Its been 12 years since the genesis block of Bitcoin was mined, the first event in the entire history of cryptocurrency. Now in 2021, we’ve seen the world’s total crypto market value push past One Trillion Dollars.
Everything has changed. And now you’re interested in learning more about the beautiful ecosystem of 2,000+ crypto-currencies whose userbase grows exponentially.
In this article we’ll guide you through the modern cryptocurrency landscape, and give you the best practices to explore it more confidently without going too much into the technicalities.
Once you learn about crypto and learn how to set up your own wallet you’ll be ready to join aboveground.market when it launches later this year!
What’s crypto and bitcoin?
We’ll leave it as that that for now and explain the structure around it later.
Bitcoin & Ethereum are two famous examples of cryptocurrencies. Bitcoin is by far the most popular and accounts for 70% of the total crypto market value. There are new competitors releasing regularly, but still, the number of usable and practical cryptocurrencies is very small.
In the words of Satoshi Nakamoto themselves (the creator of Bitcoin), Bitcoin is “A Peer-to-Peer Electronic Cash System“.
Pretty simple when you put it that way.
Satoshi designed Bitcoin to solve the ‘double-spending’ problem and achieve a trustless transaction (where you don’t have to trust anyone else with your money).
Say you have an online store you’re selling digital goods to your customer, and they pay by credit.
If they pay credit, both you an your customer must trust each other (and multiple banks).
1. You trust them to have the money
2. You trust their bank to send the money to your bank
3. You trust your bank to release the money to you
That’s a lot of trust in a centralized system. What if either bank decides to take a holiday and leave you waiting.
Let’s say everyone on earth is given a hundred digital dollars. Instead of trusting a bank like the last example, everyone decides to keep track of their own money. When you are paid, you add to your balance. When you spend, you deduct from it.
What’s the obvious problem here?
How do you ensure that people who pay you actually have their money and haven’t double-spent it?
Imagine having to chase people down for what you’re rightfully owed.
Bitcoin solves this problem by releasing all transactions publicly to other people (or nodes) which receive the notice of transaction, timestamp it – and then verify that they’ve seen the information by signing a copy of the information digitally by signing it.
Once a set of transactions is finalized, it is grouped in a block and added to a blockchain. The blockchain is the basic structure of any cryptocurrency. It is the universal ledger that keeps track of each transaction and overall ownership distribution of the currency. It is run and maintained by nodes on the network. This makes cryptocurrency decentralized, since no one entity can control its operation. This prevents anyone from creating new units of the currency, which is the problem with centralized fiat (government issued) currencies.
Before you can begin using crypto, you have to understand what wallets, addresses, and private keys are.
The concept of a wallet is easy to become familiar with, as its very much like the wallet in your pocket. It holds and controls your funds. There are tons of choices for crypto wallets, you can learn more about setting one up in our guide.
The wallet address is the alphanumeric string to which you send your funds. This is also known as the public key. In cryptography, one of the pillars of crypto and blockchain, the basic structure consists of a public key and a private key. For each of your public keys you have a private key, and vice-versa.
You should think of private keys like passwords, which you would never give anyone — or a house key, which you would also not entrust with anyone. Public keys are like your email address, or your home address in a way, which are public knowledge.
But if people get your private key, then its like they can go through your email or into your house. For the case of your wallet, it means the person has full access to your crypto and can send it to themselves.
Its fairly normal to lose track of your wallet password or even track of the wallet entirely! But thanks to the private key, if you lose your wallet, you can recover it.
That’s why it’s so important to backup your private keys in one or multiple secure locations. Learn more best practices in our guide here.
There are many ways to convert your dollar bills to crypto. The best way is to know someone who will sell it to you P2P for cash.
If you don’t know anyone, reach out to your local meetup groups and clubs. Someone will be sure to sell you some crypto for cash. Make your own character judgements and do this at your own risk, especially exercise caution when beginning to deal in larger amounts.
If those options aren’t available to you, there are a few services that will let you exchange cash for crypto (typically Bitcoin) without having to do KYC (Know Your Customer) and give them your personal information.
Once you have Bitcoin, you can spend it or exchange it for other cryptos through the use of exchanges. Exchanges can be centralized, or decentralized, and will also ask for varying levels of information. Using centralized on-ramps to convert cash in your bank account to crypto can be a very convenient option if you are ok with doing KYC (providing personal information) and don’t require utmost privacy.
The number of places you can spend crypto is growing! aboveground.market will be the best place to shop for anything when it launches – but if you’re trying to buy now – a quick Google search will show you retailers that accept crypto for the item(s) that you’re trying to buy.
The Fold App is really handy for being able to spend crypto in the physical world, as it lets you exchange crypto for digital gift cards within the app that you can redeem at brick and mortar stores. It also lets you earn rewards for spending. If you are okay with doing KYC, then your options greatly expand as you can sell crypto for fiat currency into your bank instantly, which can then be spent. Tax implications may apply when using centralized off-ramps.