Cryptocurrency with Chris

A Blog about Crypto from a Curious fellow named Chris! Here to explain all things Cryptocurrency!

Category: Basics

Ethereum Basics!

Hello everyone! Today, I want to write my first part of a new series that will detail specific coins and tokens. I already wrote a pretty basic post about Bitcoin and the basics of Blockchain technology. The next coin to talk about is naturally Ethereum given it is currently the second largest Cryptocurrency by market cap. So let’s begin!

What is Ethereum?

Ethereum is another Blockchain based technology much like Bitcoin. Just like Bitcoin is an open source and distributed blockchain ledger and network. However, it differs greatly from Bitcoin in that Ethereum is meant to be a foundation for developers to build upon and deploy other decentralized software tools and applications. Bitcoin is mainly meant to enable peer-to-peer, electronic and decentralized value transfer. Bitcoin tracks transactions and performs a certain amount of data storage to track the values within addresses.

Ethereum, on the other hand, tracks value transfer and stores distributed data like Bitcoin but goes a step further. The main purpose is focused on running distributed computation and enabling decentralized applications. So, while Bitcoin is mainly a ledger of transactions, Ethereum is distributed storage and distributed computation. Ethereum can be thought of as one massive computer that executes a program and replicates the data on all computers on the network.

Ether

Ether is the main coin of the Ethereum network and can be thought of as the fuel that powers the distributed computation for applications on the blockchain. It is much like Bitcoin in that the transactions and holders of Ether are tracked and stored on the distributed ledger. If you want to run a platform on Ethereum, you must pay Ether to the miners who are processing the transactions. This Ether fuel is the motivation that incentivizes miners to support the network.

Smart Contracts

So how are these computations performed and managed? That is where Smart Contracts come into play! Smart contracts are simply small bits of computer code that manage the exchange or manipulation of data or value on the Ethereum network. They are written in various programming languages by users and then added the public Blockchain. Once added to the ledger, they can then be run simply by fueling it with gas. You create a transaction sending some ETH fuel to the contract with any additional information the contract needs. The arrival of the fuel triggers execution of its code across each mining computer on the network. The miners come to a consensus and the output is added to the Blockchain. Smart contracts can contain a series of conditions that, when met, trigger the transfer of equity, value, or property on the Ethereum network.

These smart contracts are incredibly important because these are the basis for the decentralized applications that run on the Blockchain. Because these Smart Contracts are run on a distributed, decentralized blockchain, they run exactly as programmed on each node without anyone able to affect them. While most Blockchains have the ability to process code, they often only allow for a very small set of operations. Ethereum was the first to allow anyone to develop whatever operation them want as long as they have the Ether to pay for it to run on the network.

Ethereum’s Potential Uses

So what do these Smart Contracts give us? Well, these unlock an almost unlimited amount of potential uses. Because these contracts can be built up into very complex code, very robust platforms can be built to create decentralized implementations of many tasks. Many developers are currently developing such platforms to perform a wide array of tasks that will eliminate all central control. Many of these developers use Tokens to represent equity in their project or as fuel to perform some ability like request a payment or place a bet.

Ethereum is an exciting concept because theoretically it can create a self-sustaining, decentralized super computer that can store data, run applications, and facilitate communications. It is spread over a vast number of computers around the world and cannot be tampered with. That means no government or entity will be able to control these tasks and allows for users to remain anonymous. Very excited to see where the Future of Ethereum will lead!

Cheers! Chris

Cash App and Bitcoin Buying!

Welcome back everyone! As you may have noticed from my previous posts, one of my big concerns with the growth of Cryptocurrency is ease of entering the market. Having dealt with trying to purchase and use coins in a variety of (often quite difficult) ways, I know how frustrating it can be to get started. It is often even worse for Americans where government restrictions on currency exchange are even more difficult. I wrote this guide which illustrates what I believe to be the easiest and best method to get started. Yes, it’s easy through Coinbase but it’s often not very quick or cheap after fees. Those are what I absolutely can’t stand, fees and total USD to Crypto transaction time. For a decentralized technology that is inherently quick and cheap, Coinbase certainly tries hard to ruin both when getting in. That’s where Cash App comes in!

