{"appState":{"pageLoadApiCallsStatus":true},"categoryState":{"relatedCategories":{"headers":{"timestamp":"2023-02-01T16:01:12+00:00"},"categoryId":34277,"data":{"title":"Cryptocurrency","slug":"cryptocurrency","image":{"src":null,"width":0,"height":0},"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"},"slug":"cryptocurrency","categoryId":34277}],"parentCategory":{"categoryId":34273,"title":"Personal Finance","slug":"personal-finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"}},"childCategories":[],"description":"It sounds like sci-fi, but it's ever so real. We've got the blockchain basics, investment advice, and other cool ideas for Bitcoin, Ethereum, and beyond.","relatedArticles":{"self":"https://dummies-api.dummies.com/v2/articles?category=34277&offset=0&size=5"},"hasArticle":true,"hasBook":true,"articleCount":90,"bookCount":5},"_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"}},"relatedCategoriesLoadedStatus":"success"},"listState":{"list":{"count":10,"total":90,"items":[{"headers":{"creationTime":"2023-01-27T18:26:56+00:00","modifiedTime":"2023-01-27T18:26:56+00:00","timestamp":"2023-01-27T21:01:02+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"},"slug":"cryptocurrency","categoryId":34277}],"title":"The Different Tokens of Cryptocurrency","strippedTitle":"the different tokens of cryptocurrency","slug":"the-different-tokens-of-cryptocurrency","canonicalUrl":"","seo":{"metaDescription":"Learn about the different types of native and non-native cryptocurrency tokens, including Stablecoins, Wrapped tokens, and more.","noIndex":0,"noFollow":0},"content":"Cryptocurrency tokens are virtual currency representing fungible (non-unique) and tradable assets and utilities that reside on their own <a href=\"https://www.dummies.com/article/business-careers-money/personal-finance/cryptocurrency/what-is-a-blockchain-and-how-does-it-work-262432/\" target=\"_blank\" rel=\"noopener\">blockchains</a>.\r\n\r\nThere are two main categories of tokens: native and non-native.\r\n<h2 id=\"tab1\" >Native tokens</h2>\r\n<em>Native tokens</em> share the common characteristic of serving as the base token or inherent currency of their own proprietary blockchains.\r\n\r\nSome native tokens, such as <a href=\"https://www.dummies.com/article/business-careers-money/personal-finance/cryptocurrency/bitcoin-basics-138071/\" target=\"_blank\" rel=\"noopener\">Bitcoin</a> (BTC), were designed to serve as disintermediated currencies. The purpose of a <em>disintermediated</em> currency is to provide a global medium of exchange that is independent of a central authority, such as a bank or a government. Other examples in this category include <a href=\"https://litecoin.com/en/\" target=\"_blank\" rel=\"noopener\">Litecoin</a> (LTC) and Bitcoin Cash (BCH).\r\n\r\nMost other native tokens were designed to serve as utility tokens. A <em>utility token</em> provides access to a service or good within a given platform. For instance, ether (ETH) serves as the native token that fuels transactions on the Ethereum smart-contract platform. You need to pay ETH to transfer funds, deploy smart contracts, or access functions in an existing smart contract.\r\n\r\nOther examples in the utility category include ada (ADA) for Cardano and TRONIX (TRX), often simply called TRON, for the TRON Protocol.\r\n\r\nCoins can shift categories and even straddle more than one category. For instance, ETH became so popular that it’s also used as a disintermediated currency outside the Ethereum platform.\r\n\r\nThink of Walmart gift certificates, which are like utility tokens. The gift certificates are designed to be used to access goods and services within the Walmart platform. However, if Walmart becomes so popular that restaurants and movie theaters begin to accept Walmart gift certificates in place of cash, these gift certificates will have become a global medium of exchange that is now accepted outside the Walmart platform.\r\n\r\nFigures 1 and 2 present examples of online vendors that accept BTC, LTC, and ETH, among other crypto, as forms of payment.\r\n\r\n[caption id=\"attachment_296982\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296982\" src=\"https://www.dummies.com/wp-content/uploads/crypto-purchase-on-cheapair.jpg\" alt=\"Screenshot showing a window for using cryptocurrency to purchase a flight on CheapAir.com\" width=\"630\" height=\"752\" /> ©CheapAir.com<br />Figure 1: Using crypto to purchase a flight on CheapAir.com[/caption]\r\n\r\n \r\n\r\n[caption id=\"attachment_296983\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296983\" src=\"https://www.dummies.com/wp-content/uploads/crypto-purchase-on-newegg.jpg\" alt=\"Screenshot showing window for using cryptocurrency to purchase hardware on Newegg.com\" width=\"630\" height=\"582\" /> ©Newegg.com<br />Figure 2: Using crypto to purchase hardware on Newegg.com[/caption]\r\n<h2 id=\"tab2\" >Non-native tokens</h2>\r\nClose to 21,000 exchange-traded cryptocurrencies were listed on CoinMarketCap as of the end of August 2022. Most crypto assets are not native tokens. Instead, they are built on and secured by an existing blockchain. After all, we really don’t need 20,000 different blockchains that essentially provide the same recordkeeping function.\r\n\r\nAlso, having so many distinct blockchains would compromise the safety of each system, which depends on the size of the network.\r\n\r\nAlthough there are now many serious contenders to be the number-one. smart-contract platform, Ethereum remains the predominant blockchain on which to issue crypto assets, either as ERC-20 fungible tokens or as ERC-721 non-fungible tokens.\r\n\r\nMuch like how you can have numerous tabs in an Excel spreadsheet to keep records of different things, Ethereum allows developers to carve out their own recordkeeping systems on a reliable and tamper-proof platform.\r\n\r\nThe following sections, from Stablecoins to Meme coins, provide examples of non-native fungible tokens.\r\n<h3>Stablecoins</h3>\r\nSo-called <em>stablecoins</em> derive their name from the soft one-to-one peg they seek to maintain with a chosen fiat currency, such as the U.S. dollar. (A soft peg allows some flexibility in the exchange rate, whereas a hard peg requires strict one-to-one adherence.)\r\n\r\nSome stablecoins, such as Tether (USDT), are centrally controlled by a trusted party that controls the supply and is responsible for holding sufficient collateral — such as U.S. dollars or gold — to maintain the public’s faith in its stablecoin.\r\n\r\nWith a total market cap in excess of $180 billion, USDT is the largest stablecoin and the third largest cryptocurrency. It began as an ERC-20 token for use on Ethereum and later expanded to other blockchain platforms, such as TRON, Solana, and EOS.\r\n<p class=\"article-tips warning\">The stability of a stablecoin depends critically on the management (or mismanagement) of the stablecoin and ongoing public faith in the system. Whether the stablecoin is centrally managed and backed by traditional collateral or is algorithmically maintained by a nexus of smart contracts, stablecoins are not immune to a classic run on the bank.</p>\r\nRegulators are increasingly concerned about the seeming Wild West environment in which stablecoins have been operating. Their concerns were heightened by the recent catastrophic implosion of TerraUSD (UST), an algorithmic stablecoin that plummeted to just a few cents and has remained de-pegged from the U.S. dollar since May 2022.\r\n\r\nOverall, lawmakers are in favor of imposing capital requirements on stablecoin issuers like Tether Limited Inc. (for USDT) and Circle (for USDC). Perhaps the next move will be to require algorithmic stablecoins to undergo a formal credit rating process!\r\n<h3>Wrapped tokens</h3>\r\n<em>Wrapped tokens</em> allow for the synthetic use and trading of a native token from another blockchain. Much like how stablecoins are pegged to a fiat currency, wrapped tokens are pegged to a particular token.\r\n\r\nFor instance, you can’t swap ETH for actual Bitcoins (BTC) on the Ethereum blockchain, but you may have noticed that you can swap ETH for Wrapped Bitcoin (WBTC), which is issued as an ERC-20 token, via a DEX like Uniswap, as shown in Figure 3.\r\n\r\n[caption id=\"attachment_296981\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296981\" src=\"https://www.dummies.com/wp-content/uploads/wrapped-token-cryptocurrency.jpg\" alt=\"Screenshot showing a window for using Wrapped Bitcoin on Uniswap\" width=\"630\" height=\"503\" /> ©Uniswap<br />Trading Wrapped Bitcoin on Uniswap, a liquidity protocol on Ethereum[/caption]\r\n<h3>Governance tokens</h3>\r\n<em>Governance tokens</em> have become a popular way for development teams to elicit community participation in the ongoing management of a DeFi protocol after it has been deployed.\r\n\r\nFor instance, the Uniswap token (UNI) is an ERC-20 token that allows its holders to vote on various features of the Uniswap DEX protocols. Similarly, the SushiSwap token (SUSHI) is an ERC-20 token that allows its holders to vote on various features of the SushiSwap DEX protocols.\r\n\r\nNote that UNI and SUSHI are purely governance tokens and do not serve as utility tokens on the respective protocols:\r\n<ul>\r\n \t<li>Specifically, you don’t need UNI to execute a trade on a Uniswap liquidity pool, and you don’t need SUSHI to execute a trade on a SushiSwap liquidity pool (unless, of course, you are planning to swap UNI or SUSHI).</li>\r\n \t<li>The Uniswap and SushiSwap protocols are built on the Ethereum blockchain, and thus, you need ETH, the native utility token of Ethereum, to transact on these DEXs.</li>\r\n</ul>\r\nIn addition to voting rights, governance token holders also receive a portion of the fees earned on the protocol. SUSHI holders receive a portion of the 0.30 percent swap fee charged for trading in the SushiSwap liquidity pools, and UNI holders are expected to soon begin receiving a portion of the 0.30 percent swap fee charged for trading in the Uniswap liquidity pools.\r\n\r\nDespite their uncanny resemblance to equity securities (which also provide voting and cash-flow rights), governance tokens have thus far managed to stay out of the SEC’s crosshairs. The implications, though, would be huge — requiring their removal from any crypto exchange not registered as an Alternative Trading System (ATS).\r\n<h3>Security tokens</h3>\r\n<em>Security tokens</em> are tokenized securities, which represent equity ownership or other types of cash-flow claims in tokenized form. BCAP, an ERC-20 token issued by Blockchain Capital in 2017, is reportedly the first security token offering (STO) and was used to raise funds for its Blockchain Capital III Digital Liquid Venture Fund.\r\n\r\nOther examples of security tokens include OSTKO, an ERC-20 token representing preferred equity shares in Overstock.com, and ArCoin, an ERC-20 token representing shares in the Arca U.S. Treasury Fund.\r\n<h3>Meme coins</h3>\r\nSome coins are simply meme coins that have no explicit monetary value or practical use associated with the coin at creation.\r\n\r\nDogecoin (DOGE), the most famous meme coin, is actually a native token with its own blockchain that was originally designed as a joke. DOGE is the largest meme coin and tenth largest cryptocurrency, with a total market cap close to $8.5 billion as of the end of August 2022.\r\n\r\nInspired by the success of DOGE, other meme coins followed in its wake. Shiba Inu (SHIB), launched as an ERC-20 token on Ethereum, is another runaway success with a total market cap in excess of $6.5 billion, making it the second largest meme coin and 14th largest cryptocurrency.\r\n\r\nOf course, meme coins can also shift or straddle other categories. Refer to Figures 1 and 2 (above) to see that both DOGE and SHIB are also accepted as forms of payment on CheapAir.com and Newegg.com.\r\n\r\nOther intriguing (though far less successful) meme coins include <a href=\"https://fomocoin.org/\" target=\"_blank\" rel=\"noopener\">FOMO Coin</a> (shown in Figure 4), and <a href=\"https://www.jesuscoin.live/\" target=\"_blank\" rel=\"noopener\">Jesus Coin</a> (shown in Figure 5), both of which were also launched as ERC-20 tokens on the Ethereum blockchain.\r\n\r\n[caption id=\"attachment_296984\" align=\"alignnone\" width=\"577\"]<img class=\"size-full wp-image-296984\" src=\"https://www.dummies.com/wp-content/uploads/fomo-coin-crypto.jpg\" alt=\"Illustration of a FOMO cryptocurrency coin\" width=\"577\" height=\"382\" /> ©FOMO coin[/caption]\r\n\r\n \r\n\r\n[caption id=\"attachment_296980\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296980\" src=\"https://www.dummies.com/wp-content/uploads/jesus-coin-crypto.jpg\" alt=\"Illustration showing the cryptocurrency Jesus coin\" width=\"630\" height=\"491\" /> ©Jesus coin[/caption]\r\n\r\nMuch like the rise (and fall) of Beanie Babies in the 1990s, it’s hard to predict whether a meme coin is destined for DOGE-like greatness (though, it certainly helps if vendors adopt the meme as a form of payment and Elon Musk tweets about it!).\r\n<h2 id=\"tab3\" >Differentiating non-fungible tokens</h2>\r\nFinally, I would be remiss to ignore the category of non-fungible tokens (NFTs)!\r\n\r\nAlthough NFTs also fall under the category of non-native tokens, I’ve assigned this group its own header to clearly demarcate it from the tokens covered previously, which are all fungible tokens.\r\n\r\nNFTs are still relatively young, and thus far have mostly been designed to represent ownership of digital collectibles and gaming assets. However, many nascent projects are in various stages of planning and development.\r\n\r\nFrom NFT-izing the ownership records of luxury goods to event tickets to real estate, the possibilities are seemingly endless. Already, NFTs are being used to secure ownership and transaction records of digital property in decentralized metaverses, such as Decentraland and Sandbox. Perhaps more real-world analogues will soon follow!","description":"Cryptocurrency tokens are virtual currency representing fungible (non-unique) and tradable assets and utilities that reside on their own <a href=\"https://www.dummies.com/article/business-careers-money/personal-finance/cryptocurrency/what-is-a-blockchain-and-how-does-it-work-262432/\" target=\"_blank\" rel=\"noopener\">blockchains</a>.\r\n\r\nThere are two main categories of tokens: native and non-native.\r\n<h2 id=\"tab1\" >Native tokens</h2>\r\n<em>Native tokens</em> share the common characteristic of serving as the base token or inherent currency of their own proprietary blockchains.\r\n\r\nSome native tokens, such as <a href=\"https://www.dummies.com/article/business-careers-money/personal-finance/cryptocurrency/bitcoin-basics-138071/\" target=\"_blank\" rel=\"noopener\">Bitcoin</a> (BTC), were designed to serve as disintermediated currencies. The purpose of a <em>disintermediated</em> currency is to provide a global medium of exchange that is independent of a central authority, such as a bank or a government. Other examples in this category include <a href=\"https://litecoin.com/en/\" target=\"_blank\" rel=\"noopener\">Litecoin</a> (LTC) and Bitcoin Cash (BCH).\r\n\r\nMost other native tokens were designed to serve as utility tokens. A <em>utility token</em> provides access to a service or good within a given platform. For instance, ether (ETH) serves as the native token that fuels transactions on the Ethereum smart-contract platform. You need to pay ETH to transfer funds, deploy smart contracts, or access functions in an existing smart contract.\r\n\r\nOther examples in the utility category include ada (ADA) for Cardano and TRONIX (TRX), often simply called TRON, for the TRON Protocol.\r\n\r\nCoins can shift categories and even straddle more than one category. For instance, ETH became so popular that it’s also used as a disintermediated currency outside the Ethereum platform.\r\n\r\nThink of Walmart gift certificates, which are like utility tokens. The gift certificates are designed to be used to access goods and services within the Walmart platform. However, if Walmart becomes so popular that restaurants and movie theaters begin to accept Walmart gift certificates in place of cash, these gift certificates will have become a global medium of exchange that is now accepted outside the Walmart platform.\r\n\r\nFigures 1 and 2 present examples of online vendors that accept BTC, LTC, and ETH, among other crypto, as forms of payment.\r\n\r\n[caption id=\"attachment_296982\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296982\" src=\"https://www.dummies.com/wp-content/uploads/crypto-purchase-on-cheapair.jpg\" alt=\"Screenshot showing a window for using cryptocurrency to purchase a flight on CheapAir.com\" width=\"630\" height=\"752\" /> ©CheapAir.com<br />Figure 1: Using crypto to purchase a flight on CheapAir.com[/caption]\r\n\r\n \r\n\r\n[caption id=\"attachment_296983\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296983\" src=\"https://www.dummies.com/wp-content/uploads/crypto-purchase-on-newegg.jpg\" alt=\"Screenshot showing window for using cryptocurrency to purchase hardware on Newegg.com\" width=\"630\" height=\"582\" /> ©Newegg.com<br />Figure 2: Using crypto to purchase hardware on Newegg.com[/caption]\r\n<h2 id=\"tab2\" >Non-native tokens</h2>\r\nClose to 21,000 exchange-traded cryptocurrencies were listed on CoinMarketCap as of the end of August 2022. Most crypto assets are not native tokens. Instead, they are built on and secured by an existing blockchain. After all, we really don’t need 20,000 different blockchains that essentially provide the same recordkeeping function.\r\n\r\nAlso, having so many distinct blockchains would compromise the safety of each system, which depends on the size of the network.\r\n\r\nAlthough there are now many serious contenders to be the number-one. smart-contract platform, Ethereum remains the predominant blockchain on which to issue crypto assets, either as ERC-20 fungible tokens or as ERC-721 non-fungible tokens.\r\n\r\nMuch like how you can have numerous tabs in an Excel spreadsheet to keep records of different things, Ethereum allows developers to carve out their own recordkeeping systems on a reliable and tamper-proof platform.\r\n\r\nThe following sections, from Stablecoins to Meme coins, provide examples of non-native fungible tokens.\r\n<h3>Stablecoins</h3>\r\nSo-called <em>stablecoins</em> derive their name from the soft one-to-one peg they seek to maintain with a chosen fiat currency, such as the U.S. dollar. (A soft peg allows some flexibility in the exchange rate, whereas a hard peg requires strict one-to-one adherence.)\r\n\r\nSome stablecoins, such as Tether (USDT), are centrally controlled by a trusted party that controls the supply and is responsible for holding sufficient collateral — such as U.S. dollars or gold — to maintain the public’s faith in its stablecoin.\r\n\r\nWith a total market cap in excess of $180 billion, USDT is the largest stablecoin and the third largest cryptocurrency. It began as an ERC-20 token for use on Ethereum and later expanded to other blockchain platforms, such as TRON, Solana, and EOS.\r\n<p class=\"article-tips warning\">The stability of a stablecoin depends critically on the management (or mismanagement) of the stablecoin and ongoing public faith in the system. Whether the stablecoin is centrally managed and backed by traditional collateral or is algorithmically maintained by a nexus of smart contracts, stablecoins are not immune to a classic run on the bank.</p>\r\nRegulators are increasingly concerned about the seeming Wild West environment in which stablecoins have been operating. Their concerns were heightened by the recent catastrophic implosion of TerraUSD (UST), an algorithmic stablecoin that plummeted to just a few cents and has remained de-pegged from the U.S. dollar since May 2022.\r\n\r\nOverall, lawmakers are in favor of imposing capital requirements on stablecoin issuers like Tether Limited Inc. (for USDT) and Circle (for USDC). Perhaps the next move will be to require algorithmic stablecoins to undergo a formal credit rating process!\r\n<h3>Wrapped tokens</h3>\r\n<em>Wrapped tokens</em> allow for the synthetic use and trading of a native token from another blockchain. Much like how stablecoins are pegged to a fiat currency, wrapped tokens are pegged to a particular token.\r\n\r\nFor instance, you can’t swap ETH for actual Bitcoins (BTC) on the Ethereum blockchain, but you may have noticed that you can swap ETH for Wrapped Bitcoin (WBTC), which is issued as an ERC-20 token, via a DEX like Uniswap, as shown in Figure 3.\r\n\r\n[caption id=\"attachment_296981\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296981\" src=\"https://www.dummies.com/wp-content/uploads/wrapped-token-cryptocurrency.jpg\" alt=\"Screenshot showing a window for using Wrapped Bitcoin on Uniswap\" width=\"630\" height=\"503\" /> ©Uniswap<br />Trading Wrapped Bitcoin on Uniswap, a liquidity protocol on Ethereum[/caption]\r\n<h3>Governance tokens</h3>\r\n<em>Governance tokens</em> have become a popular way for development teams to elicit community participation in the ongoing management of a DeFi protocol after it has been deployed.\r\n\r\nFor instance, the Uniswap token (UNI) is an ERC-20 token that allows its holders to vote on various features of the Uniswap DEX protocols. Similarly, the SushiSwap token (SUSHI) is an ERC-20 token that allows its holders to vote on various features of the SushiSwap DEX protocols.\r\n\r\nNote that UNI and SUSHI are purely governance tokens and do not serve as utility tokens on the respective protocols:\r\n<ul>\r\n \t<li>Specifically, you don’t need UNI to execute a trade on a Uniswap liquidity pool, and you don’t need SUSHI to execute a trade on a SushiSwap liquidity pool (unless, of course, you are planning to swap UNI or SUSHI).</li>\r\n \t<li>The Uniswap and SushiSwap protocols are built on the Ethereum blockchain, and thus, you need ETH, the native utility token of Ethereum, to transact on these DEXs.</li>\r\n</ul>\r\nIn addition to voting rights, governance token holders also receive a portion of the fees earned on the protocol. SUSHI holders receive a portion of the 0.30 percent swap fee charged for trading in the SushiSwap liquidity pools, and UNI holders are expected to soon begin receiving a portion of the 0.30 percent swap fee charged for trading in the Uniswap liquidity pools.\r\n\r\nDespite their uncanny resemblance to equity securities (which also provide voting and cash-flow rights), governance tokens have thus far managed to stay out of the SEC’s crosshairs. The implications, though, would be huge — requiring their removal from any crypto exchange not registered as an Alternative Trading System (ATS).\r\n<h3>Security tokens</h3>\r\n<em>Security tokens</em> are tokenized securities, which represent equity ownership or other types of cash-flow claims in tokenized form. BCAP, an ERC-20 token issued by Blockchain Capital in 2017, is reportedly the first security token offering (STO) and was used to raise funds for its Blockchain Capital III Digital Liquid Venture Fund.\r\n\r\nOther examples of security tokens include OSTKO, an ERC-20 token representing preferred equity shares in Overstock.com, and ArCoin, an ERC-20 token representing shares in the Arca U.S. Treasury Fund.\r\n<h3>Meme coins</h3>\r\nSome coins are simply meme coins that have no explicit monetary value or practical use associated with the coin at creation.\r\n\r\nDogecoin (DOGE), the most famous meme coin, is actually a native token with its own blockchain that was originally designed as a joke. DOGE is the largest meme coin and tenth largest cryptocurrency, with a total market cap close to $8.5 billion as of the end of August 2022.\r\n\r\nInspired by the success of DOGE, other meme coins followed in its wake. Shiba Inu (SHIB), launched as an ERC-20 token on Ethereum, is another runaway success with a total market cap in excess of $6.5 billion, making it the second largest meme coin and 14th largest cryptocurrency.\r\n\r\nOf course, meme coins can also shift or straddle other categories. Refer to Figures 1 and 2 (above) to see that both DOGE and SHIB are also accepted as forms of payment on CheapAir.com and Newegg.com.\r\n\r\nOther intriguing (though far less successful) meme coins include <a href=\"https://fomocoin.org/\" target=\"_blank\" rel=\"noopener\">FOMO Coin</a> (shown in Figure 4), and <a href=\"https://www.jesuscoin.live/\" target=\"_blank\" rel=\"noopener\">Jesus Coin</a> (shown in Figure 5), both of which were also launched as ERC-20 tokens on the Ethereum blockchain.\r\n\r\n[caption id=\"attachment_296984\" align=\"alignnone\" width=\"577\"]<img class=\"size-full wp-image-296984\" src=\"https://www.dummies.com/wp-content/uploads/fomo-coin-crypto.jpg\" alt=\"Illustration of a FOMO cryptocurrency coin\" width=\"577\" height=\"382\" /> ©FOMO coin[/caption]\r\n\r\n \r\n\r\n[caption id=\"attachment_296980\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296980\" src=\"https://www.dummies.com/wp-content/uploads/jesus-coin-crypto.jpg\" alt=\"Illustration showing the cryptocurrency Jesus coin\" width=\"630\" height=\"491\" /> ©Jesus coin[/caption]\r\n\r\nMuch like the rise (and fall) of Beanie Babies in the 1990s, it’s hard to predict whether a meme coin is destined for DOGE-like greatness (though, it certainly helps if vendors adopt the meme as a form of payment and Elon Musk tweets about it!).\r\n<h2 id=\"tab3\" >Differentiating non-fungible tokens</h2>\r\nFinally, I would be remiss to ignore the category of non-fungible tokens (NFTs)!\r\n\r\nAlthough NFTs also fall under the category of non-native tokens, I’ve assigned this group its own header to clearly demarcate it from the tokens covered previously, which are all fungible tokens.\r\n\r\nNFTs are still relatively young, and thus far have mostly been designed to represent ownership of digital collectibles and gaming assets. However, many nascent projects are in various stages of planning and development.\r\n\r\nFrom NFT-izing the ownership records of luxury goods to event tickets to real estate, the possibilities are seemingly endless. Already, NFTs are being used to secure ownership and transaction records of digital property in decentralized metaverses, such as Decentraland and Sandbox. Perhaps more real-world analogues will soon follow!","blurb":"","authors":[{"authorId":34644,"name":"Seoyoung Kim","slug":"seoyoung-kim","description":" <p><b>Seoyoung Kim, PhD, </b>is an Associate Professor of Finance and Business Analytics at Santa Clara University and bestselling co-author of <i>NFTs For Dummies</i>. Seoyoung’s expertise lies in innovative financial instruments, crypto-assets, and blockchain-based ventures, on which she has consulted and written extensively. She regularly gives workshops and talks to academic, legal, and financial institutions, both domestically and internationally. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34644"}}],"primaryCategoryTaxonomy":{"categoryId":34277,"title":"Cryptocurrency","slug":"cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"Native tokens","target":"#tab1"},{"label":"Non-native tokens","target":"#tab2"},{"label":"Differentiating non-fungible tokens","target":"#tab3"}],"relatedArticles":{"fromBook":[{"articleId":296944,"title":"How To Set Up a DeFi Wallet with MetaMask","slug":"how-to-set-up-a-defi-wallet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296944"}},{"articleId":296935,"title":"What Is Decentralized Finance (DeFi)?","slug":"what-is-decentralized-finance-defi","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296935"}},{"articleId":296168,"title":"DeFi For Dummies Cheat Sheet","slug":"defi-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296168"}}],"fromCategory":[{"articleId":296944,"title":"How To Set Up a DeFi Wallet with MetaMask","slug":"how-to-set-up-a-defi-wallet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296944"}},{"articleId":296935,"title":"What Is Decentralized Finance (DeFi)?","slug":"what-is-decentralized-finance-defi","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296935"}},{"articleId":289714,"title":"Cryptocurrency All-in-One For Dummies Cheat Sheet","slug":"cryptocurrency-all-in-one-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289714"}},{"articleId":289345,"title":"NFTs For Dummies Cheat Sheet","slug":"nfts-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289345"}},{"articleId":266918,"title":"10 Types of Cryptocurrency Mining Resources","slug":"10-types-of-cryptocurrency-mining-resources","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266918"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":296130,"slug":"defi-for-dummies","isbn":"9781119906803","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"amazon":{"default":"https://www.amazon.com/gp/product/1119906806/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119906806/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119906806-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119906806/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119906806/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/defi-for-dummies-cover-9781119906803-170x255.jpg","width":170,"height":255},"title":"DeFi For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><p><b><b data-author-id=\"34644\">Seoyoung Kim</b>, PhD, </b>is an Associate Professor of Finance and Business Analytics at Santa Clara University and bestselling co-author of <i>NFTs For Dummies</i>. Seoyoung’s expertise lies in innovative financial instruments, crypto-assets, and blockchain-based ventures, on which she has consulted and written extensively. She regularly gives workshops and talks to academic, legal, and financial institutions, both domestically and internationally.</p>","authors":[{"authorId":34644,"name":"Seoyoung Kim","slug":"seoyoung-kim","description":" <p><b>Seoyoung Kim, PhD, </b>is an Associate Professor of Finance and Business Analytics at Santa Clara University and bestselling co-author of <i>NFTs For Dummies</i>. Seoyoung’s expertise lies in innovative financial instruments, crypto-assets, and blockchain-based ventures, on which she has consulted and written extensively. She regularly gives workshops and talks to academic, legal, and financial institutions, both domestically and internationally. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34644"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119906803&quot;]}]\" id=\"du-slot-63d43b8e9c31a\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119906803&quot;]}]\" id=\"du-slot-63d43b8e9ccb5\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2023-01-27T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":296975},{"headers":{"creationTime":"2023-01-26T21:19:34+00:00","modifiedTime":"2023-01-27T15:36:20+00:00","timestamp":"2023-01-27T18:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"},"slug":"cryptocurrency","categoryId":34277}],"title":"How To Set Up a DeFi Wallet with MetaMask","strippedTitle":"how to set up a defi wallet with metamask","slug":"how-to-set-up-a-defi-wallet","canonicalUrl":"","seo":{"metaDescription":"This article walks you through the steps of installing and setting up a Web3 wallet with MetaMask, including screenshots of each step.","noIndex":0,"noFollow":0},"content":"To meaningfully navigate the world of decentralized finance (DeFi), you first need to set up a <a href=\"https://www.dummies.com/article/business-careers-money/personal-finance/investing/general-investing/defi-for-dummies-cheat-sheet-296168/\" target=\"_blank\" rel=\"noopener\">Web3 wallet</a> that can submit transactions and access smart contracts on a public blockchain. Because so much of the DeFi ecosystem has been built on <a href=\"https://ethereum.org/en/\" target=\"_blank\" rel=\"noopener\">Ethereum</a>, this article shows you how to get started with <a href=\"https://metamask.io/\" target=\"_blank\" rel=\"noopener\">MetaMask</a>, an application that connects you to the Ethereum blockchain.\r\n\r\nMetaMask is one of the most well-known and widely supported noncustodial crypto wallets connecting you to the Ethereum blockchain. Other popular contenders include <a href=\"https://walletconnect.com/\" target=\"_blank\" rel=\"noopener\">WalletConnect</a> and the <a href=\"https://help.coinbase.com/en/dapps/getting-started/comparing-coinbase-wallets\" target=\"_blank\" rel=\"noopener\">Coinbase Wallet</a> (not to be confused with the custodial Coinbase.com wallet).\r\n<h2 id=\"tab1\" >Unmasking MetaMask</h2>\r\nMetaMask is an amazingly simple, yet powerful, application that allows you to manage your Ethereum accounts and to interact with the Ethereum network. With this wallet app, you can create new accounts, import existing accounts, and submit transactions. In addition to handling ether (ETH), the token native to Ethereum, this wallet application is also compatible with ERC-20 fungible tokens and ERC-721 non-fungible tokens (NFTs).\r\n\r\nMetaMask operates as a browser extension, which makes it easy for you to connect to web-based Ethereum dApps (decentralized applications), the vast majority of which have integrated MetaMask functionality in their websites.\r\n\r\nMore ambitious readers may be glad to discover that Remix — a web-based integrated development environment (IDE) — is integrated with MetaMask to allow you to seamlessly launch smart contracts on Ethereum without having to download additional software or run a full node on your computer.\r\n<p class=\"article-tips warning\">Exercise caution when interacting with dApps, just as you would when engaging with any application coming from an unknown or untrusted source.</p>\r\n\r\n<h2 id=\"tab2\" >Installing MetaMask</h2>\r\nMetaMask currently supports the Chrome, Firefox, Brave, and Edge browsers. I’ve chosen to proceed in Chrome because it’s the most commonly used desktop Internet browser in the U.S.\r\n<p class=\"article-tips tip\">If you’re feeling a bit adventurous and want a full DeFi immersion, I recommend getting comfortable with the <a href=\"https://brave.com/\" target=\"_blank\" rel=\"noopener\">Brave browser.</a></p>\r\nKeep in mind that your visual and textual prompts may differ slightly from what’s shown in the following steps, depending on your chosen browser. You can use these steps to download and install the MetaMask browser extension:\r\n<ul>\r\n \t<li><strong>Go to</strong> <a href=\"http://www.metamask.io\" target=\"_blank\" rel=\"noopener\">www.metamask.io</a> <strong>and click the Download Now button, as shown in Figure</strong> <strong>1.</strong></li>\r\n \t<li><strong>Click the Install MetaMask for Chrome button, as shown in Figure</strong> <strong>2.</strong></li>\r\n</ul>\r\nYou’re rerouted to the MetaMask page of the Chrome web store, as shown in Figure 3.\r\n\r\n[caption id=\"attachment_296955\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296955\" src=\"https://www.dummies.com/wp-content/uploads/metamask-main-page.jpg\" alt=\"Screenshot of the MetaMask main page\" width=\"630\" height=\"488\" /> ©MetaMask<br />Figure 1: MetaMask main page[/caption]\r\n\r\n \r\n\r\n[caption id=\"attachment_296947\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296947\" src=\"https://www.dummies.com/wp-content/uploads/metamaks-install-chrome.jpg\" alt=\"Screenshot showing install MetaMask for your browser on Chrome browser\" width=\"630\" height=\"659\" /> ©MetaMask<br />Figure 2: Installing MetaMask on the Chrome browser[/caption]\r\n\r\n \r\n\r\n[caption id=\"attachment_296951\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296951\" src=\"https://www.dummies.com/wp-content/uploads/metamask-chrome-web-store.jpg\" alt=\"Screenshot showing the MetaMask page within the Chrome web store\" width=\"630\" height=\"226\" /> ©MetaMask<br />Figure 3: MetaMask page within the Chrome web store[/caption]\r\n\r\nOf course, if you’re using a different browser, the prompts will look slightly different, as shown in Figure 4.