BASICS OF CRYPTO

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© Akinlua Isaiah (2022)

WHAT ARE CRYPTOCURRENCIES
Digital currencies in which transactions are verified and records
maintained by a decentralized system using cryptography,
rather than by a centralized authority (Google)
A cryptocurrency, crypto-currency, crypto, or coin is a digital
currency designed to work as a medium of exchange through a
computer network that is not reliant on any central authority,
such as a government or bank, to uphold or maintain it
(Wikipedia)
THE BLOCKCHAIN
A blockchain is a decentralized, distributed, and public, digital
ledger consisting of records called blocks that are used to
record transactions (Wikipedia)
All records of transactions on a blockchain (i.e. the public
ledger) can be viewed on a blockchain’s explorer.
Cryptocurrencies exist on a blockchain and as such, all records
of transactions of any cryptocoin can be viewed on its
blockchain’s explorer.
Some blockchains and there explorers include-
Bitcoin blockchain (blockchain.com/explorer)
Ethereum chain (etherscan.io)
Stellar chain (stellar.expert)
Solana chain (solscan.io)
EXCHANGES-
Crypto exchanges are platforms that facilitate buying and
selling of cryptocurrencies among individual persons (peer to
peer, these persons are called traders), and institutions.
There are two types of exchanges:
1. Centralised exchanges (CEXs)
2. Decentrallised exchanges (DEXs)
For the basic purposes of this seminar, we will define
CEXs as exchanges where individuals/traders do not have
control over their funds/crypto.
And DEXs as exchanges where traders have custodial/full
control of their funds/cryptocurrencies.
Having custody of funds simply means an individual owns or
has access to the private key of the wallet containing the
crypto.
HOW TO USE EXCHANGES
CEXs
Basically, all CEXs have the same user interface concepts for
transacting, (and other activities) with their platform with just
slight differences amongst them.
As such, understanding or having an idea of usage of one (eg.
Kucoin) should enable anyone to confidently transact on any
CEX of choice.
To make a choice of transacting on an exchange, some factors
about the CEX have to be considered, analyzed and affirmed.
These include-
Security
Conditions/criteria/ease/timeliness of withdrawals,
Fees (withdrawal, deposit and trading fees),
Pedigree (from user reviews).
Having said that, what do you meet on a CEX interface, Kucoin
(kucoin.com) for instance?
To use any CEX, you need to register/signup
If it is a CEX that requires or mandates KYC/verification,
navigate to the verification page to verify your identity after
registering.
Then, ensure to secure your account as much as possibly
provided for on the exchange-
A strong login password, enable Two Factor Authentication; 2FA
(Google authenticator or any other suitable authenticator),
trading password should be put in place in the security/ settings
page.
Please ensure to save/ backup the 2FA key given to you when
setting up 2FA security for easy recovery of your account in the
future.
Once done, you are ready to carry out transactions as you wish.

