Cryptocurrency

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Cryptocurrencies are new currencies derived mostly from a technology called blockchain. They work just like any other currency, except that they have no corporeal form and exist only in digital space. This isn't as big of a problem as one might think, and it certainly doesn't make them more likely to vanish, as many initially suspect. This is because blockchain technology relies on hundreds and thousands of computers (generally called "nodes") that carry a complete copy of the blockchain, and the entire network history is stored within that chain. In order to destroy Bitcoin, the biggest and first cryptocurrency, every single computer storing this blockchain would need to be destroyed, and this is something that could only be accomplished by a supernova or some other cataclysmic-level event. Because of this, they are typically referred to as "decentralized," though the extent to which this is true varies from coin to coin.

Why Bother?

One of the main reasons that people are turning Federal Reserve Notes into cryptocurrencies is the promise of an increase in wealth relative to the USD. It's hard to argue with this, since people who bought a thousand Bitcoins back when they were worth ten cents are now millionaires and billionaires, but the truth is that cryptocurrencies were never meant to be a way to make money. That said, there is the potential to make a lot of money, relative to the USD, and the ship hasn't sailed, despite what many people seem to think (see Don't Be That Person below). But "return on an investment" is not a good reason to purchase cryptocurrencies, and, in fact, cryptocurrencies shouldn't be treated as investments or assets. They are currencies.

Have you ever gone to buy a video game in the Microsoft store, or the PlayStation Store, and couldn't just pay USD directly? They forced you to buy 1600 Microsoft Points or whatever, and then use those points to buy the game? Cryptocurrencies are kind of like that, except with the goal of being used across the world, almost instantaneously, and for an unlimited variety of goods and services. The Free State Project in New Hampshire has already seen an enormous rise in the number of brick-and-mortar businesses that accept cyrptocurrencies as payment, allowing people to buy replacement vapor devices, cigarettes, and food with cryptocurrencies. That is the future planned for the crypto market. It's not about making money. It's about creating a currency that is strong, reliable, and doesn't lose 95% of its value over a century; it's about we the people creating our own currency to use, one that cannot be controlled by a cartel of private bankers who manipulate it for their own benefit (this is not a conspiracy theory, but how the Federal Reserve Bank actually works--it is not a part of the Federal Government), and one that is safe, secure, reliable, and strong.

Cryptocurrencies further erode national borders. If an online store in Japan accepts Ethereum as payment, then there are no International Fees involved in spending USD, having my bank transfer them into Yen, and charging me for doing it. There is no bank to take money out of my account for providing the "service" of holding my money for me and loaning it out to people. There is no taxation theft involved, as no government even has the capability (and, in theory, never can) to track and tax steal a portion of each transaction for themselves.

This is not about making money. This is about giving We the People control of our lives and taking financial autonomy for ourselves. It is about telling the government that they have absolutely no right to control our prosperity, or to manipulate the balances in their favor while bleeding us dry with tax rates theft rates that have long passed the threshold of "obscene." Cryptocurrencies, in this sense, are a way of bringing offshore banking to the masses. But it's so much more than that. It protects us from the invisible tax of inflation, which governments around the world use to hide their debts and spend money they don't have, which forces our children and grandchildren to pick up the tab in ways they don't even notice--with drastically reduced innovations and lowered standards of living. This is not "romanticizing" cryptocurrencies. This is the plan. This is the goal. We will control our own fates and destinies. And as the mechanism by which we secure our wages, by which we invest in our own futures, by which we provide for our families and friends, by which we grow and prosper and thrive, the tremendous power that is control of the money that allows us to do these things should not ever be vested in the hands of a few.

It's so cliche to say, but we are creating a new paradigm. It's not about cashing out of Bitcoin when it's at 10,000 USD and pocketing billions of dollars in profits. It's about securing your stake in the new world.

Understanding Cryptos

The world's first cryptocurrency, and first use of blockchain technology.
The best way for those unfamiliar with cryptocurrencies to understand them is to scratch "crypto" from the label entirely. Think of Bitcoin just as you would Federal Reserve Notes (USD). Or, even better, think of them exactly like the digital currency that we already use. A person can receive a paycheck, deposit it into a checking account, and then spend all of it without ever actually touching a single dollar bill, with all of it happening digitally. So the world has had digital currencies for a long time, and cryptocurrencies are "just" a new, secure, reliable, and anonymous way of doing it.

The primary difference between cryptocurrencies and traditional currencies is that every single transaction ever made with a cryptocurrency is recorded in what is called the blockchain. The vast majority of transactions in USD have not been recorded. Those that have been recorded are not publicly available for viewing. When a person pays $30 to Wal-Mart, there is technically a paper trail, but a very minor one--it is impossible to know who paid the money, so only part of the transaction is actually recorded. The paper trail becomes clearer when debit cards and checks are used, but this information still isn't publicly available, and so there is no master ledger that contains all USD transactions. Due to existing only digitally, cryptocurrencies require the transaction to be recorded in a ledger, and this ledger is called the blockchain. If a person receives 30USD, then it doesn't matter to them if the transaction is recorded or not; they are holding the USD that proves they own it.

