Bitcoin Mining - How to Mine

Ultimate glossary of crypto currency terms, acronyms and abbreviations

I thought it would be really cool to have an ultimate guide for those new to crypto currencies and the terms used. I made this mostly for beginner’s and veterans alike. I’m not sure how much use you will get out of this. Stuff gets lost on Reddit quite easily so I hope this finds its way to you. Included in this list, I have included most of the terms used in crypto-communities. I have compiled this list from a multitude of sources. The list is in alphabetical order and may include some words/terms not exclusive to the crypto world but may be helpful regardless.
Two factor authentication. I highly advise that you use it.
51% Attack:
A situation where a single malicious individual or group gains control of more than half of a cryptocurrency network’s computing power. Theoretically, it could allow perpetrators to manipulate the system and spend the same coin multiple times, stop other users from completing blocks and make conflicting transactions to a chain that could harm the network.
Address (or Addy):
A unique string of numbers and letters (both upper and lower case) used to send, receive or store cryptocurrency on the network. It is also the public key in a pair of keys needed to sign a digital transaction. Addresses can be shared publicly as a text or in the form of a scannable QR code. They differ between cryptocurrencies. You can’t send Bitcoin to an Ethereum address, for example.
Altcoin (alternative coin): Any digital currency other than Bitcoin. These other currencies are alternatives to Bitcoin regarding features and functionalities (e.g. faster confirmation time, lower price, improved mining algorithm, higher total coin supply). There are hundreds of altcoins, including Ether, Ripple, Litecoin and many many others.
An event where the investors/participants are able to receive free tokens or coins into their digital wallet.
AML: Defines Anti-Money Laundering laws**.**
Getting risk-free profits by trading (simultaneous buying and selling of the cryptocurrency) on two different exchanges which have different prices for the same asset.
Being Ashdraked is essentially a more detailed version of being Zhoutonged. It is when you lose all of your invested capital, but you do so specifically by shorting Bitcoin. The expression “Ashdraked” comes from a story of a Romanian cryptocurrency investor who insisted upon shorting BTC, as he had done so successfully in the past. When the price of BTC rose from USD 300 to USD 500, the Romanian investor lost all of his money.
ATH (All Time High):
The highest price ever achieved by a cryptocurrency in its entire history. Alternatively, ATL is all time low
A tendency of prices to fall; a pessimistic expectation that the value of a coin is going to drop.
Bear trap:
A manipulation of a stock or commodity by investors.
The very first, and the highest ever valued, mass-market open source and decentralized cryptocurrency and digital payment system that runs on a worldwide peer to peer network. It operates independently of any centralized authorities
One of the biggest scams in the crypto world. it was made popular in the meme world by screaming idiot Carlos Matos, who infamously proclaimed," hey hey heeeey” and “what's a what's a what's up wasssssssssuuuuuuuuuuuuup, BitConneeeeeeeeeeeeeeeeeeeeeeeect!”. He is now in the mentally ill meme hall of fame.
A package of permanently recorded data about transactions occurring every time period (typically about 10 minutes) on the blockchain network. Once a record has been completed and verified, it goes into a blockchain and gives way to the next block. Each block also contains a complex mathematical puzzle with a unique answer, without which new blocks can’t be added to the chain.
An unchangeable digital record of all transactions ever made in a particular cryptocurrency and shared across thousands of computers worldwide. It has no central authority governing it. Records, or blocks, are chained to each other using a cryptographic signature. They are stored publicly and chronologically, from the genesis block to the latest block, hence the term blockchain. Anyone can have access to the database and yet it remains incredibly difficult to hack.
A tendency of prices to rise; an optimistic expectation that a specific cryptocurrency will do well and its value is going to increase.
Buy the fucking dip. This advise was bestowed upon us by the gods themselves. It is the iron code to crypto enthusiasts.
Bull market:
A market that Cryptos are going up.
An agreement among blockchain participants on the validity of data. Consensus is reached when the majority of nodes on the network verify that the transaction is 100% valid.
