From Bitcoins to blockchains, we’ve broken down all your crypto queries in this handy guide.
Words: Rhys Thomas
13th June 2022
This crypto stuff is a bit of a whole new world, isn’t it? And whether you’ve wrapped your head around its intricacies or not, it’s increasingly tempting to get involved in this new realm of money-making possibilities (or radical propositions for a new global economy, if you’re keeping true to the purpose of it all). But it’s best to get clued-up before you invest. Here’s everything you’ll need to know to get started.
Generally, cryptocurrencies are a decentralised digital currency (or object with value) that sit on a blockchain. Often, the currency is generated by “mining”, a digital version of digging for gold, kind of. In other instances, cryptos are minted, just like cold hard cash.
Bitcoin is the most popular and valuable cryptocoin at the time of writing. It was also the first. Your computer is put to work when mining Bitcoin, but instead of shovelling dirt, it’s solving cryptographic puzzles – the more it does, the more Bitcoin exists.
There’s a little more to it, of course, and you can learn all about that here.
Blockchain is the backbone of crypto. It’s a bit of a ’mare to get your head around, but understanding it will give you a foundational sense of what the heck crypto is.
We need a good few paragraphs to go through it, though, which is why you should read this more thorough guide on how the blockchain works here.
There’s thousands – and dozens more are made every day. Plus, there’s not just coins, but also tokens too (of which, there’s also a few categories).
The main currencies you’ll hear about are Bitcoin and Ethereum, with the rest being called “altcoins’. Some coins serve different functions to others too.
Coins tend to be tied to a blockchain and are used for a variety of things, from trading to transaction fees. You can also use them to store value. Meanwhile, tokens tend to have a certain function, such as offering a way for you to use, say, Bitcoin on the Ethereum network – you’d use the token Wrapped Bitcoin for that.
Based on the current market, you might think so. But ultimately, it isn’t. Many of the crypto operations are legitimate (and can, in some instances, make you money), but there are also a lot of costly mistakes to be made. And just like with traditional banking and investing, there are also a lot of scams. Do your research, basically.
A bear market is where everything is worth less and isn’t really showing signs of increase; a bull market is where things are going up and up and up. Both can be good, depending on what you want to do with your money at that particular moment.
Well, you need a wallet and generally have to use a crypto exchange to get started. From there, you should have a read of this explainer for all things investment. Specifically interested in metaverse investing? Dig into this article instead.
It’s a non-fungible token, which means it’s like art. You know how there’s only one real Mona Lisa? An NFT is basically a way of signifying that the file in question (usually an image) is the real file, not just a digital copy. They generally work like a folder on a computer, with nice (or not so nice) artwork in it. You open the folder and the code for the NFT is there (a sort of security key/contract/URL, which is the thing you own) along with other elements – music, art, whatever.
Yeah, there’s a lot of features and applications that have come out of, or use blockchain technology. Web3 is a big one, which essentially is the internet but more secure. There’s play-to-earn games, which are having a boom in the crypto world. And there’s metaverses, which are sort of like virtual reality meets Animal Crossing meets social media and digital galleries, stores and more. There’s also more technical things like smart contracts, which will probably be revolutionary, but are a little less directly useful (and interesting) for the average crypto Joe – although you’ll likely sign some one day.
That’s a pretty good primer on all things crypto, we reckon. Want more? Well, you can read everything we’ve written about cryptocurrency right here. Lucky you.
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