Dad, What’s Crypto?

Son, you’re looking at the future of money.

by Ditto Palang and Drei Zamuco

I’m from the Philippines and I have to send money to my daughter, Sidney, who is taking her masters all the way in San Francisco. In order for me to send her the money, I would have to pay Western Union to do so. I don’t want to pay that additional fee. What do I do now?

This is where the kick of cryptocurrency comes in — doing away with the middle men. You’ve probably browsed through many other “Crypto 101” articles such as this. Maybe you’ve heard the famous, “Bitcoin is the future of money”, or “the future of a cashless society.” Cryptocurrencies like Ripple and Bitcoin have been trending all over the net and it’s probably because many people are raking in great returns from their Bitcoin investments. You’ve tried asking, and they still haven’t dumbed it down. Don’t worry, we gotchu.

What exactly is cryptocurrency? Digital money!

Cryptocurrency is basically digital money moving independently of central banks, or the “middle men.” Encryption, which is “the process of converting information or data into a code, especially to prevent unauthorized access” is used to regulate the units of currency, say, Bitcoin, or Ethereum. It also secures incoming and outgoing transactions.

How it started? With Bitcoin.

The first cryptocurrency, Bitcoin, was created by Satoshi Nakamoto in 2008 to find a way around conventional banking and currency. (No, you can’t look him up on Google.)

There are only 21 million Bitcoins to mine; around 16 million Bitcoins are in circulation as of today.

What’s the point? No banks, no middle men.

The very idea of cryptocurrency is financial security and decentralization. It’s like killing two birds with one stone; you invest and secure your money at the same time.

Okay, cut to the chase. How do I get started?

For starters,

Step 1 — Download the Coins.ph app then create an account (Philippines)

Step 2 — Deposit money into your coins.ph wallet

Step 3 — Convert it to your desired cryptocurrency

Step 4 — Start Investing!

*Yes, you can convert cryptocurrency to cryptocurrency

See? Simple as that! There are other ways of going about it, but you don’t have to go so far just yet.

Wait! Take note of these precautions before you start!

Make sure you invest an amount you’re prepared to lose. Remember that you are INVESTING in cryptocurrencies, meaning, while there is a possibility of growth, there is also stagnation and loss. We suggest you start with a minimum of Php 4,000 to 6,000, though this may vary depending on the cryptocurrency. Ex: Php 4 = 1 XVG (Verge); Php 513,674 = 1 BTC (Bitcoin).

The Crypto Starter Pack

Wallets

This is where you store your funds. Choose your wallet wisely! Below are the types of wallets and those we recommend!

Online wallets (Blockchain.info, coins.ph) are the most convenient to access, but are more susceptible to hackers or thieves because your private keys are stored online. Use them at your own risk, preferably with VPN over Tor.

Paper wallets (Walletgenerator.net), unlike online wallets, are hard copies of your private keys and QR codes. They’re often referred to as, “cold storage” because they are kept separate from an online network or a software database.

Hardware wallets (Ledger Nano) provide high security because your private keys are stored in a “USB”, which is your wallet. For easy online transactions, connect your wallet to a PC, enter your pin and send currency.

Software wallets (Electrum) are installed in your desktop or PC. Though they also provide high security, your coins can only be accessed through the device the wallet is installed in. The moment your desktop catches a virus, or gets hacked, you can lose it all. (This also applies to mobile apps!)

*For online transactions, make sure you secure a VPN (Virtual Private Network) over an anonymity browser, like Tor. It is important that you mask your IP address, otherwise you can be easily traced and hacked.

Public and Private Keys

Think of it like a key and a vending machine. Anyone can put money inside, but only the one with a key can withdraw from it. The vending machine is your public key — it’s where people can send you money, but not know how much is in your bank. The key to your machine is your private key — only use this when you’re going to send money spend money, or check your balance. Do NOT share your private key with anyone, as they may use it to withdraw, or make transactions.

*NEVER under any circumstances, LOSE your keys. You cannot access your wallet without them.

Altcoins are cryptocurrencies that were developed after the success of Bitcoin. Just like in stocks, it is better to diversify your investments. Altcoins are significantly more affordable than Bitcoins as of 2018, so it’s a good start for those joining the Crypto party.

Look up the stats here.

The Blockchain

Think of a VIP club called “Blockchain” where all the guests have a copy of the guest list. Each guest is given a tattoo upon entry, so other guests know who are and aren’t. Everytime a guest is accepted, a text is sent to all the current members so they know who’s in the club. This process prevents crashers. They know who to kick out by simply asking anyone if “Person A” is part of the club.

In the blockchain, you’re admitted into a pool of nodes. Nodes are basically participants in the chain — you’re considered a node the minute you start making transactions. Each node has their own copy of the Blockchain. Anyone can access the information on transactions. The community checks and confirms those transactions to make sure your 10-crate beer purchase isn’t fake.

In the context of Bitcoin, those who collate and verify blocks of transactions are called miners. They prevent things like double spending, which is transacting using the same set of coins. These miners are rewarded with Bitcoins — 12.5 bitcoins as of today. Said reward is halved every four years. This is also how more Bitcoins are introduced into the market.Anyone can become a miner, but it will require A LOT of time, energy, and solving. Read more on Bitcoin mining here.

Let’s say you have a button, and every press of that button moves a train a little towards the end of the track, which has a prize. Doing it by yourself is possible with enough time and energy but now imagine a group of people helping you. Each one of them pressing their button to get to the prize. Yes, you end up sharing the prize but you get to it faster.

Well, that’s pretty much all you have to know when you’re getting started with cryptocurrency! Be cautious and good luck!