Crypto bubble:
The instability of cryptocurrencies in terms of price value
A type of digital currency, secured by strong computer code (cryptography), that operates independently of any middlemen or central authoritie
The art of converting sensitive data into a format unreadable for unauthorized users, which when decoded would result in a meaningful statement.
The use of someone else’s device and profiting from its computational power to mine cryptocurrency without their knowledge and consent.
When HODLers(holders) eventually cash out they go to a place called crypto-Valhalla. The strong will be separated from the weak and the strong will then be given lambos.
Decentralized Autonomous Organizations. It defines A blockchain technology inspired organization or corporation that exists and operates without human intervention.
Dapp (decentralized application):
An open-source application that runs and stores its data on a blockchain network (instead of a central server) to prevent a single failure point. This software is not controlled by the single body – information comes from people providing other people with data or computing power.
A system with no fundamental control authority that governs the network. Instead, it is jointly managed by all users to the system.
Desktop wallet:
A wallet that stores the private keys on your computer, which allow the spending and management of your bitcoins.
Long red or green candles. This is a crypto signal that tells you that it is not favorable to trade at the moment. Found on candlestick charts.
Digital Signature:
An encrypted digital code attached to an electronic document to prove that the sender is who they say they are and confirm that a transaction is valid and should be accepted by the network.
Double Spending:
An attack on the blockchain where a malicious user manipulates the network by sending digital money to two different recipients at exactly the same time.
Means do your own research.
Converting data into code to protect it from unauthorized access, so that only the intended recipient(s) can decode it.
the practice of having a third party act as an intermediary in a transaction. This third party holds the funds on and sends them off when the transaction is completed.
Ethereum is an open source, public, blockchain-based platform that runs smart contracts and allows you to build dapps on it. Ethereum is fueled by the cryptocurrency Ether.
A platform (centralized or decentralized) for exchanging (trading) different forms of cryptocurrencies. These exchanges allow you to exchange cryptos for local currency. Some popular exchanges are Coinbase, Bittrex, Kraken and more.
A website which gives away free cryptocurrencies.
Fiat money:
Fiat currency is legal tender whose value is backed by the government that issued it, such as the US dollar or UK pound.
A split in the blockchain, resulting in two separate branches, an original and a new alternate version of the cryptocurrency. As a single blockchain forks into two, they will both run simultaneously on different parts of the network. For example, Bitcoin Cash is a Bitcoin fork.
Fear of missing out.
A system is frictionless when there are zero transaction costs or trading retraints.
Fear, Uncertainty and Doubt regarding the crypto market.
A fee paid to run transactions, dapps and smart contracts on Ethereum.
A 50% decrease in block reward after the mining of a pre-specified number of blocks. Every 4 years, the “reward” for successfully mining a block of bitcoin is reduced by half. This is referred to as “Halving”.
Hardware wallet:
Physical wallet devices that can securely store cryptocurrency maximally. Some examples are Ledger Nano S**,** Digital Bitbox and more**.**
The process that takes input data of varying sizes, performs an operation on it and converts it into a fixed size output. It cannot be reversed.
The process by which you mine bitcoin or similar cryptocurrency, by trying to solve the mathematical problem within it, using cryptographic hash functions.
A Bitcoin enthusiast once accidentally misspelled the word HOLD and it is now part of the bitcoin legend. It can also mean hold on for dear life.
ICO (Initial Coin Offering):
A blockchain-based fundraising mechanism, or a public crowd sale of a new digital coin, used to raise capital from supporters for an early stage crypto venture. Beware of these as there have been quite a few scams in the past.
John mcAfee:
A man who will one day eat his balls on live television for falsely predicting bitcoin going to 100k. He has also become a small meme within the crypto community for his outlandish claims.
Joy of missing out. For those who are so depressed about missing out their sadness becomes joy.
Know your customer(alternatively consumer).
This stands for Lamborghini. A small meme within the investing community where the moment someone gets rich they spend their earnings on a lambo. One day we will all have lambos in crypto-valhalla.