Blockchain

An example of a forked blockchain.
Imagine that you have a spreadsheet that two people edit regularly. If both have the file open and make different changes to the document, what happens? One will generally overwrite the other's changes. This problem becomes exponentially difficult to handle as the number of users increases. If three thousand people edit a single document, then where is the "master" document? What information is in this master document? If Person A enters "70" into a field, and Person B enters "71" into the field, which is correct?

Blockchain solves the latter problem by finding out which number people put most often. If two thousand of the users used "71," then the technology essentially chooses "71" as the right answer, and that number is stored. It's a tad more difficult and nuanced than this, because each field has only one right answer and, barring a glitch in the computer (the "node" or "miner") performing the calculation , won't come up with any other answer. Once this spreadsheet (called a "block") is filled , a piece of data is added to the beginning of the next one called a "pointer" that points directly to the previous spreadsheet. Each block starts by pointing to the previous block. This is why it's called "blockchain." In real terms, miners aren't editing fields in a spreadsheet, and it would be somewhat closer to say they are adding pages to the same spreadsheet. In blockchain, the copy with the most pages is the "most correct" and therefore "master" copy.

Once a page in this spreadsheet is completed, it cannot be altered, which is why drastic changes in the coding result in what is called a hard fork. The immutable nature of previously-complete blocks means that future blocks that do not conform to its standards are not truly compatible, and the blockchain has "forked" rather than remaining contiguous. In practical terms, the network continues operating mostly as it had done before, at least for the majority of users, but in technical terms the blockchain has forked. Think of such forks as creating new spreadsheets and pointing the first page of the new spreadsheet to the last page of the old spreadsheet. Users continue working in the new spreadsheet, and their work continues as it had before, with little or no disruption, and the fork only matters to the tech people who have to do complicated things to the spreadsheet, not to the people who enter data (use the currency). Sometimes, however, the fork is contentious, with one group continuing to edit the original spreadsheet, and others moving to the new spreadsheet. This is what happened with Ethereum and Ethereum Classic, and is the reason Bitcoin Cash forked from Bitcoin. Although every fork is technically a new currency and blockchain, in non-contended forks, users and miners continue on basically like nothing happened, and treat the new currency as though it's identical to the old. For example, the currency currently called "Bitcoin" is technically a very different currency from what it initially was, but most people still call it "Bitcoin", while the chain closest to the initial one is called something else (Bitcoin Cash).

Where Do Cryptos Exist?

In cryptocurrencies, the blockchain contains the transaction history of all the currency on the network. The wallet does not actually contain any cryptocurrency; it contains only the Public Key used to identify that wallet, and the Private Key used to unlock it. Wallet software uses the Public Key to find the unique addresses' most recently recorded balance on the network. It's very similar to how a debit card doesn't actually have any money on it. The debit card merely points to an account that has money inside of it. Think of the Public Key as the debit card number, and the Private Key as the PIN for that debit card. The wallet functions as the debit card itself. It is quite simple to use Blockchain Explorers to search for transactions made by an address, which is a long series of seemingly random, case-sensitive characters. The blockchain, after all, is publicly available to anyone and everyone who wants to take a look at it. This is its primary strength. With cryptocurrencies, you can basically type in "the debit card number" and find out the balance of that debit card, but that's all that can be done without the PIN (the Private Key).

A real-life wallet, for example, has the currency actually inside of it. A person can open their wallet and find inside of it dollar bills that are actually stored inside of that wallet. In cryptocurrencies, the money isn't actually inside the wallet, which is why it's more similar to a debit card than an actual wallet. The most common misconception among crypto users is that the money is stored inside the wallet.

Don't Be That Person

There are countless people currently saying, "I wish I'd bought Bitcoin when it was $50. I had the chance to, but... I didn't do it." Then they said, "I wish I'd bought Bitcoin when it was $500. I had the chance to, but... I didn't." Most recently, they've said, "I wish I'd bought Bitcoin when it was $5,000. I had the opportunity to, but... I didn't." Rest assured that, a year from now, they will almost certainly be saying, "I wish I'd bought Bitcoin when it was $10,000, but... I didn't." It's true that a tenfold increase in Bitcoin's value isn't likely to happen any time soon, not without mass adoption, and we're far from the point of mass adoption. But it's not unlikely that it will double or triple in the next few months. Bitcoin aside, though, there are numerous cryptocurrencies that could be purchased by someone hoping to get more "bang for the buck." There's Litecoin, Ethereum, and others. Litcoin has more than doubled since 1 July, 2017, and is up more than 2000% this year. The ship has not sailed, and it won't have sailed until we reach mass adoption. Don't be that person saying, "I wish I'd bought x cryptocurrency when it was $y. I had the chance to, but... I didn't."