Square, Inc., a financial services and mobile payment company based in the United States has recently released a new peer to peer payment service known as the Cash App to compete with Venmo and other payment services. More importantly, the CEO Jack Dorsey seems to be very keen on the future of Cryptocurrency. Because of this, they have added the feature of purchasing Bitcoin through the app! So I went ahead and tried it for you all to see how it compares with the experience Coinbase provides!

Buying

Well, this will be quick. Buying Bitcoin through the Cash App is instant if you link your bank account. I set up a Cash App account, linked my Debit Card, purchased a small amount of Bitcoin, and had it my Cash App ‘wallet’ in a matter of minutes. By wallet, I of course mean the wallet inside the app and not a real Bitcoin wallet. You do NOT own the Private Key to the wallet where your Bitcoin is held. Other than that, they have a very intuitive interface and provide seamless instant purchasing. Could not find any issues with the App itself or process of purchasing the Bitcoin. One small downside is that currently only allow for the purchasing of Bitcoin and no other Cryptocurrencies. If you want to obtain any other Coin or Token, you will have to Transfer it out to another exchange.

Transferring

This is where things seem to get a little more difficult unfortunately. In order to withdraw the Bitcoin from the Cash App, you need to confirm your identity using an ID card or Driver’s license. Yes, I know no one likes to do this, but it is the easiest and most secure way as it stands. These companies need a way to prove you are who you say you are. This is the same process that Coinbase requires and that is because these companies are not in the business of allowing or promoting fraud.

It took me just under 24 hours after submitting my ID to get verified before I could withdraw. All in all, I thought that was pretty reasonable. And also, this is a one-time deal. Once verified, you can withdraw Bitcoin free of charge (on Cash App’s end) in the amount of time it takes to confirm on the network. Awesome!

On my second attempt, when I was already verified, it took me a total of 6 minutes from purchase on Cash App to seeing the pending transaction in my wallet. Woah! If any of you have used Coinbase or GDAX, you know FULL well that it takes much longer than this. Coinbase makes it very difficult for you to actually remove your Bitcoin to your own wallet. I have had Coinbase leave my withdrawals pending for weeks before even initiating a Bitcoin network transaction.

Conclusion and Coinbase Comparison

In the end, I really enjoyed my experience using Cash App. No, I am not being paid to post this (But would be very appreciative if anyone used my referral link to get started). They built a very smooth, fluid, and easy app that allows for near instant purchasing and withdrawing of Bitcoin. Yes, the verification waiting is not ideal, but unfortunately that’s the nature of the beast when buying Cryptocurrency in the United States these days. Hopefully, someday soon, there is a true decentralized exchange so there is no need to deal with a third party.

How does it compare to Coinbase? Well, I think it’s a great option. Exchange that dollar for any Crypto is not easy. Using CashApp you can do it quickly and then you have BTC, a Crypto you can use to obtain any other Crypto easily. It also appeared to be both quicker and cheaper. The total time going from USD to Bitcoin was a matter of minutes compared to my recent 1 week waiting time when using the Coinbase subsidiary GDAX. Both of those times are assuming you were verified already. Also, the fees seem to be less on the Cash App at ~1% versus 1.49% for US users. I might be biased a bit against Coinbase, but I welcome this competition and hope that it will drive both Exchange methods to better themselves.

Cheers! Chris

Cryptocurrency Security

Welcome back! Last week, I wrote up a quick guide on how to get started in the world of Cryptocurrency using Coinbase, Binance, or something similar. Now that all of you have taken the leap, I wanted to discuss the next most important part of Cryptocurrency: Security. Keeping the Coins and Tokens you just obtained safe is a much bigger concern than normal Fiat currency. Because your Crypto lives entirely in a digital world, it is much easier to lose your money by way of hacks or making a mistake. So let’s talk about the most important security measures to follow to keep your Cryptocurrency safe!

