Blockchain and Cryptocurrency For Dummies

Blockchain & Cryptocurrency
for Dummies
Version 1.0
Date – 07 Nov, 2017
SIXPL
DIGITALIMPULSE ONLINE PVT LTD | www.sixpl.com

SixPL
Blockchain & Cryptocurrency for Dummies
Table of Contents
Executive Summary .......................................................................... 3
About SixPL .................................................................................... 4
Chapter 1 - Objective of this eBook....................................................... 5
1.1 Objective ........................................................................................ 5
1.2 At the end of this eBook, you will be able to ............................................ 5
Chapter 2 - Blockchain technology & Cryptocurrency ................................ 6
2.1 Important terms & definitions ............................................................... 6
Chapter 3 - What is blockchain technology? ............................................ 9

3.1 Concept .......................................................................................... 9
3.2 Functioning ...................................................................................... 9
3.3 Quick summary ................................................................................ 10
Chapter 4 - Features & applications of Blockchain technology.....................12
4.1 Features ......................................................................................... 12
4.2 Applications .................................................................................... 13
4.3 Potential ........................................................................................ 14
4.4 Quick summary ................................................................................ 16
Chapter 5 - Cryptocurrency ...............................................................17
5.1 Concept ......................................................................................... 17
5.2 Functioning ..................................................................................... 17
5.3 Examples ........................................................................................ 18
5.4 Cryptocurrency exchanges & digital wallets ............................................. 18
5.5 Quick summary ................................................................................ 20
Chapter 6 - What does cryptocurrency offer? .........................................21
6.1 Transactions .................................................................................... 21
6.2 Mining............................................................................................ 22
6.3 Trading .......................................................................................... 23
6.4 Quick summary ................................................................................ 23
Chapter 7 - Conclusion......................................................................24
© Copyright Digitalimpulse Online Pvt. Ltd. – All rights reserved – 2018 – www.sixpl.com 2
SixPL
Executive Summary
Bitcoin is one the most discussed and debated topic among the technology, finance and
investment circles. Recently, it has been in the headlines across the world for its valuation.
While many folks may be regretting about not investing in Bitcoin, a majority of experts
believe that the rise of cryptocurrency is still in its infancy. The blockchain technology and
cryptocurrency has the potential to disrupt the financial sector and democratize the access to
capital.
Irrespective of the nature of your job or business, you must know the basics of the emerging
technology which is going to impact your life in one way or the other. If you have surplus
money to invest, there is no better instrument than the promising cryptocurrency and tokens
to maximize the returns. Whether you want to make money on the side along with your full-
time job or planning to start your next venture, you must consider cryptocurrency or
blockchain as a means to accomplish your financial goals. For writers, developers,
entrepreneurs, marketers, and investors, cryptocurrency is a goldmine waiting to be exploited.
Of course, the economic rewards come loaded with a significant amount of risks.
Therefore, before you take the plunge and decide to invest your hard earned money or
commit the most productive time (and age) of your life, you must understand the basics of
this technology. Understanding the underlying assets and nature of transactions will help you
exploit the opportunity with minimum risks.
In this e-book, we have covered all the basic concepts of cryptocurrency in an unbiased
manner.
Warning – If you have no background in the cryptocurrency, you may find the content a bit
boring. However, we recommend you to read until the end and try to understand the nuances
of the new technology. It will help you make better financial and business decisions.
Please get in touch with us with your feedback, questions, and concerns. All the subscribed
users will receive answers to all their queries related to blockchain and cryptocurrency.
Happy Reading!
SixPL
About SixPL
SixPL is a digital marketing agency with a strong focus on Content, SEO, SMO, PPC, email
and ICO marketing. We have helped more than five hundreds clients in building and scaling
their web presence. We embraced cryptocurrency in its early stage with a modest investment
in Bitcoin and Ethereum. Since then, we never looked back. Our team of expert writers and
marketers have assisted several fledging organizations in their token crowdsale or ICO
efforts. We have written many ICO White Papers, designed internet marketing campaigns for
prominent ICOs, developed bounty programs and ghostwritten expert commentaries on top
crypto related publications. We have also helped many Bitcoin trading exchanges in building
their customer base online.
This free e-book is an effort to help the uninitiated understand the nuances of blockchain
technology and cryptocurrency. Subscribe to our newsletter and receive the latest
development in technology, marketing, and cryptocurrency.
If you are planning to launch an ICO and looking for help in writing ICO white papers,
integrated marketing campaigns, community managers, etc. get in touch with us at
sales@sixpl.com.
We will be glad to assist you in making your next blockchain-based project a massive
success.
We wish you all the best!
SixPL
Chapter 1 - Objective of this eBook

