Cryptocurrency Simplified

(Bitcoin is Just the Starter)

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Table of Contents
What is cryptocurrency ........................................................................................................................... 3
The technology behind cryptocurrency .................................................................................................. 3
Terminologies ......................................................................................................................................... 4
How to start trading / investing in cryptocurrencies .............................................................................. 5
5 Steps to Spot Potential Winners .......................................................................................................... 8
Risk management.................................................................................................................................... 9
Conclusion ............................................................................................................................................... 9

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What is cryptocurrency?

What cryptocurrency really is? Crypto currency is defined by many experts and websites as
the medium of exchange for every “work” that you have participated in the network.

The next question is “what work”?

Every transaction you made online, needs to be checked and verified by a server for it to be
valid. And that server is owned by the entity you are making transactions with. Example, you bought
online product and you wanted to pay using your credit card online. The details you key-in the
payment section is verified and checked by the servers to know if you have valid account. That server
is owned by the company where you are buying from, you pay transaction fee to them. That is a
“centralized platform” set-up. Because they are in full control of everything.

Now, instead of them solely owning a server, cryptocurrencies uses a “decentralized platform”
set-up where-in the transactions is not processed/saved only in one server. It is distributed in every
participants that “work” together to complete the transactions. Participants are paid in the form of
cryptocurrencies. All your transaction details are not stored in a “centralized platform”, it is stored in
a “decentralized” platform.

Is it safe to store information in a “decentralized” environment rather than “centralized”

environment?

Yes it is, actually in terms of protecting your information, using decentralized system is ideal
because information doesn’t have to go to one single place such as company servers. Once the
company server is hacked all your information are exposed.

In a “decentralized platform” your information are not stored in a single place, it is distributed
by parts in every participants of the network. So if they want to hack into your account, they have to
hack all the participants on the network. The participants cannot read the information as well as it is
highly encrypted and as mentioned above they only have part of the whole information.

Decentralized platform is taking the world by storm right now. Because this provides
opportunity for an ordinary people to take part in profit that huge companies and institutions are
enjoying in the longest time. Probably that’s why many big companies are against the
cryptocurrencies because this could bring them down if they will not adapt.

The technology behind cryptocurrency

Blockchain technology, is the technology that started it all for cryptocurrencies. It is a very
powerful shared database technology that is highly encrypted. A block is created after a transaction
is completed and verified by the participants. Every blocks that are created are compiled and stored
in the whole network distributed in all the participants, thus making a block chain. This technology
offers secure, efficient and tamper proof system because it needs consensus from other participants
to close a transaction.

Blockchain is just one of the many technologies that cryptocurrencies are using right now. But
this is the main idea where others are derived.

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Terminologies

Digital currency / cryptocurrency – is a medium of exchange, created and stored electronically as

payment for a work/service in a transaction. Digital currencies has no physical form nor intrinsic value
and it is not supplied by a central authority and exists only in the network.

Centralized platform – There is a third party service that holds data. The third party has sole control
with the data. Perfect example is the banks, all your details and transactions are stored in their data
centres. Once the data centre is hacked, everything could be lost.

Decentralized platform – No third party service that holds data. All participants holds a part of that
transaction ledger that comprises the whole block chain. The hacker needs to hack all the
participating computers to rebuild just a single transactions.

Blockchain – a continuously growing ledger/records linked between participants. A block is created

for every transaction completed, stored, distributed and checked by all the participants across many
computers so it cannot be changed/hacked without changing the subsequent blocks.

Mining – the term used when you participate in a blockchain network. This is the process of checking
the transactions being made in the network. And you get rewarded for participating in the verification
of each transactions because you are using a computer hardware to do so. You invested in a machine
to do mining so it is just rightfully that you receive a premium for that in the form of cryptocurrency.
(There are other ways to accumulate ways other than mining)

Altcoin – it is a term for other cryptocurrency that is not BITCOIN.

E-wallet – It is your electronic wallet where you store / buy cryptocurrencies.

*For simplicity sake, let us just use coins.ph as our wallet.

Digital currency exchanges – this is the trading exchanges that you can use to trade cryptocurrencies.

*For simplicity sake, let us just use binance.com as our trading exchange.

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How to start trading / investing in cryptocurrencies?