\r\n\r\n[caption id=\"attachment_296949\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296949\" src=\"https://www.dummies.com/wp-content/uploads/metamask-brave-browser.jpg\" alt=\"Screenshot showing MetaMask supported browsers page\" width=\"630\" height=\"413\" /> ©MetaMask<br />Figure 4: Installing MetaMask on the Brave browser[/caption]\r\n<ul>\r\n \t<li><strong>Click the Add to Chrome button</strong>.A pop-up window appears, as shown in Figure 5.</li>\r\n \t<li><strong>Click the Add Extension button</strong>.</li>\r\n</ul>\r\nAfter the installation is complete, a pop-up window momentarily appears to inform you that MetaMask has been added to your browser.\r\n\r\nYou should now see a small fox icon in the upper-right corner of your browser window (to the right of the address bar), as shown in Figure 6.\r\n\r\n[caption id=\"attachment_296948\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296948\" src=\"https://www.dummies.com/wp-content/uploads/metamask-add-browser-ext.jpg\" alt=\"Screenshot showing the pop-up window for adding the MetaMask browser extension\" width=\"630\" height=\"339\" /> ©MetaMask<br />Figure 5: Pop-up window to add MetaMask browser extension[/caption]\r\n\r\n \r\n\r\n[caption id=\"attachment_296954\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296954\" src=\"https://www.dummies.com/wp-content/uploads/metamask-fox-icon-browser-toolbar.jpg\" alt=\"Screenshot showing the MetaMask fox icon in the browser toolbar\" width=\"630\" height=\"178\" /> ©MetaMask<br />Figure 6: The MetaMask fox icon in the browser toolbar[/caption]\r\n\r\nIf the fox icon doesn’t automatically appear in your browser’s toolbar, follow these additional steps:\r\n<ul>\r\n \t<li><strong><strong>Click the puzzle-piece-shaped icon in the upper-right corner of your browser window (to the right of the address bar).\r\n\r\n</strong></strong>A drop-down menu appears, as shown in Figure 7.</li>\r\n \t<li><strong>Click the pin icon to the right of the MetaMask fox icon.</strong></li>\r\n</ul>\r\nThe pin icon turns blue, and you see the fox icon pinned to your browser’s toolbar.\r\n\r\nYay, you’re now ready to set up your MetaMask wallet!\r\n\r\n[caption id=\"attachment_296950\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296950\" src=\"https://www.dummies.com/wp-content/uploads/metamask-browser-extensions.jpg\" alt=\"Screenshot showing MetaMask in the browser extensions drop-down menu\" width=\"630\" height=\"455\" /> ©MetaMask<br />Figure 7: The browser extensions drop-down menu[/caption]\r\n<h2 id=\"tab3\" >Setting up MetaMask</h2>\r\nAfter you’ve successfully installed the MetaMask browser extension, you can follow these steps to set up your wallet:\r\n<ul>\r\n \t<li><strong>Click the MetaMask fox icon in your browser’s toolbar.</strong> (In my case, I am continuing to use the Chrome browser.)A new browser window appears, with a Get Started button displayed at the bottom of the page.</li>\r\n \t<li><strong>Click the Get Started button.</strong></li>\r\n</ul>\r\nThe page that opens shows an Import Wallet and a Create a Wallet button, as shown in Figure 8. The Import Wallet button on this page is what you’ll use if you ever need to reinstall MetaMask and recover a MetaMask wallet that you’ve already set up.\r\n\r\n \r\n\r\n[caption id=\"attachment_296953\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296953\" src=\"https://www.dummies.com/wp-content/uploads/metamask-create-wallet.jpg\" alt=\"Screenshot showing the window for creating a new MetaMask wallet\" width=\"630\" height=\"404\" /> ©MetaMask<br />Figure 8: Creating a new MetaMask wallet[/caption]\r\n<ul>\r\n \t<li><strong>Click the Create a Wallet button.</strong></li>\r\n</ul>\r\nOn the Help Us Improve MetaMask page that opens, you can click either the No Thanks or I Agree button, depending on whether you want to share your usage data with the MetaMask development team.\r\n\r\nThe next page opens, prompting you to create a password, as shown in Figure 9.\r\n<ul>\r\n \t<li><strong>Create and confirm your new password.</strong></li>\r\n \t<li><strong>Click the check box to confirm that you’ve read and agree to the terms of usage, and then click the Create button.</strong></li>\r\n</ul>\r\n[caption id=\"attachment_296959\" align=\"alignnone\" width=\"479\"]<img class=\"size-full wp-image-296959\" src=\"https://www.dummies.com/wp-content/uploads/metamask-wallet-password.jpg\" alt=\"Screenshot showing the window for creating your MetaMask wallet password\" width=\"479\" height=\"531\" /> ©MetaMask<br />Figure 9: Setting your MetaMask wallet password[/caption]\r\n\r\nA page appears that features instructions and a brief video explaining the importance of your Secret Recovery Phrase. Watch this video and read the instructions carefully.\r\n\r\nWhen you’re ready, click the Next button, which takes you to your Secret Recovery Phrase.\r\n<ul>\r\n \t<li><strong>Click the lock icon to reveal your private 12-word phrase</strong>, <strong>as shown in Figure</strong> <strong>10.</strong></li>\r\n \t<li><strong>Write down this phrase and store it for safe keeping.</strong></li>\r\n</ul>\r\nThis Secret Recovery Phrase represents the digital keys that provide access to your crypto wallet and its contents. Do <em>not</em> share this phrase with anyone.\r\n<p class=\"article-tips warning\"><em>Do not skip this critical step!</em> You’ll need your Secret Recovery Phrase if you ever need to reinstall the MetaMask browser extension or if you want to access your MetaMask wallet on a different browser or different computer.</p>\r\n\r\n\r\n[caption id=\"attachment_296957\" align=\"alignnone\" width=\"416\"]<img class=\"size-full wp-image-296957\" src=\"https://www.dummies.com/wp-content/uploads/metamask-secret-recovery-phrase.jpg\" alt=\"Screenshot showing the window for obtaining your MetaMask Secret Recovery Phrase\" width=\"416\" height=\"557\" /> ©MetaMask<br />Figure 10: Obtaining your MetaMask Secret Recovery Phrase[/caption]\r\n\r\nIn fact, even the MetaMask Support team cannot recover your MetaMask account for you. Specifically, MetaMask’s “Basic Safety and Security Tips” state that:\r\n\r\n“MetaMask is not a cloud-based solution. If your device breaks, is lost, or has data corruption, there is no way for the MetaMask Support Team to recover this for you. <strong>This <a href=\"https://metamask.zendesk.com/hc/en-us/articles/4404722782107-User-guide-Secret-Recovery-Phrase-password-and-private-keys\" target=\"_blank\" rel=\"noopener\">Secret Recovery Phrase</a> is the only way to recover your MetaMask accounts.</strong>”\r\n<ul>\r\n \t<li><strong>After you’ve secured your Secret Recovery Phrase, click the Next button.</strong></li>\r\n</ul>\r\nThe next page requires you to confirm your Secret Recovery Phrase by selecting the correct words in the correct order, as shown in Figure 11.\r\n<p class=\"article-tips warning\"><em>Do not share this unordered word matrix with anyone</em>, as I’ve (foolishly!) done here for demonstrative purposes.</p>\r\nUsing this word matrix, a hacker can easily create a program to regenerate my Secret Recovery Phrase. In fact, this hypothetical hacker could guess my secret phrase within 12! = 12 x 11 x 10 x …. X 2 x 1 = <strong>479,001,600</strong> attempts, which represents the total number of possible permutations of the words presented in Figure 11. Although 479,001,600 distinct guesses would be quite onerous to attempt manually, a computerized algorithm can glide through this guessing game.\r\n\r\n[caption id=\"attachment_296952\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296952\" src=\"https://www.dummies.com/wp-content/uploads/metamask-confirm-secret-recovery.jpg\" alt=\"Screenshot showing the window for confirming your MetaMask Secret Recovery Phrase\" width=\"630\" height=\"587\" /> ©MetaMask<br />Figure 11: Confirming your Secret Recovery Phrase[/caption]\r\n<ul>\r\n \t<li><strong>After you've clicked each word in the correct order to produce the correct word sequence, click the Confirm button.</strong></li>\r\n</ul>\r\nCongratulations! Your browser takes you to your initial MetaMask Account 1 Page, as shown in Figure 12.\r\n\r\n[caption id=\"attachment_296956\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296956\" src=\"https://www.dummies.com/wp-content/uploads/metamask-new-wallet.jpg\" alt=\"Screenshot showing a newly initiated MetaMask wallet\" width=\"630\" height=\"650\" /> ©MetaMask<br />Figure 12: A newly initiated MetaMask wallet[/caption]\r\n\r\nGoing forward, you can simply access your MetaMask wallet by clicking the MetaMask fox icon in your browser’s toolbar, which reveals a drop-down window, as shown in Figure 13. (Revisit Steps 5 and 6 from the previous “Installing MetaMask” section if you need to re-pin the MetaMask fox icon to your browser’s toolbar.)\r\n\r\n[caption id=\"attachment_296958\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296958\" src=\"https://www.dummies.com/wp-content/uploads/metamask-wallet-dropdown.jpg\" alt=\"Screenshot showing the window for accessing the MetaMask wallet from your browser's toolbar\" width=\"630\" height=\"828\" /> ©MetaMask<br />Figure 13: Accessing the MetaMask wallet drop-down window from your browser's toolbar[/caption]","description":"To meaningfully navigate the world of decentralized finance (DeFi), you first need to set up a <a href=\"https://www.dummies.com/article/business-careers-money/personal-finance/investing/general-investing/defi-for-dummies-cheat-sheet-296168/\" target=\"_blank\" rel=\"noopener\">Web3 wallet</a> that can submit transactions and access smart contracts on a public blockchain. Because so much of the DeFi ecosystem has been built on <a href=\"https://ethereum.org/en/\" target=\"_blank\" rel=\"noopener\">Ethereum</a>, this article shows you how to get started with <a href=\"https://metamask.io/\" target=\"_blank\" rel=\"noopener\">MetaMask</a>, an application that connects you to the Ethereum blockchain.\r\n\r\nMetaMask is one of the most well-known and widely supported noncustodial crypto wallets connecting you to the Ethereum blockchain. Other popular contenders include <a href=\"https://walletconnect.com/\" target=\"_blank\" rel=\"noopener\">WalletConnect</a> and the <a href=\"https://help.coinbase.com/en/dapps/getting-started/comparing-coinbase-wallets\" target=\"_blank\" rel=\"noopener\">Coinbase Wallet</a> (not to be confused with the custodial Coinbase.com wallet).\r\n<h2 id=\"tab1\" >Unmasking MetaMask</h2>\r\nMetaMask is an amazingly simple, yet powerful, application that allows you to manage your Ethereum accounts and to interact with the Ethereum network. With this wallet app, you can create new accounts, import existing accounts, and submit transactions. In addition to handling ether (ETH), the token native to Ethereum, this wallet application is also compatible with ERC-20 fungible tokens and ERC-721 non-fungible tokens (NFTs).\r\n\r\nMetaMask operates as a browser extension, which makes it easy for you to connect to web-based Ethereum dApps (decentralized applications), the vast majority of which have integrated MetaMask functionality in their websites.\r\n\r\nMore ambitious readers may be glad to discover that Remix — a web-based integrated development environment (IDE) — is integrated with MetaMask to allow you to seamlessly launch smart contracts on Ethereum without having to download additional software or run a full node on your computer.\r\n<p class=\"article-tips warning\">Exercise caution when interacting with dApps, just as you would when engaging with any application coming from an unknown or untrusted source.</p>\r\n\r\n<h2 id=\"tab2\" >Installing MetaMask</h2>\r\nMetaMask currently supports the Chrome, Firefox, Brave, and Edge browsers. I’ve chosen to proceed in Chrome because it’s the most commonly used desktop Internet browser in the U.S.\r\n<p class=\"article-tips tip\">If you’re feeling a bit adventurous and want a full DeFi immersion, I recommend getting comfortable with the <a href=\"https://brave.com/\" target=\"_blank\" rel=\"noopener\">Brave browser.</a></p>\r\nKeep in mind that your visual and textual prompts may differ slightly from what’s shown in the following steps, depending on your chosen browser. You can use these steps to download and install the MetaMask browser extension:\r\n<ul>\r\n \t<li><strong>Go to</strong> <a href=\"http://www.metamask.io\" target=\"_blank\" rel=\"noopener\">www.metamask.io</a> <strong>and click the Download Now button, as shown in Figure</strong> <strong>1.</strong></li>\r\n \t<li><strong>Click the Install MetaMask for Chrome button, as shown in Figure</strong> <strong>2.</strong></li>\r\n</ul>\r\nYou’re rerouted to the MetaMask page of the Chrome web store, as shown in Figure 3.\r\n\r\n[caption id=\"attachment_296955\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296955\" src=\"https://www.dummies.com/wp-content/uploads/metamask-main-page.jpg\" alt=\"Screenshot of the MetaMask main page\" width=\"630\" height=\"488\" /> ©MetaMask<br />Figure 1: MetaMask main page[/caption]\r\n\r\n \r\n\r\n[caption id=\"attachment_296947\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296947\" src=\"https://www.dummies.com/wp-content/uploads/metamaks-install-chrome.jpg\" alt=\"Screenshot showing install MetaMask for your browser on Chrome browser\" width=\"630\" height=\"659\" /> ©MetaMask<br />Figure 2: Installing MetaMask on the Chrome browser[/caption]\r\n\r\n \r\n\r\n[caption id=\"attachment_296951\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296951\" src=\"https://www.dummies.com/wp-content/uploads/metamask-chrome-web-store.jpg\" alt=\"Screenshot showing the MetaMask page within the Chrome web store\" width=\"630\" height=\"226\" /> ©MetaMask<br />Figure 3: MetaMask page within the Chrome web store[/caption]\r\n\r\nOf course, if you’re using a different browser, the prompts will look slightly different, as shown in Figure 4.\r\n\r\n[caption id=\"attachment_296949\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296949\" src=\"https://www.dummies.com/wp-content/uploads/metamask-brave-browser.jpg\" alt=\"Screenshot showing MetaMask supported browsers page\" width=\"630\" height=\"413\" /> ©MetaMask<br />Figure 4: Installing MetaMask on the Brave browser[/caption]\r\n<ul>\r\n \t<li><strong>Click the Add to Chrome button</strong>.A pop-up window appears, as shown in Figure 5.</li>\r\n \t<li><strong>Click the Add Extension button</strong>.</li>\r\n</ul>\r\nAfter the installation is complete, a pop-up window momentarily appears to inform you that MetaMask has been added to your browser.\r\n\r\nYou should now see a small fox icon in the upper-right corner of your browser window (to the right of the address bar), as shown in Figure 6.\r\n\r\n[caption id=\"attachment_296948\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296948\" src=\"https://www.dummies.com/wp-content/uploads/metamask-add-browser-ext.jpg\" alt=\"Screenshot showing the pop-up window for adding the MetaMask browser extension\" width=\"630\" height=\"339\" /> ©MetaMask<br />Figure 5: Pop-up window to add MetaMask browser extension[/caption]\r\n\r\n \r\n\r\n[caption id=\"attachment_296954\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296954\" src=\"https://www.dummies.com/wp-content/uploads/metamask-fox-icon-browser-toolbar.jpg\" alt=\"Screenshot showing the MetaMask fox icon in the browser toolbar\" width=\"630\" height=\"178\" /> ©MetaMask<br />Figure 6: The MetaMask fox icon in the browser toolbar[/caption]\r\n\r\nIf the fox icon doesn’t automatically appear in your browser’s toolbar, follow these additional steps:\r\n<ul>\r\n \t<li><strong><strong>Click the puzzle-piece-shaped icon in the upper-right corner of your browser window (to the right of the address bar).\r\n\r\n</strong></strong>A drop-down menu appears, as shown in Figure 7.</li>\r\n \t<li><strong>Click the pin icon to the right of the MetaMask fox icon.</strong></li>\r\n</ul>\r\nThe pin icon turns blue, and you see the fox icon pinned to your browser’s toolbar.\r\n\r\nYay, you’re now ready to set up your MetaMask wallet!\r\n\r\n[caption id=\"attachment_296950\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296950\" src=\"https://www.dummies.com/wp-content/uploads/metamask-browser-extensions.jpg\" alt=\"Screenshot showing MetaMask in the browser extensions drop-down menu\" width=\"630\" height=\"455\" /> ©MetaMask<br />Figure 7: The browser extensions drop-down menu[/caption]\r\n<h2 id=\"tab3\" >Setting up MetaMask</h2>\r\nAfter you’ve successfully installed the MetaMask browser extension, you can follow these steps to set up your wallet:\r\n<ul>\r\n \t<li><strong>Click the MetaMask fox icon in your browser’s toolbar.</strong> (In my case, I am continuing to use the Chrome browser.)A new browser window appears, with a Get Started button displayed at the bottom of the page.</li>\r\n \t<li><strong>Click the Get Started button.</strong></li>\r\n</ul>\r\nThe page that opens shows an Import Wallet and a Create a Wallet button, as shown in Figure 8. The Import Wallet button on this page is what you’ll use if you ever need to reinstall MetaMask and recover a MetaMask wallet that you’ve already set up.\r\n\r\n \r\n\r\n[caption id=\"attachment_296953\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296953\" src=\"https://www.dummies.com/wp-content/uploads/metamask-create-wallet.jpg\" alt=\"Screenshot showing the window for creating a new MetaMask wallet\" width=\"630\" height=\"404\" /> ©MetaMask<br />Figure 8: Creating a new MetaMask wallet[/caption]\r\n<ul>\r\n \t<li><strong>Click the Create a Wallet button.</strong></li>\r\n</ul>\r\nOn the Help Us Improve MetaMask page that opens, you can click either the No Thanks or I Agree button, depending on whether you want to share your usage data with the MetaMask development team.\r\n\r\nThe next page opens, prompting you to create a password, as shown in Figure 9.\r\n<ul>\r\n \t<li><strong>Create and confirm your new password.</strong></li>\r\n \t<li><strong>Click the check box to confirm that you’ve read and agree to the terms of usage, and then click the Create button.</strong></li>\r\n</ul>\r\n[caption id=\"attachment_296959\" align=\"alignnone\" width=\"479\"]<img class=\"size-full wp-image-296959\" src=\"https://www.dummies.com/wp-content/uploads/metamask-wallet-password.jpg\" alt=\"Screenshot showing the window for creating your MetaMask wallet password\" width=\"479\" height=\"531\" /> ©MetaMask<br />Figure 9: Setting your MetaMask wallet password[/caption]\r\n\r\nA page appears that features instructions and a brief video explaining the importance of your Secret Recovery Phrase. Watch this video and read the instructions carefully.\r\n\r\nWhen you’re ready, click the Next button, which takes you to your Secret Recovery Phrase.\r\n<ul>\r\n \t<li><strong>Click the lock icon to reveal your private 12-word phrase</strong>, <strong>as shown in Figure</strong> <strong>10.</strong></li>\r\n \t<li><strong>Write down this phrase and store it for safe keeping.</strong></li>\r\n</ul>\r\nThis Secret Recovery Phrase represents the digital keys that provide access to your crypto wallet and its contents. Do <em>not</em> share this phrase with anyone.\r\n<p class=\"article-tips warning\"><em>Do not skip this critical step!</em> You’ll need your Secret Recovery Phrase if you ever need to reinstall the MetaMask browser extension or if you want to access your MetaMask wallet on a different browser or different computer.</p>\r\n\r\n\r\n[caption id=\"attachment_296957\" align=\"alignnone\" width=\"416\"]<img class=\"size-full wp-image-296957\" src=\"https://www.dummies.com/wp-content/uploads/metamask-secret-recovery-phrase.jpg\" alt=\"Screenshot showing the window for obtaining your MetaMask Secret Recovery Phrase\" width=\"416\" height=\"557\" /> ©MetaMask<br />Figure 10: Obtaining your MetaMask Secret Recovery Phrase[/caption]\r\n\r\nIn fact, even the MetaMask Support team cannot recover your MetaMask account for you. Specifically, MetaMask’s “Basic Safety and Security Tips” state that:\r\n\r\n“MetaMask is not a cloud-based solution. If your device breaks, is lost, or has data corruption, there is no way for the MetaMask Support Team to recover this for you. <strong>This <a href=\"https://metamask.zendesk.com/hc/en-us/articles/4404722782107-User-guide-Secret-Recovery-Phrase-password-and-private-keys\" target=\"_blank\" rel=\"noopener\">Secret Recovery Phrase</a> is the only way to recover your MetaMask accounts.</strong>”\r\n<ul>\r\n \t<li><strong>After you’ve secured your Secret Recovery Phrase, click the Next button.</strong></li>\r\n</ul>\r\nThe next page requires you to confirm your Secret Recovery Phrase by selecting the correct words in the correct order, as shown in Figure 11.\r\n<p class=\"article-tips warning\"><em>Do not share this unordered word matrix with anyone</em>, as I’ve (foolishly!) done here for demonstrative purposes.</p>\r\nUsing this word matrix, a hacker can easily create a program to regenerate my Secret Recovery Phrase. In fact, this hypothetical hacker could guess my secret phrase within 12! = 12 x 11 x 10 x …. X 2 x 1 = <strong>479,001,600</strong> attempts, which represents the total number of possible permutations of the words presented in Figure 11. Although 479,001,600 distinct guesses would be quite onerous to attempt manually, a computerized algorithm can glide through this guessing game.\r\n\r\n[caption id=\"attachment_296952\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296952\" src=\"https://www.dummies.com/wp-content/uploads/metamask-confirm-secret-recovery.jpg\" alt=\"Screenshot showing the window for confirming your MetaMask Secret Recovery Phrase\" width=\"630\" height=\"587\" /> ©MetaMask<br />Figure 11: Confirming your Secret Recovery Phrase[/caption]\r\n<ul>\r\n \t<li><strong>After you've clicked each word in the correct order to produce the correct word sequence, click the Confirm button.</strong></li>\r\n</ul>\r\nCongratulations! Your browser takes you to your initial MetaMask Account 1 Page, as shown in Figure 12.\r\n\r\n[caption id=\"attachment_296956\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296956\" src=\"https://www.dummies.com/wp-content/uploads/metamask-new-wallet.jpg\" alt=\"Screenshot showing a newly initiated MetaMask wallet\" width=\"630\" height=\"650\" /> ©MetaMask<br />Figure 12: A newly initiated MetaMask wallet[/caption]\r\n\r\nGoing forward, you can simply access your MetaMask wallet by clicking the MetaMask fox icon in your browser’s toolbar, which reveals a drop-down window, as shown in Figure 13. (Revisit Steps 5 and 6 from the previous “Installing MetaMask” section if you need to re-pin the MetaMask fox icon to your browser’s toolbar.)\r\n\r\n[caption id=\"attachment_296958\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296958\" src=\"https://www.dummies.com/wp-content/uploads/metamask-wallet-dropdown.jpg\" alt=\"Screenshot showing the window for accessing the MetaMask wallet from your browser's toolbar\" width=\"630\" height=\"828\" /> ©MetaMask<br />Figure 13: Accessing the MetaMask wallet drop-down window from your browser's toolbar[/caption]","blurb":"","authors":[{"authorId":34644,"name":"Seoyoung Kim","slug":"seoyoung-kim","description":" <p><b>Seoyoung Kim, PhD, </b>is an Associate Professor of Finance and Business Analytics at Santa Clara University and bestselling co-author of <i>NFTs For Dummies</i>. Seoyoung’s expertise lies in innovative financial instruments, crypto-assets, and blockchain-based ventures, on which she has consulted and written extensively. She regularly gives workshops and talks to academic, legal, and financial institutions, both domestically and internationally. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34644"}}],"primaryCategoryTaxonomy":{"categoryId":34277,"title":"Cryptocurrency","slug":"cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"Unmasking MetaMask","target":"#tab1"},{"label":"Installing MetaMask","target":"#tab2"},{"label":"Setting up MetaMask","target":"#tab3"}],"relatedArticles":{"fromBook":[{"articleId":296935,"title":"What Is Decentralized Finance (DeFi)?","slug":"what-is-decentralized-finance-defi","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296935"}},{"articleId":296168,"title":"DeFi For Dummies Cheat Sheet","slug":"defi-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296168"}}],"fromCategory":[{"articleId":296935,"title":"What Is Decentralized Finance (DeFi)?","slug":"what-is-decentralized-finance-defi","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296935"}},{"articleId":289714,"title":"Cryptocurrency All-in-One For Dummies Cheat Sheet","slug":"cryptocurrency-all-in-one-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289714"}},{"articleId":289345,"title":"NFTs For Dummies Cheat Sheet","slug":"nfts-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289345"}},{"articleId":266918,"title":"10 Types of Cryptocurrency Mining Resources","slug":"10-types-of-cryptocurrency-mining-resources","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266918"}},{"articleId":266912,"title":"What Is Pool Mining?","slug":"what-is-pool-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266912"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":296130,"slug":"defi-for-dummies","isbn":"9781119906803","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"amazon":{"default":"https://www.amazon.com/gp/product/1119906806/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119906806/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119906806-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119906806/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119906806/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/defi-for-dummies-cover-9781119906803-170x255.jpg","width":170,"height":255},"title":"DeFi For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><p><b><b data-author-id=\"34644\">Seoyoung Kim</b>, PhD, </b>is an Associate Professor of Finance and Business Analytics at Santa Clara University and bestselling co-author of <i>NFTs For Dummies</i>. Seoyoung’s expertise lies in innovative financial instruments, crypto-assets, and blockchain-based ventures, on which she has consulted and written extensively. She regularly gives workshops and talks to academic, legal, and financial institutions, both domestically and internationally.</p>","authors":[{"authorId":34644,"name":"Seoyoung Kim","slug":"seoyoung-kim","description":" <p><b>Seoyoung Kim, PhD, </b>is an Associate Professor of Finance and Business Analytics at Santa Clara University and bestselling co-author of <i>NFTs For Dummies</i>. Seoyoung’s expertise lies in innovative financial instruments, crypto-assets, and blockchain-based ventures, on which she has consulted and written extensively. She regularly gives workshops and talks to academic, legal, and financial institutions, both domestically and internationally. 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Bitcoin effectively provides a currency that doesn’t rely on the stability of a central authority.\r\n\r\nThe implications of such a technology are huge for developing economies where faith in central government is low and bank runs are a serious risk, if not a reality. Moreover, much of the world’s population is, at most, one generation removed from being forcibly chased from their homes. Consider these events:\r\n<ul>\r\n \t<li>Just 70 years ago, Seoul, the capital of Korea, was captured and recaptured four times, and families were permanently separated in a war that ultimately resulted in two separate nations.</li>\r\n \t<li>The fall of Saigon 50 years ago resulted in a mass exodus of Vietnamese refugees seeking asylum.</li>\r\n \t<li>More recently, the fall of Kabul in 2021 and the Russian invasion of Ukraine in 2022 led to more waves of emigrants who found themselves in sudden exile.</li>\r\n</ul>\r\nBut aside from more dire circumstances — like the collapse of a banking system or the fall of your government — it’s natural to question what true value Bitcoin’s underlying technology adds in a stable and wealthy nation.\r\n\r\nAfter all, I trust that Bank of America won’t maliciously siphon funds from my account, and despite the infamous Wells Fargo fake account scandal (for which it was ultimately fined $3 billion), I would even entrust my money to a Wells Fargo checking account.\r\n\r\nNonetheless, reliable economies still have submarkets that are inherently rife with distrust of the central operator, with dark pools (securities exchanges in which participants can trade anonymously and with less transparency) being a case in point. (Try Googling “dark pool lawsuit”!)\r\n\r\nThe trust issue naturally goes away if there is no central operator to distrust, and with the advent of Bitcoin, a proven technology now exists to implement modern DeFi processes across many use cases in finance.\r\n<h2 id=\"tab1\" >Demystifying DeFi</h2>\r\nThe idea of decentralized processes is certainly not new. After all, before <em>centralized finance</em> (CeFi) arose to establish trusted intermediaries, primitive DeFi was the status quo. Transactions were all peer-to-peer, and you were constrained by your local neighborhood to gain access to capital and to obtain goods by bartering one item for another. Record-keeping was minimal, and ownership was determined by physical possession.\r\n\r\nIn modern markets, transactions require confidence in the validity of the agreement, which is provided by reliable and secure record-keeping systems. After all, when you sell your car, you are really transferring the legal right to access the car. Without a reliable record-keeping system in place, chaos would ensue. (Imagine the return of <em>finders keepers</em> as a rule of law!)\r\n\r\nWhat’s truly exciting now is the distributed-ledger technology that provides a reliable and secure method of record-keeping that is not maintained by a trusted intermediary, such as Bank of America or the DMV. Behold the dawn of the modern DeFi era!\r\n<h2 id=\"tab2\" >From autonomous collectives to trillion-dollar DAOs</h2>\r\nWell-functioning, leaderless communities are all around us, and in each circumstance, an inherent governance mechanism incentivizes and gels the group to act in concert — all without an elected official to assign roles and lead the process.\r\n\r\nFrom homework teams to neighborhoods to informal potlucks, small groups can effectively and efficiently self-govern when there are grades to maintain, property prices to protect, or reputational concerns at stake.\r\n\r\nThese small-scale examples probably feel reasonable and natural. But what if I told you that a trillion-dollar organization could autonomously validate, execute, secure, and provide ongoing updates to an entire system without an elected leader to assign tasks? The concept sounds naïve at best, and possibly crazy.\r\n\r\nAnd yet, Bitcoin has provided a battle-tested case in point for the underlying technology that enables it to function in a decentralized and autonomous fashion. Yes, Bitcoin is indeed a trillion-dollar <em>decentralized autonomous organization</em> (DAO)!\r\n\r\nOf course, at this scale and with the value at stake, a DAO can’t rely solely on simple mechanisms like reputational concerns to incentivize participants to behave honestly and in a way that upholds the values of the system. Instead, the underlying protocol must be protected against malicious players who may work hard to cheat the system.\r\n<h2 id=\"tab3\" >Transacting in DeFi versus CeFi</h2>\r\n<h3>Borrowing assets</h3>\r\nSuppose you want to borrow money. How would this transaction be implemented in primitive DeFi versus modern CeFi versus modern DeFi?\r\n<ul>\r\n \t<li><strong>Under a primitive DeFi process:</strong> You hit up everyone you know within reasonable geographic proximity — a neighbor, a friend, a family member — and hope that someone will lend you something that you can barter with at your local marketplace.</li>\r\n \t<li><strong>Under a modern CeFi process:</strong> People have checking accounts, savings accounts, CDs, and so on with the bank, which means that all these people have lent money to the bank. In turn, the bank lends some of this money to you.</li>\r\n \t<li><strong>Under a modern DeFi process:</strong> People lock up funds in a <em>smart-contract account</em>, which is a software program on a public blockchain that automatically enforces and executes the rules in the smart-contract code. This smart-contract account is programmed to function as a lending pool from which you can borrow funds.</li>\r\n</ul>\r\n<h3>Selling assets</h3>\r\nSuppose that instead of borrowing assets, you have assets that you want to sell. Comparing the three types of processes again, here’s how this transaction would be implemented:\r\n<ul>\r\n \t<li><strong>Under a primitive DeFi process:</strong> You again hit up everyone you know within reasonable geographic proximity — a neighbor, friend, family member — and attempt to barter by trial and error.</li>\r\n \t<li><strong>Under a modern CeFi process:</strong> Liquidity providers stand by, waiting to buy the asset from those who want to sell and to sell the asset to those who want to buy. These liquidity providers commit to buy and sell a certain quantity of assets at varying prices on designated exchanges that serve as official marketplaces for the assets in question. In turn, you place an order to sell the asset through your brokerage firm (who has custody of the asset).</li>\r\n \t<li><strong>Under a modern DeFi process:</strong> Liquidity providers lock up assets and funds in a smart-contract account. This smart-contract account serves as a liquidity pool and is programmed to function as an <em>automated market maker.</em> In turn, you can swap your assets for funds from this smart-contract account.</li>\r\n</ul>","description":"The decentralized finance (DeFi) sector is an alternative to traditional financial services with applications in cryptocurrency or blockchain technology.\r\n\r\n[caption id=\"attachment_296937\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296937\" src=\"https://www.dummies.com/wp-content/uploads/bitcoin-concept.jpg\" alt=\"\" width=\"630\" height=\"421\" /> ©André François McKenzie / Adobe Stock[/caption]\r\n\r\nThe modern DeFi era truly began with Bitcoin, the first widespread implementation of a decentralized method of record-keeping that is permissionless yet reliable and secure. Bitcoin effectively provides a currency that doesn’t rely on the stability of a central authority.\r\n\r\nThe implications of such a technology are huge for developing economies where faith in central government is low and bank runs are a serious risk, if not a reality. Moreover, much of the world’s population is, at most, one generation removed from being forcibly chased from their homes. Consider these events:\r\n<ul>\r\n \t<li>Just 70 years ago, Seoul, the capital of Korea, was captured and recaptured four times, and families were permanently separated in a war that ultimately resulted in two separate nations.</li>\r\n \t<li>The fall of Saigon 50 years ago resulted in a mass exodus of Vietnamese refugees seeking asylum.</li>\r\n \t<li>More recently, the fall of Kabul in 2021 and the Russian invasion of Ukraine in 2022 led to more waves of emigrants who found themselves in sudden exile.</li>\r\n</ul>\r\nBut aside from more dire circumstances — like the collapse of a banking system or the fall of your government — it’s natural to question what true value Bitcoin’s underlying technology adds in a stable and wealthy nation.\r\n\r\nAfter all, I trust that Bank of America won’t maliciously siphon funds from my account, and despite the infamous Wells Fargo fake account scandal (for which it was ultimately fined $3 billion), I would even entrust my money to a Wells Fargo checking account.\r\n\r\nNonetheless, reliable economies still have submarkets that are inherently rife with distrust of the central operator, with dark pools (securities exchanges in which participants can trade anonymously and with less transparency) being a case in point. (Try Googling “dark pool lawsuit”!)