Away from Blockchain, it is a book of financial transactions and balances. In the world of crypto, the blockchain functions as a ledger. A digital currency’s ledger records all transactions which took place on a certain block chain network.
Trading with borrowed capital (margin) in order to increase the potential return of an investment.
The availability of an asset to be bought and sold easily, without affecting its market price.
of the coins.
Margin trading:
The trading of assets or securities bought with borrowed money.
Market cap/MCAP:
A short-term for Market Capitalization. Market Capitalization refers to the market value of a particular cryptocurrency. It is computed by multiplying the Price of an individual unit of coins by the total circulating supply.
A computer participating in any cryptocurrency network performing proof of work. This is usually done to receive block rewards.
The act of solving a complex math equation to validate a blockchain transaction using computer processing power and specialized hardware.
Mining contract:
A method of investing in bitcoin mining hardware, allowing anyone to rent out a pre-specified amount of hashing power, for an agreed amount of time. The mining service takes care of hardware maintenance, hosting and electricity costs, making it simpler for investors.
Mining rig:
A computer specially designed for mining cryptocurrencies.
A situation the price of a coin rapidly increases in value. Can also be used as: “I hope bitcoin goes to the moon”
Any computing device that connects to the blockchain network.
Open source:
The practice of sharing the source code for a piece of computer software, allowing it to be distributed and altered by anyone.
Over the counter. Trading is done directly between parties.
P2P (Peer to Peer):
A type of network connection where participants interact directly with each other rather than through a centralized third party. The system allows the exchange of resources from A to B, without having to go through a separate server.
Paper wallet:
A form of “cold storage” where the private keys are printed onto a piece of paper and stored offline. Considered as one of the safest crypto wallets, the truth is that it majors in sweeping coins from your wallets.
Pre mining:
The mining of a cryptocurrency by its developers before it is released to the public.
Proof of stake (POS):
A consensus distribution algorithm which essentially rewards you based upon the amount of the coin that you own. In other words, more investment in the coin will leads to more gain when you mine with this protocol In Proof of Stake, the resource held by the “miner” is their stake in the currency.
The competition of computers competing to solve a tough crypto math problem. The first computer that does this is allowed to create new blocks and record information.” The miner is then usually rewarded via transaction fees.
A standardized set of rules for formatting and processing data.
Public key / private key:
A cryptographic code that allows a user to receive cryptocurrencies into an account. The public key is made available to everyone via a publicly accessible directory, and the private key remains confidential to its respective owner. Because the key pair is mathematically related, whatever is encrypted with a public key may only be decrypted by its corresponding private key.
Pump and dump:
Massive buying and selling activity of cryptocurrencies (sometimes organized and to one’s benefit) which essentially result in a phenomenon where the significant surge in the value of coin followed by a huge crash take place in a short time frame.
Recovery phrase:
A set of phrases you are given whereby you can regain or access your wallet should you lose the private key to your wallets — paper, mobile, desktop, and hardware wallet. These phrases are some random 12–24 words. A recovery Phrase can also be called as Recovery seed, Seed Key, Recovery Key, or Seed Phrase.
Referring to the word “wrecked”. It defines a situation whereby an investor or trader who has been ruined utterly following the massive losses suffered in crypto industry.
An alternative payment network to Bitcoin based on similar cryptography. The ripple network uses XRP as currency and is capable of sending any asset type.
Return on investment.
A crypto term for safe popularized by the Bizonnaci YouTube channel after the CEO of Binance tweeted
“Funds are safe."
“the exchage I use got hacked!”“Oh no, are your funds safu?”
“My coins better be safu!”

The smallest fraction of a bitcoin is called a “satoshi” or “sat”. It represents one hundred-millionth of a bitcoin and is named after Satoshi Nakamoto.
Satoshi Nakamoto:
This was the pseudonym for the mysterious creator of Bitcoin.
The ability of a cryptocurrency to contain the massive use of its Blockchain.
A scaling solution for the Blockchain. It is generally a method that allows nodes to have partial copies of the complete blockchain in order to increase overall network performance and consensus speeds.
Coin with little potential or future prospects.