Take them off of the Exchange

First things first, remove them from the exchange. I recommend removing them for two main reasons. First, you are relying on their security to protect your assets. Personally, I never like leaving the fate of my money or assets in the hands of others no matter how much I trust them. If an exchange is hacked, it will out of your control to save your coins. The second reason is access. If the exchange goes down for maintenance or halts withdrawals, you are out of luck. If some emergency comes up and you need spend the coins or sell them, you will be stuck and that scares me. During the January boom, there were a bunch of exchange issues handling the large volume increase. Personally, I don’t think those issues are out of the question in the future.

The downsides to removing them from the exchange? You have less access to selling or trading should there be a major market event. This won’t be an issue if you plan on spending the Coins directly or want to hold for a long term. If you plan to swing trade or trade often, removing them from the exchange every time probably isn’t worth it.

Safe and Secure Wallet Selection

So you decided to withdraw your Cryptocurrency from the exchange? Smart. That means you need to set up a wallet for your coins. You can do this using Online, Desktop, or Hardware wallets. They also follow that order in terms of least secure to most secure. While I recommend Hardware Wallets, let’s assume you don’t want to spend the money or no Hardware wallet supports your coin. That means either Online or Desktop. Given the choice, I would always suggest using a Desktop wallet, but for many coins Online is the only option right now. It is important that whatever you decide between the two, you do your research and find the officially supported wallet for each Coin you want to hold. Do not trust random websites. Go to the official coin documentation and see what they support or recommend.

Secure Key or Seed Generation

Once you have downloaded or found the correct wallet, you will generate your Private Key or Seed associated with the wallet. This Key is essentially the password and main security of your coins. If your key is exposed or lost, your Coins are NOT safe. Many wallets will generate it for you. If you made sure you found the correct and official wallet, the security of how the key or seed is generated will not be an issue. However, some Coins allow you or require you to generate your own Seed such as Iota. Do not fall for the mistake of allowing a website to generate it for you. They can easily store that value and steal your Coins later. Generate it offline or using an officially supported generator. Again, thorough research here is always smart.

Key or Seed Safe-Keeping

As I already stated, your Private Key or Seed used to access your wallet is EVERYTHING. Do not give it to anyone or put it anywhere someone might find it. Never post it online or store it out in the open on your computer. In my opinion, the least secure storage method you should use is an encrypted and hidden location on your computer. Many people recommend writing it on a piece of paper, removing all traces of the Key/Seed from your computer, and locking that in a safe. If you do not need to access them for a while, this is smart in my opinion and is known as a Paper Wallet and Cold Storage.

Hardware Wallet

The most secure method of storage that still allows for more access to your coins, is the use of Hardware Wallets. The best options are Ledger Nano S or Trezor. These wallets store your Key/Seed in secure hardware and usually it cannot be removed from the device in plain text. More importantly, they are immune to viruses that steal from software wallets. Finally, they allow you to access your assets in a more interactive way than a paper wallet. With Paper Wallets, you will need to manually type in a Key every time. That being said, you never know if the Hardware has been tampered with prior to you obtaining it. That means NEVER purchase or use a Hardware Wallet that you didn’t get right from the manufacture. The links above are those manufacturers. Not worth taking the risk.

What’s the downside to a Hardware wallet? Well they are often expensive (~$100 USD) for the beginner Cryptocurrency investor. Also, Hardware Wallets do not support every coin (although they are rapidly expanding). That means you will most likely need to use a combination of Hardware and Software wallets if you own a wide array of Coins/Tokens.

Avoid Phishing Websites

One last security tip is to avoid phishing websites. While this may seem simple, there have been a lot of hacks where websites will mimic the look and domain names (very closely) of online wallets or exchanges. Taking Binance.com as an example, a phishing site might match the look and use the domain name of blnance.com. Easy to see if you’re looking for it, but easy to miss if you’re being lazy. If you plugin your login information to one of these sites, kiss your coins goodbye! Make sure you use a trusted bookmark or check quickly every time to make sure you’re in the right place.

That’s all for today! Just a reminder to tread cautiously and everything will be fine! Cheers!

