Crypto Basics

Foundational Crypto Basics

Most people do not know much about crypto basics. In fact, they are often surprised to discover just how vast the crypto space is.

As of now, there are over 2.4 million cryptocurrencies. Considering that cryptocurrency began with just one cryptocurrency—Bitcoin—in 2008, this is quite astonishing.

However, the crypto space is not limited to cryptocurrencies. While the term ‘cryptocurrency’ serves as an umbrella to describe this space, there is much more happening beneath the surface.

Many people do not realise that the cryptocurrency space represents a new financial system, currently operating as a parallel system alongside the traditional one.

I have aimed to break this article down to cover as many of the basics as possible. If you’re already familiar with certain sections, feel free to skip ahead.

What is Cryptocurrency Anyway?

Cryptocurrency or crypto for short, is a digital currency. It is very much like the US dollar, Euro, British pound or any other sovereign (fiat) currency.

The main difference is that cryptocurrencies are not issued by central banks or governments. They are entirely digital, meaning they have no physical cash equivalents. So, even when you see images of Bitcoin “coins”, these are merely representations. In this case, the coins sold on Amazon in the example image, are collectibles and not actual Bitcoins.

A few examples of cryptocurrency are Bitcoin, Etherium and Monero.

If you want to learn more about the technical aspects of cryptocurrencies you can have a look at the article what is cryptocurrency? This is supplemental material to this article, which serves as a foundation for building your crypto basics knowledge.

Can You Spend Crypto?

Cryptocurrencies are not widely used for transactions at this point in time. However, the space is continually being built and is evolving.

Cryptocurrencies are gradually being adopted, although it has been quite slow progress. You may find that you have the option to pay with crypto instead of fiat at certain stores. More often than not, stores that accept crypto as payment will accept only Bitcoin.

There is also the option of using crypto credit cards, which make owning crypto more appealing by adding convenience. Partnered with Visa or Mastercard, these cards allow you to spend crypto at both brick-and-mortar stores and online.

Crypto credit cards are linked to an account that supports both fiat currency and your chosen cryptocurrency. To make a payment, you can either exchange crypto to load your fiat balance or let the card automatically convert the crypto for you at the point of purchase.

What is the Difference between Bitcoin and Blockchain?

Blockchain is the underlying technology that is often chosen as the building blocks for a cryptocurrency network, like in the case of Bitcoin.

Blockchain is a type of ledger that records all the transactions that happen on the network. It is called blockchain because transactions are recorded in blocks. The blocks are linked together using a chain – hence the name blockchain.  

If you would like to read more you can have a look at what is blockchain and what is Bitcoin.

What is DeFi?

This is one of the areas that greatly expands the potential of cryptocurrency.

DeFi is short for decentralised finance. Think of all the services our current financial system currently offers and apply it to crypto.

The services would include:

• Exchanges
• Wallets
• Savings
• Investments
• Collective investments
• Lending and borrowing
• Trading
• Asset management
• Payments
• Insurance
• Pensions

There is a lot of investment going into this space. It is fairly fascinating. If you would like to read more about it you can have a look at what is DeFi.

What is the Difference between Ethereum and Ether?

Ether is the cryptocurrency that is on the Ethereum platform. Ethereum is a blockchain network that has very flexible code. The code allows for other platforms to be built on Ethereum. In fact there are many crypto tokens or DeFi services built on the Ethereum platform.

If you would like to read more about Ethereum you can have a look at what is Ethereum.

I can’t Buy Bitcoin – it’s too Expensive

Bitcoin has its own units. Unlike fiat which goes down to cents, Bitcoin has 8 units behind the point. You literally can buy very small amounts of Bitcoin, even $/€/£10 worth depending on the exchange that you use.

In this case you may want to have a look at the article Bitcoin units. The same applies to Ether so you may want to check out the Ether units.

What is an NFT?

This is definitely should be part of your crypto basics. NFTs stands for non-fungible tokens. In short they are one of a kind digital assets that you can only buy with crypto.

Artists or platforms can create NFT’s and sell them using the blockchain. The blockchain records the sale and registers ownership. You can check with the blockchain that the artwork is authentic. As a result the blockchain solves the digital scarcity problem.

You can read more about what are NFTs and NFTs the future of digital art. If you are artistically inclined you can also find out how to create NFT art.

Learn More Crypto Basics.

There is also the creation of the metaverse. The metaverse which is the internet 2.0. If you think the internet is great now, wait till you see what is happening in the metaverse.

The metaverse is going to blur the line between reality and the virtual. It is much easier to see what is being developed for you to understand what is going on. For this you can go to what is the metaverse to see.

Not just Cryptocurrency, but Cryptoassets

Calling the crypto space cryptocurrency is not accurate. However, everyone calls it cryptocurrency. There are actually 4 different types of cryptoassets which we will now cover in this crypto basics article.

They are namely:

1. Cryptocurrency – virtual currencies like for example Bitcoin and Monero.
2. Crypto commodities – on the level of other commodities like gold and oil. Crypto commodities are like raw materials. Ethereum is one such crypto commodity because it is the foundational block for other platforms.
3. Crypto tokens – these assets are built to provide digital goods and services. For example DeFi tokens
4. Crypto collectables – think of NFTs. They are unique collectables.

If you want to learn more about the different cryptoassets you can read the book Cryptoassets. You can have a look at the Cryptoassets review or buy Cryptoassets from Amazon.

Crypto Basics Conclusion and Further Reading

If you need any more information you can find another couple of articles. Here is why crypto is a revolution and what is behind the crypto revolution. They may contain bits and pieces of information that already have been covered in this article. However there is plenty of other new information to keep you occupied.

Alternatively you can also have a look at the learning section or the blog section for some other crypto basics. There are lots of great articles there for you to start understanding the space.