Topic: Basics of Crypto - page 2. (Read 462 times)

Whats the main difference between Trezor and Nano Ledger ?

Hi BQ when I am searching google "what is best bitcoin wallet? " so see article

but I'm confused now! what I do this
No: 1. i'm new member this forum.
No: 2. I have now Zero knowledge cryptocurrency.
but I'm trying improve myself. I find that best wallet.  

Hi, I can't tell you which one is the best, however, with both Trezor and Ledger Nano you can store Bitcoin.
I personally use Trezor!

I believe you'll be fine with either! Ledger Nano had a very long waiting time for deliveries, so that's why I went with Trezor. (not sure how long waiting time it is now).
Trezor is also open source which I like!

These are Hardware Wallets, as in you order and pay for a 'usb memory'(looks like one, is not one), that then has to be delivered to you.
Free and digital alternatives there's plenty of, you can find some here.

I have written a bit more detailed about wallets here!

hi BQ I am tried for search general Bitcoin wallet, I decide that  I use Tezor wallet but I am confused  what the best wallet? can you tel me?

I didn't mean that; I ment it as a way to consider where value comes from.
If someone wants Bitcoin, for whatever reason, there's value.
I do know many people invest soley for value, not sure what you mean with your question, it sounds like you want to imply people investing in Bitcoin are Not doing it to become rich?
Surely, you're right, but many people(atleast the recent influx) do invest to become rich?
It's a 'store of value', 'digital gold' etc 

Did you mean people want Bitcoin because it could make them rich?

Short intro
There's a lot for one to grasp about crypto.
Blockchains, wallets, various techniques to ensure the networks processing(PoS, PoW), privacy, ICOs, supply, coins, tokens, etc
A beginner doesn't necessarily need to know everything, and it can be overwhelming.
I, for sure, don't know everything! Probably closer to nothing.
But, I wish crypto a good future, and I want to try and do my part as I see many questions every day in this Beginner & Help category, asking what to do, how to do it, where to start etc.
I might very well be wrong on some points here, please mention it if you notice anything and I will edit it!



What is crypto?
Crypto as we define the word in here, was born with Bitcoin.
Bitcoin utilizes cryptography to prove transactions.
From a simple perspective to understand the value of trustlessness, transactions made by a user can be proven to indeed have been confirmed by the user thanks to it being possible to cryptographically prove that a transaction was verified with a 'private key', without actually knowing the private key.

This means that people can be certain that they're in charge of their crypto funds, without requiring some type of safe-keeping by a bank or other middleman entity.


Why do we not want a middleman?
A middleman such a bank, keeps your money 'safe'.
If you wish to commit a transaction, you need to inform the bank of this, and verify yourself in some way.
The bank then ensures that you have the funds, and then commits your transaction.

However, since the bank is in control at all times, that means you are not in control of your own money.
Surely, a regular person generally doesn't need to worry, but in the big perspective, it's harmful and unnecessary that a middleman is in control of everyone's money.
Remember the previous bank crashes? Banks can play outside the safe area, and if they get burned, it's the people who ends up having to bail them out.

Simply put, at all times, you need to trust and rely on whoever is holding your money, and they can at any point in time, limit you.
Thanks to law backing and general bank-lobbying, the system is not made to work for you - perhaps it should work for noone, but we can be certain, it works for the banks.
This applies beyond banks aswell, any sort of entity that is a middleman, profits from user-user, user-company transactions, without actually doing anything.

What can we do with crypto?
With crypto, we have a immutable & decentralized ledger system.
A ledger is a system for keeping economic transactions.
This is partly what a bank does.
Such as this:
You create a bank account [0 money in account]
You receive 100 money [100 money in account]
You send 50 money [50 money in account]
Other person has +50 money [+50 money in his account]

This is basically a system to keep track of funds.
WIth a bank however, this is only numbers in a centralized database.
While it's not likely, the point has to be made that they can willingly freeze, remove, or lock your funds.

Crypto works the same way.
The name 'blockchain', what does it mean?
It's a chain of blocks!  