\r\n\r\nThe trust issue naturally goes away if there is no central operator to distrust, and with the advent of Bitcoin, a proven technology now exists to implement modern DeFi processes across many use cases in finance.\r\n<h2 id=\"tab1\" >Demystifying DeFi</h2>\r\nThe idea of decentralized processes is certainly not new. After all, before <em>centralized finance</em> (CeFi) arose to establish trusted intermediaries, primitive DeFi was the status quo. Transactions were all peer-to-peer, and you were constrained by your local neighborhood to gain access to capital and to obtain goods by bartering one item for another. Record-keeping was minimal, and ownership was determined by physical possession.\r\n\r\nIn modern markets, transactions require confidence in the validity of the agreement, which is provided by reliable and secure record-keeping systems. After all, when you sell your car, you are really transferring the legal right to access the car. Without a reliable record-keeping system in place, chaos would ensue. (Imagine the return of <em>finders keepers</em> as a rule of law!)\r\n\r\nWhat’s truly exciting now is the distributed-ledger technology that provides a reliable and secure method of record-keeping that is not maintained by a trusted intermediary, such as Bank of America or the DMV. Behold the dawn of the modern DeFi era!\r\n<h2 id=\"tab2\" >From autonomous collectives to trillion-dollar DAOs</h2>\r\nWell-functioning, leaderless communities are all around us, and in each circumstance, an inherent governance mechanism incentivizes and gels the group to act in concert — all without an elected official to assign roles and lead the process.\r\n\r\nFrom homework teams to neighborhoods to informal potlucks, small groups can effectively and efficiently self-govern when there are grades to maintain, property prices to protect, or reputational concerns at stake.\r\n\r\nThese small-scale examples probably feel reasonable and natural. But what if I told you that a trillion-dollar organization could autonomously validate, execute, secure, and provide ongoing updates to an entire system without an elected leader to assign tasks? The concept sounds naïve at best, and possibly crazy.\r\n\r\nAnd yet, Bitcoin has provided a battle-tested case in point for the underlying technology that enables it to function in a decentralized and autonomous fashion. Yes, Bitcoin is indeed a trillion-dollar <em>decentralized autonomous organization</em> (DAO)!\r\n\r\nOf course, at this scale and with the value at stake, a DAO can’t rely solely on simple mechanisms like reputational concerns to incentivize participants to behave honestly and in a way that upholds the values of the system. Instead, the underlying protocol must be protected against malicious players who may work hard to cheat the system.\r\n<h2 id=\"tab3\" >Transacting in DeFi versus CeFi</h2>\r\n<h3>Borrowing assets</h3>\r\nSuppose you want to borrow money. How would this transaction be implemented in primitive DeFi versus modern CeFi versus modern DeFi?\r\n<ul>\r\n \t<li><strong>Under a primitive DeFi process:</strong> You hit up everyone you know within reasonable geographic proximity — a neighbor, a friend, a family member — and hope that someone will lend you something that you can barter with at your local marketplace.</li>\r\n \t<li><strong>Under a modern CeFi process:</strong> People have checking accounts, savings accounts, CDs, and so on with the bank, which means that all these people have lent money to the bank. In turn, the bank lends some of this money to you.</li>\r\n \t<li><strong>Under a modern DeFi process:</strong> People lock up funds in a <em>smart-contract account</em>, which is a software program on a public blockchain that automatically enforces and executes the rules in the smart-contract code. This smart-contract account is programmed to function as a lending pool from which you can borrow funds.</li>\r\n</ul>\r\n<h3>Selling assets</h3>\r\nSuppose that instead of borrowing assets, you have assets that you want to sell. Comparing the three types of processes again, here’s how this transaction would be implemented:\r\n<ul>\r\n \t<li><strong>Under a primitive DeFi process:</strong> You again hit up everyone you know within reasonable geographic proximity — a neighbor, friend, family member — and attempt to barter by trial and error.</li>\r\n \t<li><strong>Under a modern CeFi process:</strong> Liquidity providers stand by, waiting to buy the asset from those who want to sell and to sell the asset to those who want to buy. These liquidity providers commit to buy and sell a certain quantity of assets at varying prices on designated exchanges that serve as official marketplaces for the assets in question. In turn, you place an order to sell the asset through your brokerage firm (who has custody of the asset).</li>\r\n \t<li><strong>Under a modern DeFi process:</strong> Liquidity providers lock up assets and funds in a smart-contract account. This smart-contract account serves as a liquidity pool and is programmed to function as an <em>automated market maker.</em> In turn, you can swap your assets for funds from this smart-contract account.</li>\r\n</ul>","blurb":"","authors":[{"authorId":34644,"name":"Seoyoung Kim","slug":"seoyoung-kim","description":" <p><b>Seoyoung Kim, PhD, </b>is an Associate Professor of Finance and Business Analytics at Santa Clara University and bestselling co-author of <i>NFTs For Dummies</i>. Seoyoung’s expertise lies in innovative financial instruments, crypto-assets, and blockchain-based ventures, on which she has consulted and written extensively. She regularly gives workshops and talks to academic, legal, and financial institutions, both domestically and internationally. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34644"}}],"primaryCategoryTaxonomy":{"categoryId":34277,"title":"Cryptocurrency","slug":"cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"Demystifying DeFi","target":"#tab1"},{"label":"From autonomous collectives to trillion-dollar DAOs","target":"#tab2"},{"label":"Transacting in DeFi versus CeFi","target":"#tab3"}],"relatedArticles":{"fromBook":[{"articleId":296944,"title":"How To Set Up a DeFi Wallet with MetaMask","slug":"how-to-set-up-a-defi-wallet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296944"}},{"articleId":296168,"title":"DeFi For Dummies Cheat Sheet","slug":"defi-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296168"}}],"fromCategory":[{"articleId":296944,"title":"How To Set Up a DeFi Wallet with MetaMask","slug":"how-to-set-up-a-defi-wallet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296944"}},{"articleId":289714,"title":"Cryptocurrency All-in-One For Dummies Cheat Sheet","slug":"cryptocurrency-all-in-one-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289714"}},{"articleId":289345,"title":"NFTs For Dummies Cheat Sheet","slug":"nfts-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289345"}},{"articleId":266918,"title":"10 Types of Cryptocurrency Mining Resources","slug":"10-types-of-cryptocurrency-mining-resources","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266918"}},{"articleId":266912,"title":"What Is Pool Mining?","slug":"what-is-pool-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266912"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":296130,"slug":"defi-for-dummies","isbn":"9781119906803","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"amazon":{"default":"https://www.amazon.com/gp/product/1119906806/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119906806/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119906806-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119906806/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119906806/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/defi-for-dummies-cover-9781119906803-170x255.jpg","width":170,"height":255},"title":"DeFi For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><p><b><b data-author-id=\"34644\">Seoyoung Kim</b>, PhD, </b>is an Associate Professor of Finance and Business Analytics at Santa Clara University and bestselling co-author of <i>NFTs For Dummies</i>. Seoyoung’s expertise lies in innovative financial instruments, crypto-assets, and blockchain-based ventures, on which she has consulted and written extensively. She regularly gives workshops and talks to academic, legal, and financial institutions, both domestically and internationally.</p>","authors":[{"authorId":34644,"name":"Seoyoung Kim","slug":"seoyoung-kim","description":" <p><b>Seoyoung Kim, PhD, </b>is an Associate Professor of Finance and Business Analytics at Santa Clara University and bestselling co-author of <i>NFTs For Dummies</i>. Seoyoung’s expertise lies in innovative financial instruments, crypto-assets, and blockchain-based ventures, on which she has consulted and written extensively. She regularly gives workshops and talks to academic, legal, and financial institutions, both domestically and internationally. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34644"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119906803&quot;]}]\" id=\"du-slot-63d4115eb5498\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119906803&quot;]}]\" id=\"du-slot-63d4115eb5a07\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2023-01-26T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":296935},{"headers":{"creationTime":"2017-04-12T03:18:30+00:00","modifiedTime":"2022-12-14T15:46:10+00:00","timestamp":"2022-12-14T18:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"},"slug":"cryptocurrency","categoryId":34277}],"title":"What Is Cryptocurrency?","strippedTitle":"what is cryptocurrency?","slug":"what-is-cryptocurrency","canonicalUrl":"","seo":{"metaDescription":"Learn what cryptocurrency is, how it compares to other types of money, the history of its development, and more.","noIndex":0,"noFollow":0},"content":"Simply stated, a <em>cryptocurrency</em> is a form of digital money. You can transfer your traditional, non-cryptocurrency money like the U.S. dollar digitally, but that’s not quite the same as how cryptocurrencies work. If cryptocurrencies become mainstream, you may be able to use them to pay for stuff electronically, just like you do with traditional currencies.\r\n\r\n[caption id=\"attachment_296355\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296355\" src=\"https://www.dummies.com/wp-content/uploads/bitcoin-crypto-adobestock_176244558.jpg\" alt=\"\" width=\"630\" height=\"420\" /> ©DedMitYay / Adobe Stock[/caption]\r\n\r\nHowever, what sets cryptocurrencies apart is the technology behind them. You may say, “Who cares about the technology behind my money? I only care about how much of it there is in my wallet!” The issue is that the world’s current money systems have a bunch of problems. Here are some examples:\r\n<ul>\r\n \t<li>Payment systems such as credit cards and wire transfers are outdated.</li>\r\n \t<li>In most cases, a bunch of middlemen like banks and brokers take a cut in the process, making transactions expensive and slow.</li>\r\n \t<li>Financial inequality is growing around the globe.</li>\r\n \t<li>Around 3 billion unbanked or underbanked people can’t access financial services. That’s approximately half the population on the planet!</li>\r\n</ul>\r\nCryptocurrency enthusiasts say it could solve some of these problems, if not more.\r\n<h2 id=\"tab1\" >The basics of cryptocurrencies</h2>\r\nYou know how your everyday, government-based currency is reserved in banks? And that you need an ATM or a connection to a bank to get more of it or transfer it to other people? Well, with cryptocurrencies, you may be able to get rid of banks and other centralized middlemen altogether. That’s because cryptocurrencies rely on a technology called <em>blockchain,</em> which is <em>decentralized</em> (meaning no single entity is in charge of it). Instead, every computer in the network confirms the transactions.\r\n<h3>The definition of money</h3>\r\nBefore getting into the nitty-gritty of cryptocurrencies, you need to understand the definition of money itself. The philosophy behind money is a bit like the whole “which came first: the chicken or the egg?” thing. In order for money to be valuable, it must have a number of characteristics, such as the following:\r\n<ul>\r\n \t<li>Enough people must have it.</li>\r\n \t<li>Merchants must accept it as a form of payment.</li>\r\n \t<li>Society must trust that it’s valuable and that it will remain valuable in the future.</li>\r\n</ul>\r\nOf course, in the old days, when you traded your chicken for shoes, the values of the exchanged materials were inherent to their nature. But when coins, cash, and credit cards came into play, the definition of money and, more importantly, the trust model of money changed.\r\n\r\nAnother key change in money has been its ease of transaction. The hassle of carrying a ton of gold bars from one country to another was one of the main reasons cash was invented. Then, when people got even lazier, credit cards were invented. But credit cards carry the money that your government controls.\r\n\r\nAs the world becomes more interconnected and more concerned about authorities who may or may not have people’s best interests in mind, the idea is that cryptocurrencies may offer a valuable alternative.\r\n\r\nHere’s a fun fact: Your normal, government-backed currency, such as the U.S. dollar, must go by its fancy name, <em>fiat currency,</em> now that cryptocurrencies are around. Fiat is described as a legal tender like coins and banknotes that have value only because the government says so.\r\n<h2 id=\"tab2\" >Some cryptocurrency history</h2>\r\nIn late 2022, the fate of cryptocurrency wasn't looking great. During the first half of 2022, prices fell after the collapse of some cryptocurrencies and by late 2022, many crypto-related companies were facing serious financial problems, if not insolvency.\r\n\r\nIn November 2022, well-known crypto exchanges FTX and FTX.US filed for bankruptcy and their founder, Sam Bankman-Fried, was arrested in December 2022 for fraud.\r\n\r\nYet, even after these events, many financial analysts expected cryptocurrency to recover and endure.\r\n<h3>Crypto's beginnings</h3>\r\nThe first ever cryptocurrency was (drumroll please) Bitcoin! You probably have heard of Bitcoin more than any other thing in the crypto industry. Bitcoin was the first product of the first blockchain developed by some anonymous entity who went by the name Satoshi Nakamoto. Satoshi released the idea of Bitcoin in 2008 and described it as a “purely peer-to-peer version” of electronic money.\r\n<p class=\"article-tips tech\">Bitcoin was the first established cryptocurrency, but many attempts at creating digital currencies occurred years before Bitcoin was formally introduced.</p>\r\nCryptocurrencies like Bitcoin are created through a process called <em>mining.</em> Very different than mining ore, mining cryptocurrencies involves powerful computers solving complicated problems.\r\n\r\nBitcoin remained the only cryptocurrency until 2011. Then Bitcoin enthusiasts started noticing flaws in it, so they decided to create alternative coins, also known as <em>altcoins,</em> to improve Bitcoin’s design for things like speed, security, anonymity, and more.\r\n\r\nAmong the first altcoins was Litecoin, which aimed to become the silver to Bitcoin’s gold. As of 2022, the number of cryptocurrencies had soared to more than 19,000, although many of these were not expected to survive.\r\n<h2 id=\"tab3\" >Key cryptocurrency benefits</h2>\r\nIf cryptocurrency endures, there are a number of solutions they may be able to provide through their decentralized nature:\r\n<ul>\r\n \t<li><strong>Reducing corruption:</strong> With great power comes great responsibility. But when you give a ton of power to only one person or entity, the chances of their abusing that power increase. The 19th-century British politician Lord Acton said it best: “Power tends to corrupt, and absolute power corrupts absolutely.”Cryptocurrencies aim to resolve the issue of absolute power by distributing power among many people or, better yet, among all the members of the network. That’s the key idea behind blockchain technology anyway.</li>\r\n \t<li><strong>Eliminating extreme money printing:</strong> Governments have central banks, and central banks have the ability to simply print money when they’re faced with a serious economic problem. This process is also called <em>quantitative easing.</em> By printing more money, a government may be able to bail out debt or devalue its currency.However, this approach is like putting a bandage on a broken leg. Not only does it rarely solve the problem, but the negative side effects also can sometimes surpass the original issue.For example, when a country like Iran or Venezuela prints too much money, the value of its currency drops so much that inflation skyrockets and people can’t even afford to buy everyday goods and services. Their cash becomes barely as valuable as rolls of toilet paper.Most cryptocurrencies have a limited, set amount of coins available. When all those coins are in circulation, a central entity or the company behind the blockchain has no easy way to simply create more coins or add on to its supply.</li>\r\n</ul>\r\n<ul>\r\n \t<li><strong>Giving people charge of their own money:</strong> With traditional cash, you’re basically giving away all your control to central banks and the government. If you trust your government, that’s great, but keep in mind that at any point, your government is able to simply freeze your bank account and deny your access to your funds.For example, in the United States, if you don’t have a legal will and own a business, the government has the right to all your assets if you pass away. Some governments can even simply abolish bank notes the way India did in 2016. With cryptocurrencies, you and only you can access your funds.</li>\r\n \t<li><strong>Cutting out the middleman:</strong> With traditional money, every time you make a transfer, a middleman like your bank or a digital payment service takes a cut. With cryptocurrencies, all the network members in the blockchain are that middleman; their compensation is formulated differently from that of fiat money middlemen’s and therefore is minimal in comparison.</li>\r\n \t<li><strong>Serving the unbanked:</strong> A vast portion of the world’s citizens has no access or limited access to payment systems like banks. Cryptocurrencies aim to resolve this issue by spreading digital commerce around the globe so that anyone with a mobile phone can start making payments. And yes, more people have access to mobile phones than to banks. In fact, more people have mobile phones than have toilets, but at this point the blockchain technology may not be able to resolve the latter issue.</li>\r\n</ul>\r\n<h2 id=\"tab4\" >Common crypto and blockchain myths</h2>\r\nDuring the 2017 Bitcoin hype, a lot of misconceptions about the whole industry started to circulate. These myths may have played a role in the cryptocurrency crash that followed the surge. The important thing to remember is that both the blockchain technology and its byproduct, the cryptocurrency market, are still in their infancy, and things are rapidly changing.\r\n\r\n[caption id=\"attachment_262429\" align=\"alignnone\" width=\"535\"]<img class=\"size-full wp-image-262429\" src=\"https://www.dummies.com/wp-content/uploads/cryptocurrency-blockchain.jpg\" alt=\"How blockchain works\" width=\"535\" height=\"193\" /> Simplified version of how a blockchain works.[/caption]\r\n\r\nLet me get some of the most common misunderstandings out of the way:\r\n<ul>\r\n \t<li><strong>Cryptocurrencies are good only for criminals.</strong> Some cryptocurrencies boast anonymity as one of their key features. That means your identity isn’t revealed when you’re making transactions. Other cryptocurrencies are based on a decentralized blockchain, meaning a central government isn’t the sole power behind them.These features do make such cryptocurrencies attractive for criminals; however, law-abiding citizens in corrupt countries can also benefit from them. For example, if you don’t trust your local bank or country because of corruption and political instability, the best way to store your money may be through the blockchain and cryptocurrency assets.</li>\r\n \t<li><strong>You can make anonymous transactions using all cryptocurrencies.</strong> For some reason, many people equate Bitcoin with anonymity. But Bitcoin, along with many other cryptocurrencies, doesn’t incorporate anonymity at all. All transactions made using such cryptocurrencies are made on public blockchain.Some cryptocurrencies, such as Monero, do prioritize privacy, meaning no outsider can find the source, amount, or destination of transactions. However, most other cryptocurrencies, including Bitcoin, don’t operate that way.</li>\r\n \t<li><strong>The only application of blockchain is Bitcoin.</strong> This idea couldn’t be further from the truth. Bitcoin and other cryptocurrencies are a tiny byproduct of the blockchain revolution. Many believe Satoshi created Bitcoin simply to provide an example of how the blockchain technology can work.</li>\r\n \t<li><strong>All blockchain activity is private.</strong> Many people falsely believe that the blockchain technology isn’t open to the public and is accessible only to its network of common users.Although some companies create their own private blockchains to be used only among employees and business partners, the majority of the blockchains behind famous cryptocurrencies such as Bitcoin are accessible by the public. Literally anyone with a computer can access the transactions in real time. For example, you can view the <a href=\"http://www.blockchain.com/\" target=\"_blank\" rel=\"noopener\">real-time Bitcoin transactions</a>.</li>\r\n</ul>\r\n<h3>Risks of cryptocurrency</h3>\r\nJust like anything else in life, cryptocurrencies come with their own baggage of risk. Whether you trade cryptos, invest in them, or simply hold on to them for the future, you must assess and understand the risks beforehand. Some of the most talked-about cryptocurrency risks include their volatility and lack of regulation.\r\n\r\nVolatility got especially out of hand in 2017, when the price of most major cryptocurrencies, including Bitcoin, skyrocketed above 1,000 percent and then came crashing down. However, as the cryptocurrency hype has calmed down, the price fluctuations have become more predictable and followed similar patterns of stocks and other financial assets.\r\n\r\nRegulations are another major topic in the industry. The funny thing is that both lack of regulation and exposure to regulations can turn into risk events for cryptocurrency investors.\r\n<h2 id=\"tab5\" >Gear up to make transactions</h2>\r\nCryptocurrencies are here to make transactions easier and faster. But before you take advantage of these benefits, you must gear up with crypto gadgets, discover where you can get your hands on different cryptocurrencies, and get to know the cryptocurrency community. Some of the essentials include cryptocurrency wallets and exchanges.\r\n<h3>Cryptocurrency wallets</h3>\r\nSome <em>cryptocurrency wallets,</em> which hold your purchased cryptos, are similar to digital payment services like Apple Pay and PayPal. But generally, they’re different from traditional wallets and come in different formats and levels of security.\r\n<p class=\"article-tips remember\">You can’t get involved in the cryptocurrency market without a crypto wallet. Get the most secure type of wallet, such as hardware or paper wallets, instead of using the convenient online ones.</p>\r\n\r\n<h3>Cryptocurrency exchanges</h3>\r\nAfter you get yourself a crypto wallet, you’re ready to go crypto shopping, and one of the best destinations is a cryptocurrency exchange. These online web services are where you can transfer your traditional money to buy cryptocurrencies, exchange different types of cryptocurrencies, or even store your cryptocurrencies.\r\n<p class=\"article-tips warning\">Storing your cryptocurrencies on an exchange is considered high risk because many such exchanges have been exposed to hacking attacks and scams in the past. When you’re done with your transactions, your best bet is to move your new digital assets to your personal, secure wallet.</p>\r\nExchanges come in different shapes and forms. Some are like traditional stock exchanges and act as a middleman — something crypto enthusiasts believe is a slap in the face of the cryptocurrency market, which is trying to remove a centralized middleman. Others are decentralized and provide a service where buyers and sellers come together and transact in a peer-to-peer manner, but they come with their own sets of problems, like the risk of locking yourself out.\r\n\r\nA third type of crypto exchange is called <em>hybrid,</em> and it merges the benefits of the other two types to create a better, more secure experience for users.\r\n<h3>Cryptocurrency communities</h3>\r\n<p class=\"article-tips tip\">Getting to know the crypto community can be the next step as you’re finding your way in the market. The web has plenty of chat rooms and support groups to give you a sense of the market and what people are talking about. Here are some ways to get involved:</p>\r\n\r\n<ul>\r\n \t<li><strong>Crypto-specific Telegram groups.</strong> Many cryptocurrencies have their very own channels on the Telegram app. To join them, you first need to download the Telegram messenger app on your smartphone or computer; it’s available for iOS and Android.</li>\r\n \t<li><strong>Crypto chat rooms on Reddit or BitcoinTalk:</strong> <a href=\"https://bitcointalk.org/\" target=\"_blank\" rel=\"noopener\">BitcoinTalk</a> and <a href=\"http://www.reddit.com/\" target=\"_blank\" rel=\"noopener\">Reddit</a> have some of the oldest crypto chat rooms around. You can view some topics without signing up, but if you want to get involved, you need to log in. (Of course, Reddit isn’t exclusive to cryptos, but you can search for a variety of cryptocurrency topics.)</li>\r\n \t<li><strong>TradingView chat room:</strong> One of the best trading platforms out there, <a href=\"http://www.tradingview.com/\" target=\"_blank\" rel=\"noopener\">TradingView</a> also has a social service where traders and investors of all sorts come together and share their thoughts, questions, and ideas.</li>\r\n \t<li><strong><a href=\"https://learn.investdiva.com/join-group\" target=\"_blank\" rel=\"noopener\">Invest Diva</a>’s Premium Investing Group:</strong> If you’re looking for a less crowded and more investment/trading-focused place to get support, you can join our investment group (and chat directly with me as a perk too).</li>\r\n</ul>\r\n<p class=\"article-tips remember\">On the flip side, many scammers also target these kinds of platforms to advertise and lure members into trouble. Keep your wits about you.</p>","description":"Simply stated, a <em>cryptocurrency</em> is a form of digital money. You can transfer your traditional, non-cryptocurrency money like the U.S. dollar digitally, but that’s not quite the same as how cryptocurrencies work. If cryptocurrencies become mainstream, you may be able to use them to pay for stuff electronically, just like you do with traditional currencies.\r\n\r\n[caption id=\"attachment_296355\" align=\"alignnone\" width=\"630\"]<img class=\"size-full wp-image-296355\" src=\"https://www.dummies.com/wp-content/uploads/bitcoin-crypto-adobestock_176244558.jpg\" alt=\"\" width=\"630\" height=\"420\" /> ©DedMitYay / Adobe Stock[/caption]\r\n\r\nHowever, what sets cryptocurrencies apart is the technology behind them. You may say, “Who cares about the technology behind my money? I only care about how much of it there is in my wallet!” The issue is that the world’s current money systems have a bunch of problems. Here are some examples:\r\n<ul>\r\n \t<li>Payment systems such as credit cards and wire transfers are outdated.</li>\r\n \t<li>In most cases, a bunch of middlemen like banks and brokers take a cut in the process, making transactions expensive and slow.</li>\r\n \t<li>Financial inequality is growing around the globe.</li>\r\n \t<li>Around 3 billion unbanked or underbanked people can’t access financial services. That’s approximately half the population on the planet!</li>\r\n</ul>\r\nCryptocurrency enthusiasts say it could solve some of these problems, if not more.\r\n<h2 id=\"tab1\" >The basics of cryptocurrencies</h2>\r\nYou know how your everyday, government-based currency is reserved in banks? And that you need an ATM or a connection to a bank to get more of it or transfer it to other people? Well, with cryptocurrencies, you may be able to get rid of banks and other centralized middlemen altogether. That’s because cryptocurrencies rely on a technology called <em>blockchain,</em> which is <em>decentralized</em> (meaning no single entity is in charge of it). Instead, every computer in the network confirms the transactions.\r\n<h3>The definition of money</h3>\r\nBefore getting into the nitty-gritty of cryptocurrencies, you need to understand the definition of money itself. The philosophy behind money is a bit like the whole “which came first: the chicken or the egg?” thing. In order for money to be valuable, it must have a number of characteristics, such as the following:\r\n<ul>\r\n \t<li>Enough people must have it.</li>\r\n \t<li>Merchants must accept it as a form of payment.</li>\r\n \t<li>Society must trust that it’s valuable and that it will remain valuable in the future.</li>\r\n</ul>\r\nOf course, in the old days, when you traded your chicken for shoes, the values of the exchanged materials were inherent to their nature. But when coins, cash, and credit cards came into play, the definition of money and, more importantly, the trust model of money changed.\r\n\r\nAnother key change in money has been its ease of transaction. The hassle of carrying a ton of gold bars from one country to another was one of the main reasons cash was invented. Then, when people got even lazier, credit cards were invented. But credit cards carry the money that your government controls.\r\n\r\nAs the world becomes more interconnected and more concerned about authorities who may or may not have people’s best interests in mind, the idea is that cryptocurrencies may offer a valuable alternative.\r\n\r\nHere’s a fun fact: Your normal, government-backed currency, such as the U.S. dollar, must go by its fancy name, <em>fiat currency,</em> now that cryptocurrencies are around. Fiat is described as a legal tender like coins and banknotes that have value only because the government says so.\r\n<h2 id=\"tab2\" >Some cryptocurrency history</h2>\r\nIn late 2022, the fate of cryptocurrency wasn't looking great. During the first half of 2022, prices fell after the collapse of some cryptocurrencies and by late 2022, many crypto-related companies were facing serious financial problems, if not insolvency.\r\n\r\nIn November 2022, well-known crypto exchanges FTX and FTX.US filed for bankruptcy and their founder, Sam Bankman-Fried, was arrested in December 2022 for fraud.\r\n\r\nYet, even after these events, many financial analysts expected cryptocurrency to recover and endure.\r\n<h3>Crypto's beginnings</h3>\r\nThe first ever cryptocurrency was (drumroll please) Bitcoin! You probably have heard of Bitcoin more than any other thing in the crypto industry. Bitcoin was the first product of the first blockchain developed by some anonymous entity who went by the name Satoshi Nakamoto. Satoshi released the idea of Bitcoin in 2008 and described it as a “purely peer-to-peer version” of electronic money.\r\n<p class=\"article-tips tech\">Bitcoin was the first established cryptocurrency, but many attempts at creating digital currencies occurred years before Bitcoin was formally introduced.</p>\r\nCryptocurrencies like Bitcoin are created through a process called <em>mining.</em> Very different than mining ore, mining cryptocurrencies involves powerful computers solving complicated problems.\r\n\r\nBitcoin remained the only cryptocurrency until 2011. Then Bitcoin enthusiasts started noticing flaws in it, so they decided to create alternative coins, also known as <em>altcoins,</em> to improve Bitcoin’s design for things like speed, security, anonymity, and more.\r\n\r\nAmong the first altcoins was Litecoin, which aimed to become the silver to Bitcoin’s gold. As of 2022, the number of cryptocurrencies had soared to more than 19,000, although many of these were not expected to survive.\r\n<h2 id=\"tab3\" >Key cryptocurrency benefits</h2>\r\nIf cryptocurrency endures, there are a number of solutions they may be able to provide through their decentralized nature:\r\n<ul>\r\n \t<li><strong>Reducing corruption:</strong> With great power comes great responsibility. But when you give a ton of power to only one person or entity, the chances of their abusing that power increase. The 19th-century British politician Lord Acton said it best: “Power tends to corrupt, and absolute power corrupts absolutely.”Cryptocurrencies aim to resolve the issue of absolute power by distributing power among many people or, better yet, among all the members of the network. That’s the key idea behind blockchain technology anyway.</li>\r\n \t<li><strong>Eliminating extreme money printing:</strong> Governments have central banks, and central banks have the ability to simply print money when they’re faced with a serious economic problem. This process is also called <em>quantitative easing.</em> By printing more money, a government may be able to bail out debt or devalue its currency.However, this approach is like putting a bandage on a broken leg. Not only does it rarely solve the problem, but the negative side effects also can sometimes surpass the original issue.For example, when a country like Iran or Venezuela prints too much money, the value of its currency drops so much that inflation skyrockets and people can’t even afford to buy everyday goods and services. Their cash becomes barely as valuable as rolls of toilet paper.Most cryptocurrencies have a limited, set amount of coins available. When all those coins are in circulation, a central entity or the company behind the blockchain has no easy way to simply create more coins or add on to its supply.</li>\r\n</ul>\r\n<ul>\r\n \t<li><strong>Giving people charge of their own money:</strong> With traditional cash, you’re basically giving away all your control to central banks and the government. If you trust your government, that’s great, but keep in mind that at any point, your government is able to simply freeze your bank account and deny your access to your funds.For example, in the United States, if you don’t have a legal will and own a business, the government has the right to all your assets if you pass away. Some governments can even simply abolish bank notes the way India did in 2016. With cryptocurrencies, you and only you can access your funds.</li>\r\n \t<li><strong>Cutting out the middleman:</strong> With traditional money, every time you make a transfer, a middleman like your bank or a digital payment service takes a cut. With cryptocurrencies, all the network members in the blockchain are that middleman; their compensation is formulated differently from that of fiat money middlemen’s and therefore is minimal in comparison.</li>\r\n \t<li><strong>Serving the unbanked:</strong> A vast portion of the world’s citizens has no access or limited access to payment systems like banks. Cryptocurrencies aim to resolve this issue by spreading digital commerce around the globe so that anyone with a mobile phone can start making payments. And yes, more people have access to mobile phones than to banks. In fact, more people have mobile phones than have toilets, but at this point the blockchain technology may not be able to resolve the latter issue.