You have to understand that it is not all about Bitcoin, there are many other coins out there
that is way better than bitcoin. It just so happened that Bitcoin came out strong first and it is very
popular right now. Here are the top 10 cryptocurrencies based on https://coinmarketcap.com/ .

1. BITCOIN (BTC)

2. RIPPLE (XRP)

3. ETHEREUM (ETH)

4. BITCOIN CASH (BCH)

5. CARDANO (ADA)

6. LITECOIN (LTC

7. NEM (XEM)

8. STELLAR (XLM)

9. IOTA (MIOTA)

10. TRON (TRX)

These cryptocurrencies has the largest market capitalization as of this writing. If you dig
deeper, you will find out that there are other coins way better than Bitcoin. The reason why you may
want to buy other coins. You can buy them using your Bitcoin. In the trading exchanges, there are
pairing of Bitcoin to other coins. You can use that pairing to convert your Bitcoin to other coins, of
course for a fee.

Example:

*Not all coins has Bitcoin pairing, they are adding new one when there is a
demand.

Before you can start trading / investing, you need several things, first is your e-wallet. E-wallet
or digital wallet is your secure place where you can store your digital currency. You need to fund it
using your credit card/debit card/ over the counter purchases in order for you to buy a
cryptocurrencies. The most used e-wallet in the Philippines is coins.ph. (Click here to sign-up).

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Coins.ph

If you wanted to trade, you would be needing a cryptocurrency exchange. One of the most
used and trusted exchange is binance.com. (Click here to sign-up for binance.com)

binance.com:

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Register:

Do not forget to use 2 factor authentication for added security, you can download it via iOS or
Android.

Done, you now have wallet and an exchange account. Please do not forget to verify your account.
You would be needing to transfer your BITCOIN to your binance account to start trading.

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5 Steps to Spot Potential Winners

Before you buy any coin you must study it first and understand all the technology behind it. You
don’t want to just place trades without putting extra effort in identifying what could be its strength
and weaknesses. Here are the checklist I used before I buy any coins.

1. User adoption - Is there a current or growing need for it? Any coin will not succeed if there is
no user adoption. Look for the possible applications, is it realistic and achievable? Does the
technology behind it strong enough to sustain? Strong meaning it is proven and backed-up
by scientific principles and not just common knowledge shared by other coins.

2. The team behind the company – Is there a committed team of developers that focuses on the
growth, implementation, marketing? Go and look for their background and credentials. Just
like any other businesses, this is critical to the progress of the project.

3. Community acceptance – Do they have a strong group of community supporting the project,
website, social media, blogs? Does the community talk about it? The more people talking
about it the more details of it are exposed and their opinion affects the price.

4. Road map – Do they have a clear, progressive and achievable roadmap and not just a fancy
one that is impossible to attain? This is important specially if we are looking at it as a long
term coin. The company should be able to meet the roadmap on time, if not, it is a red flag.

5. Best in its class - Many coins out there are somehow similar to another one. Do check if it has
more to offer compare to its rival coins, check their market capitalization if it still has room to
grow by comparing to other similar coins.

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Risk management

Nothing is certain in trading, and that is the risk we have to take to win. Remember “If you are not
risking anything you are actually at risk” so why not do calculated risk anyway so you can maximize
the gains and protect yourself from losses at the same time.

Risk management guide:

1. Control your positions – Invest only what you can afford to lose, do not put any money in here that
you need in the coming months. There is no certainty in trading, so be cautious.

2. Control your emotions – Investing/trading is not about emotions, you should not be overwhelmed
by your emotions if you are on the losing side. Think logically and reasonably, your emotions will not
make you a winner, your decisions will.

3. Plan – Make your own trading plan, I can provide you my trading plan but that may not be applicable
to you. No one knows yourself better except yourself. Make a plan and stick to it, set your entry and
exit points and respect it. Do not go overboard. You not respecting your plan is you not respecting
yourself.

Conclusion

Cryptocurrency is an open opportunity for all. It provides fair and equal shot to this new and
evolving technology. This provides chance for everyone to take part in the profits that the huge
institutions are earning while providing more security while we progress in the information age. It is
just a matter of time before everyone even the largest institution fully integrate to this new technology
as the main purpose of this is to provide more stable, serviceable, user-focused and progressive
platform there is. It is not all about BITCOIN, it is just the beginning.

Needed accounts:

E-wallet: Coins.ph

Trading Exchange: Binance.com

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