10-Minute Crypto Guide For Beginners

CoinW Exchange
9 min readJul 31, 2023

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Let’s face it–the topic of cryptocurrency can be pretty intimidating. All those complex terms can make anyone’s head spin.

But there is a crypto guide that gives you a high-level explanation of all the key concepts you need to know first, without submerging you in technicalities and jargon, and you’re reading it right now.

By the time you get to the end of this article, you will have a bird’s eye view of crypto and the fundamentals before going down this rabbit hole and that (trust us, there is a never-ending number of them in the world of crypto!)

The Birth of Bitcoin and Early Cryptocurrencies

Photo: Karolina Grabowska on Pexels

It all started with the Cypherpunks, a group of super-intelligent and far-sighted programmers, privacy advocates and activists who emerged in the late 1980s, championing the use of strong cryptography and digital privacy as a means to protect personal freedoms–as digitization proliferated and personal computers started entering the market.

With a conviction in the power of encryption to protect individuals from surveillance and control by governments and corporations, their ideas and inventions laid the groundwork for the creation of Bitcoin in 2008 by a mysterious figure known as Satoshi Nakamoto.

Imagine Bitcoin as a digital form of money, just like regular currency, but entirely decentralized, meaning it’s not issued by any government.

Before Bitcoin, there were some earlier attempts at creating digital currencies, but they faced significant challenges and didn’t gain widespread adoption. Bitcoin’s brilliance lies in its underlying technology–blockchain.

A decentralized digital currency, Bitcoin offered a groundbreaking alternative to traditional finance. This revolutionary concept laid the foundation for the blockchain technology, a transparent and immutable ledger that underpins most cryptocurrencies today.

Blockchain: The Foundation of Cryptocurrencies

Think of the blockchain as a public ledger or record-keeping system that ensures transparency, security, and immutability. Instead of a single entity controlling all transactions, blockchain enables a distributed network of computers (nodes) to collectively validate and record transactions. Each block in the chain contains a group of transactions, and new blocks are added sequentially to form the chain.

Each transaction on the blockchain is verified by multiple nodes, making it incredibly difficult for anyone to alter the data maliciously. This decentralization and tamper-resistant nature make blockchain an essential building block for cryptocurrencies.

The Blockchain Trilemma and the Diverse World of Cryptocurrencies

As more cryptocurrencies emerged, each aimed to address specific challenges and cater to different use cases. One of the most critical considerations for any cryptocurrency is the “Blockchain Trilemma.” It refers to the trade-off between three key factors: security, scalability, and decentralization. A cryptocurrency can excel in one or two of these aspects, but it’s challenging to achieve all three simultaneously.

For instance, Bitcoin prioritizes security and decentralization, but its scalability is limited, leading to slower transaction processing times. On the other hand, newer cryptocurrencies like EOS and Cardano focus on improving scalability and processing speed while compromising slightly on full decentralization.

The Limitations of Bitcoin and the Rise of Ethereum

While Bitcoin was a groundbreaking invention, it did have some limitations. Its primary purpose was to serve as digital cash, which meant its use cases were somewhat limited.

This led to the development of Ethereum in 2015 by Vitalik Buterin, a young programmer.

Ethereum took the concept of blockchain to the next level. It introduced “smart contracts” — self-executing contracts with the terms of the agreement written directly into code. Smart contracts enable developers to create decentralized applications (DApps) that can perform various functions without the need for intermediaries.

Just like how the Apple iOS enabled the boom of smartphone apps and turned our phones into a mini computer, Ethereum opened the floodgates for decentralized apps (DApps). DApps can take the form of mobile games, communications platforms, online services like file storage, as well as social media sites. Instead of a centralized computer/entity, many computers across a vast network manage these instead.

This ushered in the concept of Web3, a growing vision of a decentralized internet where users have more control over their data and online interactions. Instead of relying on centralized platforms, Web3 envisions a world where users can own their data and use cryptocurrencies to transact and interact with various applications directly.

For example, what if there was a social media platform that cannot censor what you say or post online? In return, you pay crypto to post pictures onto a social media platform–and get paid crypto directly by your network of connections who consume your content, without having to give any portion to the platform owners.

Alongside this revolutionary idea of DApps is Non-Fungible Tokens (NFTs). Nevermind if you cannot wrap your head around million-dollar monkey pictures, here’s why it’s interesting–before social media, normal folks like us could only consume whatever content was put on the Web. With social media apps like Facebook and Instagram, anyone could not just consume but create content.

With NFTs, there is a third “C” — capture.

You can capture the value of the content you create, without having to depend on platforms for ad revenue or middlemen commission. One of the most mind-blowing aspects of NFTs is how they’ve revolutionized the way artists and creators can monetize their work. This is because with NFT technology, every piece of digital content is trackable. Right now, any artist that uploads a song online loses out on potential revenue if that song file is downloaded by someone and shared with a million friends.

With NFT, artists can sell their digital masterpieces directly to collectors without the need for intermediaries like galleries. Artists can earn royalties every time their NFT changes hands in the future. Musicians like Kings of Leon have released their album as an NFT, allowing fans to own a piece of music history.

Rock band Kings Of Leon have generated over $2million from NFT sales of their most recent album ‘When You See Yourself’ (Source: OpenSea)

The Era of DeFi, NFTs, and Web3

Ethereum’s smart contracts paved the way for an explosion of creativity and innovation in the cryptocurrency space. Decentralized Finance (DeFi) emerged, offering traditional financial services like lending, borrowing, and trading, but without any banks. DeFi protocols run on the blockchain, allowing users to interact directly with them using their crypto assets.