Getting Started

Those wishing to get started purchasing cryptocurrencies (and there's no reason to put it off) would be best advised to use Coinbase, a San Francisco-based company and the largest cryptocurrency exchange in the United States. They receive a lot of criticism, but do quite a lot for the crypto market, and have three coins for sale: Bitcoin, Ethereum, and Litecoin. Many people would suggest more complex exchanges like Kraken or Bittrex, but Coinbase is the most reliable and safest exchange for a beginner. Simply create an account with them, attach a bank account or debit card to the Coinbase account, and start making purchases. It wasn't always so simple, but it is that simple now.

Once this is done, one is best advised to downloaded the Coinomi or Jaxx wallets onto one's phone. Jaxx is particularly useful, as it has both a PC and smartphone version, while Coinomi is limited to smartphones. The setup is simple, during which users will be presented with an enormous list of coins. Most of these coins are junk, hence this website. Beginners are advised to add only cryptocurrencies they are familiar with, such as Bitcoin and Ethereum, and to not add currencies like Hempcoin and Belacoin.

Sending & Receiving

In order to send cryptocurrencies, you'll need the address of the receiver. In Coinomi, this information can be gotten by opening the cryptocurrency you wish to receive, and swiping left to "Receive." Coinomi helpfully breaks the wallet address into several parts. You'll notice that, each time you receive that currency, the wallet address changes. This is normal, and is done to protect your privacy. This address is the one you'll need to copy and paste into Coinbase's "To" field in order to send the cryptocurrency. Coinbase is somewhat unhelpful in that they will not tell you how much of your available cryptocurrency is spendable (fees prevent some from being spendable), and it asks you to set the amount you're sending in USD rather than the cryptocurrency itself.

This is done primarily because every exchange (places where cryptocurrencies are bought, sold, and traded) providers users with wallets, but withhold the private keys. Because of this, the exchange ultimately controls the cryptocurrencies that are stored in its wallet, rather than the user. When hard forks happen, they do not usually turn over the newly created currency to customers. With both Coinomi and Jaxx, the user and only the user has the private keys, so follow the instructions and write down your recovery phrase somewhere secure and safe--and don't give it to anyone. It's completely okay to give people your Public Key--your wallet address, found under "Receive"--but one should not ever give someone their private keys. Of course, it's a little difficult to even find one's private keys, and it's not something that can really be done by accident.

Shapeshift & Changelly

Once the cryptocurrencies are in a Coinomi or Jaxx address, if you wish to convert them into a more obscure currency, such as Blackcoin or Bitcoin Gold, services are available within the Jaxx and Coinomi software to facilitate this. It involves a small fee, but this is still the simplest and easiest way to acquire coins not listed on Coinbase. Please note that Changelly's fees are not substantially lower than Shapeshift's; however, Shapeshift simply includes its fee in the conversation rate, and Changelly does not. Only Shapeshift is available to Jaxx users as of 25 Nov 2017, though this may change in the future. The truly notable difference between Changelly and Shapeshift is that they offer different cryptocurrencies: Changelly offers Bitcoin Gold, while Shapeshift does not, and Shapeshift offers Potcoin while Changelly does not.

These services can get rather expensive, since each transaction requires a fee to be paid, and the exchange of one currency for another includes a fee from Changelly and Shapeshift. Many people alternate between cryptocurrencies in order to make a profit, and this is very much possible, even with the fee, but it's not recommended for beginners, and there is more luck involved than most are comfortable with.

What Next?

That's pretty much it. Either hold onto them and wait for the inevitable collapse of the scamcoin USD, or find a store or service that accepts the cryptocurrency as payment, and send it as payment. Or treat them like an asset, waiting until they have gained considerably in value and then selling them. In this case, it probably wouldn't be the best idea to move them from the exchange's wallet.

Staying Safe

Do not:

  • Lose the list of random words you are given when setting up your wallet.
  • Give anyone your private key.
  • Mess with transaction fees unless you have some idea of what you're doing. The wallet software will handle them.
  • Wait any longer to purchase cryptocurrencies!

I deleted a coin / the entire wallet! What do I do?

So you uninstalled Coinomi accidentally, or you deleted Bitcoin out of its interface. No biggie. Just use the Add Coin function to add the coin back in--all of your cryptocurrency is still there (it never went anywhere, after all). If you uninstalled the wallet, all you must do is reinstall it and enter your backup passphrase. You... You did write that down, didn't you?

++continuation== This page is not yet finished. It's a complex subject requiring more than one evening of typing to fully address.