Transactions include
TRADING-
Buying and selling crypto is quite simple and straightforward.
Click/navigate to the markets page on any CEX. The market
page contains all the crypto/fiat pairings listed/offered on the
CEX.
There is usually a search box on the page. Type the ticker of the
crypto in the box, and select the appropriate paring of the coin
you wish to trade.
E.g. you have Bitcoin (ticker BTC) and want to change it to
Ethereum (ETH).
Click on markets, type BTC in the search box on the markets
page.
Select or click on BTC/ETH pair from the list of BTC
market/trading pairs displayed. This will take you to the trading
page.
On the trading page, we have:
 The chart of the coin pair,
 The buy and sell portal,
 The order book,
 The order/trade records tab.
The chart shows price movement of the market pair over time.
The buy and sell portal; to place buy and sell orders for a coin,
you can set price, amount/quantity to be bought or spent.
The order book outlines/lists quantities of coins at specific
prices placed by other traders to be bought or sold.
Order/trade records tab displays your current orders still
unfulfilled on the market, and all records of your transactions
on the market pair.
So, to sell your BTC to ETH, on a BTC/ETH market, simply use
the buy and sell portal to input-
The amount (of BTC to be sold/spent).
The price at which the selling should take place
The exchange would automatically show the corresponding
amount of ETH that would be received.
Double check all parameters to ensure they are as you want it
and click on either BUY or SELL as appropriate.
If there is no BTC/ETH market listed by the exchange, you can
find another coin paired to both BTC and ETH on the exchange
e.g. USDT.
As such, there must be BTC/USDT and ETH/USDT markets or
pairs on the exchange.
Once confirmed, you then convert/change your BTC to USDT
and convert/change your USDT to ETH.
These process(es) are applicable to selling or buying any coin on
any CEX.
P2P PLATFORMS (Peer to Peer)
Most CEXs now incorporate and develop a P2P platform to
serve there users need for conversion of fiat to crypto and vice
versa.
This means you can easily exchange money from your local
currency in your PERSONAL local bank account to crypto on the
CEX, and equally exchange your crypto to your local fiat
currency deposited in your bank account.
Basically, you are exchanging funds with another individual, and
the platform provides security against fraud from either party
by standing as escrow between both. And since the exchange
has been affirmed to be reliable, with pedigree, this process is
safe to a large extent, but still, care has to be taken to not be
inadvertently cheated by scammers.
Other P2P platforms aside the CEXs exist, like,
localbitcoins.com, and paxful.com. They all use the same
concept as will be explained below.
To use P2P, navigate to the P2P page on any CEX. Binance
exchange will be our example here.
The interface consists of;
BUY and SELL- Select whichever of the two depending on
whether you want to buy crypto, or, sell your crypto.
FIAT CURRENCY SELECTION- Select whichever fiat/local
currency you wish to transact with e.g. Naira (ticker NGN)
 CRYPTOCURRENCY SELLECTION- Select the cryptocurrency
you wish to buy or sell from the available ones listed on
the platform .e.g. USDT, BTC, BNB etc.
FILTERS- Like amount, payment method; to help in quickly
locating P2P traders orders appropriate to your needs, e.g
inputting #5,000 in amount box would list only traders
willing to sell or buy #5000 worth of the crypto of choice.
LIST OF TRADERS- These are available traders on the P2P
market at that point in time, there trade amount in crypto
and fiat (this may be a range e.g. 100 USDT, #5000 -
#50000) and their payment methods (e.g. bank transfer,
recharge card, PayPal transfer, etc.)
Also shown is the trader’s trading history on the P2P platform,
and reputation or score over a period of time, and their buying
or selling price.
So let’s say for instance, you wish to buy #20000 worth of BTC.
The #20000 is in your wardrobe at home.
The process goes thus:
Deposit the money into your bank account.
Login to the P2P platform. Binance.com being our example
now.
Navigate to the P2P page.
Click BUY and have BUY selected
Select the fiat currency to be transacted (NGN)
Filter the offers that will be shown .e.g. input #20000 in the
amount field.
Check the list of available traders displayed after filtering and
select any of your choice.
To select a trader for your P2P transaction, consider and check;
The trader’s reputation/history and score
The price offered.
There are usually very negligible differences in prices offered by
traders, so this may not really count for much. But still take
note to check.
The P2P trading history and score is however very important.
Clicking on a trader’s nickname will give access to view the
trader’s entire history on the platform plus feedbacks received.
Select a trader with a reasonably good score, number of
traders, and feedback. And whose limit can accommodate your
amount, in this case, #20000, and click buy button in front of
the traders offer.
The resulting page will show;
Price,
Enter amount box (by fiat or by crypto).
In this case, we select “by fiat” and input #20,000. The system
automatically shows corresponding quantity in BTC that will be
received and amount in NGN
Read the trader’s terms and conditions and ensure they are
okay by you. Also, check the payment window, i.e. how long
the transaction should take, before clicking on Buy.
Once you click on buy, the platform withholds the traders
crypto (equivalent to the amount you wish to buy) in the
platforms escrow account.
Then you get the traders payment details , in this case, his bank
account details to transfer the #20000 to either via chatting
with the trader on the chat box provided by the platform or
copying the information on the platform if pre-stored.
Go to your banking app/platform and transfer exact amount to
the traders account.
Once the transfer is done from your bank account, click
paid/transferred or any variant as provided on the platform, so
that the platform can notify the trader to check.
Once the trader has checked and confirmed receiving your
payment in his bank account, he authorizes/notifies the
platform escrow account to release the crypto to you.
These same processes apply to selling your crypto on the P2P
platform too. Only, now, you provide your bank account details
and authorize release of crypto from escrow account once you
have confirmed and verified payment received in your bank
account.
FEW SECURITY TIPS FOR P2P TRADES
When selling crypto, ensure the name on the account sending
Naira to your bank account is the same as the trader’s real
name displayed or verified by the platform. This is to avoid
funds from hacked bank accounts being used to purchase
crypto from you.
Also, verify the money is reflected absolutely in your account
before releasing escrow, no matter the payment evidence
presented to you. Fake alerts, failed payments (bank failure)
are not easy to correct.
WALLETS
Wallets generally and on CEXs serve the basic function of
keeping and managing funds. CEXs wallets still retain their
traditional purpose of managing deposits and withdrawals to
and from the exchange.
When you signup or register on a CEX, a wallet is immediately
opened for you on the CEX which provides for all the
cryptocurrencies available for transaction on the CEX. These
provision for each coin fundamentally includes deposit address
(es) for each coin based on the number of blockchains the coin
features on (and nowadays most coin are interoperable on
several block chains different from their native chain) e.g. USDT
on Kucoin would have Ethereum, Solana, Algorand, Kcc, Tron
blockchain deposit addresses, each address different and
unique to each block chain, and so must be used appropriately
for each chain when depositing USDT.
Withdrawal to each blockchain that is supported by a CEX for
each crypto coin is also provided.
Aside from the traditional functions of deposits and
withdrawals, wallets on CEXs are now demarcated to help
traders separate their funds for different purposes/services
offered on the exchange.
And easy transfer of funds between the demarcations made
possible.
Thus, for instance, kucoin and binance in comparison have the
following equivalent demarcations.
KUCOIN BINANCE PURPOSE
Main Spot Deposits, withdrawals,
(spot trading on
binance)
Trading Spot Spot trading
Margin Margin Margin trading
Futures Futures Futures trading
PoolX Earn Staking and such
like
Main Funding P2P transactions