Chris

 

 

Cryptocurrency Terminology!

Hello readers! After continually seeing confusion and misunderstanding around the cryptocurrency world, I have created a basic glossary for many of the basic, yet very important Cryptocurrency and Blockchain terms. I will keep this up to date so feel free to let me know if there are any terms you want defined or think should be added! (Last updated: 5/14/2018)

General Terminology

Satoshi – smallest possible unit of Bitcoin, .00000001 BTC

Wei – smallest possible unit of Ethereum, 1ETH = 1e18 wei

Satoshi Nakamoto – mysterious founder of Bitcoin, identity is still unknown, could be one person or a group of people

Exchange – location on which one can buy and sell Cryptocurrencies like Coinbase or Binance

Fiat – Government issued currency

Coin – Cryptocurrency with its own implemented Blockchain or transactional network that derives its value from the network speed, cost, and reliability

Token – Cryptocurrency built on top of an existing Blockchain or network using smart contracts, most commonly on top of the Ethereum Blockchain

Altcoin – generally refers to any coin or token that is not Bitcoin. Some might argue Ethereum is no longer an Altcoin

Wallet – means of storing your cryptocurrency, can be purely software based or more securely on a hardware wallet

Private Key – unique sequence of characters that allows one to access tokens in a wallet, essentially a password and should be kept secure

Address – the targets or destinations used to send and receive transactions on a Crypto network

Cold Storage – moving all cryptocurrency offline to prevent hacking. Can involve a physical reference to a software wallet, a hardware wallet, or secure USB

Blockchain – technology on which Bitcoin and most Cryptocurrencies are built, a distributed ledger, secured by Cryptography that anyone can read but can’t edit. Decentralized and distributed amongst all users

POS – ‘Proof of Stake’ is a proposed algorithm for which people think Ethereum should operate on in the future. Different from current mining process and allows current Ether owns to vote by locking up their ether.

Sharding – proposed solution for Blockchain scaling problem, allows for users to only have partial copies of the complete blockchain as opposed to the entire chain in its current form. Helps increase overall performance and speed of the network

Fork – split of a Coin’s blockchain resulting in the original Coin and new Coin. Often occurs when there is update to the blockchains code resulting in a different technology and different Coin

Node – any user who holds a copy of the Blockchain and maintains it

DAG – directed acyclic graph, a cryptocurrency graph performing the same functions of a blockchain (recording, confirming, maintaining all transactions in the network), IOTA’s tangle is an example

Miners – users who willingly confirm transactions on the network and mine new blocks for the blockchain, are incentivized by a coin reward for each new block mined and the fees associated with the transactions they confirm

ICO/ITO – Initial Coin Offering, Initial Token Offering

White Paper – Academic paper outlining the details and specifics of a given coin or token and its underlying technology

Smart Contract – code executed on a Blockchain (usually Ethereum) that affects how the money flows (Transaction will only occur if a specific condition is met)

Whale – large volume investors who control enough buying power to potentially manipulate the market

Market Cap – total value of a Cryptocurrency, simply MC = Number of Coins x Price of a Coin

 Once again let me know if there is anything else you have a question about or want added! If you want a quick introduction in how to get started with your first coin or tokens, take a look at the guide I wrote up!

Cheers! Chris

Getting Started in the World of Cryptocurrency!

Welcome back! This time around, I want to chat about the absolute basics needed to get started with Cryptocurrency investing or adoption. I hope to cover the most popular exchanges, wallets, and security methods so that any beginner can get going. In the future, I hope to dive further into all the options available to the cryptocurrency investor, but for now, I want to get anyone who is interested started and on their way!

I know when I first started, it was quite difficult to wrap my head around everything I needed to do to be assured that I was investing safely and securely. A lot has changed since then, and it is easier than ever to get started. That being said however, there are still many caveats and traps that everyone should we aware to make sure they don’t make any mistakes along the way. Hopefully today, I can lay out the basics needed to get started investing!

Cash to Bitcoin to Your Coin of Choice! Simple as that right? Unfortunately not.