Spreading buzz by heavily promoting a particular coin in the community to create awareness.
Short position:
Selling of a specific cryptocurrency with an expectation that it will drop in value.
Silk road:
The online marketplace where drugs and other illicit items were traded for Bitcoin. This marketplace is using accessed through “TOR”, and VPNs. In October 2013, a Silk Road was shut down in by the FBI.
Smart Contract:
Certain computational benchmarks or barriers that have to be met in turn for money or data to be deposited or even be used to verify things such as land rights.
Software Wallet:
A crypto wallet that exists purely as software files on a computer. Usually, software wallets can be generated for free from a variety of sources.
A contract-oriented coding language for implementing smart contracts on Ethereum. Its syntax is similar to that of JavaScript.
Stable coin:
A cryptocoin with an extremely low volatility that can be used to trade against the overall market.
Staking is the process of actively participating in transaction validation (similar to mining) on a proof-of-stake (PoS) blockchain. On these blockchains, anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn Staking rewards.
When a crypto currency appreciates or goes up in price.
The opposite of mooning. When a coin tanks it can also be described as crashing.
For traders , the chief prize is “tendies” (chicken tenders, the treat an overgrown man-child receives for being a “Good Boy”) .
A unit of value that represents a digital asset built on a blockchain system. A token is usually considered as a “coin” of a cryptocurrency, but it really has a wider functionality.
TOR: “The Onion Router” is a free web browser designed to protect users’ anonymity and resist censorship. Tor is usually used surfing the web anonymously and access sites on the “Darkweb”.
Transaction fee:
An amount of money users are charged from their transaction when sending cryptocurrencies.
A measure of fluctuations in the price of a financial instrument over time. High volatility in bitcoin is seen as risky since its shifting value discourages people from spending or accepting it.
A file that stores all your private keys and communicates with the blockchain to perform transactions. It allows you to send and receive bitcoins securely as well as view your balance and transaction history.
An investor that holds a tremendous amount of cryptocurrency. Their extraordinary large holdings allow them to control prices and manipulate the market.

A comprehensive report or guide made to understand an issue or help decision making. It is also seen as a technical write up that most cryptocurrencies provide to take a deep look into the structure and plan of the cryptocurrency/Blockchain project. Satoshi Nakamoto was the first to release a whitepaper on Bitcoin, titled “Bitcoin: A Peer-to-Peer Electronic Cash System” in late 2008.
And with that I finally complete my odyssey. I sincerely hope that this helped you and if you are new, I welcome you to crypto. If you read all of that I hope it increased, you in knowledge.
my final definition:
A collection of all the HODLers and crypto fanatics. A place where all people alike unite over a love for crypto.
We are all in this together as we pioneer the new world that is crypto currency. I wish you a great day and Happy HODLing.
feel free to comment words or terms that you feel should be included or about any errors I made.
Edit1:some fixes were made and added words.
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December 25th CHRISTMAS (Presents from the King)! News on Christmas: MCO, PAY, WAVES, BAY…Tech This Week: BURST, ICX, XVG, STRAT, XEM, ARDR

December 25th CHRISTMAS (Presents from the King)! News on Christmas: MCO, PAY, WAVES, BAY…Tech This Week: BURST, ICX, XVG, STRAT, XEM, ARDR
Ok yesterday with a market that basically tanked I managed to pick 5 of the only green coins out of literally 1200. MCO, PAY, BURST, ICX, and STRAT were all in the green. Picking winners when everything is green is one thing, but when the market is swimming in red and you have the 4 green, it’s a good day.
I appreciate all my loyal followers! For tips and strategy hours before being posted to the message boards follow on Reddit, Instagram: JaketheCryptoKing and Twitter: JbtheCryptoKing. And now on Discord: (join group to reach me directly and see posts early!) Remember in trading minutes matter, hours are eternities.
