cryptocurrencies for laymen
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Ismertető:
This book introduces the reader to the exciting and constantly evolving world of cryptocurrencies in an easy-to-understand way. It answers the questions that an everyday reader might ask about the topic, such as how to get Bitcoin, where to store it, how much privacy it offers, what it can be used for, and what opportunities it offers. It presents the history of cryptocurrencies, their potential, mining, the role and uses of digital money, with a strong emphasis on security. It explains the technological background and innovations such as NFTs and smart contracts. It covers the various storage, purchase and trading options and explains how to use the popular applications and platforms. All this is presented in clear, accessible language for those new to this fast-changing financial world.
Table of contents
Introduction 8
1. What you need to know about cryptocurrencies 10
1.1. What is Bitcoin anyway? 10
1.2. Its creation, background 11
1.3. Other cryptocurrencies 14
1.4. State cryptocurrencies 17
1.5. What is money worth, what is cryptocurrency worth? 19
1.6. Is cryptocurrency a pyramid scheme? 23
1.7. Can it replace real money? 24
1.8. Advantages and disadvantages of cryptocurrencies 25
1.9. Why are they being persecuted so much? 26
1.10. Security 27
1.11. Is it really not inflationary? 28
1.12. A favourite of criminals 30
1.13. How can I get Bitcoin? 30
1.14. What if I don't have internet access? 31
1.15. Can the government stop it? 31
1.16. Costs 32
1.17. How is it taxed? 32
1.18. What is mining? 33
1.19. Expensive, energy-intensive, polluting 35
1.20. How much does a transfer cost? 36
1.21. How can we make money with cryptocurrency? 38
1.22. What if we forget our password or private key? 40
1.23. Inheritance 41
1.24. What is two-step and two-key identification? 41
1.25. Is Bitcoin anonymous? 42
1.26. Why is decentralisation a good thing? 42
1.27. Why is it so secure? 43
1.28. Who or what is behind the algorithm? 44
1.29. Who oversees the processes? 44
1.30. Who determines the maximum amount that can be mined from a currency? 45
1.31. How does this translate into dollars or euros? 46
1.32. How can I pay with cryptocurrency? 47
1.33. What determines the exchange rate? 48
1.34. What is a Bitcoin ETF? 49
1.35. Are there any traces of our activity? 50
2. Where can we store our cryptocurrencies? 53
2.1. Wallet addresses 53
2.2. Cold and hot wallets 54
2.3. Fintech company applications 56
2.4. Storage on an exchange or stock market 57
2.5. Hardware wallet 60
2.5.1. How a hardware wallet works 60
2.5.2. Advantages and disadvantages of hardware wallets 61
2.5.3. Popular hardware wallets 61
2.5.4. How to set it up and use it safely? 62
2.5.5. When is it worth using a hardware wallet? 62
2.6. Software wallets 63
2.6.1. Advantages and disadvantages of software wallets 64
2.6.2. How to use a software wallet securely? 64
2.6.3. Popular software wallets 65
2.6.4. When is it worth using a software wallet? 65
2.6.5. Example of using a software wallet 65
2.7. Paper wallet 66
2.7.1. When is it worth using a paper wallet? 66
2.7.2. Advantages and disadvantages of paper wallets 66
2.7.3. Generating a paper wallet 67
2.7.4. Sending cryptocurrency to a paper wallet 69
2.7.5. Checking the balance of a paper wallet 70
2.7.6. Withdrawing money from the wallet 70
2.8. Multi-signature wallets 72
2.8.1. How does a MultiSig wallet work? 72
2.8.2. Advantages, disadvantages and risks of MultiSig wallets 72
2.8.3. Popular MultiSig wallets and solutions 73
2.8.4. When is it worth using a MultiSig wallet? 73
2.9. What to look out for 73
2.10. Revolut as one of the most convenient tools 75
3. How can we obtain cryptocurrency? 76
3.1. Purchase 76
3.2. Exchange 76
3.3. Receiving a transfer 76
3.4. Mining 77
3.5. Purchasing at ATMs 77
3.6. Sales, wages 77
3.7. The effects of transaction fees and network delays 77
3.8. Let's issue our own money 78
4. The technology behind it 80
4.1. How the system works, blocks and chains 80
4.2. The basics of cryptography 86
4.2.1. Consensus mechanisms 88
4.2.2. Block structure 90
4.2.3. The role of nodes 92
4.2.4. Smart contracts 93
4.3. Block rewards, transaction and gas fees 95
4.4. Address formats and derivation paths 96
4.5. Scaling problems and Layer 2 solutions 98
