INTRODUCTION TO CRYPTO
This is not investment, financial or legal advice and is for information purposes only.
This introduction is intended to get newcomers safely learning, using and storing crypto. Modern cryptography is incredibly exciting and one of the greatest opportunities for mankind. It can make us freer, more productive and happier. Before we get to all of the fun and exciting things, we need to cover the ground rules and potential pitfalls.
First things first, what is crypto?
'Crypto' is shorthand for cryptography, crypto-currency, 'blockchain' and Bitcoin, the most well known of the thousands upon thousands of crypto-currencies. Don't get caught up in the hype of 'blockchain'. Everyone seems to want to put everything on a blockchain when most often it is not a good tool for the job. What they need to be focusing on is liberating capacity of crytpographic protocols.
The ultimate rule of crypto:
You are ultimately responsible for what happens.
Part of the whole point of crypto is the self liberation of the individual. With that comes an equal measure of self responsibility. You do not of course have to heed or adhere to this rule but the degree to which you do will determine your positive or negative outcomes with crypto. Make sure you understand what you are doing and your expected result before you do something. You can never know everything but you can always know the limits of your knowledge and the result of your direct experience whether successful or not.
Be on guard for bad actors.
Frankly, a person is much easier to 'hack' than the infrastructure of the internet and modern cryptography. That is where bad actors will focus the majority of their efforts. It is no harder to safeguard yourself from them than it is to control yourself and your emotions. Your excitement, joy, desire, anger, impatience... especially impatience, all of these things will be manipulated and exploited in order to unjustly separate you from your property.
Know the predator. They range from high to low tech, working alone or as parts of large organizations. They will often message you without solicitation offering to help with whatever problem you have or information you are looking for. They will pose as part of larger organisations, including government, or personalities and developers in the crypto space. They will pretend to be their personnel and customer service. They will contact you via email, chat and phone. They will set up false websites that look exactly like the official ones you may be trying to visit. The website name or link will look almost like the official site with a small exception that is easy to miss at first glance. They have all the time in the world to scratch and pick and find the place that you or your organization is weak.
Many organizations these days go out of their way to hide their phone number or means of easily reaching a human representative. Scammers will take advantage of that. When your crypto exchange is down from high demand and nobody is answering your emails for weeks on end because it's a bull run and they are busier than they have ever been, scammers will pose as the exchanges customer service and post links and phone numbers to reach them anywhere and everywhere on the internet. They do this so that when people are searching online for contacts to the official organization, find the scammers contacts instead of legitimate ones.
Be especially cautious of anyone sending you direct messages, this is so prolific in the crypto space that I have mentioned it twice. Any potentially good actor will have no problem having a conversation in public where others can see what is being said.
A special note, on a dramatic increase in the crypto price you may find what could once buy a car can now buy several houses outright. People have killed for far, far less. Already people known to have crypto currency have been special targets of kidnapping , extortion and violence. Take the steps necessary to ensure you do not become unfortunate news.
Where do I get information?
People you know and trust with a good reputation relying primarily on your own judgement.
Cross check any and all sources against each other, always get multiple perspectives.
Search online for information about the project or aspect of crypto that you are interested in, there is almost always a public conversation occurring somewhere.
When you speak to others directly make sure it is in a public environment where others can see the exchange and correct any wrong or malicious information that is shared.
Again, be incredibly suspicious of anyone that messages you. Bad actors will pretend to be anyone, manipulate and tell any lie to get your crypto. They are sociopaths that do not care whom they hurt and how much.
If I were researching a project I would go to their website, find them on twitter ( unfortunately ), find their telegram and discord group ( the real ones not the scams ) and get more information about where the most active community convo is from there. Finally I might look for more info on their gitlab and or github page.
How does one know if it's a scam? Do a ( preferably non-google ) web search for 'scammer grammar' those are generally the kids of clues you will have.
What wallet should I use?
Crypto wallets are programs people use to hold and transact their crypto. Some have more features than others and they may or may not be created and maintained by the communities that develop a particular crypto. There are many kinds such as software, paper and hardware. Wallets can be 'cold' or not attached to the internet or 'hot' attached to the internet. Their is also a special category of wallet I'd call 'glacial' or never exposed to the internet. For more info, read here: https://glacierprotocol.org/
Paper wallets associate the keys to your crypto with a random word phrase. Usually 12, 18 or 24 words. This series of random words can be used to generate an endless supply of cryptographic keys so they can store multiple cryptos on multiple addresses. Paper wallets are a great way to store crypto long term and without anything other than your own mind ( if you don't mind risking forgetting ). Also look into products and methods of securing your list of random words in metal so that it can survive something like a fire. Software wallets are either command-line wallets or have a user-interface. Command-line wallets are text only and used entirely with in the terminal process of a computer. Software wallets are like any other piece of software you come across, they can be an application on your phone or computer, or web-based and accessed via your web browser. Most software wallets will and should give you an option to backup the wallet with a 'seed phrase', this is essentially a paper wallet. Backing up your seed phrase is one of the first things one should do when setting up a new wallet.
Take special note, your seed phrase is the keys to your vault, whomever has those random words controls your crypto. So keep your paper wallet private and secure like you would they keys to your wealth. Hardware wallets are pieces of hardware that have a special chip for both securing and using cryptographic keys without exposing them to bad actors. Your hardware wallet, like a software wallet will be backed up with a paper wallet and recording that seed phrase is one of the first things you should do when setting your hardware wallet up. The most commonly used hardware wallets are the Trezor and Ledger brand. Of note, Ledger unfortunately proved incapable of securing thier customers information and was recently hacked.
I have personally used the atomic wallet ( not to be confused with atomex ) without issue. Also, most crypto projects have wallets developed by their core developers and community which I usually find helpful.
As a rule of thumb, keep the least amount of wealth on a software wallet, intermediate amounts on paper or hardware wallets. What constitutes small, intermediate and large amounts of wealth here is up to you. Securing your crypto is necessary but there is a cost benefit to consider with all things. When you get to great sums of wealth arrange your holdings in such a way that you alone could not surrender your crypto to a bad actor alone, even if you wanted to. That's another article though.
What is crypto mining?
Crypto mining is using computer hardware and energy to secure and process a particular blockchain or cryptographic protocol. Securing and processing cryptography in this way is known as proof of work ( or POW ). Though proof of work is the most common, it is not the only means of processing cryptography. There is also proof of stake ( or POS ) which is less energy intensive and requires stake in a particular network in order to participate in processing the network. There are also other more theoretical means of processing cryptographic networks but I will not get into them here.
Can I make money mining crypto?
Maybe, mining something like bitcoin, likley not unless you have a great, great deal of capital to throw at the project and have a cheap source of electricity. If you have or want to build a powerful computer and want to use it to mine crypto you can use this resource to see if it might be profitable for you: https://www.nicehash.com/profitability-calculator
You can also use nicehash to quickly setup mining for you. Yes, they take a small cut but unless you want to make mining a part if not full time job it's worth it in my opinion. Nope, they aren't paying me but feel free to email them and let them know they should be 🙂
Questions, comments and feedback are welcome you can reach me via my contact page.