Let's get to it, Merry Christmas All! News For Christmas: MCO has promised a Christmas bonus. Their twitter is swimming with hints about a KRISTMAS (spelled incorrectly? Bonus!). According to MCO, "We have something special planned for all of you for December 25th and we think you will love it." Their new cards are supposed to be released by January 1, maybe their debit cards (allowing you to exchange crypto for FIAT instantly) are ready?! Check them out online they look GORGEOUS. I have already placed orders for 3/5 of the available ones and I’m #40,000+ I expect MCO to start rolling these cards out, there is absurd demand for them. With surprise Christmas news tomorrow and a working product this month this coin should skyrocket. If you are interested in getting a card rf downloading the ap they are gorgeous:
PAY tweeted earlier today about shutting down their system for a short period while they prepared for the Christmas surprise. This confirms we will have Christmas news and from the tone of the tweet, positive news! What could it be?! With many projects and partnerships on the horizon I highly doubt they would release negative news on Christmas this is a must own for tomorrow to find out what news is released!
WAVES’s founder has a livestream occurring on Christmas (not sure how he picked the day) at least everyone will be home to watch it? Either way their NG activation was successful, they have a live stream with the coin founder tomorrow, and a presentation at an enormous Miami Blockchain Convention in January. This is a buy and hold. Not to mention the Binance promotion which in essence is buy and hold WAVES (you lose points if you sell) is in effect for another 3 days and they are having an airdrop and the end of the month. Nothing but positive information here. If you need a Binance account to trade WAVES please use my referral link:
BAY has hinted at a Christmas surprise for some time now. The crypto coin market is gambling mixed with stock trading. My money is on BAY not disappointing and releasing news worthy of placing it in the 20%+ range with heavy volume.
Now that the “NEWS” section is complete, which is all positive news for today! Let’s begin to discussion on technology. Nothing really creates 100% gains (or more) in the Crypto Markets like technological block chain advances. This is the week’s leaders for this category…
BURST is one of the most unique altcoins on the scene. I wrote about them yesterday and they are here today because on the 27th we get Dymaxion. Do you investors/followers/crytophenes know what one of the biggest problem with mining is? Electricity consumption! BURST changes that by using 400x less electricity then BTC miners. They have their Dymaxion launch this week and their mining platform should revolutionize blockchain tech. BURST uses free memory space instead of CPU, GPU, and ASIC miners using literally less than 0.025% of the electricity when compared to BTC’s mining algorithm. BTC mining uses more electricity than many small nations and BURST will provide an ability to mine at a very low cost while still having a tradable coin on exchanges. Imagine being able to use the free memory on your computer, while you sleep to earn an income, the technology is crazy. I expect this week (their release is the 27th), particularly the next 72 hours to see the biggest BURST gains to date, while leading volume on Bittrex.
NXT (will be in each post until the airdrop, and it went from $.7 when originally recommended to $1.80ish), with the future value of airdrop priced this should trend toward $2.00 or $2.50. As I’m writing this I see it’s spiked over $1.60. That is more then 100% gains in 72 hours, I’ve been screaming to buy NXT in all of my prior posts. Two days ago it popped. The whole market trended downward yesterday. However, NXT should continue to trend toward $2.00+. I just did the math on the IGNIS airdrop, the IGNIS has increased to $4.02 in value, meaning NXT should be worth a minimum of $2.00, a penny more for every penny NXT is worth following the airdrop, price point $2.00-$3.00 depending on if IGNIS continues to appreciate. More people will become interested in “free IGNIS” tokens in the coming days. NXT and the future value of IGNIS should continue to appreciate following Christmas leading up to the airdrop.
ICX was one of the few winners yesterday! Their Mainnet goes live by the end of December which means any day now there will be that 100% pop everyone dreams of. Leading up to that we should receive the hype and anticipation boost on a daily basis. I expect ICX to rally 10% daily until the Mainnet announcement is made with a 100% gain the day of going live! Having a live Mainnet is essential for a viable crypto currency. Welcome to the big leagues ICX.