If you’re still reading up to this point, congratulations–because we have come to the most exciting section of the entire article.

Cryptocurrency Trading Cryptocurrencies: Where All the Action Is

When it comes to investing in cryptocurrencies, there are two main approaches: long-term holding and short-term trading.

Long-term holding refers to buying a crypto and holding it for anything from two years to five years or more before selling.

Trading involves actively buying and selling assets within shorter time frames e.g. daily/weekly/monthly to capitalize on price fluctuations i.e. buy low, sell high. There are two main types of trading:

  • Spot trading: In spot trading, you buy or sell cryptocurrencies at their current market price for immediate settlement. This is similar to traditional stock trading, where you own the asset directly, and is the most common type of trading for beginners
  • Futures trading: Futures trading involves entering into contracts to buy or sell cryptocurrencies at a predetermined price on a specific date in the future. It allows traders to speculate on the price movements of cryptocurrencies without owning the underlying asset. Futures trading is more popular among experienced or advanced traders, as the rewards–and risks–are amplified.

To get started, you’ll need to use crypto exchanges like CoinW, which are platforms that facilitate the buying and selling of cryptocurrencies.

But beware, the crypto market is notorious for its wild volatility, which can lead to both substantial gains and steep losses.As a beginner, you’d want to minimize your risk by sticking with the top 10 or 20 biggest cryptocurrencies like Bitcoin, Ethereum, Solana, Litecoin and Cardano, as these are more established cryptos that have been around for longer, and are thus less susceptible to scams.

What about cryptos like USDT and USDC? These are known as “stablecoins” which are designed to maintain a stable value, usually pegged to a fiat currency like the US Dollar i.e. 1 USDT = USD1.

These serve as a digital representation of the fiat currency, offering a reliable and convenient way for traders and investors to move funds within the cryptocurrency ecosystem while avoiding the price volatility associated with other cryptocurrencies like Bitcoin or Ethereum.

Stablecoins are commonly used for fast and low-cost transactions, as well as for hedging against market fluctuations, providing stability in an otherwise volatile cryptocurrency market.

Staying Safe in the Crypto World

While the world of cryptocurrency offers incredible opportunities, it’s essential to stay vigilant and cautious. There are scams and fraudulent schemes out there, especially in the largely unregulated space of cryptocurrency. Here are some things you should do to protect yourself:

  • Do Your Research: Before investing in any cryptocurrency, thoroughly research the project, its team, and its use case. Avoid falling for quick-rich schemes that promise unrealistic returns.
  • Secure Your Assets: Use reputable wallets and exchanges to store your cryptocurrencies securely. Enable two-factor authentication (2FA) and use strong passwords to protect your accounts.
  • Be Wary of Phishing: Be cautious of emails or messages claiming to be from exchanges or companies asking for your login credentials or private keys. Legitimate entities won’t ask for this information.
  • Avoid Pump-and-Dump Schemes: Pump and Dump is a form of price manipulation where the price of a crypto is boosted based on false recommendations (pump) before the assets are sold at a higher price (dump), leaving unsuspecting investors who still hold the crypto at a loss.

Culture in Crypto

One of the more delightful aspects of crypto is its culture, the lingo and THE MEMES.

Like this:

Source: Twitter

And this:

Source: Trality.com

HODL (pronounced “hor-del”) originated as a typo, but has since become an actual word of its own, meaning “Hold On for Dear Life.” See, in the crypto world, people tend to defy the typical investment strategy of selling when prices dip. The most hard-core crypto enthusiasts have so much conviction that even when the market crashes and the value of their crypto drops, they do not sell but instead HODL (and rally others to do the same) because they believe its value will rise again.

Indeed, memes have become the language of crypto, a way for enthusiasts to express their excitement, frustration, and shared experiences in a light-hearted and relatable manner. These memes create a sense of belonging and camaraderie among crypto enthusiasts, uniting them through humor and shared inside jokes. They bring levity to a space that can often be complex and overwhelming, making it more accessible and inviting to newcomers.

Of course, there is also the rally cry WAGMI, which stands for “We Are Gonna Make It.” In a world where uncertainty reigns supreme, crypto enthusiasts come together to form a bond of solidarity, support–and sometimes, blind optimism.

Don’t take every WAGMI at face value–if a crypto is plunging in price because of some fundamental flaw in the crypto project or if it has been revealed to be a scam, you are never gonna make it, so at the risk of sounding like a nag, research is critical to protect your money and avoid making F.A.T.A.L mistakes (we say fatal because making mistakes is almost unavoidable when you are getting your feet wet and learning about the crazy world of crypto–the key is to make mistakes that you can afford.)

Where We’re At

With the increasing adoption of blockchain technology and the ability to transact without intermediaries, the possibilities are endless in the crypto world.

New innovations like layer-2 solutions, dynamic NFTs, and AI-driven DeFi platforms are underway and will enable increased access, scalability, and sustainability.

Major financial players like Visa and Mastercard are also entering the crypto scene, allowing users to spend their digital assets through crypto debit cards and payment gateways. This integration paves the way for a future where cryptocurrencies become a seamless part of everyday transactions, making it easier for you to spend and manage your digital wealth.

So don’t worry about not getting rich overnight and don’t take it too seriously. At the same time, stay safe, learn, and have some fun along the way. We’re here for the long haul!

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CoinW Exchange
CoinW Exchange

Written by CoinW Exchange

Established in 2017, our top-tier integrated trading platform offers futures trading and a range of other services to over 7 million users globally.

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