Blockchain technology is the future of the ‘next big what?’. This concept is a technological
‘goldmine’ that is just unveiling numerous possibilities to us. And this is only the beginning.
Cryptocurrencies, smart contracts, shared economy, transparency & online trustworthiness
are some of the possibilities to name a few. Already declared as the next big idea by world
leaders like Brian Chesky (CEO & founder, Airbnb), Bill Gates (Co-Founder, Microsoft
Inc.), Richard Branson (Founder, Virgin Galactic, 400+ companies) & John McAfee
(Founder, McAfee), the technology truly is revolutionizing. So an understanding of the
subject is worth it!
1.1 Objective
The objective of this eBook is precise. To make the reader aware of the underlying concept of
Blockchain technology and its application in Cryptocurrency. If you are a beginner and have
no idea about these terms, this guide is crafted for you. This eBook will be the shortest path
between you and the latest trends and events in this field.
1.2 At the end of this eBook, you will be able to
● Know what Blockchain technology is, it's concept & functioning

● Understand the jargons, terms and their definitions used in this field
● Understand the features, applications, and potential of Blockchain technology
● Grasp what is Cryptocurrency and how it functions
● Know about the features and types of cryptocurrencies with examples
● Know how you can utilize benefits of cryptocurrencies including transactions,
investing & trading and mining them.
Let us begin our exciting journey and quickly understand some basic terms and definitions
used in this subject. Understanding these jargons is essential as you will frequently come
across them. Not too technical, they have been made easy for the reader’s quick
understanding.
SixPL
Chapter 2 - Blockchain technology & Cryptocurrency
2.1 Important terms & definitions
Here are some commonly used terms/Jargons that occur while discussing this subject.
Understanding them will make the reader aware of the basic concept of technology and its
implications. The reader can go through these definitions initially and come back to this
chapter anytime for references, as they are used in the upcoming sections. It is assumed that
you are a beginner in this subject. Do not expect to grasp, memorize or be thorough with the
terms at once. They will become familiar over the time.
Address
Address for a cryptocurrency, say Bitcoin, is a digital location, from where you send, hold or
receive money. It is like your home address and has a unique key. It consists of a ‘public key’
and a ‘personal key.' Your ‘digital wallet’ address is the public key, and your ‘password’ is
the personal key. Example of address: “1Mh40iTIkNnSPKkdyv”.
Altcoin
Commonly used term for any cryptocurrency that is not Bitcoin.
ASIC/ASIC Miner
Application Specific Integrated Chip (ASIC) mining is a method to mine cryptocurrencies at
a much faster rate than what a typical processor allows. An ASIC chip is specifically
designed to execute/process one mathematical code at a time. Though, recently, networks
have made it impossible to mine with an ASIC.
Blockchain
A blockchain is merely a data system that works on a ‘non-centralized’ network. This allows
for the creation of ‘digital ledger or account’ of transactions on such a network. This system
is protected by ‘Cryptography’, hence removing the need for a central authority or control.
A blockchain comprises of ‘blocks’ which are digital transaction records. It grows
continuously to become a chain, visible to everyone on the network.
Block
These are the files where ‘unchangeable’ data belonging to the network is permanently
stored. Blocks are like pages of a record-keeping account.
Block height
SixPL
Block height is the ‘length’ of the blockchain. It is used to get a reference to the time frame
of the network activities and limiting some aspects like betting, etc. The first block (Called
genesis block) will always have a block height of zero because nothing lies before it.
Block reward
Block reward is the reward for solving mathematical equations of a block. This activity is
termed as ‘hashing.' It is an essential term for cryptocurrency mining.
Distributed ledger
Distributed ledger is the database that is synchronized and shared with consent across a
network. Such a system can be spread across multiple geo-locations. Participants (called
nodes) of the network always have access to record files and own a copy of it. Any changes
or updates made to the ledger are visible to all the nodes at all times. This idea is the
underlying principle of Blockchain technology.
Whereas a centralized ledger system’s data can be synchronized and shared, it is controlled
by a single authority. Example: Etherium is a distributed ledger blockchain network while
Facebook is a centralized ledger network.
That is why, distributed ledger systems guarantee transparency, trust and long-term potential
of a ‘democratic’ cyberspace.
Hashrate
It is simply the speed of discovering a ‘block’ on the network and the rate at which its
equations are solved. ASIC is an example of a such a mining tool that operates at a specific
hash rate. Dedicated systems are being used to mine the blocks on different blockchain
networks.
Halving
Halving is the reward reduction for miners for every ‘N’ number of blocks mined by solving
mathematical codes & equations. Example: Bitcoin’s mining reward of 25 Bitcoins/block is
halved for every 210,000 blocks mined.
Mining
Mining is the process of discovering blocks of a blockchain and solving the algorithms and
mathematical equations associated with it. Each time a block is ‘solved,' that blockchain is
lengthened. For doing so, a digital ‘miner’ is given a reward as we have discussed earlier.
Node
A node is a computer that is the part of a network. Such a node helps in relaying of
transactions and validating them. Every node stores a full copy of the associated blockchain.
Nodes of a particular blockchain network continuously communicate with each other.
SixPL
P2P
Simply put, a Peer-2-peer (P2P) network is a connection between two or more computers that
share their resources and data, without any mediation of a server computer. Computers
participating in such a system are referred to as ‘peers.' They are equal in the hierarchy and
are assigned tasks or workload to process with mutual consent with each other.
Proof-of-work
This is an essential term in blockchain functioning and cryptocurrencies. Blocks are made up
of algorithms that need to be solved by computational power. This process is called ‘hashing’
and takes time & effort by a processor. Hence, a solved or a hashed block is considered as a
‘proof-of-work.' A proof of work contains time-stamp and a digital signature that makes a
block authentic.
Smart contracts
These are a set of rules and conditions to be executed, similar to a legal contract. Only smart
agreements are written in the language of computers and not legal language. Example;
Ethereum is a smart contract blockchain network with broad applications.
Token
It refers to a digital identity of anything that can be digitally owned.
Waller/digital wallet
It is a software used to store data, majorly virtual currency. It is identified by a public and
private key.
Above mentioned terms will frequently occur in the upcoming chapters. You can refer to
them at any time.
Let us now begin with the concept of Blockchain technology, above which many applications
are being built.
SixPL
Chapter 3 - What is blockchain technology?
3.1 Concept
The basic idea behind blockchain technology is ‘decentralization’ of a network database