Having said these, to perform any wallet function for a

cryptocoin in your Kucoin account, simply navigate to the
wallet page, type the coin ticker into the box, click on the
function you want (e.g. deposit, withdraw, trade, transfer, etc.)
as displayed and simply follow the prompts.
Care must be taken to ensure wallet addresses are carefully
and correctly entered when withdrawing and depositing and
appropriate blockchains are selected.
FEW TRADING TOOLS/SNIPETS
To increase the chances of success in crypto currency markets
trading, it is essential to understand how to analyze or read
charts. Some important basic concepts in chart analysis include
support and resistance levels, trends, candle stick analysis.
Above technical analysis concepts can be easily learnt online on
platforms like investopedia, babypips.com.
To easily read and analyze charts, and keep records of one’s
executed technical analysis, a platform like tradingview.com is
very useful.
You can register an account and save analysis carried out on
your chart like support and resistance lines drawings, trend
lines, etc. keeping these drawings is not possible or very
accurate on charts provided by CEX. So, adopting trading view
for chart analysis can be very beneficial.

PRICE ALERTS: Getting alerted when market prices reach some

points of personal interest can be critical to successful trading.
Tabtrader app can really help in this regard.
Most CEXs provide price alert functions as well, so a
combination of tabtrader and CEX alert functions should
adequately provide for price alerts.
DECENTRALIZED FINANCE (DEFI) AND EXCHANGES (DEXs)
DEXs traditional purpose is same as CEXs i.e., to exchange coins,
one for another. This process is called swapping.
The major difference between DEXs and CEXs, as previously
outlined is fund custody.
Unlike CEXs, (that provides a wallet for you on their platform
which the CEX have custody over), DEXs allow you to
interact/transact with your own personal wallet (containing
your funds) which you have custody over.
Having custody of a wallet simply means ONLY you can
access/own/have the private key of the wallet, or the wallet
backup (Phrase, mnemonic or any other such).
Thus, when we create a personal wallet using any of the wallet
platforms/providers (e.g. trustwallet, metamask, safepal, etc),
backup the wallet first and foremost. Backing up means saving
the private key or mnemonic issued for the wallet securely, as
anyone with access to the backup can access the funds.
Personal wallets usage is pretty simple. Whether on mobile or
web, the concept of usage is the same. Only the interface
differs.
One thing to note at this point is that the wallet is actually the
wallet address issued at creation and not the app or web app
(platform) used to access or manage transactions on that
address.
Thus, trust wallet, metamask, safepal, phantom wallet etc. are
just platform providers who developed user interface to easily
manage/monitor your address.
There, apps or dapps (decentralized apps), mobile or
web/extension, are not your actual wallet holding your funds.
That is why if trustwallet app stops functioning today, you can
simply move (import) your address to another wallet provider
e.g. metamask or math wallet and continue managing your
address there.
Your backup phrase/mnemonic phrase/private key comes into
play for this purpose. As it is uniquely encoded to carry all your
address(es) on all blockchains where it is applicable.
A custodial wallet address is used to store crypto, send funds,
interact with dapps (of which DEXs are part), check/monitor
your transaction on the blockchain (explorer) and much more.
It is your identity on the blockchain.
Dapps are apps that run on the blockchain. Like traditional
apps, dapps are useful to create; banks, financial models, DAOs,
social networks, gaming, market places etc.
The usefulness of dapps will keep advancing and changing.
Therefore, todays trending and valuable apps will keep having
their dapp alternatives developed.

Interacting with a dapp is pretty simple and straight forward.

Whether on mobile or web interface, the process remains the
same: Connect your address through a wallet provider to the
dapp and carry out any transaction offered by the dapp.