4.6. Transparency and auditability 99
4.7. Other cryptocurrencies and altcoins 101
4.8. Future prospects 105
5. Trading cryptocurrencies 108
5.1. Trust Wallet 108
5.1.1. Installing TrustWallet 108
5.1.2. The programme's user interface 109
5.1.3. Settings 109
5.1.4. Purchasing cryptocurrency 110
5.1.5. Receiving cryptocurrencies 111
5.1.6. Sending cryptocurrencies 111
5.1.7. Exchanging cryptocurrencies 111
5.1.8. Selling cryptocurrency 112
5.1.9. Staking 113
5.1.10. Analyses 113
5.1.11. Adding additional wallets 114
5.1.12. Security settings and wallet restoration 114
5.2. Revolut 114
5.2.1. Opening a Revolut account 115
5.2.2. Other practical services on Revolut 115
5.2.3. Topping up your Revolut account 117
5.2.4. Managing cryptocurrencies on Revolut 117
5.2.5. Purchasing cryptocurrency 117
5.2.6. Selling cryptocurrency 118
5.2.7. Exchanging cryptocurrency 118
5.2.8. Sending cryptocurrency 118
5.2.9. Receiving cryptocurrency 119
5.2.10. Staking cryptocurrency for interest 119
5.2.11. Revolut X 119
5.3. Binance 120
5.3.1. Registration and account creation 121
5.3.2. Identification (KYC ? Know Your Customer) 122
5.3.3. Main screen functions 123
5.3.4. Important settings 124
5.3.5. Storage on Binance 125
5.3.6. Depositing money 126
5.3.7. Transferring between wallets 126
5.3.8. Buying cryptocurrency 127
5.3.9. Basic trading functions 127
5.3.10. Additional options 129
5.3.11. Exceptions, refunds 129
5.3.12. Sending cryptocurrency 130
5.3.13. Accepting cryptocurrency 131
5.3.14. Mobile application 131
5.4. Coinbase 131
5.5. MetaMask 132
5.6. Crypto.com 133
5.7. Kraken 134
5.8. Kriptomat 135
5.8.1. Installation, registration, login 135
5.8.2. Basic functions 136
5.8.3. Depositing money 136
5.8.4. Purchasing cryptocurrency 136
5.8.5. Trading, exchange 137
5.8.6. Selling cryptocurrency 137
5.8.7. Sending cryptocurrency 138
5.8.8. Receiving cryptocurrency 138
5.8.9. Staking 138
5.8.10. Other functions 138
5.9. BlueWallet 138
5.9.1. Creating a new wallet 139
5.9.2. Sending Bitcoin 139
5.9.3. Receiving Bitcoin 139
5.9.4. Security settings 140
5.10. Exchanges, Pancakeswap, DexTools, Anyswap 140
5.11. Risks arising from address formats 141
6. Smart contracts 142
6.1. The concept and historical background of smart contracts 142
6.2. Operating mechanism 143
6.3. Practical applications 144
6.4. Advantages and challenges 144
6.5. Implementation in practice 144
7. Let's sell our digital images ? or what is this mysterious NFT? 146
7.1. What is an NFT? 146
7.2. How does NFT technology work in practice? 148
7.3. Economic opportunities and risks 149
7.4. Legal, ethical and social issues 150
7.5. NFTs in culture and community building 151
7.6. Technical implementation 152
7.7. How can we buy or sell NFTs? 153
7.8. Creating and selling NFTs in practice 155
7.9. Where are NFTs headed? 159
8. Cryptocurrency mining 160
8.1. What is mining? 160
8.2. Is mining worthwhile? 160
8.3. What does a mining machine look like and what does it do? 162
8.4. What do you need to mine? 165
8.5. Pitfalls 166
8.6. Return on investment, profit 167
8.7. Mining as a layman and as a professional 168
8.8. Ethical and energy issues 170
9. Investment strategies 172
9.1. What investment strategies are worth applying as a layman? 172
9.2. Success and failure stories from the crypto world 172
9.3. How can we learn from the mistakes of others? 174
9.4. Risk management 174
9.5. Long-term and short-term investments 174
9.5.1. Long-term investment 175
9.5.2. Short-term investments 177
9.6. Portfolio diversification 179
9.7. Stop-loss orders 180
9.8. Leveraged trades 180
9.9. Featured cryptocurrencies and altcoins 181
9.10. DeFi and yield farming 182
9.11. Fundamental and technical analysis in the crypto world 183
9.12. Interpreting market movements and charts 184
9.13. Challenges and market manipulation 187
9.14. Taxation and legal issues 187
10. Fraud 188
10.1. Here are a few examples 188
10.1.1. OneCoin 188
10.1.2. FTX bankruptcy 189
10.1.3. D.AI.SY project 189
10.1.4. BitConnect 190
10.1.5. PlusToken 190
10.1.6. Terra/Luna. 190
10.1.7. Lessons learned and vision for the future 190
10.2. Typical signs of fraud ? where should you be suspicious? 191
10.3. How can we protect ourselves? 193
10.4. The role of regulation 195
11. Let's try it 196
12. Recommended websites 197
13. Glossary 198