to mine, its underlying framework, and its practical uses can all come into play.
Although we can’t say for sure, we’re pretty confident that they are. Just how big of a part they’ll play in global finance remains to be seen, but it seems extremely unlikely at this point that they’ll simply disappear. We’ll probably end up with just a few major ones rather than the hundreds we have now, though.
Again, we can’t say for sure. We seriously doubt this will happen any time soon, though, and it probably won’t be for several generations if it ever does happen. It’s hard to imagine that governments will want to lose the monetary control that they currently have.At SOME point in the future? It’s possible, yes. We live in a digital age, and that’s not going to change. It makes some degree of sense that the currencies we’ll use will ultimately become digitally based.