What is Cryptocurrency? Bitcoin and the Blockchain
What is Cryptocurrency?
Bitcoin and the Blockchain
Cryptocurrency for Beginners Guide
With so many people asking me what is cryptocurrency right now, including a very good friend of mine, I’ve decided to write an article to accompany my videos from a few years back. With the imminent economic collapse on our doorstep, intelligent people are trying to save themselves economically. You can do that by investing in two ways: precious metals, and cryptocurrency.
Now, I don’t know much about precious metals other than you should buy some as soon as possible. Not the fake stocks on the stock exchange, but real metal. Hide it somewhere safe and hope that you never need to use it. I do know a little bit about cryptocurrency so I’m going to explain it as simply as possible. Do keep in mind that this will be a very simplistic description to get you going on your new journey to economic freedom. This is not a technical or investment guide.
Definition of Cryptocurrency
Often, the best way to begin is to start with the name. Cryptocurrency is usually spelt as one word, and is not capitalised. It’s a common noun, like money, or cash. Bitcoin is a proper noun, so it is capitalised. Cryptocurrency comes from two words really. Cryptography and currency. It is encrypted currency. In simple terms, encrypted means that we cannot view the data. You cannot just pop open the ledger, and take a peek inside. I’ll get into the ledger concept later.
Cryptography is the writing of something that is secret or hidden. This is pertinent to our discussion because it addresses the privacy or security provided for by a true cryptocurrency. Since it is hidden or encrypted, no one can read the information. Cryptocurrency is secured by cryptography, which makes it nearly impossible to counterfeit. This also makes it impossible to double-spend. In addition, only the blockchain can read and write to itself. Think of the blockchain as a ledger.
Definition of Blockchain
Since cryptocurrency must be archived somehow, it has to be written to a type of digital ledger. The blockchain is that ledger. Now, imagine this ledger as a digital record with an increasing list of entries, called blocks. It’s a chain of blocks of information. Since it is written into blocks of info, the blocks can be stored around the world on any system, anywhere, willing to participate. The ledger is spread around the world in a peer-to-peer type network.
Remember that no one can read the data so it doesn’t matter who has which chunks. It’s just a lump of computer data, and only the actual blockchain can read it. You could have Bill Gates’ millions in Bitcoin on your system and never know it. The blockchain doesn’t know it either. It just knows that at this ledger entry, there is a specific amount of cryptocurrency … until it is moved somewhere else.
This ledger keeps updating, but it’s not erased. This is how it prevents people pretending to have more cryptocurrency than they actually do. There is no way to bluff as there is no way to falsify the records. It reads the existing blocks and says, “No to that, Buster!” It literally compares and verifies each transaction. With so many computers contributing to the blockchain, fraud is identified and the transaction fails. The money must exist at that specified address before it can be moved.
Where’s My Crypto?
If I had a fraction of a Bitcoin for each time I was asked this, I would be very wealthy. I’d buy an island! Unlike traditional banking, there is no actual account. You don’t have a banking profile. Instead, you have a wallet. All that is needed is some money reside at that point in the blockchain. There are no credit checks, and no documentation is required for this to occur; just tiniest bit of cryptocurrency will be enough to create a wallet.
Now, remember that I am strictly speaking about the blockchain. When it comes to governments, they are forcing identification and so forth before you can register with these crypto exchanges online. From there on out, the trail will die. There is no way the government can track what you do with your initial transfer into the blockchain world, and that is the point. If your $100 becomes a million, that is your business until you tell the government. Please note that I am not advising you what your legal duties are with these things as that is your own responsibility.
Therefore, you don’t have an account, per se. What you do have, are the keys to the address where the money is stored. Imagine you put a million Bitcoin in a briefcase somewhere in the world, but only you know the street address. Your keys are key to accessing your cash. Unlike my real-world example, it’s all encrypted, so without someone physically looking over your shoulder, they cannot see you going to that address to where the money is located. That is the beauty of the blockchain.
There are different types of wallets, and that is a more complex discussion. Look at the links at the end of this article for more information. The two main types are online (as on an cryptocurrency exchange), desktop (software on your own computer), mobile (phone apps), hardware (often on a memory stick type device), and finally paper (print out the keys and store them in a safe place!)
Keys and Security
It’s important to note that these things may vary with each cryptocurrency type, but generally, you have two types of cryptocurrency keys, namely Public and private keys. The concept is very easy to comprehend. Your public key is the place where the public can pay you, and your private key is your access to your secret address on the blockchain.
The private key allows you to manage your money. You can look at it, transfer it, and pay people, but you can’t destroy it. Cryptocurrency lives forever even if you lose your keys; just that no one can access them. It is lost in the blockchain forever, and ever, and then ever more.
