Need an introduction to cryptocurrency? We serve up the basics of blockchain and Bitcoin, what you need to know before considering investing in crypto, what the heck cryptocurrency is, and exactly how it works.
What is a blockchain?
By definition, a blockchain is a decentralized ledger that allows transactions across a peer-to-peer network.
So what does that mean? It’s a growing list of records. Each block contains information and together these blocks form a chain that cannot be changed or destroyed – like a Google sheet of display only permissions.
You can also visualize the blockchain as train tracks. These tracks are the foundation on which cryptocurrencies (and NFTs) run. The blockchain provides security and infrastructure that keeps the trains – crypto and NFT – safe, without them needing to be controlled by a central figure or bank. There are many blockchains, and even more cryptocurrencies, running off of these blockchains.
What is the benefit of the blockchain for me?
- With decentralized finance (DeFi), you can act like a bank – borrow, lend and earn interest on your cryptocurrency holdings.
- Proof of ownership for creators, artists and brands means lifetime royalties on future sales and control over supply and scarcity.
- Blockchain can support consumer safety, store medical records and increase transparency between consumers and companies.
What is cryptocurrency?
Cryptocurrency is decentralized, digital currency that runs on the blockchain. Different cryptocurrencies have different purposes (referred to as utility). Crypto tools can range from gaming to supply chain management to payment processing. Some cryptos run on their own blockchains (like Bitcoin or Ethereum). These cryptocurrencies are called coins. Some cryptos do not have their own blockchain, and instead run on another coin’s blockchain. These are called tokens.
Understanding cryptocurrency exchanges
Cryptocurrency exchanges are platforms where you can buy and sell crypto. Some crypto exchanges are centralized, meaning they are run by one company. Other exchanges are decentralized, meaning they are built on a blockchain network and use smart contacts to facilitate transactions. For those just starting out, we recommend Coinbase or Gemini Exchange. These are trusted centralized exchanges that offer customer support and coin training.
Cryptocurrency Wallet Basics
A cryptocurrency wallet is a physical (hardware) or online (software) device that stores your public and private keys. These keys give you access to your crypto. Without your private key, your crypto cannot be accessed. Having your money in a wallet means you have full custody and ownership. You should always store your crypto in a wallet, and never leave it on an exchange. It is important to know that not all wallets are compatible with all cryptocurrencies. For starters, we like MetaMask as a software wallet and Ledger Nano S as a hardware wallet.
What you should know for your first purchase
- Do your own research on the cryptocurrency you choose to invest in.
- Know that you can buy crypto fractional – you don’t need to buy a full Bitcoin to invest in it. Try starting with just $20.
- Plan to hold for the long term. Crypto can be very volatile.
How to get started
1. Sign up for a cryptocurrency exchange.
2. Select three projects you want to investigate from their available crypto projects.
3. After the survey, select the coin(s) you want to buy.
4. Download or buy a crypto wallet compatible with your coins.
5. Transfer your crypto to your wallet to keep it safe.