</li>\r\n</ul>\r\n<h2 id=\"tab4\" >Common crypto and blockchain myths</h2>\r\nDuring the 2017 Bitcoin hype, a lot of misconceptions about the whole industry started to circulate. These myths may have played a role in the cryptocurrency crash that followed the surge. The important thing to remember is that both the blockchain technology and its byproduct, the cryptocurrency market, are still in their infancy, and things are rapidly changing.\r\n\r\n[caption id=\"attachment_262429\" align=\"alignnone\" width=\"535\"]<img class=\"size-full wp-image-262429\" src=\"https://www.dummies.com/wp-content/uploads/cryptocurrency-blockchain.jpg\" alt=\"How blockchain works\" width=\"535\" height=\"193\" /> Simplified version of how a blockchain works.[/caption]\r\n\r\nLet me get some of the most common misunderstandings out of the way:\r\n<ul>\r\n \t<li><strong>Cryptocurrencies are good only for criminals.</strong> Some cryptocurrencies boast anonymity as one of their key features. That means your identity isn’t revealed when you’re making transactions. Other cryptocurrencies are based on a decentralized blockchain, meaning a central government isn’t the sole power behind them.These features do make such cryptocurrencies attractive for criminals; however, law-abiding citizens in corrupt countries can also benefit from them. For example, if you don’t trust your local bank or country because of corruption and political instability, the best way to store your money may be through the blockchain and cryptocurrency assets.</li>\r\n \t<li><strong>You can make anonymous transactions using all cryptocurrencies.</strong> For some reason, many people equate Bitcoin with anonymity. But Bitcoin, along with many other cryptocurrencies, doesn’t incorporate anonymity at all. All transactions made using such cryptocurrencies are made on public blockchain.Some cryptocurrencies, such as Monero, do prioritize privacy, meaning no outsider can find the source, amount, or destination of transactions. However, most other cryptocurrencies, including Bitcoin, don’t operate that way.</li>\r\n \t<li><strong>The only application of blockchain is Bitcoin.</strong> This idea couldn’t be further from the truth. Bitcoin and other cryptocurrencies are a tiny byproduct of the blockchain revolution. Many believe Satoshi created Bitcoin simply to provide an example of how the blockchain technology can work.</li>\r\n \t<li><strong>All blockchain activity is private.</strong> Many people falsely believe that the blockchain technology isn’t open to the public and is accessible only to its network of common users.Although some companies create their own private blockchains to be used only among employees and business partners, the majority of the blockchains behind famous cryptocurrencies such as Bitcoin are accessible by the public. Literally anyone with a computer can access the transactions in real time. For example, you can view the <a href=\"http://www.blockchain.com/\" target=\"_blank\" rel=\"noopener\">real-time Bitcoin transactions</a>.</li>\r\n</ul>\r\n<h3>Risks of cryptocurrency</h3>\r\nJust like anything else in life, cryptocurrencies come with their own baggage of risk. Whether you trade cryptos, invest in them, or simply hold on to them for the future, you must assess and understand the risks beforehand. Some of the most talked-about cryptocurrency risks include their volatility and lack of regulation.\r\n\r\nVolatility got especially out of hand in 2017, when the price of most major cryptocurrencies, including Bitcoin, skyrocketed above 1,000 percent and then came crashing down. However, as the cryptocurrency hype has calmed down, the price fluctuations have become more predictable and followed similar patterns of stocks and other financial assets.\r\n\r\nRegulations are another major topic in the industry. The funny thing is that both lack of regulation and exposure to regulations can turn into risk events for cryptocurrency investors.\r\n<h2 id=\"tab5\" >Gear up to make transactions</h2>\r\nCryptocurrencies are here to make transactions easier and faster. But before you take advantage of these benefits, you must gear up with crypto gadgets, discover where you can get your hands on different cryptocurrencies, and get to know the cryptocurrency community. Some of the essentials include cryptocurrency wallets and exchanges.\r\n<h3>Cryptocurrency wallets</h3>\r\nSome <em>cryptocurrency wallets,</em> which hold your purchased cryptos, are similar to digital payment services like Apple Pay and PayPal. But generally, they’re different from traditional wallets and come in different formats and levels of security.\r\n<p class=\"article-tips remember\">You can’t get involved in the cryptocurrency market without a crypto wallet. Get the most secure type of wallet, such as hardware or paper wallets, instead of using the convenient online ones.</p>\r\n\r\n<h3>Cryptocurrency exchanges</h3>\r\nAfter you get yourself a crypto wallet, you’re ready to go crypto shopping, and one of the best destinations is a cryptocurrency exchange. These online web services are where you can transfer your traditional money to buy cryptocurrencies, exchange different types of cryptocurrencies, or even store your cryptocurrencies.\r\n<p class=\"article-tips warning\">Storing your cryptocurrencies on an exchange is considered high risk because many such exchanges have been exposed to hacking attacks and scams in the past. When you’re done with your transactions, your best bet is to move your new digital assets to your personal, secure wallet.</p>\r\nExchanges come in different shapes and forms. Some are like traditional stock exchanges and act as a middleman — something crypto enthusiasts believe is a slap in the face of the cryptocurrency market, which is trying to remove a centralized middleman. Others are decentralized and provide a service where buyers and sellers come together and transact in a peer-to-peer manner, but they come with their own sets of problems, like the risk of locking yourself out.\r\n\r\nA third type of crypto exchange is called <em>hybrid,</em> and it merges the benefits of the other two types to create a better, more secure experience for users.\r\n<h3>Cryptocurrency communities</h3>\r\n<p class=\"article-tips tip\">Getting to know the crypto community can be the next step as you’re finding your way in the market. The web has plenty of chat rooms and support groups to give you a sense of the market and what people are talking about. Here are some ways to get involved:</p>\r\n\r\n<ul>\r\n \t<li><strong>Crypto-specific Telegram groups.</strong> Many cryptocurrencies have their very own channels on the Telegram app. To join them, you first need to download the Telegram messenger app on your smartphone or computer; it’s available for iOS and Android.</li>\r\n \t<li><strong>Crypto chat rooms on Reddit or BitcoinTalk:</strong> <a href=\"https://bitcointalk.org/\" target=\"_blank\" rel=\"noopener\">BitcoinTalk</a> and <a href=\"http://www.reddit.com/\" target=\"_blank\" rel=\"noopener\">Reddit</a> have some of the oldest crypto chat rooms around. You can view some topics without signing up, but if you want to get involved, you need to log in. (Of course, Reddit isn’t exclusive to cryptos, but you can search for a variety of cryptocurrency topics.)</li>\r\n \t<li><strong>TradingView chat room:</strong> One of the best trading platforms out there, <a href=\"http://www.tradingview.com/\" target=\"_blank\" rel=\"noopener\">TradingView</a> also has a social service where traders and investors of all sorts come together and share their thoughts, questions, and ideas.</li>\r\n \t<li><strong><a href=\"https://learn.investdiva.com/join-group\" target=\"_blank\" rel=\"noopener\">Invest Diva</a>’s Premium Investing Group:</strong> If you’re looking for a less crowded and more investment/trading-focused place to get support, you can join our investment group (and chat directly with me as a perk too).</li>\r\n</ul>\r\n<p class=\"article-tips remember\">On the flip side, many scammers also target these kinds of platforms to advertise and lure members into trouble. Keep your wits about you.</p>","blurb":"","authors":[{"authorId":21503,"name":"Kiana Danial","slug":"kiana-danial","description":" <p><b>Kiana Danial</b> is an investment trainer and consultant as well as the author of <i>Cryptocurrency Investing For Dummies.</i></p> <p><b>Peter Kent</b> is a veteran technology author. <b>Tyler Bain </b>is a Certified Bitcoin Professional. Peter and Tyler are co-authors of <i>Cryptocurrency Mining For Dummies</i>. <b>Tiana Laurence </b>heads her own venture capital firm and is author of <i>Blockchain For Dummies</i>, 2nd Edition. <b>Michael G. Solomon, PhD,</b> is a professor of Computer Information Sciences as well as author of <i>Ethereum For Dummies</i>.</p>","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/21503"}}],"primaryCategoryTaxonomy":{"categoryId":34277,"title":"Cryptocurrency","slug":"cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"The basics of cryptocurrencies","target":"#tab1"},{"label":"Some cryptocurrency history","target":"#tab2"},{"label":"Key cryptocurrency benefits","target":"#tab3"},{"label":"Common crypto and blockchain myths","target":"#tab4"},{"label":"Gear up to make transactions","target":"#tab5"}],"relatedArticles":{"fromBook":[{"articleId":262472,"title":"Short-Term Analysis Methods for Cryptocurrency Investing","slug":"short-term-analysis-methods-for-cryptocurrency-investing","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/262472"}},{"articleId":262463,"title":"3 Short-Term Cryptocurrency Investing Time Frames","slug":"3-short-term-cryptocurrency-investing-time-frames","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/262463"}},{"articleId":262455,"title":"Cryptocurrencies in Long-Term Diversification","slug":"cryptocurrencies-in-long-term-diversification","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/262455"}},{"articleId":262448,"title":"What You Need for Mining Cryptocurrency","slug":"what-you-need-for-mining-cryptocurrency","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/262448"}},{"articleId":262443,"title":"How Mining Cryptocurrency Works","slug":"how-mining-cryptocurrency-works","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/262443"}}],"fromCategory":[{"articleId":289714,"title":"Cryptocurrency All-in-One For Dummies Cheat Sheet","slug":"cryptocurrency-all-in-one-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289714"}},{"articleId":289345,"title":"NFTs For Dummies Cheat Sheet","slug":"nfts-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289345"}},{"articleId":266918,"title":"10 Types of Cryptocurrency Mining Resources","slug":"10-types-of-cryptocurrency-mining-resources","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266918"}},{"articleId":266912,"title":"What Is Pool Mining?","slug":"what-is-pool-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266912"}},{"articleId":266907,"title":"What Is Cryptocurrency Mining?","slug":"what-is-cryptocurrency-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266907"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282129,"slug":"cryptocurrency-investing-for-dummies","isbn":"9781119533030","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"amazon":{"default":"https://www.amazon.com/gp/product/1119533031/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119533031/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119533031-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119533031/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119533031/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/cryptocurrency-investing-for-dummies-cover-9781119533030-203x255.jpg","width":203,"height":255},"title":"Cryptocurrency Investing For Dummies","testBankPinActivationLink":"","bookOutOfPrint":false,"authorsInfo":"<p><b data-author-id=\"21503\">Kiana Danial</b> is the CEO of Invest Diva as well as an internationally recognized personal investing and wealth management expert. She delivers workshops and seminars to corporations, universities, and investment groups, and has been featured in <i>Forbes</i> and on CNN. She was named the 2018 Personal Investment Expert of the Year by Wealth &amp; Finance International. </p>","authors":[{"authorId":21503,"name":"Kiana Danial","slug":"kiana-danial","description":" <p><b>Kiana Danial</b> is an investment trainer and consultant as well as the author of <i>Cryptocurrency Investing For Dummies.</i></p> <p><b>Peter Kent</b> is a veteran technology author. <b>Tyler Bain </b>is a Certified Bitcoin Professional. Peter and Tyler are co-authors of <i>Cryptocurrency Mining For Dummies</i>. <b>Tiana Laurence </b>heads her own venture capital firm and is author of <i>Blockchain For Dummies</i>, 2nd Edition. <b>Michael G. Solomon, PhD,</b> is a professor of Computer Information Sciences as well as author of <i>Ethereum For Dummies</i>.</p>","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/21503"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119533030&quot;]}]\" id=\"du-slot-639a0f5f932eb\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119533030&quot;]}]\" id=\"du-slot-639a0f5f93bf2\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Explore","lifeExpectancy":"One year","lifeExpectancySetFrom":"2022-12-14T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":237561},{"headers":{"creationTime":"2019-09-01T00:59:34+00:00","modifiedTime":"2022-07-25T20:23:50+00:00","timestamp":"2022-09-14T18:19:48+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"},"slug":"cryptocurrency","categoryId":34277}],"title":"Basic Ethereum Smart Contract Syntax","strippedTitle":"basic ethereum smart contract syntax","slug":"basic-ethereum-smart-contract-syntax","canonicalUrl":"","seo":{"metaDescription":"If you want to get involved with Ethereum development, you'll need to know how to code smart contracts in Solidity. Here's how.","noIndex":0,"noFollow":0},"content":"If you plan to do any Ethereum development, you’ll likely be using Solidity, one of the most popular programming languages for smart contracts. Let’s take a look at some basic Solidity syntax. When you write Solidity source code, you save that code in a file with the extension .sol.\r\n\r\n[caption id=\"attachment_263815\" align=\"aligncenter\" width=\"535\"]<img class=\"wp-image-263815 size-full\" src=\"https://www.dummies.com/wp-content/uploads/ethereum-smart-contact-code.jpg\" alt=\"Ethereum smat contract code\" width=\"535\" height=\"385\" /> ©Shutterstock/polygraphus[/caption]\r\n\r\nA Solidity program has several main sections, as follows:\r\n<ul>\r\n \t<li><strong>Pragma:</strong> This tells Solidity what versions of the compiler are valid to compile this file.</li>\r\n \t<li><strong>Comments:</strong> Developers should use comments for documenting code.</li>\r\n \t<li><strong>Import:</strong> An import defines an external file that contains code that your smart contract needs.</li>\r\n \t<li><strong>Contract(s):</strong> This section is where the body of your smart contract code resides.</li>\r\n</ul>\r\n<h2 id=\"tab1\" >Declaring valid compiler version in Ethereum smart contracts</h2>\r\nThe <code>pragma</code> directive should be the first line of code in a Solidity file. Because the Solidity language is still maturing, it is common for new compiler versions to include changes that would fail to compile older programs. The <code>pragma</code> directive helps avoid compiler failures due to using a newer compiler.\r\n\r\nHere is the syntax for the <code>pragma</code> directive:\r\n<pre class=\"code\">pragma Solidity &lt;&lt;version number&gt;&gt;;</pre>\r\nHere is a sample <code>pragma</code> directive:\r\n<pre class=\"code\">pragma Solidity ^0.4.24;</pre>\r\n<p class=\"article-tips remember\">All statements in Solidity end with a semicolon.</p>\r\nThe version number starts with a 0, followed by a major build number and a minor build number. For example, the version number 0.4.24 refers to major build 4 and minor build 24. The caret symbol (^) before the version number tells Solidity that it can use the latest build in a major version range. In the preceding example, Solidity can use a compiler from any build in the version 4 build range. This is a way to tell readers that your program was written for 0.4.24 but will still compile for subsequent version 4 builds.\r\n\r\nAlthough using the caret in the <code>pragma</code> directive provides flexibility, it is a better practice to drop the caret and tell Solidity exactly what compiler version you expect.\r\n<h2 id=\"tab2\" >Commenting your Solidity code</h2>\r\nAdding comments to your code is an extra step that adds a professional look and feel to your Solidity code. A well-commented source code file is easier to read and understand and helps other developers quickly understand what your code is supposed to do. Even simple comments can cut down on the time required to fix bugs or add new functionality. Comments can also provide input for utilities to generate documentation for your smart contracts.\r\n\r\nYou can use single-line or multiline regular comments. Single-line comments start with two forward slashes. Multiline comments start with the <code>/*</code> characters and end with the <code>*/</code> characters. Here is an example of Solidity comments:\r\n<pre class=\"code\">// Here is a single line Solidity comment\r\n/* I have a lot more to say with this comment, so I’ll\r\nuse a multiline comment. The compiler will ignore\r\neverything after the opening comment characters, until\r\nit sees the closing comment characters. */</pre>\r\nA third type of Solidity comment is called the <em>Ethereum Natural Specification (NatSpec)</em> directive. You can use NatSpec to provide information about your code for documentation generators to use to create formatted documentation the describes your smart contracts. NatSpec directives start with three forward slashes and include special tags with data for the documentation. Here is an example of using NatSpec directives:\r\n<pre class=\"code\">/// @title Greeter smart contract\r\n/// @author Joe Programmer\r\n/// @notice This code takes a person's name and says hello\r\n/// @param name The name of the caller\r\n/// @return greeting The greeting with the caller's name</pre>\r\n<p class=\"article-tips tech\">Check out <a href=\"https://github.com/ethereum/wiki/wiki/Ethereum-Natural-Specification-Format\" target=\"_blank\" rel=\"noopener\">NatSpec documentation</a> for additional information.</p>\r\n\r\n<h2 id=\"tab3\" >Importing external code into your Ethereum smart contract</h2>\r\nThe import section is optional but can be powerful when used correctly in your <a href=\"https://www.dummies.com/personal-finance/ethereum-for-dummies-cheat-sheet/\" target=\"_blank\" rel=\"noopener\">Ethereum</a> smart contract. If your smart contract needs to refer to code in other files, you’ll have to import those other files first. Importing files makes it as though you copied the other code into the current file. Using imports helps you avoid actually copying code from one place to another. If you need to access code, just import the Solidity file that contains it.\r\n\r\nThe syntax for importing other files is simple. You use the <code>import</code> keyword and then provide the filename for the file you want to import. For example, to import the file myToken.sol, use this syntax:\r\n<pre class=\"code\">Import 'myToken.sol';</pre>\r\n<h2 id=\"tab4\" >Defining your Ethereum smart contracts</h2>\r\nIn the last main section of Solidity, you define the <a href=\"https://www.dummies.com/article/business-careers-money/personal-finance/cryptocurrency/ethereum-smart-contracts-tips-for-handling-data-in-solidity-263689/\" target=\"_blank\" rel=\"noopener\">contents of your smart contract</a>. It starts with the keyword <code>contract</code> and contains all of the functional code in your smart contract. You can have multiple <code>contract</code> sections in Solidity. That means a single .sol file can define multiple contracts. Here is an example <code>contract</code> section:\r\n<pre class=\"code\">contract HelloWorld {\r\nstring private helloMessage = \"Hello world\";\r\nfunction getHelloMessage() public view returns (string) {\r\nreturn helloMessage;\r\n}\r\n}</pre>\r\nInside the <code>contract</code> section is where you define all of your variables, structures, events, and functions. There's a lot more to the <code>contract</code> section of your code, but for now, you know how to set up a Solidity smart contract.\r\n\r\nOnce you master the basics of Solidity, you can continue to develop more complex code and the sky's the limit.","description":"If you plan to do any Ethereum development, you’ll likely be using Solidity, one of the most popular programming languages for smart contracts. Let’s take a look at some basic Solidity syntax. When you write Solidity source code, you save that code in a file with the extension .sol.\r\n\r\n[caption id=\"attachment_263815\" align=\"aligncenter\" width=\"535\"]<img class=\"wp-image-263815 size-full\" src=\"https://www.dummies.com/wp-content/uploads/ethereum-smart-contact-code.jpg\" alt=\"Ethereum smat contract code\" width=\"535\" height=\"385\" /> ©Shutterstock/polygraphus[/caption]\r\n\r\nA Solidity program has several main sections, as follows:\r\n<ul>\r\n \t<li><strong>Pragma:</strong> This tells Solidity what versions of the compiler are valid to compile this file.</li>\r\n \t<li><strong>Comments:</strong> Developers should use comments for documenting code.</li>\r\n \t<li><strong>Import:</strong> An import defines an external file that contains code that your smart contract needs.</li>\r\n \t<li><strong>Contract(s):</strong> This section is where the body of your smart contract code resides.</li>\r\n</ul>\r\n<h2 id=\"tab1\" >Declaring valid compiler version in Ethereum smart contracts</h2>\r\nThe <code>pragma</code> directive should be the first line of code in a Solidity file. Because the Solidity language is still maturing, it is common for new compiler versions to include changes that would fail to compile older programs. The <code>pragma</code> directive helps avoid compiler failures due to using a newer compiler.\r\n\r\nHere is the syntax for the <code>pragma</code> directive:\r\n<pre class=\"code\">pragma Solidity &lt;&lt;version number&gt;&gt;;</pre>\r\nHere is a sample <code>pragma</code> directive:\r\n<pre class=\"code\">pragma Solidity ^0.4.24;</pre>\r\n<p class=\"article-tips remember\">All statements in Solidity end with a semicolon.</p>\r\nThe version number starts with a 0, followed by a major build number and a minor build number. For example, the version number 0.4.24 refers to major build 4 and minor build 24. The caret symbol (^) before the version number tells Solidity that it can use the latest build in a major version range. In the preceding example, Solidity can use a compiler from any build in the version 4 build range. This is a way to tell readers that your program was written for 0.4.24 but will still compile for subsequent version 4 builds.\r\n\r\nAlthough using the caret in the <code>pragma</code> directive provides flexibility, it is a better practice to drop the caret and tell Solidity exactly what compiler version you expect.\r\n<h2 id=\"tab2\" >Commenting your Solidity code</h2>\r\nAdding comments to your code is an extra step that adds a professional look and feel to your Solidity code. A well-commented source code file is easier to read and understand and helps other developers quickly understand what your code is supposed to do. Even simple comments can cut down on the time required to fix bugs or add new functionality. Comments can also provide input for utilities to generate documentation for your smart contracts.\r\n\r\nYou can use single-line or multiline regular comments. Single-line comments start with two forward slashes. Multiline comments start with the <code>/*</code> characters and end with the <code>*/</code> characters. Here is an example of Solidity comments:\r\n<pre class=\"code\">// Here is a single line Solidity comment\r\n/* I have a lot more to say with this comment, so I’ll\r\nuse a multiline comment. The compiler will ignore\r\neverything after the opening comment characters, until\r\nit sees the closing comment characters. */</pre>\r\nA third type of Solidity comment is called the <em>Ethereum Natural Specification (NatSpec)</em> directive. You can use NatSpec to provide information about your code for documentation generators to use to create formatted documentation the describes your smart contracts. NatSpec directives start with three forward slashes and include special tags with data for the documentation. Here is an example of using NatSpec directives:\r\n<pre class=\"code\">/// @title Greeter smart contract\r\n/// @author Joe Programmer\r\n/// @notice This code takes a person's name and says hello\r\n/// @param name The name of the caller\r\n/// @return greeting The greeting with the caller's name</pre>\r\n<p class=\"article-tips tech\">Check out <a href=\"https://github.com/ethereum/wiki/wiki/Ethereum-Natural-Specification-Format\" target=\"_blank\" rel=\"noopener\">NatSpec documentation</a> for additional information.</p>\r\n\r\n<h2 id=\"tab3\" >Importing external code into your Ethereum smart contract</h2>\r\nThe import section is optional but can be powerful when used correctly in your <a href=\"https://www.dummies.com/personal-finance/ethereum-for-dummies-cheat-sheet/\" target=\"_blank\" rel=\"noopener\">Ethereum</a> smart contract. If your smart contract needs to refer to code in other files, you’ll have to import those other files first. Importing files makes it as though you copied the other code into the current file. Using imports helps you avoid actually copying code from one place to another. If you need to access code, just import the Solidity file that contains it.\r\n\r\nThe syntax for importing other files is simple. You use the <code>import</code> keyword and then provide the filename for the file you want to import. For example, to import the file myToken.sol, use this syntax:\r\n<pre class=\"code\">Import 'myToken.sol';</pre>\r\n<h2 id=\"tab4\" >Defining your Ethereum smart contracts</h2>\r\nIn the last main section of Solidity, you define the <a href=\"https://www.dummies.com/article/business-careers-money/personal-finance/cryptocurrency/ethereum-smart-contracts-tips-for-handling-data-in-solidity-263689/\" target=\"_blank\" rel=\"noopener\">contents of your smart contract</a>. It starts with the keyword <code>contract</code> and contains all of the functional code in your smart contract. You can have multiple <code>contract</code> sections in Solidity. That means a single .sol file can define multiple contracts. Here is an example <code>contract</code> section:\r\n<pre class=\"code\">contract HelloWorld {\r\nstring private helloMessage = \"Hello world\";\r\nfunction getHelloMessage() public view returns (string) {\r\nreturn helloMessage;\r\n}\r\n}</pre>\r\nInside the <code>contract</code> section is where you define all of your variables, structures, events, and functions. There's a lot more to the <code>contract</code> section of your code, but for now, you know how to set up a Solidity smart contract.\r\n\r\nOnce you master the basics of Solidity, you can continue to develop more complex code and the sky's the limit.","blurb":"","authors":[{"authorId":27199,"name":"Michael G. Solomon","slug":"michael-solomon","description":"Michael G. Solomon, PhD, is a professor at the University of the Cumberlands who specializes in courses on blockchain and distributed computing systems as well as computer security. He holds numerous security and project management certifications and has written several books on security and project management, including Ethereum For Dummies. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/27199"}}],"primaryCategoryTaxonomy":{"categoryId":34277,"title":"Cryptocurrency","slug":"cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"Declaring valid compiler version in Ethereum smart contracts","target":"#tab1"},{"label":"Commenting your Solidity code","target":"#tab2"},{"label":"Importing external code into your Ethereum smart contract","target":"#tab3"},{"label":"Defining your Ethereum smart contracts","target":"#tab4"}],"relatedArticles":{"fromBook":[{"articleId":263802,"title":"10 Free Ethereum Resources","slug":"10-free-ethereum-resources","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263802"}},{"articleId":263715,"title":"Ethereum Basics: An Introduction to Smart Contracts and Solidity","slug":"ethereum-basics-an-introduction-to-smart-contracts-and-solidity","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263715"}},{"articleId":263689,"title":"Ethereum Smart Contracts: Tips for Handling Data in Solidity","slug":"ethereum-smart-contracts-tips-for-handling-data-in-solidity","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263689"}},{"articleId":263679,"title":"Top 10 Ethereum Uses","slug":"top-10-ethereum-uses","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263679"}},{"articleId":263674,"title":"Different Types of Ethereum Wallets","slug":"different-types-of-ethereum-wallets","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263674"}}],"fromCategory":[{"articleId":289714,"title":"Cryptocurrency All-in-One For Dummies Cheat Sheet","slug":"cryptocurrency-all-in-one-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289714"}},{"articleId":289345,"title":"NFTs For Dummies Cheat Sheet","slug":"nfts-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289345"}},{"articleId":266918,"title":"10 Types of Cryptocurrency Mining Resources","slug":"10-types-of-cryptocurrency-mining-resources","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266918"}},{"articleId":266912,"title":"What Is Pool Mining?","slug":"what-is-pool-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266912"}},{"articleId":266907,"title":"What Is Cryptocurrency Mining?","slug":"what-is-cryptocurrency-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266907"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":281698,"slug":"ethereum-for-dummies","isbn":"9781119474128","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"amazon":{"default":"https://www.amazon.com/gp/product/1119474124/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119474124/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119474124-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119474124/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119474124/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/ethereum-for-dummies-cover-9781119474128-203x255.jpg","width":203,"height":255},"title":"Ethereum For Dummies","testBankPinActivationLink":"","bookOutOfPrint":false,"authorsInfo":"<p><b data-author-id=\"34832\">Michael G. Solomon, PhD,</b> is a full-time security, privacy, blockchain, and data science expert. An active speaker, consultant, and author, Michael is a professor of cybersecurity and global business with blockchain technology at the University of the Cumberlands. He has written more than 20 books on IT, security, and the PMP exam. </p>","authors":[{"authorId":34832,"name":"Michael G. Solomon","slug":"michael-g-solomon","description":" <p><b>Kiana Danial</b> is an investment trainer and consultant as well as the author of <i>Cryptocurrency Investing For Dummies.</i></p> <p><b>Peter Kent</b> is a veteran technology author. <b>Tyler Bain </b>is a Certified Bitcoin Professional. Peter and Tyler are co-authors of <i>Cryptocurrency Mining For Dummies</i>. <b>Tiana Laurence </b>heads her own venture capital firm and is author of <i>Blockchain For Dummies</i>, 2nd Edition. <b>Michael G. Solomon, PhD,</b> is a professor of Computer Information Sciences as well as author of <i>Ethereum For Dummies</i>.</p>","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34832"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119474128&quot;]}]\" id=\"du-slot-63221b44bab63\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119474128&quot;]}]\" id=\"du-slot-63221b44bb62a\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"One year","lifeExpectancySetFrom":"2022-07-25T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":263811},{"headers":{"creationTime":"2017-07-31T19:28:55+00:00","modifiedTime":"2022-07-25T18:27:17+00:00","timestamp":"2022-09-14T18:19:48+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"},"slug":"cryptocurrency","categoryId":34277}],"title":"How Blockchains Work","strippedTitle":"how blockchains work","slug":"what-is-blockchain-and-what-blockchains-are","canonicalUrl":"","seo":{"metaDescription":"Blockchains are data structures. In this article, learn how they work and the different types of blockchain applications.","noIndex":0,"noFollow":0},"content":"Originally, <em>blockchain</em> was just the computer science term for how to structure and share data. Today, <a href=\"https://www.dummies.com/personal-finance/what-blockchains-do/\" target=\"_blank\" rel=\"noopener\">blockchains</a> are hailed the \"fifth evolution\" of computing. Blockchains are a novel approach to the distributed database. The innovation comes from incorporating old technology in new ways. You can think of blockchains as distributed databases that a group of individuals controls and that store and share information.\r\n\r\nThere are many different types of blockchains and blockchain applications. Blockchain is an all-encompassing technology that is integrating across platforms and hardware all over the world.\r\n\r\nA blockchain is a data structure that makes it possible to create a digital ledger of data and share it among a network of independent parties. There are many different types of blockchains.\r\n<ul>\r\n \t<li><strong>Public blockchains:</strong> Public blockchains, such as Bitcoin, are large distributed networks that are run through a native token. They're open for anyone to participate at any level and have open-source code that their community maintains.</li>\r\n \t<li><strong>Permissioned blockchains:</strong> Permissioned blockchains, such as Ripple, control roles that individuals can play within the network. They're still large and distributed systems that use a native token. Their core code may or may not be open source.</li>\r\n \t<li><strong>Private blockchains:</strong> Private blockchains tend to be smaller and do not utilize a token. Their membership is closely controlled. These types of blockchains are favored by consortiums that have trusted members and trade confidential information.</li>\r\n</ul>\r\nAll three types of blockchains use cryptography to allow each participant on any given network to manage the ledger in a secure way without the need for a central authority to enforce the rules. The removal of central authority from database structure is one of the most important and powerful aspects of blockchains.\r\n\r\nThe figure shows the concept of <a href=\"https://www.dummies.com/article/business-careers-money/personal-finance/cryptocurrency/the-structure-of-blockchains-242804/\" target=\"_blank\" rel=\"noopener\">how blockchains come to agreement</a>.\r\n\r\n[caption id=\"attachment_242784\" align=\"aligncenter\" width=\"535\"]<a href=\"https://www.dummies.com/wp-content/uploads/blockchain-transaction.jpg\"><img class=\"wp-image-242784 size-full\" src=\"https://www.dummies.com/wp-content/uploads/blockchain-transaction.jpg\" alt=\"blockchain-transaction\" width=\"535\" height=\"250\" /></a> How blockchains work.[/caption]\r\n<p class=\"article-tips remember\">Blockchains create permanent records and histories of transactions, but nothing is really permanent. The permanence of the record is based on the permanence of the network. In the context of blockchains, this means that a large portion of a blockchain community would all have to agree to change the information and are incentivized not to change the data.