through consent by all of its participants, i.e., nodes. It is a continually growing database, in
which the data cannot be altered and is stored for infinity. Since, when any changes made to
the data are visible to every computer, and all the previous versions are accessible to every
node at any time, the chances of tampering with data with malicious intents become zero.
This very idea is revolutionary in itself.
Today, most of the ‘systems’ in human society are based on a ‘central authority, ’ i.e., they
are centralized. Be it a political system, a corporate venture, banks, military, etc. In fact,
computer networks throughout the web are also based on a ‘central control’ system. Such
systems have a single point-of-authority and can become non-democratic, corrupt and be
breached.
Imagine a kingdom ‘X.' A King rules the city of X. King orders and the employees, soldiers,
and citizens execute. But then, what if the king starts giving questionable commands? Who
decides to intervene? Who decides right or wrong? Can the king be trusted? Since he is the
‘only’ authority, the kingdom fails to see transparency & trust in the governance. This
scenario flips in the case of a decentralized system, i.e., a transparent and democratic system.
This idea is the biggest ‘value’ that blockchain database networks represent. Applications are
further built on such a blockchain network by utilizing this fact, example: Cryptocurrencies.
3.2 Functioning
To understand the functioning of a blockchain network, keep three simple things in mind. 1)
A decentralized network to create ledger, 2) Cryptography and 3) An incentive to keep the
blockchain secure and keep a record of transactions. All these technologies have been present
from an earlier time and are not new. However, their combination is unique and full of
promising potential.
A decentralized network, as discussed earlier is based on authentication and transparency
where node computers are the validators. Take a scenario as an example, where a lady is
walking on a street. Three strangers are walking in different directions at the same time. A
thug comes running and snatches the lady’s bag and runs away. The three strangers
‘witnessed’ the whole incident. In short, the event is valid, a proof of what happened with the
SixPL
lady. Suppose, if the lady were to be alone. Even though she got robbed, due to lack of
witnesses, she would have had a hard time proving her story or giving any evidence. This
analogy is fit to describe the importance of a blockchain network. Only, the computers verify
and authenticate every transaction/piece of data with each other mathematically.
Cryptography is another significant component of blockchain technology. Cryptography
enables ‘each’ node computer or user to have a unique digital identity. Such a digital identity
is required for authentication over the network by other users with unique identities of their
own. It acts as an authentic and unique signature, which is further made up of two
components. A digital-crypto signature is made up of a ‘Public key’ and the ‘Private key.' A
user’s public key is always visible and known to other users/nodes. The private key is the
secret part and is used by the node to finally ‘authenticate’ or ‘agree’ to a transaction. This
function is just like your home, where your address (Public key) is known to your ‘relatives’
but ‘only you’ have the ‘key’ (Private key) to open the gates when you want to welcome
them.
‘Incentive’ to secure the network and keep the data in the record is another important aspect.
There has to be ‘someone’ to add their computers to the network for maintaining a
blockchain network. ‘Someone’ who can contribute their processing power to the network to
find the ‘blocks,' solve their algorithms and add them to the blockchain according to a set
‘protocol’ or ‘scrypt.' To attract such users with processing power to cater to a public service,
an incentive or value has to be given to them. This value is called ‘Cryptocurrency.' Take the
example of Bitcoin network. Here, many computers across the globe joined the network to
‘provide service to it’ by becoming nodes. In return for their computing power, each
node/user/computer is awarded ‘Bitcoins.' These coins are the digital currency of that
particular network.
We have discussed the idea of a decentralized digital network, how it functions, securing it
with cryptography and incentive structure that it offers. Now let us further see some exciting
features, applications, and potential of the Blockchain technology.
3.3 Quick summary
● A blockchain network is a decentralized network to store and process data

● It solves the problem of trust and transparency
● Participant computers of the network are called nodes
SixPL
● Cryptography is used to secure the system with two unique keys, public and private
keys
● To keep the network secure and functioning, an incentive has to be given to the node
computers. They provide the necessary computing power to solve the data blocks
● This incentive is the underlying concept of cryptocurrency
SixPL
Chapter 4 - Features & applications of Blockchain technology