Each block contains transaction information.
Transactions made are added into each block, and then verified by nodes on the network.
When the block is confirmed, it's attached to the chain, and will forever be verifiable by anyone who cares to look at it.

There's the Genesis Block, the first block in the blockchain.
Every single node in the network, has a copy of the ledger, dating all the way back to the genesis block.
This allows every single node to look back in the history, and confirm any and all transactions, it allows anyone to see who sent what to who, and that way, it can 100% be confirmed that a transaction is valid.
The good part? Noone can edit it! Noone can freeze someone's funds, noone can edit it.

You might think, you can spin up a node and simply broadcast that your wallet has 1000 BTC and you wish to transfer this somewhere.
When this broadcast reaches the rest of the network, everyone looks back in history to confirm whether or not this is a valid transaction.
Since it's not, it'll be ignored.
The only way to pass a false transaction, is by controlling >50% of the nodes.
That's why the decentralization is very important in crypto! The bigger the network, the better the safety.
However, even if someone temporarily gained >50% of the nodes, the moment he lost power, every other node would simply drop the false blocks since the data you submitted with your >50% nodes, aren't valid back to the genesis block!

Importance of Decentralization
Anyone can (with a bit of money) start their own node, and get paid for processing the network transactions.
It's important that people do this, spread out around the world, to ensure that the network stays safe.
There's a risk that those who hold a large part of the network, could start manipulating it, or even take it hostage.
If a big part of the nodes stopped mining, the block difficulty would still remain the same, which would mean it would take days or weeks or even months before the difficulty is adjusted.
This would set a full stop for all transactions!

Crypto allows anyone to be in control of their funds, and that is truly beautiful.
If we stick to Bitcoin, it allows anyone to transact Bitcoin to anyone else in the world, without anyone having a say about it.
We can completely cut out the middleman, ensuring our own safety and peace of mind.



How to get started?
Generally, most people wants to earn money.
How do you know what to buy?

Some important concepts to understand in this market, which seem to be often misunderstood by new people, I shall try to explain:
Bitcoin was at one point worth much less than $1.
Today it's $9,100.
High point was close to $19,000.

What does this mean? Does this mean any coin can go from $1 to $19,000?
Does this mean Bitcoin will go to $190,000,000?
Maybe, maybe not.

Where does Bitcoin's value come from?
Where does any value come from?
Demand. If there's mass starvation, noone will care much about a bunch of dollar bills, right?

Why do people want Bitcoin?
Well, why do you want Bitcoin?
A lot of crypto value comes from Speculation.

People have seen what happened with Bitcoin, and many people hope it'll continue to go up.
People want to have Bitcoin, because of the trip it has taken.
What else?
Bitcoin is sometimes named as 'digital gold'.
Aslong as Bitcoin is desirable by people, we can expect the price to remain steady.
When bad news comes about regulation for example, people don't want to have Bitcoin before they know it's safe.
That's when the price drops.

Bitcoin's concept is sound, and therefore, Bitcoin has gained such traction in the world.
I can't tell you what to invest in.

How to know what to invest in?
What gain is there for anyone to tell you what to invest in?
Generally, none.

If I tell you to invest in Bitcoin, I don't gain anything from it, unless you invest tens or hundreds of millions of dollars.
Therefore, by telling you, the only thing I can gain is to have possibly caused you to lose money.

On an internet discussion forum however, it's different, since it's a discussion forum where people can discuss the potential future.
This also means that any sort of credibility is generally irrelevant, so take everything with a grain of salt!

The most important factors I find in regards to crypto investment:
NEVER invest more than you are willing to lose. There are absolutely zero guarantees Bitcoin will ever go $1 more than it is currently.
It can be likely, but it's not guaranteed. Don't play with money you need. If you do, don't complain when it's lost.

TRUST your investment, or you're in for a bad time. Crypto is very volatile. If you invest and see a -10% one day, and you have no idea what you're invested in,
you might sell off and quit and leave with 10% less money.