Fiat (Traditional Currency/US Dollar) to Coin 

So where do we start? If you simply want to buy Bitcoin, then it is as simple as setting up a wallet and going to a bitcoin ATM! But if you want to invest in some of the other coins and tokens, there is a bit more work that needs to be done. Assuming I am talking to a mostly US audience, the goal is turn our US Dollars into an equal value of a certain Coin or Token (for simplicity in this article, when I say Coin I really mean any Altcoin, Coin, or Token). Currently, the easiest way for a US resident to do this is to first buy one of the most popular coins through traditional means. I recommend using the exchange Coinbase to buy either Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH) or Litecoin (LTC). This can be done relatively easily by linking a bank account or using a credit card. While using a credit card is definitely more secure, they charge a pretty brutal 4% fee for doing so and only a 1.5% fee for using a bank account. In addition, some credit card companies have stopped allowing purchases of Cryptocurrency so beware. Once your payment method is squared away however, it’s rather easy to use the ‘Buy/Sell’ tab on the home page to directly purchase any of the four currently available coins. Congrats! You know own Cryptocurrency!

The next step is heavily dependent on which coin you want to own. If it is one of the four coins above, congratulations! You are now the proud owner of Cryptocurrency! Skip to the section on Coin safe-keeping to learn what to do next!

Exchange to Exchange

For those who want to dive deeper and obtain a Coin not offered in Coinbase, we need to transfer our current coins to an exchange that allows for trading between our purchased Coin and the Coin we hope to obtain. In my experience, Binance has the most trading pairs available and almost all the Coins any new investor might need. If your desired coin is not on Binance, check out KuCoin or even Bitfinex otherwise you may need to do research on where to obtain it. In order to get your Coins to this new exchange, first sign up with that new exchange (assuming you are using Binance, but other exchanges will operate in the same way more or less). At this point, I would recommend setting up Two Factor Authentication using Google Authenticator or the likes to make your account more secure from tampering. While not necessary, there is a lot of value in adding an extra layer of protection whenever possible. Once all set-up, locate your deposit address for the Coin you already own. Assuming Binance and Ethereum, simply head to the top menu and select Funds -> Deposits. Select Ethereum from the drop-down menu and copy the ‘ETH Deposit Address’ it displays. This is your Binance Wallet Ethereum address and is important to keep safe and accurate, so you send your ETH to the correct place every time.

Once you have your deposit address, head back to Coinbase and go to Accounts. Here you should see balances for all the Coins as well as any transactions you may have made. Simply select send on the Coin you wish to transfer and input your address. Make sure you use the exact same address specified by your Destination Exchange. If even one character is incorrect, the Coins will go to the wrong address and this is irreversible. Always double-check. Once you hit send, Cheers! This is most likely the first Cryptocurrency transaction you have ever performed. Head back to your destination exchange, wait for the transaction to be confirmed on the network, and then enter the trading markets to obtain the coin you wish!

Coin Safe-keeping and Security

Now that you have finally obtained the Coin or Token desired, it’s time to store it securely until you either want to sell it or use what every utility it may provide. I highly recommend against keeping any coins on an exchange unless planning to trade them away in the near future. While generally pretty secure, if the exchange is hacked, there is a good chance you will lose your coins and there is nothing you can do about it. I would much rather take security into my own hands and pull the coins out into the officially supported wallet with a seed/address only I know and can protect. This process if different for each Coin and Token so I will leave it to you all to do the proper research on how to do so, but generally it is pretty easy to look up the official Desktop or Mobile Wallet, install it, and generate a Seed/Address to house your coins. Once done, you can Withdrawal the coin from the exchange by sending it to that address. If you have any questions, please feel free to comment below and I am happy to help! There are also more secure Hardware wallets that allow you to completely disconnect from the grid which I highly recommend looking into. But I will go into a Hardware Wallets and what they bring to the table in much more depth in a later post!

So there you have it, the quickest and safest way to take Fiat and exchange it for whatever Cryptocurrency you wish!

Cheers!

Chris