We have seen that the blockchain technology is based on a unique and revolutionary
principle. It sure has some excellent features and applications.
4.1 Features
Transparency & trust; The exchange and execution of data in the blockchain network runs
with ‘mutual consent’ of the nodes. The point here is to ensure that ‘all transactions/ledgers’
are validated, and all the validated transactions are added only ‘once’ to the corresponding
blockchain. A valid recorded transaction cannot be altered or erased. Hence, if there is one
Bitcoin, it is unique, can be spent only once and it cannot be duplicated. This quality feature
of the network brings trust with the ‘integrity’ of the data stored in it. It is incorruptible.
Hyper-security; cryptography secures this network. That means every node/user has two
keys, the public key, and the private key. A blockchain network can never be hacked or
compromised. Even though individual private keys may be hacked, but due to the design of
network structure, data always remains intact and unalterable. In fact, blockchain networks
offer security that is greater than any top financial or centralized network/institution. Any
blockchain network present today has never been hacked.
The multipliable capacity of the network; Unlike a centralized network system with limited
computing power, a blockchain network can ‘gather’ any amount of required computing
power. Simply, it just has to add more ‘miners’ or ‘nodes’ to its already secure network and
pool in the processing power. Central systems cannot do so because they have limited
servers. This feature also makes the blockchain networks one of the fastest and non-
crashable.
Uncrashable network; One particular feature of the decentralized digital network is that it
has no ‘single-point-of-failure.' Since multiple active computers govern the system, failure of
a few, in fact, 49% of them will keep the system up and be running. Whereas, in case of a
centrally governed digital system, failure of major servers can crash the system. A blockchain
network can take any amount of load. It just has to gather more processors.
Digital democracy; Blockchain network provides the users in control of their data, without
the intervention of a third party. Example, you can keep the power of your financial data
without the need for a bank. It indeed is a revolution, in the sense that the technology
provides for real privacy and control of what belongs to us.
SixPL
In-built asset value; Digital value is inbuilt in a blockchain network. Directly, it is the nature
of the system that creates the value. The system has something of value to the users. It also
demands something from the users to keep it running. Hence, a currency is created. Example,
if I found an oil well in my garden, I have something to give to those who need it (I am the
blockchain network, others are those who need oil!). But I also require ‘someone’ to mine or
drill that oil for me so that I can sell it ('Someone' is the network computers that run it). I can
then safely invent some coins and trade them between the demand and supply cycle. This
cycle is the idea behind digital currency, which is born within the system. It is free from any
external influence like inflation, war, etc.
Faster data processing; Let us say that you made an online transaction. If you did it with the
help of a bank, it would take time because of proper authentication and lengthy process. If
you made that transaction over a decentralized blockchain network, it would be much faster.
Because there is no third party involved and the system has inbuilt rules of validation.
Lowered costs; The costs of the transaction, storage or data execution will automatically
come down. Since there is no involvement of a third party, there is no service fee and
additional costs.
4.2 Applications
The concept of this technology has numerous applications, both in practice as well as
development. Here is the list of some platform technologies utilizing blockchain networks.
Proof-of-Work; In a world where things, products, concepts and new ideas are continuously
created, authenticity plays a vital role. Protecting the intellectual value of original author or
creator of anything ranging from paper to invention is highly essential. It is to be made sure
that they are authentic and that nobody else copies or forges their idea. Blockchain networks
like Proof-of-existence.com and Uproov.com serve the same purpose. The user can upload
their publishing or idea or proof-of-work in any format, and it is saved in a ‘block’ forever.
Proof-of-providing; It is often difficult for the businesses to keep their supply-chain
transparent. From manufacturers to dealers, they face problems to tell their customers the
real-time status of the product or service. This problem can be addressed using the blockchain
technology. Companies like SkuChain are doing the same. Any highly valuable asset such as
real estate, diamonds, etc. can be tracked in real time at each stage of a transaction. From raw
materials to final sale, everything will become transparent.
SixPL
Autonomous organizations; Yes, this is already happening. Organizations like