</p>\r\nWhen data is recorded in a blockchain, it's extremely difficult to change or remove it. When someone wants to add a record to a blockchain, also called a <em>transaction</em> or an <em>entry,</em> users in the network who have validation control verify the proposed transaction. This is where things get tricky because every blockchain has a slightly different spin on how this should work and who can validate a transaction.","description":"Originally, <em>blockchain</em> was just the computer science term for how to structure and share data. Today, <a href=\"https://www.dummies.com/personal-finance/what-blockchains-do/\" target=\"_blank\" rel=\"noopener\">blockchains</a> are hailed the \"fifth evolution\" of computing. Blockchains are a novel approach to the distributed database. The innovation comes from incorporating old technology in new ways. You can think of blockchains as distributed databases that a group of individuals controls and that store and share information.\r\n\r\nThere are many different types of blockchains and blockchain applications. Blockchain is an all-encompassing technology that is integrating across platforms and hardware all over the world.\r\n\r\nA blockchain is a data structure that makes it possible to create a digital ledger of data and share it among a network of independent parties. There are many different types of blockchains.\r\n<ul>\r\n \t<li><strong>Public blockchains:</strong> Public blockchains, such as Bitcoin, are large distributed networks that are run through a native token. They're open for anyone to participate at any level and have open-source code that their community maintains.</li>\r\n \t<li><strong>Permissioned blockchains:</strong> Permissioned blockchains, such as Ripple, control roles that individuals can play within the network. They're still large and distributed systems that use a native token. Their core code may or may not be open source.</li>\r\n \t<li><strong>Private blockchains:</strong> Private blockchains tend to be smaller and do not utilize a token. Their membership is closely controlled. These types of blockchains are favored by consortiums that have trusted members and trade confidential information.</li>\r\n</ul>\r\nAll three types of blockchains use cryptography to allow each participant on any given network to manage the ledger in a secure way without the need for a central authority to enforce the rules. The removal of central authority from database structure is one of the most important and powerful aspects of blockchains.\r\n\r\nThe figure shows the concept of <a href=\"https://www.dummies.com/article/business-careers-money/personal-finance/cryptocurrency/the-structure-of-blockchains-242804/\" target=\"_blank\" rel=\"noopener\">how blockchains come to agreement</a>.\r\n\r\n[caption id=\"attachment_242784\" align=\"aligncenter\" width=\"535\"]<a href=\"https://www.dummies.com/wp-content/uploads/blockchain-transaction.jpg\"><img class=\"wp-image-242784 size-full\" src=\"https://www.dummies.com/wp-content/uploads/blockchain-transaction.jpg\" alt=\"blockchain-transaction\" width=\"535\" height=\"250\" /></a> How blockchains work.[/caption]\r\n<p class=\"article-tips remember\">Blockchains create permanent records and histories of transactions, but nothing is really permanent. The permanence of the record is based on the permanence of the network. In the context of blockchains, this means that a large portion of a blockchain community would all have to agree to change the information and are incentivized not to change the data.</p>\r\nWhen data is recorded in a blockchain, it's extremely difficult to change or remove it. When someone wants to add a record to a blockchain, also called a <em>transaction</em> or an <em>entry,</em> users in the network who have validation control verify the proposed transaction. This is where things get tricky because every blockchain has a slightly different spin on how this should work and who can validate a transaction.","blurb":"","authors":[{"authorId":11136,"name":"Tiana Laurence","slug":"tiana-laurence","description":" <p><b>Kiana Danial</b> is an investment trainer and consultant as well as the author of <i>Cryptocurrency Investing For Dummies.</i></p> <p><b>Peter Kent</b> is a veteran technology author. <b>Tyler Bain </b>is a Certified Bitcoin Professional. Peter and Tyler are co-authors of <i>Cryptocurrency Mining For Dummies</i>. <b>Tiana Laurence </b>heads her own venture capital firm and is author of <i>Blockchain For Dummies</i>, 2nd Edition. <b>Michael G. Solomon, PhD,</b> is a professor of Computer Information Sciences as well as author of <i>Ethereum For Dummies</i>.</p>","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/11136"}}],"primaryCategoryTaxonomy":{"categoryId":34277,"title":"Cryptocurrency","slug":"cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":289714,"title":"Cryptocurrency All-in-One For Dummies Cheat Sheet","slug":"cryptocurrency-all-in-one-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289714"}},{"articleId":289345,"title":"NFTs For Dummies Cheat Sheet","slug":"nfts-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289345"}},{"articleId":266918,"title":"10 Types of Cryptocurrency Mining Resources","slug":"10-types-of-cryptocurrency-mining-resources","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266918"}},{"articleId":266912,"title":"What Is Pool Mining?","slug":"what-is-pool-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266912"}},{"articleId":266907,"title":"What Is Cryptocurrency Mining?","slug":"what-is-cryptocurrency-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266907"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":0,"slug":null,"isbn":null,"categoryList":null,"amazon":null,"image":null,"title":null,"testBankPinActivationLink":null,"bookOutOfPrint":false,"authorsInfo":null,"authors":null,"_links":null},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-63221b449387b\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-63221b4494345\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"One year","lifeExpectancySetFrom":"2022-07-25T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":242782},{"headers":{"creationTime":"2019-12-26T19:18:55+00:00","modifiedTime":"2022-07-19T14:43:23+00:00","timestamp":"2022-09-14T18:19:46+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"},"slug":"cryptocurrency","categoryId":34277}],"title":"Best Places to Find Mining Info: Staying Current as a Cryptocurrency Miner","strippedTitle":"best places to find mining info: staying current as a cryptocurrency miner","slug":"best-places-to-find-mining-info-staying-current-as-a-cryptocurrency-miner","canonicalUrl":"","seo":{"metaDescription":"Because the cryptocurrency mining space is so new, it can be difficult to identify reliable resources. Use this guide to identify trustworthy information.","noIndex":0,"noFollow":0},"content":"Cryptocurrency miners need to keep an eye on the latest mining info to be successful. The best method of checking the pulse of the burgeoning cryptocurrency mining industry is to stay up to date using online resources, such as social media and specific online forums covering the topic.\r\n\r\n[caption id=\"attachment_266896\" align=\"aligncenter\" width=\"556\"]<img class=\"wp-image-266896 size-full\" src=\"https://www.dummies.com/wp-content/uploads/cryptocurrency-mining-info.jpg\" alt=\"crytpcurrency mining info\" width=\"556\" height=\"353\" /> ©Shutterstock/LuckyStep[/caption]\r\n\r\nDue to the infancy of the <a href=\"https://www.dummies.com/personal-finance/investing/what-you-need-for-mining-cryptocurrency/\">cryptocurrency mining</a> space, many news sources in the space can be misleading, downright inaccurate, or even propagate bought-and-paid-for content without a sponsored label. A recent study found that many of the top cryptocurrency news sites were posting sponsored content — essentially ads — under the guise of news.\r\n\r\nThis kind of misinformation makes it important to stay plugged into the community and various other peer-based resources: don’t trust, verify. Check out the following list of resources to stay up with current cryptocurrency mining events:\r\n<ul>\r\n \t<li><strong>Bitcoin Talk:</strong> Use <a href=\"https://bitcointalk.org/\">Bitcoin Talk</a> to inquire into almost any cryptocurrency topic, including (but definitely not limited to) mining. Despite the name, it’s not just for bitcoin anymore. You’ll find many different cryptocurrencies being discussed. For example, it is where most popular alternative cryptocurrencies were announced prior to launch.</li>\r\n \t<li><strong>Bitcoin subReddit:</strong> The <a href=\"http://www.reddit.com/r/Bitcoin\">bitcoin subreddit</a> provides a great forum for lots of breaking news and current events and provides a window into the current sentiment in the community. It’s not all serious stuff, though; you’ll find plenty of memes, jokes, and other nonmining content, so do surf lightly.</li>\r\n \t<li><strong>Bitcoin Beginners subreddit:</strong> The <a href=\"http://www.reddit.com/r/BitcoinBeginners\">bitcoin beginners subreddit</a> is an even better resource for recent entrants into the ecosystem, providing plenty of great information for newbies.</li>\r\n \t<li><strong>CoinDesk:</strong> <a href=\"http://coindesk.com\">CoinDesk</a> is a decent news source in an industry riddled with faulty cryptocurrency news outlets. It also provides exchange rate data from a variety of different cryptocurrencies.</li>\r\n \t<li><strong>CoinJournal:</strong> <a href=\"https://coinjournal.net/\">CoinJournal</a> is also a good source for cryptocurrency-related news, but clearly separates press releases from news articles so users can differentiate public relations from journalism.</li>\r\n \t<li><strong>Bitcoin Magazine:</strong> <em><a href=\"https://bitcoinmagazine.com/\">Bitcoin Magazine</a></em> has long been a reliable news outlet in the cryptocurrency space. Although print releases of the magazine stopped years ago, it still provides good and consistent news coverage on its website.</li>\r\n \t<li><strong>Merkle Report:</strong> The <a href=\"http://www.merklereport.com/\">Merkle Report</a> curates a wide variety of relevant content from various news sources in the cryptocurrency space. It offers a good one-stop shop for news across the industry.</li>\r\n \t<li><strong>Messari:</strong> <a href=\"https://messari.io/\">Messari</a> has a ton of cryptocurrency-focused data, research, and news from across the industry. It also offers a periodic daily newsletter to stay up-to-date on current trends.</li>\r\n \t<li><strong>Block Digest:</strong> <a href=\"http://www.youtube.com/c/blockdigest\">Block Digest</a> is an excellent source of news in the form of a weekly podcast that features various community members discussing and digesting news and headlines from the Bitcoin space.</li>\r\n \t<li><strong>Stack Exchange:</strong> The <a href=\"https://bitcoin.stackexchange.com/\">Bitcoin Stack Exchange</a> has a large trove of questions answered by other cryptocurrency enthusiasts. Anyone can post a question or an answer. If you are looking for specific insight, chances are someone has already answered the question you may have.</li>\r\n</ul>\r\n<h2 id=\"tab1\" >Why current events are important for cryptocurrency mining</h2>\r\nCryptocurrencies and <a href=\"https://www.dummies.com/personal-finance/the-structure-of-blockchains/\">blockchains act as an immutable record of data</a>, indisputable information that is accessible to anyone with the tools and knowledge to look for it. This isn’t the case with off-chain data, such as current events and news in the space, which is why it is very important to stay up-to-date on accurate information from reliable sources if you intend to mine cryptocurrency.\r\n<p class=\"article-tips remember\">Current events affect what’s going on in the mining space. They can affect the value of the cryptocurrency, and thus, in response to fluctuation in the value, the network hash rate, your percentage of the network hash rate, the amount of blocks you’ll mine, and ultimately your loss or profit.</p>\r\nThere is plethora of news sources in the cryptocurrency mining space, but not all can be trusted. Some peddle misinformation with the intent of misleading you. Staying up to date on the latest and greatest in the cryptocurrency mining industry is crucial to your continued success in the space.\r\n\r\nReliable content is the best defense against spin and distortion from those that would lead you astray. Without information, you may find yourself mining a cryptocurrency without much future value, or on the uneconomical side of a <a href=\"https://www.dummies.com/personal-finance/investing/cryptocurrency-forks-or-investment-splits/\">blockchain fork</a>.\r\n\r\nIn any event, as a cryptocurrency miner, you will will have the best chance of success if you stay current with developing information.","description":"Cryptocurrency miners need to keep an eye on the latest mining info to be successful. The best method of checking the pulse of the burgeoning cryptocurrency mining industry is to stay up to date using online resources, such as social media and specific online forums covering the topic.\r\n\r\n[caption id=\"attachment_266896\" align=\"aligncenter\" width=\"556\"]<img class=\"wp-image-266896 size-full\" src=\"https://www.dummies.com/wp-content/uploads/cryptocurrency-mining-info.jpg\" alt=\"crytpcurrency mining info\" width=\"556\" height=\"353\" /> ©Shutterstock/LuckyStep[/caption]\r\n\r\nDue to the infancy of the <a href=\"https://www.dummies.com/personal-finance/investing/what-you-need-for-mining-cryptocurrency/\">cryptocurrency mining</a> space, many news sources in the space can be misleading, downright inaccurate, or even propagate bought-and-paid-for content without a sponsored label. A recent study found that many of the top cryptocurrency news sites were posting sponsored content — essentially ads — under the guise of news.\r\n\r\nThis kind of misinformation makes it important to stay plugged into the community and various other peer-based resources: don’t trust, verify. Check out the following list of resources to stay up with current cryptocurrency mining events:\r\n<ul>\r\n \t<li><strong>Bitcoin Talk:</strong> Use <a href=\"https://bitcointalk.org/\">Bitcoin Talk</a> to inquire into almost any cryptocurrency topic, including (but definitely not limited to) mining. Despite the name, it’s not just for bitcoin anymore. You’ll find many different cryptocurrencies being discussed. For example, it is where most popular alternative cryptocurrencies were announced prior to launch.</li>\r\n \t<li><strong>Bitcoin subReddit:</strong> The <a href=\"http://www.reddit.com/r/Bitcoin\">bitcoin subreddit</a> provides a great forum for lots of breaking news and current events and provides a window into the current sentiment in the community. It’s not all serious stuff, though; you’ll find plenty of memes, jokes, and other nonmining content, so do surf lightly.</li>\r\n \t<li><strong>Bitcoin Beginners subreddit:</strong> The <a href=\"http://www.reddit.com/r/BitcoinBeginners\">bitcoin beginners subreddit</a> is an even better resource for recent entrants into the ecosystem, providing plenty of great information for newbies.</li>\r\n \t<li><strong>CoinDesk:</strong> <a href=\"http://coindesk.com\">CoinDesk</a> is a decent news source in an industry riddled with faulty cryptocurrency news outlets. It also provides exchange rate data from a variety of different cryptocurrencies.</li>\r\n \t<li><strong>CoinJournal:</strong> <a href=\"https://coinjournal.net/\">CoinJournal</a> is also a good source for cryptocurrency-related news, but clearly separates press releases from news articles so users can differentiate public relations from journalism.</li>\r\n \t<li><strong>Bitcoin Magazine:</strong> <em><a href=\"https://bitcoinmagazine.com/\">Bitcoin Magazine</a></em> has long been a reliable news outlet in the cryptocurrency space. Although print releases of the magazine stopped years ago, it still provides good and consistent news coverage on its website.</li>\r\n \t<li><strong>Merkle Report:</strong> The <a href=\"http://www.merklereport.com/\">Merkle Report</a> curates a wide variety of relevant content from various news sources in the cryptocurrency space. It offers a good one-stop shop for news across the industry.</li>\r\n \t<li><strong>Messari:</strong> <a href=\"https://messari.io/\">Messari</a> has a ton of cryptocurrency-focused data, research, and news from across the industry. It also offers a periodic daily newsletter to stay up-to-date on current trends.</li>\r\n \t<li><strong>Block Digest:</strong> <a href=\"http://www.youtube.com/c/blockdigest\">Block Digest</a> is an excellent source of news in the form of a weekly podcast that features various community members discussing and digesting news and headlines from the Bitcoin space.</li>\r\n \t<li><strong>Stack Exchange:</strong> The <a href=\"https://bitcoin.stackexchange.com/\">Bitcoin Stack Exchange</a> has a large trove of questions answered by other cryptocurrency enthusiasts. Anyone can post a question or an answer. If you are looking for specific insight, chances are someone has already answered the question you may have.</li>\r\n</ul>\r\n<h2 id=\"tab1\" >Why current events are important for cryptocurrency mining</h2>\r\nCryptocurrencies and <a href=\"https://www.dummies.com/personal-finance/the-structure-of-blockchains/\">blockchains act as an immutable record of data</a>, indisputable information that is accessible to anyone with the tools and knowledge to look for it. This isn’t the case with off-chain data, such as current events and news in the space, which is why it is very important to stay up-to-date on accurate information from reliable sources if you intend to mine cryptocurrency.\r\n<p class=\"article-tips remember\">Current events affect what’s going on in the mining space. They can affect the value of the cryptocurrency, and thus, in response to fluctuation in the value, the network hash rate, your percentage of the network hash rate, the amount of blocks you’ll mine, and ultimately your loss or profit.</p>\r\nThere is plethora of news sources in the cryptocurrency mining space, but not all can be trusted. Some peddle misinformation with the intent of misleading you. Staying up to date on the latest and greatest in the cryptocurrency mining industry is crucial to your continued success in the space.\r\n\r\nReliable content is the best defense against spin and distortion from those that would lead you astray. Without information, you may find yourself mining a cryptocurrency without much future value, or on the uneconomical side of a <a href=\"https://www.dummies.com/personal-finance/investing/cryptocurrency-forks-or-investment-splits/\">blockchain fork</a>.\r\n\r\nIn any event, as a cryptocurrency miner, you will will have the best chance of success if you stay current with developing information.","blurb":"","authors":[{"authorId":9031,"name":"Peter Kent","slug":"peter-kent","description":"","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9031"}},{"authorId":33256,"name":"Tyler Bain","slug":"tyler-bain","description":"","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/33256"}}],"primaryCategoryTaxonomy":{"categoryId":34277,"title":"Cryptocurrency","slug":"cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"Why current events are important for cryptocurrency mining","target":"#tab1"}],"relatedArticles":{"fromBook":[{"articleId":266918,"title":"10 Types of Cryptocurrency Mining Resources","slug":"10-types-of-cryptocurrency-mining-resources","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266918"}},{"articleId":266912,"title":"What Is Pool Mining?","slug":"what-is-pool-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266912"}},{"articleId":266907,"title":"What Is Cryptocurrency Mining?","slug":"what-is-cryptocurrency-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266907"}},{"articleId":266900,"title":"Decentralization of Cryptocurrency Is a Good Thing","slug":"decentralization-of-cryptocurrency-is-a-good-thing","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266900"}},{"articleId":266890,"title":"Software Options for Mining Cryptocurrency","slug":"software-options-for-mining-cryptocurrency","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266890"}}],"fromCategory":[{"articleId":289714,"title":"Cryptocurrency All-in-One For Dummies Cheat Sheet","slug":"cryptocurrency-all-in-one-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289714"}},{"articleId":289345,"title":"NFTs For Dummies Cheat Sheet","slug":"nfts-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289345"}},{"articleId":266918,"title":"10 Types of Cryptocurrency Mining Resources","slug":"10-types-of-cryptocurrency-mining-resources","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266918"}},{"articleId":266912,"title":"What Is Pool Mining?","slug":"what-is-pool-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266912"}},{"articleId":266907,"title":"What Is Cryptocurrency Mining?","slug":"what-is-cryptocurrency-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266907"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":281674,"slug":"cryptocurrency-mining-for-dummies","isbn":"9781119885368","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"amazon":{"default":"https://www.amazon.com/gp/product/1119885361/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119885361/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119885361-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119885361/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119885361/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/1119885361-203x255.jpg","width":203,"height":255},"title":"Cryptocurrency Mining For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"","authors":[{"authorId":33256,"name":"Tyler Bain","slug":"tyler-bain","description":"","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/33256"}},{"authorId":9031,"name":"Peter Kent","slug":"peter-kent","description":"","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9031"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119885368&quot;]}]\" 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Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"},"slug":"cryptocurrency","categoryId":34277}],"title":"Cryptocurrency Mining For Dummies Cheat Sheet","strippedTitle":"cryptocurrency mining for dummies cheat sheet","slug":"cryptocurrency-mining-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Explore the basics of cryptocurrency mining, how to choose a cryptocurrency to mine, and a quick list of some of the top mining pools.","noIndex":0,"noFollow":0},"content":"Cryptocurrency mining is a relatively new concept that started slowly and has, over about a decade, developed into an entire industry with a wild-west-gold-rush reputation.\r\n\r\nThe mining of “digital gold” in the form of cryptocurrencies is often painted as a get-rich-quick scam, with comparisons to tulip mania and the gold rushes of years past.\r\n\r\nIndeed, the industry is rife with hype, scams, and misleading promotions, and there’s a lot of room for error. However, there are profitable mining ventures, and there is still room for you, as a new miner, to profit from <a href=\"https://www.dummies.com/personal-finance/investing/what-you-need-for-mining-cryptocurrency/\" target=\"_blank\" rel=\"noopener\">cryptocurrency mining</a> if you do your research, do your homework, and plan carefully.","description":"Cryptocurrency mining is a relatively new concept that started slowly and has, over about a decade, developed into an entire industry with a wild-west-gold-rush reputation.\r\n\r\nThe mining of “digital gold” in the form of cryptocurrencies is often painted as a get-rich-quick scam, with comparisons to tulip mania and the gold rushes of years past.\r\n\r\nIndeed, the industry is rife with hype, scams, and misleading promotions, and there’s a lot of room for error. However, there are profitable mining ventures, and there is still room for you, as a new miner, to profit from <a href=\"https://www.dummies.com/personal-finance/investing/what-you-need-for-mining-cryptocurrency/\" target=\"_blank\" rel=\"noopener\">cryptocurrency mining</a> if you do your research, do your homework, and plan carefully.","blurb":"","authors":[{"authorId":9031,"name":"Peter Kent","slug":"peter-kent","description":"","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9031"}},{"authorId":33256,"name":"Tyler Bain","slug":"tyler-bain","description":"","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/33256"}}],"primaryCategoryTaxonomy":{"categoryId":34277,"title":"Cryptocurrency","slug":"cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":266918,"title":"10 Types of Cryptocurrency Mining Resources","slug":"10-types-of-cryptocurrency-mining-resources","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266918"}},{"articleId":266912,"title":"What Is Pool Mining?","slug":"what-is-pool-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266912"}},{"articleId":266907,"title":"What Is Cryptocurrency Mining?","slug":"what-is-cryptocurrency-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266907"}},{"articleId":266900,"title":"Decentralization of Cryptocurrency Is a Good Thing","slug":"decentralization-of-cryptocurrency-is-a-good-thing","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266900"}},{"articleId":266895,"title":"Best Places to Find Mining Info: Staying Current as a Cryptocurrency Miner","slug":"best-places-to-find-mining-info-staying-current-as-a-cryptocurrency-miner","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266895"}}],"fromCategory":[{"articleId":289714,"title":"Cryptocurrency All-in-One For Dummies Cheat Sheet","slug":"cryptocurrency-all-in-one-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289714"}},{"articleId":289345,"title":"NFTs For Dummies Cheat Sheet","slug":"nfts-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289345"}},{"articleId":266918,"title":"10 Types of Cryptocurrency Mining Resources","slug":"10-types-of-cryptocurrency-mining-resources","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266918"}},{"articleId":266912,"title":"What Is Pool Mining?","slug":"what-is-pool-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266912"}},{"articleId":266907,"title":"What Is Cryptocurrency Mining?","slug":"what-is-cryptocurrency-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266907"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":281674,"slug":"cryptocurrency-mining-for-dummies","isbn":"9781119885368","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"amazon":{"default":"https://www.amazon.com/gp/product/1119885361/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119885361/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119885361-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119885361/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119885361/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/1119885361-203x255.jpg","width":203,"height":255},"title":"Cryptocurrency Mining For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"","authors":[{"authorId":33256,"name":"Tyler Bain","slug":"tyler-bain","description":"","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/33256"}},{"authorId":9031,"name":"Peter Kent","slug":"peter-kent","description":"","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9031"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119885368&quot;]}]\" 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cryptocurrencies by verifying and ordering transactions. Miners run mining &#8220;rigs,&#8221; computer equipment that generates new blocks of transactions to be added to the cryptocurrency blockchain. In return, miners are rewarded by earning newly minted coins and transaction fees.</p>\n<p>Cryptocurrency mining fortifies the peer-to-peer network of nodes and makes it more expensive and difficult for the network to be attacked. Miners are an integral part of the system’s protection against hackers and others attempting to subvert the cryptocurrency.</p>\n<p>It is important to stay up to date in the cryptocurrency mining space, so check out the following list of resources to stay current with what’s going on.</p>\n<ul>\n<li><strong><a href=\"https://bitcointalk.org/index.php?topic=375643.0.\" target=\"_blank\" rel=\"noopener\">Bitcoin Talk</a>:</strong> Use Bitcoin Talk to inquire into almost any cryptocurrency topic, including (but definitely not limited to) mining. Despite the name, it’s not just for bitcoin anymore; you’ll find many different cryptocurrencies being discussed. For example, it is where most popular alternative cryptocurrencies were announced prior to launch.</li>\n<li><strong><a href=\"https://www.reddit.com/r/Bitcoin\" target=\"_blank\" rel=\"noopener\">Bitcoin subreddit</a>:</strong> The bitcoin subreddit provides a great forum for lots of breaking news and current events and provides a window into the current sentiment in the community. It’s not all serious stuff, though; you’ll find plenty of memes, jokes, and other non-mining content.</li>\n<li><strong><a href=\"http://www.reddit.com/r/BitcoinBeginners\" target=\"_blank\" rel=\"noopener\">Bitcoin Beginners subreddit</a>:</strong> The bitcoin beginners subreddit is an even better resource for recent entrants into the ecosystem, providing plenty of great information for newbies.</li>\n<li><strong><a href=\"http://www.coindesk.com/\" target=\"_blank\" rel=\"noopener\">CoinDesk</a>:</strong> CoinDesk is a decent news source in an industry riddled with faulty cryptocurrency news outlets. It also provides exchange rate data from a variety of different cryptocurrencies.</li>\n<li><strong><a href=\"https://coinjournal.net/\" target=\"_blank\" rel=\"noopener\">CoinJournal</a>:</strong> CoinJournal is also a good source for cryptocurrency related news, but clearly separates press releases from news articles so users can differentiate the public relations messaging from journalism.</li>\n<li><strong><a href=\"https://bitcoinmagazine.com/\" target=\"_blank\" rel=\"noopener\">Bitcoin Magazine</a>:</strong> Bitcoin Magazine has long been a reliable news outlet in the cryptocurrency space. Although print releases of the magazine stopped years ago, it still provides good and consistent news coverage on its website.</li>\n<li><strong><a href=\"http://www.merklereport.com/\" target=\"_blank\" rel=\"noopener\">Merkle Report:</a></strong> The Merkle Report curates a wide variety of relevant content from various news sources in the cryptocurrency space. It offers a good one-stop-shop for news across the industry.</li>\n<li><strong><a href=\"https://messari.io/\" target=\"_blank\" rel=\"noopener\">Messari</a>:</strong> Messari has a ton of cryptocurrency focused data, research, and news from across the industry. It also offers a daily newsletter and weekly podcast to help you stay up-to-date on current trends.</li>\n<li><strong><a href=\"http://www.youtube.com/c/blockdigest\" target=\"_blank\" rel=\"noopener\">Block Digest</a>:</strong> Block Digest is an excellent source of news in the form of a weekly podcast that features various community members discussing news and headlines from the cryptocurrency space.</li>\n<li><strong><a href=\"https://bitcoin.stackexchange.com/\" target=\"_blank\" rel=\"noopener\">Stack Exchange</a>:</strong> The Bitcoin Stack Exchange has a large trove of questions answered by other cryptocurrency enthusiasts. Anyone can post a question or an answer, and whether you are looking for specific insight, chances are someone has already answered the question you have.</li>\n</ul>\n"},{"title":"Choose a cryptocurrency to mine","thumb":null,"image":null,"content":"<p>Don’t rush your choice of which cryptocurrency you’ll mine. The choice can make or break the viability of mining.</p>\n<p>Some of the most important attributes to consider when selecting which cryptocurrency to mine include longevity, security, community support, relative decentralization, coin-distribution method, and personal preference.</p>\n<p>If the cryptocurrency you choose to mine is missing one or several of these central aspects of a well-functioning peer-to-peer system, it may be difficult to maintain viability and profitability long term.</p>\n<p>The following table provides background information about commonly mined cryptocurrencies.</p>\n<p>&nbsp;</p>\n<table width=\"571\">\n<tbody>\n<tr>\n<td width=\"69\"><strong>Coin</strong></td>\n<td width=\"68\"><strong>Ticker Symbol</strong></td>\n<td width=\"82\"><strong>Max Coin Distribution</strong></td>\n<td width=\"70\"><strong>% Supply Issued</strong></td>\n<td width=\"54\"><strong>Years Active</strong></td>\n<td width=\"66\"><strong>Current Price</strong></td>\n<td width=\"78\"><strong>Network Hash Rate</strong></td>\n<td width=\"84\"><strong>Mining Algorithm</strong></td>\n</tr>\n<tr>\n<td width=\"69\">Bitcoin</td>\n<td width=\"68\">BTC/XBT</td>\n<td width=\"82\">21,000,000</td>\n<td width=\"70\">90%</td>\n<td width=\"54\">13</td>\n<td width=\"66\">$37,980</td>\n<td width=\"78\">193 EH/s</td>\n<td width=\"84\">SHA-256d</td>\n</tr>\n<tr>\n<td width=\"69\">Bitcoin Cash</td>\n<td width=\"68\">BCH</td>\n<td width=\"82\">21,000,000</td>\n<td width=\"70\">90%</td>\n<td width=\"54\">5</td>\n<td width=\"66\">$290</td>\n<td width=\"78\">1.5 EH/s</td>\n<td width=\"84\">SHA-256d</td>\n</tr>\n<tr>\n<td width=\"69\">DASH</td>\n<td width=\"68\">DASH</td>\n<td width=\"82\">18,900,000</td>\n<td width=\"70\">56%</td>\n<td width=\"54\">8</td>\n<td width=\"66\">$92</td>\n<td width=\"78\">4 PH/s</td>\n<td width=\"84\">X11</td>\n</tr>\n<tr>\n<td width=\"69\">Ethereum</td>\n<td width=\"68\">ETH</td>\n<td width=\"82\">No limit</td>\n<td width=\"70\">N/A</td>\n<td width=\"54\">7</td>\n<td width=\"66\">$2,618</td>\n<td width=\"78\">994.7 TH/s</td>\n<td width=\"84\">Ethash</td>\n</tr>\n<tr>\n<td width=\"69\">Litecoin</td>\n<td width=\"68\">LTC</td>\n<td width=\"82\">84,000,000</td>\n<td width=\"70\">83%</td>\n<td width=\"54\">11</td>\n<td width=\"66\">$107</td>\n<td width=\"78\">391 TH/s</td>\n<td width=\"84\">Scrypt</td>\n</tr>\n<tr>\n<td width=\"69\">Monero</td>\n<td width=\"68\">XMR</td>\n<td width=\"82\">No limit</td>\n<td width=\"70\">N/A</td>\n<td width=\"54\">8</td>\n<td width=\"66\">$147</td>\n<td width=\"78\">3 GH/s</td>\n<td width=\"84\">CryptoNight</td>\n</tr>\n<tr>\n<td width=\"69\">Zcash</td>\n<td width=\"68\">ZEC</td>\n<td width=\"82\">21,000,000</td>\n<td width=\"70\">66%</td>\n<td width=\"54\">3</td>\n<td width=\"66\">$99</td>\n<td width=\"78\">8 GH/s</td>\n<td width=\"84\">Equihash</td>\n</tr>\n</tbody>\n</table>\n"},{"title":"Pool versus solo mining","thumb":null,"image":null,"content":"<p>Depending on your hardware capabilities and the block difficulty for the cryptocurrency you intend to mine, the odds of creating and mining a new block by <em>solo</em> cryptocurrency mining alone may be very low: within the realm of purchasing a winning lottery ticket. Thus, it often makes more sense to mine as part of a mining pool, to ensure steady and relatively constant rewards.</p>\n<p><em>Pool mining</em> is when various miners combine, or <em>pool </em>their mining hash rate resources to find blocks as a team and share the subsequent rewards between members of the team, proportionally to how much each miner contributed.