At any point, the dapp will seek your consent/signature/

authorization for critical transactions like spending and so on.
These will be in form of prompts or pop ups from the wallet
provider and easily clickable consent or non-consent responses.
When interacting with a dapp, it is important to hold the native
token of the block chain on which the dapp operates as it will
be required to pay for the cost of your transaction (gas fee).

Say, on a dex, assuming we want to swap from one coin to the

other.
Let’s use the polygon blockchain as example, and the most
popular dex on polygon- quickswap.
So, visit the quickswap website (quickswap.exchange)
(NB- Always ensure you are visiting the correct dapp address to
avoid phishing attacks)
On mobile, most if not all wallet providers incorporate a
browser in their app. Type the address in the wallet browser
and go.
The quickswap interface on the resulting page is a typical dex
page, and the concept of its usage can be applied to usage of all
dexes, with probably just slight differences among them.
So, on this dex page, you see-
 -Connect wallet: click to connect your wallet
-Settings: click to change setting for your trade/swap and
-TRADE/SWAP INTERFACE-
FROM: Click on the drop down menu and select/click the
coin you currently own and wish to swap for another.
TO: Click on the “select a token” drop down menu
and select the coin you wish to get/have.
Under “From”,
Input the amount you wish to swap, the exchange
automatically fills in the amount you will get under “TO”
The estimated price is displayed and you can click on the swap
arrows in front of the prize to change the price unit for easier
understanding if necessary.
Now, you can click on swap. A confirmation tab pops up.
Please, carefully scrutinize the estimated output amount and
be sure it corresponds/is very close to the amount of the coin
you expected to receive before clicking on swap.
It is necessary to note here that having an idea of the prevalent
price/exchange rate of the pair you are swapping is important.
This enables you to have the idea of the amount you should
receive, as dex algorithms sometimes (even though rarely) can
give a wrong estimated output amount.

This takes us back to the trade settings icon/button. When you

click on it, “transaction settings” button pops out.
“Slippage Tolerance” is the major concern here. Slippage
tolerance simply refers to percentage error/loss that you can
bear in the output amount of the coin you are swapping to, or
else, the transaction is cancelled.
There are preset slippage values (i.e. 0.1%, 0.5%, 1%) and there
is a box to input a custom slippage of your choice.
The slippage tolerance is always displayed on the swap
interface under the price, just above the large swap button.

Given all values are as expected and correct, click on “confirm

swap”.
Your wallet provider brings a pop up for you to authorize the
transaction.
The wallet pop up shows the total amount of your currently
owned coin that will be spent, and the gas fee that the
transaction will cost. You can edit/reset the gas fee if necessary
to higher or lower values as needed.
When satisfied with all values, click confirm, or reject/cancel to
restart the swapping process.
If you click on confirm, the wallet provider will broadcast the
transaction to the blockchain and give you a notification of the
outcome; whether successful or unsuccessful transaction.
You can always check the status of your transaction on the
blockchain’s explorer (in this case, polygon explorer which is
polygonscan.com)

Some DEX charting tools

dextools.io
dexscreener.com
SOME WAYS TO EARN IN CRYPTO
AIRDROPS- Free coins handed out by crypto projects to random
supporters, most times as reward for performing some
activities for the project.
News about airdrops can be sourced from-
A projects social media spaces,
Randomly on social media (reddit, twitter, discord,
telegram etc.)
You can also get to know of airdrops by joining an airdrops
aggregating and announcement channel on social media.
E.g deficalendar on telegram.
https://t.me/deficalendar
https://t.me/deficalendargroup

The major knowledge needed to participate in airdrop activities

is familiarity with usage of wallets, addresses.
Any airdrop announcement would provide a guide for the
activities/actions/steps required to be performed to be eligible
for the drop.
And everything to be clicked or browsed or accessed is always
provided for in the user interface/page you are directed to.

P2P TRADING-
It’s possible to earn with P2P trading. The slight difference in
the buying and selling prices of NGN for instance, on the P2P
platforms provides a profitable opportunity.

NFTs-
Creatives can get to put their works (like art pieces, pictures,
drawings, music, video) on the blockchain and seek/be exposed
to interested parties/individuals willing to buy/purchase such at
a premium.

Another way to earn from NFTs is by speculation. Meaning, you

can buy a NFT which you feel can easily be much more valuable
in the near or distant future and keep it, to sell for a higher
value than you bought it.
NFTs can also be gotten from airdrops. More crypto projects
are developing NFTs and airdropping same to supporters freely.

Buying, selling, creating and putting your work on the

blockchain (minting) are all simple and easy processes that
simply requires an understanding of using wallets and exploring
defi user interfaces.

PS:
For a simple and comprehensive definition/explanation of what
NFTs are, kindly explore this thread on twitter.
https://twitter.com/purisima_pixels/status/
1512372866511257603?t=6DvLGq4dP7TysLEnH4Cf6w&s=08