XVG, VERGE WRAITH PROTCOL (XVG promises this to come out by end of year, plus a very impressive ad came out 4 days ago so I doubt they miss their deadline) anonymity with the flick of a button (public and private ledges in one block chain). By the time you are reading this post it may unfortunately be too late . There is speculation Wraith may be released in the morning. XVG has promised WRAITH will be released by the end of this year, it should hit $.50-$1 range when it does, McAfee although I don’t agree w/him on much he says, states a $15 price target within 6 months of Wraith Protocol being released. I’m saying $1.00 it’s currently $.25 that’s a 400% upswing if I’m right, 4000% if McAfee is. Does it matter really who is correct at that point?
Wraith allows the individual user to determine if they want their balance visible on the block chain or not. Right now we have coins like Monero which are completely anonymous hence their use on the dark web, or ones that are completely public where anyone who knows your wallet address can check your balance. Verge lets each user determine whether to be, public or private, this will revolutionize blockchian and altcoins. If you want to see the impressive link for the Wraith ad here it is:
An article was written today by Bitcoinist highly favorable of Verge, Wraith will make the coin value explode:
XEM has been quiet but should NOT go unnoticed. Have you seen yesterday's chart? I suggest you glance at it. Literally no dips, 45degree angle upward. Leading to what.... Catapult, which is version 2.0 of NEM (is to be released by the end of the year). Plus a 4 week hackathon beginning in January. There is nothing better to build awareness and test out their new Catapult network they’ll be releasing this week, then a worldwide hackathon and a new update to their NEM network. XEM will have a pop this week when Catapult goes live, followed by a 4 week awareness rally driven by a worldwide hackathon.
STRAT, is going to have an amazing week. It was one of the only positive performers on a day the market looked like the movie Jaws. They promised that by January, "I can confirm they will be able to host ICO's on our blockchain agnostic platform this year." STRAT is on the cusp of being able to host ICO’s for other companies. This is extremely valuable technology and they’ve announced it will be ready to go this week. Would anyone like to know the going rate of an ICO? 20-40BTC. Per ICO these small companies and their coin holders are making $250k-$600k at the depressed BTC prices. This is a very big business. They’ve also announced 2 Flagship ICOs that will be available on their STRATIS network in January. The platform to host ICOs goes live this week, and within 2 weeks we find out which ICOs STRAT is hosting. This should be a very positive 2 weeks for STRAT.
ARDR’s platform launches Jan 1st. Ardor’s blockchain becomes fully operational Jan 1st., and the Genesis snapshot is announced 1 week in advance. Not to mention all those NXT you’ve been holding for the free IGNIS are used specifically on the ARDR block chain. ARDR should continue to trend upward with NXT and IGNIS leading up to the airdrop. With a new platform and coins to be used on it this will be a positive week for ARDR with exceptionally high returns correlated with the new platform and IGNIS.
I am including some CB predictions as they are a favorite DM topic I’ve received of late. CB Future Picks the same screenshot that showed BCC showed XRP and Monero. CB admits new coins will be added in the next few months. It was speculated in the online community that because CB released wallets for BCC, XRP, and Monero that those would be added next. CB adamantly denies that they planned to add BCC, XRP, and Monero. And then CB added BCC. I fully expect XRP and Monero to be added within 2 months, and that the original rumor they denied had some truth to it. XRP and Monero are buy and holds. Another favorite question is ICOs. ICOs are very difficult because 99% of them are garbage which is why I've only recommended 2, one of which just met it's hard cap for fund :/. The only one left I like is.. Crypterium- The team is unreal and they are presenting at the Dubai Blockchain Intl’ in January. The ICO is also ending very soon! The bonus period ends in 2 days so I highly recommend getting an ether or 2 involved in this. The Dubai Blockchain Intl’ will greatly increase the number of individuals interested in holding Crypterium, (I make $0 off my posts and extensive research if you do purchase the ICOs please use my referral link):
Some Lovely Followers Requested I Provide Addresses for “Thank You’s and Holiday Cheer” Here are 3 address to help provide my girlfriend with presents so I can spend more time researching! What is 5% of the 200% I earned you this week? (NXT, Verge, MCO, PAY, EMC2, STRAT)
ETH: Address: 0x955A1a68613C028Ea98b0b5dcC58901897EB90DB LTC Address: LSnEW1h1bZwFH67s9tXZVX2GCZHNmzFGVN BTC address: 1GKPSkohnt9pSgBnXRmn2SejQNPWD96qif
Once again, no tips are mandatory but I spend 100’s of hours a week researching to make your investment and my small investment grow! Help spread the love this Holiday Season!
