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We are a free educational platform offering high-quality content on the disruptive industry of decentralized technology. With the help of our team, you are gaining access to hundreds of articles covering anything from how blockchains work to how DeFi revolutionizes modern banking.
Everyone who ventured into the world of cryptocurrencies had a hard time at first. We know it, you know it, and anyone who has joined the market knows it. In fact, knowing where to start might be even harder than actually studying the fundamentals.
With that in mind, we have created a starting guide to blockchain technology that explains everything that you need to know about this exciting sector...at least for now.
Do not fret, this guide is made for beginners in mind, and it will not cover concepts that are not suitable for first-timers. Everything discussed in the following sections will be enough to form a solid foundation for your journey.
Cryptocurrencies are a form of digital money. They are stored on blockchain networks, which are cryptographically secured ledgers that process and host information about transactions.
Cryptocurrencies function both as currency and investment assets.
As a currency, crypto can be used to buy items online, tip users or even send money to a family member living abroad. We can use all cryptocurrencies as a currency. However, vendors and stores in the real world tend to only accept major and long-standing assets (Bitcoin, Ethereum, Litecoin, etc.)
As an investment asset, we can use cryptocurrencies for speculative purposes. For example, someone who hears about Bitcoin’s limited supply or security would want to invest in BTC rather than a stock or a precious metal.
Both use cases have one thing in common: decentralization.
You are your own bank
Being your own bank is a phrase that cannot be repeated enough. Unlike fiat users, crypto holders have full control over their money. They are the ones to initiate a transaction, store assets, and organize trades. No one is capable of freezing assets or stopping a transaction.
So when we talk about payments, transactions are facilitated through a blockchain network rather than a bank. Besides yourself, there is no one else controlling your crypto.
The same applies to investments. Cryptocurrencies are not stored in Swiss vaults or your local bank. Instead, crypto assets are stored on a public, decentralized, and digital ledger.
Bitcoin is the first cryptocurrency ever made, and it was created in 2009 by an anonymous developer called Satoshi Nakamoto. Funnily enough, the asset launched only a year later after the global economic crisis - which is why some speculate that Satoshi made Bitcoin to provide an alternative to the traditional financial system.
Apart from Bitcoin, there are thousands of other cryptocurrencies as well. You might have already heard about assets such as Ethereum, Litecoin, XRP, and Chainlink.
While all of them are cryptocurrencies and offer the same fundamental benefits, it is important to understand that each crypto is different. One is specially designed to offer privacy, one to process small transactions, another one provides utility on an exchange, and so forth.
It takes weeks and weeks to learn about all cryptocurrencies. Luckily enough, we have a special altcoins section that reviews new and popular projects. Why is it called altcoins? Because the community refers to all non-Bitcoin crypto as alternative coins (altcoins).
Blockchains networks are digital ledgers used to power and store cryptocurrencies. Think of it as a database but decentralized.
You might ask, what is so special about a database? To explain that, we will have to explain which features define blockchain technology.
A blockchain is decentralized. Simply put, there is no central entity managing it. Control is instead transferred to the entire network rather than an individual or a group of people.
Immutability is another reason why blockchains have such a high adoption rate. Immutability means that all information stored on the blockchain is permanent. It cannot be removed nor changed.
Blockchains are also anonymous - but only to a certain degree. Users can track every wallet’s financial activity, but it is almost impossible to find out who controls the wallet. The identity remains hidden unless the owner interacts with a platform that enforces identity verification.
So how do these blockchains work if they are so autonomous and decentralized?
Each network has two groups: users and miners.
Users are people who hold crypto and request or create transactions.
These transactions are processed by miners. Miners are people who confirm transactions by hosting blockchain nodes and validating blocks of transactions. Once a block is verified, it is added to the ledger. Since every block has a piece of information (called 'hash') that connects it to the previous block, all blocks form an unbreakable chain that can be traced back to the very first group of transactions.
We would like to stop here since learning how blockchains work is usually overwhelming for beginners. If you want to learn more about blockchain technology, we recommend reading the following articles:
Cryptocurrencies are speculative assets that can be invested in.
The nature of investing proposes that we focus on long-term goals rather than short-term ones. Instead of buying and selling within the period of three months, investing means that we should hold the asset for multiple years.
Being the first coin on the market, Bitcoin spawned the ethos of HODL. HODL means holding onto cryptocurrencies in spite of volatility spikes. Since it is believed that digital assets will be massive in the decades to come, it is worth experiencing temporary losses for the sake of not selling and missing out.
Think of it as investing in tech companies during the 90s. Whoever strongly believed in revolutionary computer and internet technology has made a killing after investing in companies like Google, Microsoft, Amazon, eBay, etc.
Similarly, crypto investors have a feeling that blockchain technology will disrupt the world as much as the internet did.
Investing takes place on cryptocurrency exchanges, but as of lately legacy financial companies are starting to offer digital assets as well. After investing, it is possible to withdraw assets to a private wallet where they can be stored. Whenever you want, you can send them back to a trading platform and exchange your crypto into fiat money.
We are dealing with an innovative asset class that is incredibly volatile.
Cryptocurrencies move in extreme directions on a daily basis, which creates plenty of opportunities for traders who wish to earn money faster than by simply investing. This short-term option is great for generating steady income or successively making a lot of profits.
Do keep in mind that trading is riskier than investing and that it is dangerous to trade as a beginner.
Trading blindly is not recommended. Individuals who wish to become a trader need to study technical analysis (TA). TA is a method of predicting future prices based on historical price action. This involves reading charts, using indicators, analyzing technical and non-technical data, etc.
Anyone can trade and there are no limitations. But before trading, we recommend that you educate yourself and master technical analysis first.
You must surely feel exhausted by the end of this article. We have managed to cover dozens of crypto ideas in such a short time, and by this point, taking a break will surely help.
Completing this guide only helps you with understanding the barebones of cryptocurrencies and blockchains. We have a lot more to talk about. Luckily for you, we have made the most intuitive way to explore this brand new world.
On the Shrimpy Academy, users can read about blockchain technology by either filtering difficulty levels or categories.
There are three difficulty levels: beginner, intermediate, and advanced.
Rather than reading articles randomly, we recommend starting with beginner articles and moving your way up as you obtain a firmer grasp on decentralized networks.
By visiting specific categories, you can search concepts based on their niche.
For example, articles related to yield farming, governance, and lending can be found in the DeFi Category. Blockchain concepts like Proof of Work, mining, and wallets can be found in the Bitcoin & Blockchain category.
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