</p>\n<p>Here is a quick list of some of the top mining pools by cryptocurrency:</p>\n<p><strong>Bitcoin (BTC):</strong></p>\n<ul>\n<li><a href=\"https://www.antpool.com/\">Antpool</a></li>\n<li><a href=\"https://pool.binance.com/\">Binance Pool</a></li>\n<li><a href=\"https://pool.btc.com/\">BTC.com</a></li>\n<li><a href=\"https://www.f2pool.com/\">F2Pool</a></li>\n<li><a href=\"https://foundryusapool.com/\">Foundry USA Pool</a></li>\n<li><a href=\"https://www.poolin.com/\">Poolin</a></li>\n<li><a href=\"https://pool.viabtc.com/\">ViaBTC</a></li>\n</ul>\n<p><strong>Ethereum (ETH):</strong></p>\n<ul>\n<li><a href=\"https://ethermine.org/\">Ethermine</a></li>\n<li><a href=\"https://www.f2pool.com/\">F2Pool</a></li>\n<li><a href=\"https://minerall.io/\">Minerall Pool</a></li>\n<li><a href=\"https://miningexpress.com/\">Mining Express</a></li>\n<li><a href=\"https://ethereum.miningpoolhub.com/\">Mining Pool Hub</a></li>\n<li><a href=\"https://eth.nanopool.org/\">Nanopool</a></li>\n<li><a href=\"https://eth.pandaminer.com/\">Pandaminer</a> (select English in the upper right)</li>\n</ul>\n<p><strong>Litecoin (LTC):</strong></p>\n<ul>\n<li><a href=\"https://www.antpool.com/\">Antpool</a></li>\n<li><a href=\"https://www.f2pool.com/\">F2Pool</a></li>\n<li><a href=\"https://www.litecoinpool.org/\">LitcoinPool.org</a></li>\n<li><a href=\"https://www.poolin.com/\">Poolin</a></li>\n<li><a href=\"https://pool.viabtc.com/\">ViaBTC</a></li>\n</ul>\n<p><strong>Monero (XMR):</strong></p>\n<ul>\n<li><a href=\"https://www.f2pool.com/\">F2Pool</a></li>\n<li><a href=\"https://minexmr.com/\">MineXMR</a></li>\n<li><a href=\"https://xmr.nanopool.org/\">NanoPool</a></li>\n<li><a href=\"https://www.poolin.com/\">Poolin</a></li>\n<li><a href=\"https://www.supportxmr.com/\">SupportXMR</a></li>\n</ul>\n<p><strong>Zcash (ZEC):</strong></p>\n<ul>\n<li><a href=\"https://zcash.flypool.org/\">FlyPool</a></li>\n<li><a href=\"https://zec.nanopool.org/\">Nanopool</a></li>\n<li><a href=\"https://slushpool.com/\">Slush Pool</a></li>\n</ul>\n"},{"title":"Cryptocurrency unit prefixes","thumb":null,"image":null,"content":"<table style=\"font-size: 16px;\">\n<tbody>\n<tr>\n<td width=\"105\"><strong>Number</strong></td>\n<td width=\"111\"><strong>Abbreviation</strong></td>\n<td width=\"114\"><strong>Number of Hashes</strong></td>\n<td width=\"56\"><strong>10<sup>x</sup></strong></td>\n<td width=\"190\"><strong>Number</strong></td>\n</tr>\n<tr>\n<td width=\"105\">Zettahash</td>\n<td width=\"111\">ZH</td>\n<td width=\"114\">Sextillion hashes</td>\n<td width=\"56\">10<sup>21</sup></td>\n<td width=\"190\">1,000,000,000,000,000,000,000</td>\n</tr>\n<tr>\n<td width=\"105\">Exahash</td>\n<td width=\"111\">EH</td>\n<td width=\"114\">Quintillion hashes</td>\n<td width=\"56\">10<sup>18</sup></td>\n<td width=\"190\">1,000,000,000,000,000,000</td>\n</tr>\n<tr>\n<td width=\"105\">Petahash</td>\n<td width=\"111\">PH</td>\n<td width=\"114\">Quadrillion hashes</td>\n<td width=\"56\">10<sup>15</sup></td>\n<td width=\"190\">1,000,000,000,000,000</td>\n</tr>\n<tr>\n<td width=\"105\">Terahash</td>\n<td width=\"111\">TH</td>\n<td width=\"114\">Trillion hashes</td>\n<td width=\"56\">10<sup>12</sup></td>\n<td width=\"190\">1,000,000,000,000</td>\n</tr>\n<tr>\n<td width=\"105\">Gigahash</td>\n<td width=\"111\">GH</td>\n<td width=\"114\">Billion hashes</td>\n<td width=\"56\">10<sup>9</sup></td>\n<td width=\"190\">1,000,000,000</td>\n</tr>\n<tr>\n<td width=\"105\">Megahash</td>\n<td width=\"111\">MH</td>\n<td width=\"114\">Million hashes</td>\n<td width=\"56\">10<sup>6</sup></td>\n<td width=\"190\">1,000,000</td>\n</tr>\n<tr>\n<td width=\"105\">Kilohash</td>\n<td width=\"111\">kH</td>\n<td width=\"114\">Thousand hashes</td>\n<td width=\"56\">10<sup>3</sup></td>\n<td width=\"190\">1,000</td>\n</tr>\n</tbody>\n</table>\n<p>The names of these numbers are based on the <em>short-scale</em> large-number naming convention that is used throughout most of the English-speaking world.</p>\n<p>Much of the non-English-speaking world uses the <em>long-scale</em> and, thus, uses different names for these numbers. For example, while a tera (1,000,000,000,000) is called a <em>trillion</em> in the short scale, on the long scale it’s known as a <em>billion.</em></p>\n<p>The numbers’ prefix names (exa, peta, and so on) and their symbols are the same in both systems; only the numbers’ <em>names</em> change (for the five largest numbers in the preceding table).</p>\n<p>The abbreviation of kilohash is kH, with a small k, because the capitalized letter k in ISU (the International System of Units), represents <em>kelvin,</em> a measurement of temperature. These number prefixes can be used in any context in which large numbers are employed, but in the cryptocurrency mining space, they’re typically used for hashes and watts.</p>\n"},{"title":"Coin divisibility in cryptocurrency mining ","thumb":null,"image":null,"content":"<p>Cryptocurrencies can be divisible into many small pieces, depending on the cryptocurrency protocol specifications. Just as with dollars, transactions are not always carried out in whole dollars, but can be fractions of a dollar (dollars and cents), so, too, cryptocurrency transactions can be made using coin fractions. You don’t have to buy whole bitcoins, for example.</p>\n<p>Here is a rundown of some of the most common units used to refer to amounts of bitcoin (there are <a href=\"https://en.bitcoin.it/wiki/Units\" target=\"_blank\" rel=\"noopener\">others</a>). Other cryptocurrencies have similar unit divisibility. The list uses BTC as the bitcoin “ticker symbol,” but a common alternative is XBT.</p>\n<p>&nbsp;</p>\n<table>\n<tbody>\n<tr>\n<td width=\"115\"><strong>Unit Name</strong></td>\n<td width=\"115\"><strong>Abbreviation</strong></td>\n<td width=\"115\"><strong>Number</strong></td>\n<td width=\"115\"><strong>10<sup>x</sup></strong></td>\n<td width=\"115\"><strong>Number</strong></td>\n</tr>\n<tr>\n<td width=\"115\">Megabitcoin</td>\n<td width=\"115\">MBTC</td>\n<td width=\"115\">Million Bitcoin</td>\n<td width=\"115\">10<sup>6</sup></td>\n<td width=\"115\">1,000,000</td>\n</tr>\n<tr>\n<td width=\"115\">Kilobitcoin</td>\n<td width=\"115\">kBTC</td>\n<td width=\"115\">Thousand Bitcoin</td>\n<td width=\"115\">10<sup>3</sup></td>\n<td width=\"115\">1,000</td>\n</tr>\n<tr>\n<td width=\"115\">Hectobitcoin</td>\n<td width=\"115\">hBTC</td>\n<td width=\"115\">Hundred Bitcoin</td>\n<td width=\"115\">10<sup>2</sup></td>\n<td width=\"115\">100</td>\n</tr>\n<tr>\n<td width=\"115\">Decabitcoin</td>\n<td width=\"115\">daBTC</td>\n<td width=\"115\">Ten Bitcoin</td>\n<td width=\"115\">10<sup>1</sup></td>\n<td width=\"115\">10</td>\n</tr>\n<tr>\n<td width=\"115\">Bitcoin</td>\n<td width=\"115\">BTC</td>\n<td width=\"115\">One Bitcoin</td>\n<td width=\"115\">10<sup>0</sup></td>\n<td width=\"115\">1.0</td>\n</tr>\n<tr>\n<td width=\"115\">Decibitcoin</td>\n<td width=\"115\">dBTC</td>\n<td width=\"115\">Tenth of a Bitcoin</td>\n<td width=\"115\">10<sup>–1</sup></td>\n<td width=\"115\">0.1</td>\n</tr>\n<tr>\n<td width=\"115\">Centibitcoin</td>\n<td width=\"115\">cBTC</td>\n<td width=\"115\">Hundredth of a Bitcoin</td>\n<td width=\"115\">10<sup>–2</sup></td>\n<td width=\"115\">0.01</td>\n</tr>\n<tr>\n<td width=\"115\">Millibitcoin</td>\n<td width=\"115\">mBTC</td>\n<td width=\"115\">Thousandth of a Bitcoin</td>\n<td width=\"115\">10<sup>–3</sup></td>\n<td width=\"115\">0.001</td>\n</tr>\n<tr>\n<td width=\"115\">Microbitcoin</td>\n<td width=\"115\">µBTC</td>\n<td width=\"115\">Millionth of a Bitcoin</td>\n<td width=\"115\">10<sup>–6</sup></td>\n<td width=\"115\">0.000001</td>\n</tr>\n<tr>\n<td width=\"115\">Satoshi</td>\n<td width=\"115\">sat</td>\n<td width=\"115\">Hundred millionth of a Bitcoin</td>\n<td width=\"115\">10<sup>–8</sup></td>\n<td width=\"115\">0.00000001</td>\n</tr>\n</tbody>\n</table>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"One year","lifeExpectancySetFrom":"2022-05-17T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":266240},{"headers":{"creationTime":"2019-01-16T21:15:40+00:00","modifiedTime":"2022-04-05T15:36:50+00:00","timestamp":"2022-09-14T18:19:33+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"},"slug":"cryptocurrency","categoryId":34277}],"title":"Cryptocurrency Investing For Dummies Cheat Sheet","strippedTitle":"cryptocurrency investing for dummies cheat sheet","slug":"cryptocurrency-investing-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Educate yourself on the basics of cryptocurrencies, check out the team behind the crypto, and figure out what you need to get started.","noIndex":0,"noFollow":0},"content":"So, you’ve heard about Bitcoin and other cryptocurrencies, and you’re ready to add these new kids on the block to your investment portfolio — that’s great! You’re now officially a part of the future economy. To make the best decisions for your portfolio, educate yourself on the basics of cryptocurrencies and what you need to get started. Also, be sure to do your homework on a crypto’s fundamentals before adding any new assets to your portfolio.","description":"So, you’ve heard about Bitcoin and other cryptocurrencies, and you’re ready to add these new kids on the block to your investment portfolio — that’s great! You’re now officially a part of the future economy. To make the best decisions for your portfolio, educate yourself on the basics of cryptocurrencies and what you need to get started. Also, be sure to do your homework on a crypto’s fundamentals before adding any new assets to your portfolio.","blurb":"","authors":[{"authorId":21503,"name":"Kiana Danial","slug":"kiana-danial","description":" <p><b>Kiana Danial</b> is an investment trainer and consultant as well as the author of <i>Cryptocurrency Investing For Dummies.</i></p> <p><b>Peter Kent</b> is a veteran technology author. <b>Tyler Bain </b>is a Certified Bitcoin Professional. Peter and Tyler are co-authors of <i>Cryptocurrency Mining For Dummies</i>. <b>Tiana Laurence </b>heads her own venture capital firm and is author of <i>Blockchain For Dummies</i>, 2nd Edition. <b>Michael G. Solomon, PhD,</b> is a professor of Computer Information Sciences as well as author of <i>Ethereum For Dummies</i>.</p>","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/21503"}}],"primaryCategoryTaxonomy":{"categoryId":34277,"title":"Cryptocurrency","slug":"cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":262472,"title":"Short-Term Analysis Methods for Cryptocurrency Investing","slug":"short-term-analysis-methods-for-cryptocurrency-investing","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/262472"}},{"articleId":262463,"title":"3 Short-Term Cryptocurrency Investing Time Frames","slug":"3-short-term-cryptocurrency-investing-time-frames","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/262463"}},{"articleId":262455,"title":"Cryptocurrencies in Long-Term Diversification","slug":"cryptocurrencies-in-long-term-diversification","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/262455"}},{"articleId":262448,"title":"What You Need for Mining Cryptocurrency","slug":"what-you-need-for-mining-cryptocurrency","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/262448"}},{"articleId":262443,"title":"How Mining Cryptocurrency Works","slug":"how-mining-cryptocurrency-works","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/262443"}}],"fromCategory":[{"articleId":289714,"title":"Cryptocurrency All-in-One For Dummies Cheat Sheet","slug":"cryptocurrency-all-in-one-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289714"}},{"articleId":289345,"title":"NFTs For Dummies Cheat Sheet","slug":"nfts-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289345"}},{"articleId":266918,"title":"10 Types of Cryptocurrency Mining Resources","slug":"10-types-of-cryptocurrency-mining-resources","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266918"}},{"articleId":266912,"title":"What Is Pool Mining?","slug":"what-is-pool-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266912"}},{"articleId":266907,"title":"What Is Cryptocurrency Mining?","slug":"what-is-cryptocurrency-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266907"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282129,"slug":"cryptocurrency-investing-for-dummies","isbn":"9781119533030","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"amazon":{"default":"https://www.amazon.com/gp/product/1119533031/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119533031/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119533031-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119533031/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119533031/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/cryptocurrency-investing-for-dummies-cover-9781119533030-203x255.jpg","width":203,"height":255},"title":"Cryptocurrency Investing For Dummies","testBankPinActivationLink":"","bookOutOfPrint":false,"authorsInfo":"<p><b data-author-id=\"21503\">Kiana Danial</b> is the CEO of Invest Diva as well as an internationally recognized personal investing and wealth management expert. She delivers workshops and seminars to corporations, universities, and investment groups, and has been featured in <i>Forbes</i> and on CNN. She was named the 2018 Personal Investment Expert of the Year by Wealth &amp; Finance International. </p>","authors":[{"authorId":21503,"name":"Kiana Danial","slug":"kiana-danial","description":" <p><b>Kiana Danial</b> is an investment trainer and consultant as well as the author of <i>Cryptocurrency Investing For Dummies.</i></p> <p><b>Peter Kent</b> is a veteran technology author. <b>Tyler Bain </b>is a Certified Bitcoin Professional. Peter and Tyler are co-authors of <i>Cryptocurrency Mining For Dummies</i>. <b>Tiana Laurence </b>heads her own venture capital firm and is author of <i>Blockchain For Dummies</i>, 2nd Edition. <b>Michael G. Solomon, PhD,</b> is a professor of Computer Information Sciences as well as author of <i>Ethereum For Dummies</i>.</p>","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/21503"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119533030&quot;]}]\" id=\"du-slot-63221b35df419\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119533030&quot;]}]\" id=\"du-slot-63221b35dffb3\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":259464,"title":"Things You Must Have Before Investing in Cryptocurrencies","slug":"","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/259464"}},{"articleId":259461,"title":"The Most Important Things to Know about Cryptocurrency Investing","slug":"","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/259461"}},{"articleId":259458,"title":"Checking Cryptocurrency Fundamentals Before Adding to Your Portfolio","slug":"","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/259458"}}],"content":[{"title":"Things you must have before investing in cryptocurrencies","thumb":null,"image":null,"content":"<p>Investing and trading cryptocurrencies can be different than investing in other assets, but there are some similarities as well. Here are the most important things you must have before jumping into the cryptocurrency investing space:</p>\n<ul>\n<li>A cryptocurrency exchange or a broker where you can buy and sell cryptocurrencies</li>\n<li>A secure cryptocurrency wallet to store your cryptocurrencies</li>\n<li>Knowledge about the cryptocurrency’s fundamentals</li>\n<li>Money you can afford to lose</li>\n<li>An investment strategy that’s unique to your risk tolerance</li>\n</ul>\n"},{"title":"The most important things to know about cryptocurrency investing","thumb":null,"image":null,"content":"<p>Cryptocurrency investing is one of the newest ways to earn profit. As market participants find out more about the industry, many misconceptions are resolved and more people can be a part of the marketplace:</p>\n<ul>\n<li><strong>At the time of writing, over 2,000 cryptocurrencies other than Bitcoin are out there, and the number may change drastically in the future.</strong></li>\n<li><strong>A <em>cryptocurrency</em> is a cross between a currency and a digital asset.</strong> Like a currency, you can use it to pay for things. Like a digital asset, you can invest in it for long-term gains.</li>\n<li><strong>You’re not buying a currency; you’re buying the idea behind the coin, which is supported by an underlying blockchain technology.</strong> <em>Blockchain technology</em> is a distributed ledger that records a growing list of data.</li>\n<li><strong>Cryptocurrency investing is very new; therefore its investment resources are constantly evolving.</strong></li>\n<li><strong>Always read about the background of a cryptocurrency, its underlying technology, its management, and its community before investing. </strong>Ask yourself what problem a cryptocurrency is trying to solve and why that solution matters.</li>\n<li><strong>If you’re buying a cryptocurrency to hold long term, you’re looking for <em>capital appreciation.</em></strong> If you’re actively getting in and out of trades, you’re <em>speculating.</em></li>\n<li><strong>The cryptocurrency market is extremely volatile. </strong>Make sure you’re investing money you can afford to lose.</li>\n<li><strong>Unlike the stock market, you can participate in the cryptocurrency market 24 hours a day, 7 days a week.</strong></li>\n<li><strong>Buy the freaking dip. </strong>What does that mean? It means that instead of panicking when the prices drop to a dip, it may be the best time for you to buy. Don’t buy when the prices have gone up so much in a short amount of time and the markets are hyped up. Of course, for all your investment decisions, you must analyze the market from different points than just the low price.</li>\n<li><strong>Diversify your portfolio with at least ten cryptocurrencies from different categories to manage your risk. </strong>Expand your horizons by investing in stocks with exposure to blockchain technology and the cryptocurrency market.</li>\n</ul>\n"},{"title":"Checking cryptocurrency fundamentals before adding to your portfolio","thumb":null,"image":null,"content":"<p>Before you invest in a cryptocurrency, you must do a little research about it. Pay attention to the following key components when you do your crypto research:</p>\n<ul>\n<li><strong>The crypto’s white paper: </strong>A <em>white paper</em> is something like a business proposal for new cryptocurrencies. It includes everything potential investors need to know about the crypto, such as technology, purpose, financial details, and so on. Think of it as your crypto&#8217;s resume.</li>\n<li><strong>The team behind the crypto: </strong>No one really knows who created Bitcoin, but the rest of the cryptocurrencies out there normally have a team behind them who guide the company and its blockchain technology. Make sure to find out about team members’ experience in the field, their motivations, and their authority.</li>\n<li><strong>Partnerships: </strong>If you’re not willing to take a lot of risk, seeing who in the industry has put their trust in the hands of the cryptocurrency you’re considering buying is very important. Another good thing about having partners in the traditional world is that the cryptocurrency may have a higher chance of being accepted by the masses.</li>\n<li><strong>The crypto’s technology: </strong>Many cryptocurrencies are tokens from blockchain companies with multiple products. The more you get to know the products and the technology behind the cryptocurrency, the better.</li>\n<li><strong>The crypto’s contribution to society: </strong>What problem is this cryptocurrency trying to solve? Does it matter to you? Is the team behind the cryptocurrency just trying to get rich quick, or does it have a long-term plan for the betterment of society? Finding answers to these questions can help you decide whether you should consider buying this cryptocurrency.</li>\n<li><strong>The road map: </strong>Many companies behind cryptocurrencies have sections on their websites dedicated to their road maps: where they come from, what they’ve achieved, and what they’re planning to accomplish in the future. If available, road maps are a great way to discover a ton of fundamental information about the crypto in a few minutes.</li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"One year","lifeExpectancySetFrom":"2021-07-02T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":259467},{"headers":{"creationTime":"2019-05-28T22:11:20+00:00","modifiedTime":"2022-03-28T17:44:12+00:00","timestamp":"2022-09-14T18:19:31+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"},"slug":"cryptocurrency","categoryId":34277}],"title":"Ethereum For Dummies Cheat Sheet","strippedTitle":"ethereum for dummies cheat sheet","slug":"ethereum-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"To best leverage all that Ethereum offers, learn what blockchain technology can do for you and the extras that Ethereum offers.","noIndex":0,"noFollow":0},"content":"Ethereum is much more than just another blockchain implementation. It is a complete dApp (decentralized app) development and runtime environment. To best leverage all that Ethereum offers, become familiar with what <a href=\"https://www.dummies.com/personal-finance/what-is-blockchain-and-what-blockchains-are/\" target=\"_blank\" rel=\"noopener\">blockchain technology</a> can do for you and the extras that Ethereum offers.\r\n\r\nLearn the main language of smart contracts, Solidity, and how you can use its syntax to make your dApps provide value to its users. And establish a healthy respect for each of the steps in the Ethereum dApp development process so you will have more effective software.","description":"Ethereum is much more than just another blockchain implementation. It is a complete dApp (decentralized app) development and runtime environment. To best leverage all that Ethereum offers, become familiar with what <a href=\"https://www.dummies.com/personal-finance/what-is-blockchain-and-what-blockchains-are/\" target=\"_blank\" rel=\"noopener\">blockchain technology</a> can do for you and the extras that Ethereum offers.\r\n\r\nLearn the main language of smart contracts, Solidity, and how you can use its syntax to make your dApps provide value to its users. And establish a healthy respect for each of the steps in the Ethereum dApp development process so you will have more effective software.","blurb":"","authors":[{"authorId":27199,"name":"Michael G. Solomon","slug":"michael-solomon","description":"Michael G. Solomon, PhD, is a professor at the University of the Cumberlands who specializes in courses on blockchain and distributed computing systems as well as computer security. He holds numerous security and project management certifications and has written several books on security and project management, including Ethereum For Dummies. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/27199"}}],"primaryCategoryTaxonomy":{"categoryId":34277,"title":"Cryptocurrency","slug":"cryptocurrency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34277"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":263811,"title":"Basic Ethereum Smart Contract Syntax","slug":"basic-ethereum-smart-contract-syntax","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263811"}},{"articleId":263802,"title":"10 Free Ethereum Resources","slug":"10-free-ethereum-resources","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263802"}},{"articleId":263715,"title":"Ethereum Basics: An Introduction to Smart Contracts and Solidity","slug":"ethereum-basics-an-introduction-to-smart-contracts-and-solidity","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263715"}},{"articleId":263689,"title":"Ethereum Smart Contracts: Tips for Handling Data in Solidity","slug":"ethereum-smart-contracts-tips-for-handling-data-in-solidity","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263689"}},{"articleId":263679,"title":"Top 10 Ethereum Uses","slug":"top-10-ethereum-uses","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263679"}}],"fromCategory":[{"articleId":289714,"title":"Cryptocurrency All-in-One For Dummies Cheat Sheet","slug":"cryptocurrency-all-in-one-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289714"}},{"articleId":289345,"title":"NFTs For Dummies Cheat Sheet","slug":"nfts-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/289345"}},{"articleId":266918,"title":"10 Types of Cryptocurrency Mining Resources","slug":"10-types-of-cryptocurrency-mining-resources","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266918"}},{"articleId":266912,"title":"What Is Pool Mining?","slug":"what-is-pool-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266912"}},{"articleId":266907,"title":"What Is Cryptocurrency Mining?","slug":"what-is-cryptocurrency-mining","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266907"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":281698,"slug":"ethereum-for-dummies","isbn":"9781119474128","categoryList":["business-careers-money","personal-finance","cryptocurrency"],"amazon":{"default":"https://www.amazon.com/gp/product/1119474124/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119474124/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119474124-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119474124/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119474124/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/ethereum-for-dummies-cover-9781119474128-203x255.jpg","width":203,"height":255},"title":"Ethereum For Dummies","testBankPinActivationLink":"","bookOutOfPrint":false,"authorsInfo":"<p><b data-author-id=\"34832\">Michael G. Solomon, PhD,</b> is a full-time security, privacy, blockchain, and data science expert. An active speaker, consultant, and author, Michael is a professor of cybersecurity and global business with blockchain technology at the University of the Cumberlands. He has written more than 20 books on IT, security, and the PMP exam. </p>","authors":[{"authorId":34832,"name":"Michael G. Solomon","slug":"michael-g-solomon","description":" <p><b>Kiana Danial</b> is an investment trainer and consultant as well as the author of <i>Cryptocurrency Investing For Dummies.</i></p> <p><b>Peter Kent</b> is a veteran technology author. <b>Tyler Bain </b>is a Certified Bitcoin Professional. Peter and Tyler are co-authors of <i>Cryptocurrency Mining For Dummies</i>. <b>Tiana Laurence </b>heads her own venture capital firm and is author of <i>Blockchain For Dummies</i>, 2nd Edition. <b>Michael G. Solomon, PhD,</b> is a professor of Computer Information Sciences as well as author of <i>Ethereum For Dummies</i>.</p>","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34832"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119474128&quot;]}]\" id=\"du-slot-63221b33f0707\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;cryptocurrency&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119474128&quot;]}]\" id=\"du-slot-63221b33f0f89\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":261718,"title":"Ethereum and Blockchain Quick Facts","slug":"","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/261718"}},{"articleId":261722,"title":"Ethereum Solidity Quick Syntax","slug":"","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/261722"}},{"articleId":261725,"title":"Ethereum Smart Contract Development Process","slug":"","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/261725"}}],"content":[{"title":"Ethereum and blockchain quick facts","thumb":null,"image":null,"content":"<p>Blockchain technology is a fast-growing disruptive technology that enables data to be shared among a set of untrusted parties. Moreover, blockchain makes it possible to share ledgers of items of value and control the exchange of these items in an untrusted environment.</p>\n<p>Ethereum is the most popular blockchain implementation and supports complex software applications.</p>\n<div class=\"figure-container\"><figure id=\"attachment_261719\" aria-labelledby=\"figcaption_attachment_261719\" class=\"wp-caption alignnone\" style=\"width: 545px\"><img loading=\"lazy\" class=\"wp-image-261719 size-full\" src=\"https://www.dummies.com/wp-content/uploads/ethereum-blockchain-technology.jpg\" alt=\"ethereum blockchain technology\" width=\"535\" height=\"357\" /><figcaption id=\"figcaption_attachment_261719\" class=\"wp-caption-text\">©By Wit Olszewski/Shutterstock</figcaption></figure></div><div class=\"clearfix\"></div>\n<p>Learning about blockchain technology with Ethereum will help you understand how people and organizations will conduct business in the near future. The following list summarizes some of Ethereum&#8217;s most important features:</p>\n<ul>\n<li>A <em>blockchain</em> is a chain of blocks, where each block stores the Keccak-256 hash value of the previous block, connecting it to its predecessor.</li>\n<li>Ethereum uses the Keccak-256 hashing algorithm to calculate hash values for blocks.</li>\n<li>The <em>Ethereum Virtual Machine </em><em>(EVM)</em> is the runtime environment that executes on each Ethereum node and carries out smart contract instructions.</li>\n<li>Any changes to a block invalidate that block and all subsequent blocks in the chain.</li>\n<li>At startup and then periodically, each EVM instance verifies that the local blockchain is valid.</li>\n<li>Smart contracts must run the same way, and produce the same results, on every EVM instance.</li>\n<li>Each blockchain operation in a smart contract requires an amount of <em>gas,</em> or cryptocurrency, to complete.</li>\n<li>Each transaction has a gas budget.</li>\n<li>If a smart contract runs out of gas for the transaction, the transaction fails to complete and is restored to the starting state.</li>\n<li>Ethereum uses the <em>Proof of Work (PoW)</em> consensus algorithm to validate new blocks for the blockchain. PoW pays a reward for a node called a miner that solves a difficult math puzzle to find a hash value for a block that meets complexity standards.</li>\n<li>Databases support Create, Read, Update, and Delete (CRUD) operations, whereas blockchains support only Read and Write operations.</li>\n<li>Crypto-asset owners are identified by an <em>Ethereum address,</em> which is a truncated portion of their Ethereum public encryption key.</li>\n<li>The most common use of a blockchain is to transfer some item of value from one account to another.</li>\n</ul>\n"},{"title":"Ethereum solidity quick syntax","thumb":null,"image":null,"content":"<p>The real power of Ethereum is in the combination of distributed trusted data and the operations you can perform on that data. <em>Smart contracts</em> provide consistent and trusted methods to add new data to the Ethereum blockchain and to read existing data.</p>\n<p>The most popular language for Ethereum smart contracts is Solidity, which looks a lot like JavaScript and is designed to be easy to understand and use. The following list summarizes some of the most common Solidity keywords you’ll use to write smart contracts for Ethereum:</p>\n<ul>\n<li><code>pragma solidity ^0.4.25;</code> tells Solidity which versions of the compiler should compile this file.</li>\n<li><code>contract contractName {</code> identifies the start of a smart contract and gives it a name.</li>\n<li><code>import “myToken.sol”;</code> imports the contents of another file, in this case myToken.sol, to give the compiler access to the code in another file.</li>\n<li><code>function <em>functionName</em> {</code> identifies the start of a function in a smart contract and gives it a name.</li>\n<li><code>]</code> closes any block, including contracts, functions, flow control, and conditional execution blocks.</li>\n<li><code>uint</code> and <code>int</code> are data types for variables that store integer data.</li>\n<li><code>byte </code>and <code>string </code>are data types for variables that store character data.</li>\n<li><code>bool </code>is a data type for variables that store logical (yes/no) data.</li>\n<li><code>address </code>is a dData type for variables that store Ethereum addresses.</li>\n<li><code>mapping </code>is a dData type for variables that store data associated with key values and support lookup by key value.</li>\n<li><code>public </code>is a visibility modifier that makes a variable or function accessible by anyone.</li>\n<li><code>external </code>is a visibility modifier that makes a variable or function only accessible to external functions.</li>\n<li><code>internal </code>is a visibility modifier that makes a variable or function accessible only to functions in the current contract or any contract derived from the current contract.</li>\n<li><code>private </code>is a visibility modifier that makes a variable or function accessible only to functions in the current contract.</li>\n<li><code>if else</code> is a conditional statement that executes code based on a condition being true.</li>\n<li><code>while </code>executes a group of statements zero or more times, based on a condition.</li>\n<li><code>do while</code> executes a group of statements one or more times, until a condition is true.</li>\n<li><code>for </code>executes a group of statements zero or more times, until a condition is true, with the condition defined in the header.</li>\n<li><code>revert()</code>, <code>assert()</code>, and <code>require()</code> are functions that undo changes in a transaction and return control to the caller.</li>\n</ul>\n"},{"title":"Ethereum smart contract development process","thumb":null,"image":null,"content":"<p>The process of developing, testing, and deploying smart contracts in Ethereum is consistent, regardless of how the size or complexity of your project. Follow the same basic steps and plan for each phase to ensure that your smart contracts provide the most effective software solution.</p>\n<p>The following list summarizes the steps you’ll take during the development and deployment phase for smart contracts using <a href=\"https://ethereum.github.io/go-ethereum\" target=\"_blank\" rel=\"noopener\">Geth</a>, <a href=\"https://truffleframework.com/docs/truffle/getting-started/installation\" target=\"_blank\" rel=\"noopener\">Truffle</a>, and <a href=\"https://truffleframework.com/ganache\" target=\"_blank\" rel=\"noopener\">Ganache</a>:</p>\n<ul>\n<li>Initialize a new Truffle: <code>mkdir projectName ; cd projectName ; truffle init</code></li>\n<li>Create test cases: <code>truffle create test projectName</code></li>\n<li>Write smart contact code in Solidity and test cases in JavaScript: use your favorite IDE or editor</li>\n<li>Launch Ganache</li>\n<li>Compile all your code: <code>truffle compile --all --network development</code></li>\n<li>Deploy your code to your development blockchain (Ganache): <code>truffle deploy --reset --network development</code></li>\n<li>Test your code: <code>truffle console </code>(for manual tests) or <code>truffle test</code> (for automated test cases)</li>\n<li>Fix any errors, redeploy, and then retest</li>\n<li>Choose a test network (such as Ropsten, Rinkeby, or Kovan)</li>\n<li>Fill up with gas: Get enough gas to test your code from test network faucets.</li>\n<li>Compile all your code: <code>truffle compile --all --network test</code></li>\n<li>Deploy your code to your test blockchain: <code>truffle deploy --network test</code></li>\n<li>If all tests pass, deploy to the live network</li>\n<li>Compile all your code: <code>truffle compile --all --network live</code></li>\n<li>Deploy your code to the live blockchain: <code>truffle deploy --network live</code></li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"One year","lifeExpectancySetFrom":"2022-03-28T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":261728}],"_links":{"self":{"self":"https://dummies-api.dummies.com/v2/categories/34277/categoryArticles?sortField=time&sortOrder=1&size=10&offset=0"},"next":{"self":"https://dummies-api.dummies.com/v2/categories/34277/categoryArticles?sortField=time&sortOrder=1&size=10&offset=10"},"last":{"self":"https://dummies-api.dummies.com/v2/categories/34277/categoryArticles?sortField=time&sortOrder=1&size=10&offset=80"}}},"objectTitle":"","status":"success","pageType":"article-category","objectId":"34277","page":1,"sortField":"time","sortOrder":1,"categoriesIds":[],"articleTypes":[],"filterData":{"categoriesFilter":[{"itemId":0,"itemName":"All Categories","count":90}],"articleTypeFilter":[{"articleType":"All Types","count":90},{"articleType":"Articles","count":84},{"articleType":"Cheat 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Cryptocurrency Articles