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The Way Money Used to Be
I wrote this story about the paradigm shift that cryptocurrencies may cause in the future, from the perspective of an old man reflecting on the past.
If you enjoy this story, please have a look at other material I have written at
The Way Money Used to Be
“I remember it like it was yesterday, James,” the old man wistfully pondered. “Money was so different back then. Everything was different.”
“How so, Will?” the younger one asked - not so young as to be a child, but young enough to not remember the way money used to be.
“Back then,” Will replied, “money was not something shared and traded freely like it is now… it was mostly owned by a few, and they were the few who controlled it. They issued it, and they manipulated its value to their advantage.”
“They could print it, as much as they would convince the people they needed, and over time, the money became worth less and less, but the people would owe more and more.”
“But if they mined it and mined it,” James asked, “and mined it all, wouldn’t they run out of money eventually? Then the money would be scarce and become worth more, right?”
“No, no, no!” Will was amused at James’ naivete. “They didn’t mine it like we do now. Now, our computers solve mathematical problems to mine a currency, and it becomes more and more scarce, and more and more valuable, but back then, the people in power just printed more and more money as they saw fit, creating more and more debt and less and less value.”
“Out of thin air?” James was incredulous. “How could they do that? Didn’t people see how they were taking advantage of them?”
“It took time for people to realise. They began to realise when the new money came to be. But it was a slow, gradual change. Cryptocurrency did not have a good reputation, at first.”
James was confused. “What do you mean? How can a currency be bad? Can’t it be used for good or bad?”
“Of course!” Will replied, “but the few who controlled money wanted to keep things that way, so they created fear and paranoia about the new money. They said cryptocurrency was only used by criminals, paying for committing horrible acts with impunity, behind a shield of anonymity. The old money, on the other hand, was tracked and followed everywhere it went on the Internet, thus creating the illusion of safety. In reality, though, it was controlled and manipulated.”
“And people didn’t mind? They just willingly gave up their privacy like that? Bizarre!” James was struggling to relate to such a different way of seeing the world.
“They didn’t know there were better alternatives” Will explained. “Money was not only controlled by the few, the powerful, and the elite, but also by tanks, guns and bombs. There wasn’t much the average person could do about it at the time.”
“Money was centralised - controlled by a few powerful entities. Not like now. Cryptocurrency as we know it today has no central authority. It can not be attacked and destroyed at any one single point,” Will continued, “It wasn’t secure like it is now, either. Money could be stolen and hidden in vast quantities by those in power who could control what was seen, so nobody could possibly know if a government or other person in power was stealing money from the rest of the people.”
James was astonished. “No public ledger? So, you just had to trust the people who controlled the money to be honest about the money, when it was in their best interests to be selfish? That makes no sense!”
Will laughed. “I know, it’s funny when you think back how it just seemed perfectly normal and acceptable at the time! Now it seems… ridiculous!”
They chuckled as they reminisced.
“I remember…” Will continued, “You would have to go to a place called a bank - a place that might give you permission to store your own money there if you had enough money to begin with, and then charged you for storing it, charged you for withdrawing it, charged you for sending it, and profited from gambling it, all while charging you more to borrow it!”
“That’s crazy.” James almost sounded disgusted. “You didn’t just store your own money in your own wallet? And just send it to whomever you please?”
“Nope!” Will replied. “Instead, you asked the bank to send it for you, for a fee, of course! And if you wanted to send money to family or friends across the world, well…”
“Well, what?” James prodded.
“Well… it could take days, and it cost a great deal.”
James answered, “Well I suppose that’s fair since that was before the internet, right? I mean, it wouldn’t be so easy to move money like that back then, right?”