Decentralized-autonomous-organization, i.e., The DAO has already been experimented on for
such a possibility. An autonomous digital organization is the one ‘without human leaders.' In
such an enterprise, the rules, regulations, and code-of-conduct are predefined by the voting
consensus. Then, everything is monitored and executed by the computers on the network.
Nobody can bend or change the rules, and nobody can go against the ‘code.' This design will
ensure equality and transparency in the corporate world and even governments. However,
there is one fundamental limitation in such an organization. In case of a bug or wrong
rule/code in the system, the coder cannot change it himself. This is why DAO was shut down.
But these kinds of digitally piloted organizations will be an everyday reality in the upcoming
decade.
Smart contracts; Another revolutionary application based on the blockchain network. Smart
contracts are a set of written rules or ‘logic’ that the computer can execute itself if ‘certain’
conditions are met. Such a model will bring high trust and trend of ‘self-regulation with high
standards’. Example, any kind of ‘smart contract’ can be written on the ‘Etherium’
blockchain. They can be used in the transaction of property, logistics, rentals, security, etc.
the essence here is ‘fair’ and ‘trustable’ execution of a set of conditions without human
intervention.
4.3 Potential
The blockchain technology promises some mind-boggling applications in the future. Trust
and transparency have long been a question in the human-made systems. This technology
might be bringing a new level of global democracy or fairness.
Blockchain voting platform; Imagine a digital system, where people can cast votes reliably.
Transparency in electing a board of the company, a leader or a government will meet the
highest possible level. Such a platform cannot be hacked or prone to data manipulation. A
single vote will have an authentic origin, cannot be replicated and will be visible to everyone
at each point of time. The results of such an election will be fair and stored forever in the
network.
Healthcare industry; The scope of this technology is enormous in the healthcare industry.
Ranging from niches like tracking of pharmaceuticals to monitoring ethical clinical trials, the
potential becomes clear to us. A patient’s medical history can be regularly saved on the
SixPL
network, for example, and be referred by other doctors at any time. There are also possible
applications in the fields of genes study and DNA decoding.
Citizen’s database; the Personal identity of people is used to define their citizenship,
criminal records, etc. For a nation, such data is crucial to maintaining internal security and
order. Blockchain technology can be employed to create such a database, where a person’s
identity can be uploaded to a network and be transparent to the system. Of course, those with
criminal backgrounds and frauds need to worry. In such an order, the data cannot be
tampered even by the government itself. A full system based on digital passports can be
created without the possibility of error and data tampering.
Insurance industry; Processing insurance claims is a time consuming and costly process.
Insurance companies often have to make a thorough background check, asset valuation, risk
assessment and scan for personal credentials of a person. A system based on blockchain
network will be beneficial for both the individual/company and insurance provider. In a
process where there is a scope for many errors, possibilities of false claims, negligence, etc.
will be eliminated. Only fraud claims will be screened out and a lot of time will be saved.
Cross-border trading; Mutual trust is vital in businesses involving frequent trades. Today,
purchase and sales of goods are often done with other states and countries. But the buyer
must be able to trust the seller. Hence, payment protection with real-time tracking of the
goods/services purchased can be availed with this technology. This will ensure weeding out
of fake traders and intermediaries. The buyer from the native place can be sure of the
transactions and honesty on the other party’s part.
Proof of birth and death; This is kind of a similar application to the ‘Citizens database.' But