It sounds like sci-fi, but it's ever so real. We've got the blockchain basics, investment advice, and other cool ideas for Bitcoin, Ethereum, and beyond.

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Cryptocurrency The Different Tokens of Cryptocurrency

Article / Updated 01-27-2023

Cryptocurrency tokens are virtual currency representing fungible (non-unique) and tradable assets and utilities that reside on their own blockchains. There are two main categories of tokens: native and non-native. Native tokens Native tokens share the common characteristic of serving as the base token or inherent currency of their own proprietary blockchains. Some native tokens, such as Bitcoin (BTC), were designed to serve as disintermediated currencies. The purpose of a disintermediated currency is to provide a global medium of exchange that is independent of a central authority, such as a bank or a government. Other examples in this category include Litecoin (LTC) and Bitcoin Cash (BCH). Most other native tokens were designed to serve as utility tokens. A utility token provides access to a service or good within a given platform. For instance, ether (ETH) serves as the native token that fuels transactions on the Ethereum smart-contract platform. You need to pay ETH to transfer funds, deploy smart contracts, or access functions in an existing smart contract. Other examples in the utility category include ada (ADA) for Cardano and TRONIX (TRX), often simply called TRON, for the TRON Protocol. Coins can shift categories and even straddle more than one category. For instance, ETH became so popular that it’s also used as a disintermediated currency outside the Ethereum platform. Think of Walmart gift certificates, which are like utility tokens. The gift certificates are designed to be used to access goods and services within the Walmart platform. However, if Walmart becomes so popular that restaurants and movie theaters begin to accept Walmart gift certificates in place of cash, these gift certificates will have become a global medium of exchange that is now accepted outside the Walmart platform. Figures 1 and 2 present examples of online vendors that accept BTC, LTC, and ETH, among other crypto, as forms of payment. Non-native tokens Close to 21,000 exchange-traded cryptocurrencies were listed on CoinMarketCap as of the end of August 2022. Most crypto assets are not native tokens. Instead, they are built on and secured by an existing blockchain. After all, we really don’t need 20,000 different blockchains that essentially provide the same recordkeeping function. Also, having so many distinct blockchains would compromise the safety of each system, which depends on the size of the network. Although there are now many serious contenders to be the number-one. smart-contract platform, Ethereum remains the predominant blockchain on which to issue crypto assets, either as ERC-20 fungible tokens or as ERC-721 non-fungible tokens. Much like how you can have numerous tabs in an Excel spreadsheet to keep records of different things, Ethereum allows developers to carve out their own recordkeeping systems on a reliable and tamper-proof platform. The following sections, from Stablecoins to Meme coins, provide examples of non-native fungible tokens. Stablecoins So-called stablecoins derive their name from the soft one-to-one peg they seek to maintain with a chosen fiat currency, such as the U.S. dollar. (A soft peg allows some flexibility in the exchange rate, whereas a hard peg requires strict one-to-one adherence.) Some stablecoins, such as Tether (USDT), are centrally controlled by a trusted party that controls the supply and is responsible for holding sufficient collateral — such as U.S. dollars or gold — to maintain the public’s faith in its stablecoin. With a total market cap in excess of $180 billion, USDT is the largest stablecoin and the third largest cryptocurrency. It began as an ERC-20 token for use on Ethereum and later expanded to other blockchain platforms, such as TRON, Solana, and EOS. The stability of a stablecoin depends critically on the management (or mismanagement) of the stablecoin and ongoing public faith in the system. Whether the stablecoin is centrally managed and backed by traditional collateral or is algorithmically maintained by a nexus of smart contracts, stablecoins are not immune to a classic run on the bank. Regulators are increasingly concerned about the seeming Wild West environment in which stablecoins have been operating. Their concerns were heightened by the recent catastrophic implosion of TerraUSD (UST), an algorithmic stablecoin that plummeted to just a few cents and has remained de-pegged from the U.S. dollar since May 2022. Overall, lawmakers are in favor of imposing capital requirements on stablecoin issuers like Tether Limited Inc. (for USDT) and Circle (for USDC). Perhaps the next move will be to require algorithmic stablecoins to undergo a formal credit rating process! Wrapped tokens Wrapped tokens allow for the synthetic use and trading of a native token from another blockchain. Much like how stablecoins are pegged to a fiat currency, wrapped tokens are pegged to a particular token. For instance, you can’t swap ETH for actual Bitcoins (BTC) on the Ethereum blockchain, but you may have noticed that you can swap ETH for Wrapped Bitcoin (WBTC), which is issued as an ERC-20 token, via a DEX like Uniswap, as shown in Figure 3. Governance tokens Governance tokens have become a popular way for development teams to elicit community participation in the ongoing management of a DeFi protocol after it has been deployed. For instance, the Uniswap token (UNI) is an ERC-20 token that allows its holders to vote on various features of the Uniswap DEX protocols. Similarly, the SushiSwap token (SUSHI) is an ERC-20 token that allows its holders to vote on various features of the SushiSwap DEX protocols. Note that UNI and SUSHI are purely governance tokens and do not serve as utility tokens on the respective protocols: Specifically, you don’t need UNI to execute a trade on a Uniswap liquidity pool, and you don’t need SUSHI to execute a trade on a SushiSwap liquidity pool (unless, of course, you are planning to swap UNI or SUSHI). The Uniswap and SushiSwap protocols are built on the Ethereum blockchain, and thus, you need ETH, the native utility token of Ethereum, to transact on these DEXs. In addition to voting rights, governance token holders also receive a portion of the fees earned on the protocol. SUSHI holders receive a portion of the 0.30 percent swap fee charged for trading in the SushiSwap liquidity pools, and UNI holders are expected to soon begin receiving a portion of the 0.30 percent swap fee charged for trading in the Uniswap liquidity pools. Despite their uncanny resemblance to equity securities (which also provide voting and cash-flow rights), governance tokens have thus far managed to stay out of the SEC’s crosshairs. The implications, though, would be huge — requiring their removal from any crypto exchange not registered as an Alternative Trading System (ATS). Security tokens Security tokens are tokenized securities, which represent equity ownership or other types of cash-flow claims in tokenized form. BCAP, an ERC-20 token issued by Blockchain Capital in 2017, is reportedly the first security token offering (STO) and was used to raise funds for its Blockchain Capital III Digital Liquid Venture Fund. Other examples of security tokens include OSTKO, an ERC-20 token representing preferred equity shares in Overstock.com, and ArCoin, an ERC-20 token representing shares in the Arca U.S. Treasury Fund. Meme coins Some coins are simply meme coins that have no explicit monetary value or practical use associated with the coin at creation. Dogecoin (DOGE), the most famous meme coin, is actually a native token with its own blockchain that was originally designed as a joke. DOGE is the largest meme coin and tenth largest cryptocurrency, with a total market cap close to $8.5 billion as of the end of August 2022. Inspired by the success of DOGE, other meme coins followed in its wake. Shiba Inu (SHIB), launched as an ERC-20 token on Ethereum, is another runaway success with a total market cap in excess of $6.5 billion, making it the second largest meme coin and 14th largest cryptocurrency. Of course, meme coins can also shift or straddle other categories. Refer to Figures 1 and 2 (above) to see that both DOGE and SHIB are also accepted as forms of payment on CheapAir.com and Newegg.com. Other intriguing (though far less successful) meme coins include FOMO Coin (shown in Figure 4), and Jesus Coin (shown in Figure 5), both of which were also launched as ERC-20 tokens on the Ethereum blockchain. Much like the rise (and fall) of Beanie Babies in the 1990s, it’s hard to predict whether a meme coin is destined for DOGE-like greatness (though, it certainly helps if vendors adopt the meme as a form of payment and Elon Musk tweets about it!). Differentiating non-fungible tokens Finally, I would be remiss to ignore the category of non-fungible tokens (NFTs)! Although NFTs also fall under the category of non-native tokens, I’ve assigned this group its own header to clearly demarcate it from the tokens covered previously, which are all fungible tokens. NFTs are still relatively young, and thus far have mostly been designed to represent ownership of digital collectibles and gaming assets. However, many nascent projects are in various stages of planning and development. From NFT-izing the ownership records of luxury goods to event tickets to real estate, the possibilities are seemingly endless. Already, NFTs are being used to secure ownership and transaction records of digital property in decentralized metaverses, such as Decentraland and Sandbox. Perhaps more real-world analogues will soon follow!

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Cryptocurrency How To Set Up a DeFi Wallet with MetaMask

Article / Updated 01-27-2023

To meaningfully navigate the world of decentralized finance (DeFi), you first need to set up a Web3 wallet that can submit transactions and access smart contracts on a public blockchain. Because so much of the DeFi ecosystem has been built on Ethereum, this article shows you how to get started with MetaMask, an application that connects you to the Ethereum blockchain. MetaMask is one of the most well-known and widely supported noncustodial crypto wallets connecting you to the Ethereum blockchain. Other popular contenders include WalletConnect and the Coinbase Wallet (not to be confused with the custodial Coinbase.com wallet). Unmasking MetaMask MetaMask is an amazingly simple, yet powerful, application that allows you to manage your Ethereum accounts and to interact with the Ethereum network. With this wallet app, you can create new accounts, import existing accounts, and submit transactions. In addition to handling ether (ETH), the token native to Ethereum, this wallet application is also compatible with ERC-20 fungible tokens and ERC-721 non-fungible tokens (NFTs). MetaMask operates as a browser extension, which makes it easy for you to connect to web-based Ethereum dApps (decentralized applications), the vast majority of which have integrated MetaMask functionality in their websites. More ambitious readers may be glad to discover that Remix — a web-based integrated development environment (IDE) — is integrated with MetaMask to allow you to seamlessly launch smart contracts on Ethereum without having to download additional software or run a full node on your computer. Exercise caution when interacting with dApps, just as you would when engaging with any application coming from an unknown or untrusted source. Installing MetaMask MetaMask currently supports the Chrome, Firefox, Brave, and Edge browsers. I’ve chosen to proceed in Chrome because it’s the most commonly used desktop Internet browser in the U.S. If you’re feeling a bit adventurous and want a full DeFi immersion, I recommend getting comfortable with the Brave browser. Keep in mind that your visual and textual prompts may differ slightly from what’s shown in the following steps, depending on your chosen browser. You can use these steps to download and install the MetaMask browser extension: Go to www.metamask.io and click the Download Now button, as shown in Figure 1. Click the Install MetaMask for Chrome button, as shown in Figure 2. You’re rerouted to the MetaMask page of the Chrome web store, as shown in Figure 3. Of course, if you’re using a different browser, the prompts will look slightly different, as shown in Figure 4. Click the Add to Chrome button.A pop-up window appears, as shown in Figure 5. Click the Add Extension button. After the installation is complete, a pop-up window momentarily appears to inform you that MetaMask has been added to your browser. You should now see a small fox icon in the upper-right corner of your browser window (to the right of the address bar), as shown in Figure 6. If the fox icon doesn’t automatically appear in your browser’s toolbar, follow these additional steps: Click the puzzle-piece-shaped icon in the upper-right corner of your browser window (to the right of the address bar). A drop-down menu appears, as shown in Figure 7. Click the pin icon to the right of the MetaMask fox icon. The pin icon turns blue, and you see the fox icon pinned to your browser’s toolbar. Yay, you’re now ready to set up your MetaMask wallet! Setting up MetaMask After you’ve successfully installed the MetaMask browser extension, you can follow these steps to set up your wallet: Click the MetaMask fox icon in your browser’s toolbar. (In my case, I am continuing to use the Chrome browser.)A new browser window appears, with a Get Started button displayed at the bottom of the page. Click the Get Started button. The page that opens shows an Import Wallet and a Create a Wallet button, as shown in Figure 8. The Import Wallet button on this page is what you’ll use if you ever need to reinstall MetaMask and recover a MetaMask wallet that you’ve already set up. Click the Create a Wallet button. On the Help Us Improve MetaMask page that opens, you can click either the No Thanks or I Agree button, depending on whether you want to share your usage data with the MetaMask development team. The next page opens, prompting you to create a password, as shown in Figure 9. Create and confirm your new password. Click the check box to confirm that you’ve read and agree to the terms of usage, and then click the Create button. A page appears that features instructions and a brief video explaining the importance of your Secret Recovery Phrase. Watch this video and read the instructions carefully. When you’re ready, click the Next button, which takes you to your Secret Recovery Phrase. Click the lock icon to reveal your private 12-word phrase, as shown in Figure 10. Write down this phrase and store it for safe keeping. This Secret Recovery Phrase represents the digital keys that provide access to your crypto wallet and its contents. Do not share this phrase with anyone. Do not skip this critical step! You’ll need your Secret Recovery Phrase if you ever need to reinstall the MetaMask browser extension or if you want to access your MetaMask wallet on a different browser or different computer. In fact, even the MetaMask Support team cannot recover your MetaMask account for you. Specifically, MetaMask’s “Basic Safety and Security Tips” state that: “MetaMask is not a cloud-based solution. If your device breaks, is lost, or has data corruption, there is no way for the MetaMask Support Team to recover this for you. This Secret Recovery Phrase is the only way to recover your MetaMask accounts.” After you’ve secured your Secret Recovery Phrase, click the Next button. The next page requires you to confirm your Secret Recovery Phrase by selecting the correct words in the correct order, as shown in Figure 11. Do not share this unordered word matrix with anyone, as I’ve (foolishly!) done here for demonstrative purposes. Using this word matrix, a hacker can easily create a program to regenerate my Secret Recovery Phrase. In fact, this hypothetical hacker could guess my secret phrase within 12! = 12 x 11 x 10 x …. X 2 x 1 = 479,001,600 attempts, which represents the total number of possible permutations of the words presented in Figure 11. Although 479,001,600 distinct guesses would be quite onerous to attempt manually, a computerized algorithm can glide through this guessing game. After you've clicked each word in the correct order to produce the correct word sequence, click the Confirm button. Congratulations! Your browser takes you to your initial MetaMask Account 1 Page, as shown in Figure 12. Going forward, you can simply access your MetaMask wallet by clicking the MetaMask fox icon in your browser’s toolbar, which reveals a drop-down window, as shown in Figure 13. (Revisit Steps 5 and 6 from the previous “Installing MetaMask” section if you need to re-pin the MetaMask fox icon to your browser’s toolbar.)