Regardless of what you invest in, make sure you understand:
WHAT it is you are investing, what the purpose of the investment is.
WHO or WHAT drives the project towards it's purpose.
WHERE the value comes from.

If you're investing in an early project, you shouldn't throw money on a project just because it uses 'buzz words' or because it 'sounds good'.
Make sure the team is there, that they're capable, and legit.
Make sure the project has a purpose, and a reason to exist. Do we need to count bananas on the blockchain? No!
Make sure you understand where the value comes from. If you hold a Bitcoin, how do you know the 'market cap' can't rise and yet leave you with a loss?

Market Cap
Market cap in crypto on a site such as coinmarketcap.com, shows how much every 'asset' in circulation of the crypto, is worth.
If there's 100 Bitcoin's circulating, and I pay $1 for one, then the market cap is $100.

This is very, very important for new people to understand.
Popular example:
One TRON costs $0.078289.
What prevents TRON from being worth $9,100, just like Bitcoin?
The supply.
There's 65,748,111,645 TRON-tokens in circulation.
If the price of TRON went to, even $10, that'd mean that the market cap of TRON would be:
$650,748,111,645.
That's 5 times Bitcoin's current marketcap.

I think it's important to mention, because I see so many new people fall in the trap of "what is the cheapest coin?".
It's a stupid question. If you have one banana and there's 100 bananas, you have 1/100 of the value.
However, if there's a billion bananas, people don't care as much for your banana.

Important note however, is that - even if TRON at $10 would mean 5 times Bitcoin's market cap today, in 5 years, $10 TRON could maybe be spot #10 overall.
However, be logical - at $1,000 per TRON, the market cap would be so large that we'd at that point probably have TRON as the world currency and having completely left any other currency-markets.

Summary:
Don't invest in something just because someone tells you to.
Make sure you understand what you're investing in.
Analyze the purpose.
Ensure you understand the economics of your investment

Great, what's next?
If you now feel that you understand some basic things about crypto, it's time to getting some crypto.
There's various ways, and currently, the most common way is still using a middleman. Exchanges.

Exchanges such as coinbase.com, kraken.com, and many more, allows you to give them fiat, and in return, you get some numbers on their website.
These numbers represent the money you paid them, and you trust that they'll allow you to use it to buy crypto.

If you head over to an exchange, deposit money, you can then start buying some crypto.
Generally, the largest fiat-handling exchanges, only lists the most popular coins.
Coinbase for example, has:
Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic.

If you want something else, you'll have to go elsewhere.
Binance is very popular, and I'd like to mention huobi.pro as they have a lot of listed crypto, but with much lower fees.

So, lets pretend you want TRON(I don't suggest investing in TRON; I personally despite it, but I'm just continuing on the previous example).
TRON is not on Coinbase, however, it's on Binance, which doesn't handle fiat.
What do you do then?

Why is Bitcoin controlling the market?
Currently, the #1 way for any crypto to be obtainable on the market, is by trading Bitcoin to it.
Many sites also allows Ethereum to be traded.
(Trading Pairs).
So this means that you can purchase Bitcoin from Coinbase.com and transfer it to for example Binance, and then trade your Bitcoin to TRON.

What does a transfer mean? That brings us to..
Wallets
A wallet is a pair of keys, specifically, a Public and a Private key.
Just to make it easier to understand, a Public key is basically your 'username', and the Private key is the 'password'.
If you wish to receive funds to your wallet, you'd provide someone with your public key.
Whoever has the private key, has full control of the wallet contents.
This private key is used to sign transactions, basically verifying that you are indeed the owner of this wallet.

What an exchange does, as a middleman, is generate wallets for you.
On Coinbase, they create a Bitcoin wallet when you purchase Bitcoin.
They allocate your Bitcoin wallet, with the amount of Bitcoin you purchased.
However, they are still in control - you only have the Public Key!(at most), allowing you to deposit Bitcoin aswell.
The same goes for Huobi, Binance etc - they create wallets, you get the public key.

