Crypto Basics

Foundational Crypto Basics

Most people do not know much crypto basics. In fact they are surprised to find out just how vast the crypto space is.

At this point in time there are over 11,000 cryptos. If you consider that cryptocurrency started with one cryptocurrency in 2008 that is quite astonishing.

However the crypto space is not just about cryptocurrency. Cryptocurrency is used as an umbrella term to refer to the space, but there is much more going on.

A lot of people do not realise that the cryptocurrency space is a new financial system. It is currently a parallel financial system that is being built alongside the old system.

I have tried to break this article down to cover as much of the basics as possible. If there is anything you already know, feel free to skip sections of information.

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 they are not issued by central banks or governments. They are also solely digital which means they do not have cash equivalents. A few examples of cryptocurrency are Bitcoin, Ether and Monero.

If you want to learn more you can have a look at the article what is cryptocurrency? This is literally the very foundation of where your crypto basics knowledge should start.

Can You Spend Crypto?

Cryptocurrencies are not being used that much for transactions at the moment. However the space is continually being built and is evolving.

Cryptocurrencies are slowly being adopted. You may find that you have the option to pay with crypto instead of fiat at certain stores. Most often than not, stores that accept crypto as payment will accept Bitcoin.

There is also the option of using crypto credit cards. Cards make it more appealing to own crypto because they make it convenient to use. Crypto credit cards are partnered with Visa and Mastercard. They enable you to spend crypto at any brick and mortar store or any store online.

Cards are tied to your account which supports both the fiat currency and crypto of your choice. To make a payment you would either need to exchange your crypto to load your fiat account. Or else the card will make the exchange automatically for you.

What is the Difference between Bitcoin and Blockchain?

Blockchain is the underlying technology that is usually chosen as the building blocks for a cryptocurrency network. Like for example Bitcoin. Bitcoin is a cryptocurrency that uses blockchain.

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.