it is important in the sense that it will store valuable records of an individual’s life.
Documental proofs like birth, marriage & death are crucial for a government to keep an
account of its citizens. And often, recording them is time-consuming. Government’s system
is also not full proof. By employing blockchain technology, an invaluable system can be built
for the same purpose.
Many more applications of this technology are possible and being worked on. The bracket is
huge, and the blockchain concept has just been introduced. Let us now take a look at our
subject of focus, Cryptocurrencies.
SixPL
4.4 Quick summary
● Blockchain network provides features like transparency, hyper-security, multipliable

network capacity and minimum scope of failure.
● They form the basis of various applications like patent, publishing, autonomous
organizations, virtual currencies and smart contracts.
● Blockchain technology has futuristic applications in the healthcare industry, electing
processes and business processes.
SixPL
Chapter 5 - Cryptocurrency
At this point, we are somewhat familiar with the concept of cryptocurrency. It is an
application or an inbuilt feature of a blockchain network. Let us take a detailed look at it.
5.1 Concept
Cryptocurrencies first came into use in 2009. It was created by a secret group or an individual
by the codename of ‘Satoshi Nakamoto.' Simply put, cryptocurrency is a form of digital
currency that is secured by cryptography. This currency arises from the inbuilt ‘asset value’
of the blockchain network. The rate at which the currency is produced is predefined. ‘Miners’
who help maintain such a network are issued with these currencies as an incentive. Usually,
the system is so designed, that the digital coins produced by it will eventually stop. That
means there is always a definite number of coins available on a network. For example, there
are only 21 million Bitcoins on its respective web network. However, exhausting all of them
is impossible anytime soon.
There are two main aspects of digital currency that make it alluring. 1) Cryptocurrencies like
Bitcoin are not issued by the government or a bank. They cannot manipulate or interfere in
the system. 2) This currency cannot be forged, copied, double-spent, stolen or compromised
in any way. These features of digital currency make it unique. However, it has its own set of
advantages and drawbacks.
Let us see how digital currency functions exactly.
5.2 Functioning
In simple words, digital coins are created by the users who ‘mine’ them by lending their
processing/computing power to verify other user’s data/transactions, i.e., ledger. These coins
are the ‘intrinsic’ value of the system and exist only inside it. The coins are a collection of
codes, that is stamped or signed each time while moving from moving from user to user. This
is what makes the currency authentic and usable within the network.
The users who provide the network with its computing power have an objective of keeping it
honest and secure, for which they are paid. This fact holds the law enforcement and
government out of reach of the network’s functioning. More the number of transactions are
done with the currency, the more it is needed. To meet the demand for new coins, miners step
in, and the exchange rate of the digital coins is then decided. Cryptocurrencies can be traded
SixPL
with any significant ‘hard-currency’ like USD, INR, AUD, etc. It is valid everywhere
throughout the globe. Although, many businesses and organizations do not directly take
payments in the form of cryptocurrencies. The trend is gathering speed as we make progress
on bigger and better blockchain networks.
5.3 Examples
Cryptocurrencies came into the trend in 2009. Bitcoin was the first digital coin. Since then,
many cryptocurrencies have come into being. Some notable ones are;
● Bitcoin
● Ethereum-Ether
● Ripple
● Litecoin
● Dash
● NEM
● Monero
● ZCash
● Dogecoin
● Safecoin
● Lisk
● Storjcoin X
● Cardano
● Tether
● Waves
And numerous more. Most of these currencies are relatively new. These are sometimes
referred to as ‘Altcoin,' as an alternative to Bitcoin.
5.4 Cryptocurrency exchanges & digital wallets
It is obvious, if there is a currency, there has to be a currency exchange. Also, to store such a
coin, there has to be a digital wallet or e-wallet.
5.4.1 Cryptocurrency exchanges