So, continuing on the Coinbase transaction:
Register on Huobi/Binance, go to Balances, find Bitcoin, and click Deposit.
You'll see your Public Key to your Wallet, which they created for you, simply copy it.
Return to Coinbase, go to to your Bitcoin Wallet, click Send, and paste in your Huobi/Binance wallet.
Once this is sent, if you entered a wrong address - it's gone!
Hopefully, you entered the correct address, and soon, you'll have Bitcoin in your Huobi/Binance wallet, ready to trade to TRON.

Once the funds arrive, head on over to the Exchange-part of the Exchange.
Find the TRON/BTC page. Generally, you can place an order, to buy at a LOWER amount than current price, basically hoping that the TRON price drops in relation to BTC.
You can also simply market-buy(buy at current price).
In the future, you can sell your TRON the same way - either at market price, or on a higher amount than current price, hoping it'll go up and you make a profit.

Once you've bought your TRON, you should be able to see them under the Balance view on Huobi/Binance.
Here comes the interesting, and very important part.

Keeping your funds safe
You can leave your crypto there on Huobi/Binance, in their control.
This is just the same as a bank - probably less credible. You hope that they'll keep your funds safe.
if they are hacked, or simply take it and leave, you're out of luck(generally, laws might hunt them).
You are also promoting the middleman-aspect.

What else is there?
You can create your own wallet, and with that, you'll be in charge!

There are multiple types of wallets.
Paper Wallets - generally what you say when you print out the wallet information on a piece of paper.
Hardware Wallets - like an USB-stick, with it's own little computer inside, that ensures your private key stays safe, and makes it easier to handle.
Software Wallets - a software you run on your computer to do your transactions.
Web Wallets - a web version.
Other alternatives - such as using MetaMask(a web browser plugin for Ethereum).

Depending on what crypto you have, you need different wallets.
You can't send Ethereum to your Bitcoin wallet.
You can send TRON to your Ethereum wallet. Why?
TRON is a token on the Ethereum blockchain.

Generally:
A coin = depending on context, means Bitcoin, or any coin running on it's own blockchain.
An altcoin = depending on context, it could be a coin running on it's own blockchain, or a fork of another coin.
A token = 'lives' on another coins blockchain, basically serving no purpose except being an asset to whatever project it's tied(like TRON).

Either way, security is important.
If you wish to print out a wallet, you need to be certain your computer is completely safe of viruses, or you can assume, that you've already lost your funds.
(I have written a guide about wallet-safe keeping in general here)

For this guide, I'll continue with the TRON example.
If you wish to hold your tokens yourself, you'd need a wallet.
A hardware wallet(look my wallet thread for options)  is purchased by a company such as Trezor or Ledger.
Since this takes time, I will continue with the most simple method:
MyEtherWallet. (the same concept works for Bitcoin, you can look at: https://bitcoin.org/en/choose-your-wallet)
www.myetherwallet.com will guide you through generating your first wallet.

Whatever you do, ensure you keep your Private Key safe.
If you misplace it, the money is gone, forever.

To make this easier, there's Seed Phrases, basically a set of words that combined make up your private key.
This is part of the myetherwallet.com guide.

I cover Wallet-generation in my other thread which I linked up there, so I won't go through the steps, since it's also clearly written on myetherwallet.

The concept is simple:
You generate your wallet, you see a Public + Private key.
Enter your Public Key on Huobi/Binance, and withdraw your TRON.
A few minutes later, you should have your TRON in your wallet.
Now, noone on earth can do anything with your TRON, without your Private Key.
So, again! Ensure you have the private key safely stored somewhere.

If you wish to send your TRON back to Binance, or somewhere else, to sell it, you simply login via MyEtherWallet, click Send, enter your ETH-Wallet adress from the Huobi/Binance Balance-view, and send it.
A few minutes later, it's there!

A few links:
Some tips regarding analysing ICOs(which would also apply any crypto project)
General Crypto Safety + Wallet Guide
Choosing your Bitcoin wallet
Coinbase
Huobi Exchange
Binance Exchange
A good collection of Bitcoin information