“Oh, no, no.” Will clarified. “The internet had already been around for quite some time, in fact. But because currencies were not cryptocurrencies, because they were centrally controlled with middlemen like banks, there was not much choice but to pay for the banks to move the money as they saw fit. And if they could make more money charging fees to send money around the world, why wouldn’t they?” Will chuckled.
“Wow” James found the whole scenario amusing.
“It’s funny how when you look back at something in the past, it can seem so ridiculous, but at the time, it seems perfectly reasonable” Will contemplated.
“I know I’ll never understand it!” they laughed together, one at memories of the strange ways things were in the past, the other not quite understanding how different things had become.
So what exactly is cryptocurrency then?
Cryptocurrency attempts to solve many of the problems of the modern money system, called fiat. In the current money system, money is printed or minted by selling debt. The money is then lent out to borrowers and spent around the world. More and more money gets printed and more and more debt gets created. Since the money is created out of debt, it is impossible to ever pay back the debt entirely as more debt is constantly created with the money that is used to continuously pay the debt.
Cryptocurrency, on the other hand, is not printed or minted out of debt. It is created, most commonly, through a process that uses computer work, solving math problems that can not be cheated. It is created by anyone who chooses to participate in its creation, called a miner, much like miners of gold and other precious metals. When a miner successfully “mines” a cryptocurrency by solving a math problem with a computer, they are rewarded with a “block”, and can choose to keep the reward or to trade it with others. So, it is not controlled or stored somewhere by any one person or government. This is the greatest unique attribute of cryptocurrency - that it is decentralised - not controlled or stored by any one “central” person or group of people.
Cryptocurrencies use computer code that makes it secure and prevents it from being copied, so it can not be created out of debt and can not become so plentiful as to be worthless. Whenever someone trades cryptocurrency with someone else, the transactions also use this computer code, called cryptography, to make sure the transaction is true and that it is secure.
Miners are a part of this process, making sure that every transaction is correct and is not a duplicate or an incorrect amount. Most cryptocurrencies record these trades in a chain of blocks, called the blockchain, with each block storing information about the trade. The blocks create a chain of information that is checked by miners to make sure it is true. So cryptocurrency, through the use of cryptography, is far more secure than old fashioned fiat money.
Another great advantage of cryptocurrency is that it is much cheaper to send to people anywhere. Since there is no need for any kind of bank or money transfer agent, the fees can be tiny, rewarding miners around the world for checking that each trade is correct on a public ledger; the permanent and unchangeable list of trades seen on the blockchain. The public ledger is like an open account book where everyone can see all of the trades. Anyone who wants can look and see the amounts of currency that have been traded. Cryptocurrencies can use features that makes these transactions anonymous to varying degrees, to protect the privacy of traders. Money can be sent anywhere in the world without any border issues or bank accounts, directly from one person to another using this cryptographic system. The fee to send cryptocurrency to the other side of the world would be the same as it would be to send it to your neighbour because of this system.
Often, because of a cryptocurrency’s ability to send money anonymously anywhere in the world, it is portrayed as being used mostly by criminals for various crimes and terrorism. In reality, fiat money is used for almost all criminal activity in the form of cash, mostly USD. Ultimately, any currency can be used for good or evil, but it is in the interests of central fiat powers, who make a great deal of profit from debt, fees, and fiat money fabrication, to maintain a negative image for cryptocurrency.
Of all cryptocurrencies, the best known by far is Bitcoin. It is the oldest blockchain with the most miners and is seen as the most trusted and secure for this reason. But there are many other cryptocurrencies with different purposes. Ethereum, for example, is a cryptocurrency that was created with the idea of using the currency itself as a sort of platform for programming. Many cryptocurrencies are traded for goods and services on a constant basis, like Litecoin, Monero, and Ripple. There are literally thousands of cryptocurrencies for different purposes!
If you’re interested in cryptocurrencies, you can learn to mine them on your own computer or you can simply buy them from exchanges like Coinbase, Kraken, and Binance. There are new exchanges constantly springing up around the world, so check out exchanges in your region.
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