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Cryptocurrency What Is Decentralized Finance (DeFi)?

Article / Updated 01-27-2023

The decentralized finance (DeFi) sector is an alternative to traditional financial services with applications in cryptocurrency or blockchain technology. The modern DeFi era truly began with Bitcoin, the first widespread implementation of a decentralized method of record-keeping that is permissionless yet reliable and secure. Bitcoin effectively provides a currency that doesn’t rely on the stability of a central authority. The implications of such a technology are huge for developing economies where faith in central government is low and bank runs are a serious risk, if not a reality. Moreover, much of the world’s population is, at most, one generation removed from being forcibly chased from their homes. Consider these events: Just 70 years ago, Seoul, the capital of Korea, was captured and recaptured four times, and families were permanently separated in a war that ultimately resulted in two separate nations. The fall of Saigon 50 years ago resulted in a mass exodus of Vietnamese refugees seeking asylum. More recently, the fall of Kabul in 2021 and the Russian invasion of Ukraine in 2022 led to more waves of emigrants who found themselves in sudden exile. But aside from more dire circumstances — like the collapse of a banking system or the fall of your government — it’s natural to question what true value Bitcoin’s underlying technology adds in a stable and wealthy nation. After all, I trust that Bank of America won’t maliciously siphon funds from my account, and despite the infamous Wells Fargo fake account scandal (for which it was ultimately fined $3 billion), I would even entrust my money to a Wells Fargo checking account. Nonetheless, reliable economies still have submarkets that are inherently rife with distrust of the central operator, with dark pools (securities exchanges in which participants can trade anonymously and with less transparency) being a case in point. (Try Googling “dark pool lawsuit”!) The trust issue naturally goes away if there is no central operator to distrust, and with the advent of Bitcoin, a proven technology now exists to implement modern DeFi processes across many use cases in finance. Demystifying DeFi The idea of decentralized processes is certainly not new. After all, before centralized finance (CeFi) arose to establish trusted intermediaries, primitive DeFi was the status quo. Transactions were all peer-to-peer, and you were constrained by your local neighborhood to gain access to capital and to obtain goods by bartering one item for another. Record-keeping was minimal, and ownership was determined by physical possession. In modern markets, transactions require confidence in the validity of the agreement, which is provided by reliable and secure record-keeping systems. After all, when you sell your car, you are really transferring the legal right to access the car. Without a reliable record-keeping system in place, chaos would ensue. (Imagine the return of finders keepers as a rule of law!) What’s truly exciting now is the distributed-ledger technology that provides a reliable and secure method of record-keeping that is not maintained by a trusted intermediary, such as Bank of America or the DMV. Behold the dawn of the modern DeFi era! From autonomous collectives to trillion-dollar DAOs Well-functioning, leaderless communities are all around us, and in each circumstance, an inherent governance mechanism incentivizes and gels the group to act in concert — all without an elected official to assign roles and lead the process. From homework teams to neighborhoods to informal potlucks, small groups can effectively and efficiently self-govern when there are grades to maintain, property prices to protect, or reputational concerns at stake. These small-scale examples probably feel reasonable and natural. But what if I told you that a trillion-dollar organization could autonomously validate, execute, secure, and provide ongoing updates to an entire system without an elected leader to assign tasks? The concept sounds naïve at best, and possibly crazy. And yet, Bitcoin has provided a battle-tested case in point for the underlying technology that enables it to function in a decentralized and autonomous fashion. Yes, Bitcoin is indeed a trillion-dollar decentralized autonomous organization (DAO)! Of course, at this scale and with the value at stake, a DAO can’t rely solely on simple mechanisms like reputational concerns to incentivize participants to behave honestly and in a way that upholds the values of the system. Instead, the underlying protocol must be protected against malicious players who may work hard to cheat the system. Transacting in DeFi versus CeFi Borrowing assets Suppose you want to borrow money. How would this transaction be implemented in primitive DeFi versus modern CeFi versus modern DeFi? Under a primitive DeFi process: You hit up everyone you know within reasonable geographic proximity — a neighbor, a friend, a family member — and hope that someone will lend you something that you can barter with at your local marketplace. Under a modern CeFi process: People have checking accounts, savings accounts, CDs, and so on with the bank, which means that all these people have lent money to the bank. In turn, the bank lends some of this money to you. Under a modern DeFi process: People lock up funds in a smart-contract account, which is a software program on a public blockchain that automatically enforces and executes the rules in the smart-contract code. This smart-contract account is programmed to function as a lending pool from which you can borrow funds. Selling assets Suppose that instead of borrowing assets, you have assets that you want to sell. Comparing the three types of processes again, here’s how this transaction would be implemented: Under a primitive DeFi process: You again hit up everyone you know within reasonable geographic proximity — a neighbor, friend, family member — and attempt to barter by trial and error. Under a modern CeFi process: Liquidity providers stand by, waiting to buy the asset from those who want to sell and to sell the asset to those who want to buy. These liquidity providers commit to buy and sell a certain quantity of assets at varying prices on designated exchanges that serve as official marketplaces for the assets in question. In turn, you place an order to sell the asset through your brokerage firm (who has custody of the asset). Under a modern DeFi process: Liquidity providers lock up assets and funds in a smart-contract account. This smart-contract account serves as a liquidity pool and is programmed to function as an automated market maker. In turn, you can swap your assets for funds from this smart-contract account.

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Cryptocurrency What Is Cryptocurrency?

Article / Updated 12-14-2022

Simply stated, a cryptocurrency is a form of digital money. You can transfer your traditional, non-cryptocurrency money like the U.S. dollar digitally, but that’s not quite the same as how cryptocurrencies work. If cryptocurrencies become mainstream, you may be able to use them to pay for stuff electronically, just like you do with traditional currencies. However, what sets cryptocurrencies apart is the technology behind them. You may say, “Who cares about the technology behind my money? I only care about how much of it there is in my wallet!” The issue is that the world’s current money systems have a bunch of problems. Here are some examples: Payment systems such as credit cards and wire transfers are outdated. In most cases, a bunch of middlemen like banks and brokers take a cut in the process, making transactions expensive and slow. Financial inequality is growing around the globe. Around 3 billion unbanked or underbanked people can’t access financial services. That’s approximately half the population on the planet! Cryptocurrency enthusiasts say it could solve some of these problems, if not more. The basics of cryptocurrencies You know how your everyday, government-based currency is reserved in banks? And that you need an ATM or a connection to a bank to get more of it or transfer it to other people? Well, with cryptocurrencies, you may be able to get rid of banks and other centralized middlemen altogether. That’s because cryptocurrencies rely on a technology called blockchain, which is decentralized (meaning no single entity is in charge of it). Instead, every computer in the network confirms the transactions. The definition of money Before getting into the nitty-gritty of cryptocurrencies, you need to understand the definition of money itself. The philosophy behind money is a bit like the whole “which came first: the chicken or the egg?” thing. In order for money to be valuable, it must have a number of characteristics, such as the following: Enough people must have it. Merchants must accept it as a form of payment. Society must trust that it’s valuable and that it will remain valuable in the future. Of course, in the old days, when you traded your chicken for shoes, the values of the exchanged materials were inherent to their nature. But when coins, cash, and credit cards came into play, the definition of money and, more importantly, the trust model of money changed. Another key change in money has been its ease of transaction. The hassle of carrying a ton of gold bars from one country to another was one of the main reasons cash was invented. Then, when people got even lazier, credit cards were invented. But credit cards carry the money that your government controls. As the world becomes more interconnected and more concerned about authorities who may or may not have people’s best interests in mind, the idea is that cryptocurrencies may offer a valuable alternative. Here’s a fun fact: Your normal, government-backed currency, such as the U.S. dollar, must go by its fancy name, fiat currency, now that cryptocurrencies are around. Fiat is described as a legal tender like coins and banknotes that have value only because the government says so. Some cryptocurrency history In late 2022, the fate of cryptocurrency wasn't looking great. During the first half of 2022, prices fell after the collapse of some cryptocurrencies and by late 2022, many crypto-related companies were facing serious financial problems, if not insolvency. In November 2022, well-known crypto exchanges FTX and FTX.US filed for bankruptcy and their founder, Sam Bankman-Fried, was arrested in December 2022 for fraud. Yet, even after these events, many financial analysts expected cryptocurrency to recover and endure. Crypto's beginnings The first ever cryptocurrency was (drumroll please) Bitcoin! You probably have heard of Bitcoin more than any other thing in the crypto industry. Bitcoin was the first product of the first blockchain developed by some anonymous entity who went by the name Satoshi Nakamoto. Satoshi released the idea of Bitcoin in 2008 and described it as a “purely peer-to-peer version” of electronic money. Bitcoin was the first established cryptocurrency, but many attempts at creating digital currencies occurred years before Bitcoin was formally introduced. Cryptocurrencies like Bitcoin are created through a process called mining. Very different than mining ore, mining cryptocurrencies involves powerful computers solving complicated problems. Bitcoin remained the only cryptocurrency until 2011. Then Bitcoin enthusiasts started noticing flaws in it, so they decided to create alternative coins, also known as altcoins, to improve Bitcoin’s design for things like speed, security, anonymity, and more. Among the first altcoins was Litecoin, which aimed to become the silver to Bitcoin’s gold. As of 2022, the number of cryptocurrencies had soared to more than 19,000, although many of these were not expected to survive. Key cryptocurrency benefits If cryptocurrency endures, there are a number of solutions they may be able to provide through their decentralized nature: Reducing corruption: With great power comes great responsibility. But when you give a ton of power to only one person or entity, the chances of their abusing that power increase. The 19th-century British politician Lord Acton said it best: “Power tends to corrupt, and absolute power corrupts absolutely.”Cryptocurrencies aim to resolve the issue of absolute power by distributing power among many people or, better yet, among all the members of the network. That’s the key idea behind blockchain technology anyway. Eliminating extreme money printing: Governments have central banks, and central banks have the ability to simply print money when they’re faced with a serious economic problem. This process is also called quantitative easing. By printing more money, a government may be able to bail out debt or devalue its currency.However, this approach is like putting a bandage on a broken leg. Not only does it rarely solve the problem, but the negative side effects also can sometimes surpass the original issue.For example, when a country like Iran or Venezuela prints too much money, the value of its currency drops so much that inflation skyrockets and people can’t even afford to buy everyday goods and services. Their cash becomes barely as valuable as rolls of toilet paper.Most cryptocurrencies have a limited, set amount of coins available. When all those coins are in circulation, a central entity or the company behind the blockchain has no easy way to simply create more coins or add on to its supply. Giving people charge of their own money: With traditional cash, you’re basically giving away all your control to central banks and the government. If you trust your government, that’s great, but keep in mind that at any point, your government is able to simply freeze your bank account and deny your access to your funds.For example, in the United States, if you don’t have a legal will and own a business, the government has the right to all your assets if you pass away. Some governments can even simply abolish bank notes the way India did in 2016. With cryptocurrencies, you and only you can access your funds. Cutting out the middleman: With traditional money, every time you make a transfer, a middleman like your bank or a digital payment service takes a cut. With cryptocurrencies, all the network members in the blockchain are that middleman; their compensation is formulated differently from that of fiat money middlemen’s and therefore is minimal in comparison. Serving the unbanked: A vast portion of the world’s citizens has no access or limited access to payment systems like banks. Cryptocurrencies aim to resolve this issue by spreading digital commerce around the globe so that anyone with a mobile phone can start making payments. And yes, more people have access to mobile phones than to banks. In fact, more people have mobile phones than have toilets, but at this point the blockchain technology may not be able to resolve the latter issue. Common crypto and blockchain myths During the 2017 Bitcoin hype, a lot of misconceptions about the whole industry started to circulate. These myths may have played a role in the cryptocurrency crash that followed the surge. The important thing to remember is that both the blockchain technology and its byproduct, the cryptocurrency market, are still in their infancy, and things are rapidly changing. Let me get some of the most common misunderstandings out of the way: Cryptocurrencies are good only for criminals. Some cryptocurrencies boast anonymity as one of their key features. That means your identity isn’t revealed when you’re making transactions. Other cryptocurrencies are based on a decentralized blockchain, meaning a central government isn’t the sole power behind them.These features do make such cryptocurrencies attractive for criminals; however, law-abiding citizens in corrupt countries can also benefit from them. For example, if you don’t trust your local bank or country because of corruption and political instability, the best way to store your money may be through the blockchain and cryptocurrency assets. You can make anonymous transactions using all cryptocurrencies. For some reason, many people equate Bitcoin with anonymity. But Bitcoin, along with many other cryptocurrencies, doesn’t incorporate anonymity at all. All transactions made using such cryptocurrencies are made on public blockchain.Some cryptocurrencies, such as Monero, do prioritize privacy, meaning no outsider can find the source, amount, or destination of transactions. However, most other cryptocurrencies, including Bitcoin, don’t operate that way. The only application of blockchain is Bitcoin. This idea couldn’t be further from the truth. Bitcoin and other cryptocurrencies are a tiny byproduct of the blockchain revolution. Many believe Satoshi created Bitcoin simply to provide an example of how the blockchain technology can work. All blockchain activity is private. Many people falsely believe that the blockchain technology isn’t open to the public and is accessible only to its network of common users.Although some companies create their own private blockchains to be used only among employees and business partners, the majority of the blockchains behind famous cryptocurrencies such as Bitcoin are accessible by the public. Literally anyone with a computer can access the transactions in real time. For example, you can view the real-time Bitcoin transactions. Risks of cryptocurrency Just like anything else in life, cryptocurrencies come with their own baggage of risk. Whether you trade cryptos, invest in them, or simply hold on to them for the future, you must assess and understand the risks beforehand. Some of the most talked-about cryptocurrency risks include their volatility and lack of regulation. Volatility got especially out of hand in 2017, when the price of most major cryptocurrencies, including Bitcoin, skyrocketed above 1,000 percent and then came crashing down. However, as the cryptocurrency hype has calmed down, the price fluctuations have become more predictable and followed similar patterns of stocks and other financial assets. Regulations are another major topic in the industry. The funny thing is that both lack of regulation and exposure to regulations can turn into risk events for cryptocurrency investors. Gear up to make transactions Cryptocurrencies are here to make transactions easier and faster. But before you take advantage of these benefits, you must gear up with crypto gadgets, discover where you can get your hands on different cryptocurrencies, and get to know the cryptocurrency community. Some of the essentials include cryptocurrency wallets and exchanges. Cryptocurrency wallets Some cryptocurrency wallets, which hold your purchased cryptos, are similar to digital payment services like Apple Pay and PayPal. But generally, they’re different from traditional wallets and come in different formats and levels of security. You can’t get involved in the cryptocurrency market without a crypto wallet. Get the most secure type of wallet, such as hardware or paper wallets, instead of using the convenient online ones. Cryptocurrency exchanges After you get yourself a crypto wallet, you’re ready to go crypto shopping, and one of the best destinations is a cryptocurrency exchange. These online web services are where you can transfer your traditional money to buy cryptocurrencies, exchange different types of cryptocurrencies, or even store your cryptocurrencies. Storing your cryptocurrencies on an exchange is considered high risk because many such exchanges have been exposed to hacking attacks and scams in the past. When you’re done with your transactions, your best bet is to move your new digital assets to your personal, secure wallet. Exchanges come in different shapes and forms. Some are like traditional stock exchanges and act as a middleman — something crypto enthusiasts believe is a slap in the face of the cryptocurrency market, which is trying to remove a centralized middleman. Others are decentralized and provide a service where buyers and sellers come together and transact in a peer-to-peer manner, but they come with their own sets of problems, like the risk of locking yourself out. A third type of crypto exchange is called hybrid, and it merges the benefits of the other two types to create a better, more secure experience for users. Cryptocurrency communities Getting to know the crypto community can be the next step as you’re finding your way in the market. The web has plenty of chat rooms and support groups to give you a sense of the market and what people are talking about. Here are some ways to get involved: Crypto-specific Telegram groups. Many cryptocurrencies have their very own channels on the Telegram app. To join them, you first need to download the Telegram messenger app on your smartphone or computer; it’s available for iOS and Android. Crypto chat rooms on Reddit or BitcoinTalk: BitcoinTalk and Reddit have some of the oldest crypto chat rooms around. You can view some topics without signing up, but if you want to get involved, you need to log in. (Of course, Reddit isn’t exclusive to cryptos, but you can search for a variety of cryptocurrency topics.) TradingView chat room: One of the best trading platforms out there, TradingView also has a social service where traders and investors of all sorts come together and share their thoughts, questions, and ideas. Invest Diva’s Premium Investing Group: If you’re looking for a less crowded and more investment/trading-focused place to get support, you can join our investment group (and chat directly with me as a perk too). On the flip side, many scammers also target these kinds of platforms to advertise and lure members into trouble. Keep your wits about you.

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Cryptocurrency Basic Ethereum Smart Contract Syntax

Article / Updated 07-25-2022

If you plan to do any Ethereum development, you’ll likely be using Solidity, one of the most popular programming languages for smart contracts. Let’s take a look at some basic Solidity syntax. When you write Solidity source code, you save that code in a file with the extension .sol. A Solidity program has several main sections, as follows: Pragma: This tells Solidity what versions of the compiler are valid to compile this file. Comments: Developers should use comments for documenting code. Import: An import defines an external file that contains code that your smart contract needs. Contract(s): This section is where the body of your smart contract code resides. Declaring valid compiler version in Ethereum smart contracts The pragma directive should be the first line of code in a Solidity file. Because the Solidity language is still maturing, it is common for new compiler versions to include changes that would fail to compile older programs. The pragma directive helps avoid compiler failures due to using a newer compiler. Here is the syntax for the pragma directive: pragma Solidity <<version number>>; Here is a sample pragma directive: pragma Solidity ^0.4.24; All statements in Solidity end with a semicolon. The version number starts with a 0, followed by a major build number and a minor build number. For example, the version number 0.4.24 refers to major build 4 and minor build 24. The caret symbol (^) before the version number tells Solidity that it can use the latest build in a major version range. In the preceding example, Solidity can use a compiler from any build in the version 4 build range. This is a way to tell readers that your program was written for 0.4.24 but will still compile for subsequent version 4 builds. Although using the caret in the pragma directive provides flexibility, it is a better practice to drop the caret and tell Solidity exactly what compiler version you expect. Commenting your Solidity code Adding comments to your code is an extra step that adds a professional look and feel to your Solidity code. A well-commented source code file is easier to read and understand and helps other developers quickly understand what your code is supposed to do. Even simple comments can cut down on the time required to fix bugs or add new functionality. Comments can also provide input for utilities to generate documentation for your smart contracts. You can use single-line or multiline regular comments. Single-line comments start with two forward slashes. Multiline comments start with the /* characters and end with the */ characters. Here is an example of Solidity comments: // Here is a single line Solidity comment /* I have a lot more to say with this comment, so I’ll use a multiline comment. The compiler will ignore everything after the opening comment characters, until it sees the closing comment characters. */ A third type of Solidity comment is called the Ethereum Natural Specification (NatSpec) directive. You can use NatSpec to provide information about your code for documentation generators to use to create formatted documentation the describes your smart contracts. NatSpec directives start with three forward slashes and include special tags with data for the documentation. Here is an example of using NatSpec directives: /// @title Greeter smart contract /// @author Joe Programmer /// @notice This code takes a person's name and says hello /// @param name The name of the caller /// @return greeting The greeting with the caller's name Check out NatSpec documentation for additional information. Importing external code into your Ethereum smart contract The import section is optional but can be powerful when used correctly in your Ethereum smart contract. If your smart contract needs to refer to code in other files, you’ll have to import those other files first. Importing files makes it as though you copied the other code into the current file. Using imports helps you avoid actually copying code from one place to another. If you need to access code, just import the Solidity file that contains it. The syntax for importing other files is simple. You use the import keyword and then provide the filename for the file you want to import. For example, to import the file myToken.sol, use this syntax: Import 'myToken.sol'; Defining your Ethereum smart contracts In the last main section of Solidity, you define the contents of your smart contract. It starts with the keyword contract and contains all of the functional code in your smart contract. You can have multiple contract sections in Solidity. That means a single .sol file can define multiple contracts. Here is an example contract section: contract HelloWorld { string private helloMessage = "Hello world"; function getHelloMessage() public view returns (string) { return helloMessage; } } Inside the contract section is where you define all of your variables, structures, events, and functions. There's a lot more to the contract section of your code, but for now, you know how to set up a Solidity smart contract. Once you master the basics of Solidity, you can continue to develop more complex code and the sky's the limit.

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Cryptocurrency How Blockchains Work

Article / Updated 07-25-2022

Originally, blockchain was just the computer science term for how to structure and share data. Today, blockchains are hailed the "fifth evolution" of computing. Blockchains are a novel approach to the distributed database. The innovation comes from incorporating old technology in new ways. You can think of blockchains as distributed databases that a group of individuals controls and that store and share information. There are many different types of blockchains and blockchain applications. Blockchain is an all-encompassing technology that is integrating across platforms and hardware all over the world. A blockchain is a data structure that makes it possible to create a digital ledger of data and share it among a network of independent parties. There are many different types of blockchains. Public blockchains: Public blockchains, such as Bitcoin, are large distributed networks that are run through a native token. They're open for anyone to participate at any level and have open-source code that their community maintains. Permissioned blockchains: Permissioned blockchains, such as Ripple, control roles that individuals can play within the network. They're still large and distributed systems that use a native token. Their core code may or may not be open source. Private blockchains: Private blockchains tend to be smaller and do not utilize a token. Their membership is closely controlled. These types of blockchains are favored by consortiums that have trusted members and trade confidential information. All three types of blockchains use cryptography to allow each participant on any given network to manage the ledger in a secure way without the need for a central authority to enforce the rules. The removal of central authority from database structure is one of the most important and powerful aspects of blockchains. The figure shows the concept of how blockchains come to agreement. Blockchains create permanent records and histories of transactions, but nothing is really permanent. The permanence of the record is based on the permanence of the network. In the context of blockchains, this means that a large portion of a blockchain community would all have to agree to change the information and are incentivized not to change the data. When data is recorded in a blockchain, it's extremely difficult to change or remove it. When someone wants to add a record to a blockchain, also called a transaction or an entry, users in the network who have validation control verify the proposed transaction. This is where things get tricky because every blockchain has a slightly different spin on how this should work and who can validate a transaction.

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Cryptocurrency Best Places to Find Mining Info: Staying Current as a Cryptocurrency Miner

Article / Updated 07-19-2022

Cryptocurrency miners need to keep an eye on the latest mining info to be successful. The best method of checking the pulse of the burgeoning cryptocurrency mining industry is to stay up to date using online resources, such as social media and specific online forums covering the topic. Due to the infancy of the cryptocurrency mining space, many news sources in the space can be misleading, downright inaccurate, or even propagate bought-and-paid-for content without a sponsored label. A recent study found that many of the top cryptocurrency news sites were posting sponsored content — essentially ads — under the guise of news. This kind of misinformation makes it important to stay plugged into the community and various other peer-based resources: don’t trust, verify. Check out the following list of resources to stay up with current cryptocurrency mining events: Bitcoin Talk: Use Bitcoin Talk to inquire into almost any cryptocurrency topic, including (but definitely not limited to) mining. Despite the name, it’s not just for bitcoin anymore. You’ll find many different cryptocurrencies being discussed. For example, it is where most popular alternative cryptocurrencies were announced prior to launch. Bitcoin subReddit: The bitcoin subreddit provides a great forum for lots of breaking news and current events and provides a window into the current sentiment in the community. It’s not all serious stuff, though; you’ll find plenty of memes, jokes, and other nonmining content, so do surf lightly. Bitcoin Beginners subreddit: The bitcoin beginners subreddit is an even better resource for recent entrants into the ecosystem, providing plenty of great information for newbies. CoinDesk: CoinDesk is a decent news source in an industry riddled with faulty cryptocurrency news outlets. It also provides exchange rate data from a variety of different cryptocurrencies. CoinJournal: CoinJournal is also a good source for cryptocurrency-related news, but clearly separates press releases from news articles so users can differentiate public relations from journalism. Bitcoin Magazine: Bitcoin Magazine has long been a reliable news outlet in the cryptocurrency space. Although print releases of the magazine stopped years ago, it still provides good and consistent news coverage on its website. Merkle Report: The Merkle Report curates a wide variety of relevant content from various news sources in the cryptocurrency space. It offers a good one-stop shop for news across the industry. Messari: Messari has a ton of cryptocurrency-focused data, research, and news from across the industry. It also offers a periodic daily newsletter to stay up-to-date on current trends. Block Digest: Block Digest is an excellent source of news in the form of a weekly podcast that features various community members discussing and digesting news and headlines from the Bitcoin space. Stack Exchange: The Bitcoin Stack Exchange has a large trove of questions answered by other cryptocurrency enthusiasts. Anyone can post a question or an answer. If you are looking for specific insight, chances are someone has already answered the question you may have. Why current events are important for cryptocurrency mining Cryptocurrencies and blockchains act as an immutable record of data, indisputable information that is accessible to anyone with the tools and knowledge to look for it. This isn’t the case with off-chain data, such as current events and news in the space, which is why it is very important to stay up-to-date on accurate information from reliable sources if you intend to mine cryptocurrency. Current events affect what’s going on in the mining space. They can affect the value of the cryptocurrency, and thus, in response to fluctuation in the value, the network hash rate, your percentage of the network hash rate, the amount of blocks you’ll mine, and ultimately your loss or profit. There is plethora of news sources in the cryptocurrency mining space, but not all can be trusted. Some peddle misinformation with the intent of misleading you. Staying up to date on the latest and greatest in the cryptocurrency mining industry is crucial to your continued success in the space. Reliable content is the best defense against spin and distortion from those that would lead you astray. Without information, you may find yourself mining a cryptocurrency without much future value, or on the uneconomical side of a blockchain fork. In any event, as a cryptocurrency miner, you will will have the best chance of success if you stay current with developing information.

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Cryptocurrency Cryptocurrency Mining For Dummies Cheat Sheet

Cheat Sheet / Updated 05-17-2022

Cryptocurrency mining is a relatively new concept that started slowly and has, over about a decade, developed into an entire industry with a wild-west-gold-rush reputation. The mining of “digital gold” in the form of cryptocurrencies is often painted as a get-rich-quick scam, with comparisons to tulip mania and the gold rushes of years past. Indeed, the industry is rife with hype, scams, and misleading promotions, and there’s a lot of room for error. However, there are profitable mining ventures, and there is still room for you, as a new miner, to profit from cryptocurrency mining if you do your research, do your homework, and plan carefully.

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Cryptocurrency Cryptocurrency Investing For Dummies Cheat Sheet

Cheat Sheet / Updated 04-05-2022

So, you’ve heard about Bitcoin and other cryptocurrencies, and you’re ready to add these new kids on the block to your investment portfolio — that’s great! You’re now officially a part of the future economy. To make the best decisions for your portfolio, educate yourself on the basics of cryptocurrencies and what you need to get started. Also, be sure to do your homework on a crypto’s fundamentals before adding any new assets to your portfolio.

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Cryptocurrency Ethereum For Dummies Cheat Sheet

Cheat Sheet / Updated 03-28-2022

Ethereum is much more than just another blockchain implementation. It is a complete dApp (decentralized app) development and runtime environment. To best leverage all that Ethereum offers, become familiar with what blockchain technology can do for you and the extras that Ethereum offers. Learn the main language of smart contracts, Solidity, and how you can use its syntax to make your dApps provide value to its users. And establish a healthy respect for each of the steps in the Ethereum dApp development process so you will have more effective software.

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