Security levels improve with the increase in decentralisation. If you use an online wallet, the organisation managing it can be forced to disclose the existence and even the contents of your account. This is the biggest reason for a private account that no one has any of the keys too. Once it moves off into the blockchain, it is entirely anonymous and private.
Common sense always teaches us not to place all our eggs in one basket, and it’s good advice for cryptocurrency too. Just because the blockchain is encrypted, and your cash is safe — and it is safe — there is always human error or crime to consider. Therefore, I strongly advise having two accounts for each currency once you have amassed enough to be concerned with security. Why? For really simple reasons.
I advise one account (possibly even online) which you use for trading and shopping, and another one that is completely secret. No one knows of its existence except you. The only person who uses the public or private keys is you. People cannot find what they do not know exists. So, similar to the public and private keys, you will hold two separate wallets for the same reason. Why? Again, for simple reasons.
It’s bad practice to keep any large amount of money in one place. If you have more than you need for regular expenses or use for trading and shopping, put the spare cash into your crypto ‘savings account’ that no one knows about. Should the worst happen, and your private key for your regular wallet be compromised, the thieves will only get the little bit that is in there, not your mega-millions in cryptocurrency.
You can have as many wallets as you want, but the more you create, the bigger the blockchain grows. Don’t be the nitwit that contributes to slowing it down by creating unnecessary data.
At this point, I must make a quick but important note: each currency will require a separate wallet. You cannot store Bitcoin (BTC) and Ethereum (ETH) together as they are on different blockchain technologies. That is the drawback of this encrypted security. It doesn’t allow others to peer into your accounts, so they cannot be shared as in traditional banks.
Identifying True Cryptocurrencies
A true cryptocurrency is a decentralised network built on encrypted blockchain technology. It’s a widely-distributed ledger enforced by a network of computers. In theory, these systems are not subject to interference or manipulation. This is not some vague point that we need clarity on. It is either decentralised, and immune to interference, or it is controlled by someone or something.
Here are some warning bells that should go off in your head when considering transferring any money into cryptocurrency.
- There are claims that they can recover your keys or safeguard your online wallet. They can’t, and please read the bit about the keys above once again. The only caveat is with an online wallet, which is why they are not secure. You can save your keys on these services for ease of trading;
- The money system is forced on you. If you have no choice but to accept it, as we will see in the world shortly. This will be the New World Order coming to the fore;
- The word regulation or regulated is mentioned. Scream and run away. Only governments want to regulate and control your money. They keep manipulating and crashing the economy for their own purposes. If you don’t want them to do this, then join true blockchain freedom where everyone is responsible for their own lives and crypto keys;
- Unrealistic promises. Cryptocurrency is money. It is not an investment. We are investing in our freedom when we choose to use an alternative currency to fiat currency. This is the only purpose for currency of any type. If someone promises you great returns, ignore them. Yes, you can make money by selling and trading cryptocurrencies, but that was not the point of creating them. It was to set you free;
- Anyone you don’t know and trust promises to manage your money for you. There is no need to manage cryptocurrency other than you have some, and it sits in your wallet;
- Any person or institution asks you for your private keys, other than the caveat about online wallets. Do you trust the person? Good, but still keep your private keys to yourself, if you are not hiding money from your spouse, what reason is there for someone to have your secret key. It’s your ‘pin number’ to your wallet. Tell ’em to piss off;
My Final Thoughts
This has been a simplified primer into this subject. My goal has been just to ‘get you into the know’ so to speak. To buy, store, and use cryptocurrency is not difficult, but I definitely encourage you to do far more reading into the subject. It’s not required that you learn everything technical, but it will give you some understanding of how it works. Understanding how it functions goes a long way to giving you the confidence to use it.
It’s very important that you remember that your keys (think of them as passwords) are not recoverable. You must assume a responsible approach to this, and save the information in multiple ways and places. The risk lies only in human error.
I wrote this over many months, and instead of it sitting on my PC unedited, and unseen, I have decided to release it now. There may be some gaps in the information, but it’s all available online. I encourage you to keep reading about these things. As long as you follow my rules of thumb for crypto, you should be just fine.
Since I began this article, the financial world has begun to collapse. Planning your escape route from tyranny is now not a fanciful thought, but an urgent issue. I strongly urge you to take the responsibility of saving yourself from what is coming. Those that don’t will suffer the worst example of enslavement ever known to man. Remember, we need evolution (of the mind of man) not another revolution that never works.
A few years back, I made four short videos about some of these subjects. You can watch them on YouTube here.
- My Video Playlist for this subject
You might also want to read, ‘Ready for a World Currency?’.
Table of Content
- 1 What is Cryptocurrency?