There are several trustworthy cryptocurrency exchanges online. One can buy or sell the listed
digital coins in return of suitable currency. For example, you can buy 1 ETH for $301 as of
SixPL
today (The rate keeps changing). Online virtual currency exchanges are merely mediums that
match buyers of the currency pair to the traders. These online exchanges are similar to Forex
& commodities trading.
If you want to buy BTC (Bitcoin) in exchange of INR or USD, sim put up a request online at
a digital currency exchange. Or, you can sell BTC in return for a currency of your preference
through these online exchanges.
Some trustable exchanges for cryptocurrencies are;
● Coinbase
● Kraken
● Cex.io
● ShapeShift
● Poloniex
● Bitstamp
● Coinmama
● Bitsquare
● Gemini
5.4.2 Digital wallets
Coming to the e-wallets, they are secure digital locations to store, send or receive digital
coins. A cryptocurrency wallet is secured by cryptography i.e., a private key and a public key
as we discussed earlier. Such an e-wallet is connected with various blockchain networks to
enable the user to send and receive these coins. If you intend to use a digital currency, having
an e-wallet is a must.
There are majorly three types of digital wallets;
Desktop wallet; A desktop wallet is downloaded and installed on a PC or a laptop. It can
only be used on that single computer. A private key thoroughly secures them. However, the
user should be sure that the computer system is free from any virus or malware attack.
Online wallet; The purpose and functioning of such an e-wallet are same as a desktop wallet.
The only difference is that is works on a cloud network. Online e-wallets store your private
keys online and are run by third-party controls. They are a little more vulnerable to hacking
or cyber-attack.
Mobile wallets; These are much more convenient to use and employ PC level security. They
can be used for transactions at retail stores, and the private key lies with the user only.
SixPL
The reader might now be familiar with the technology of cryptocurrency, its features, and
applications. It can be safely assumed that in the future, digital currencies will become
familiar and many vital systems will function on Blockchain networks.
Let us now see how you can benefit from the cryptocurrencies and use them to your
advantage.
5.5 Quick summary
● Cryptocurrency or virtual currency is a form of digital money secured with

cryptography.
● It is an incentive given to the users who maintain and secure the network. They mine
it in return of their processing power.
● It can be used for trade and transactions.
● There are several cryptocurrencies like Bitcoin.
● A virtual currency can be traded at any reliable online exchange.
● Cryptocurrencies are stored in digital wallets that are secured by private & public key.
SixPL
Chapter 6 - What does cryptocurrency offer?

Cryptocurrencies, despite being a nascent discovery, provide you with some opportunities
that you can exploit to your advantage. Let us see what those chances are.
6.1 Transactions
Using currencies like Bitcoin or Ether for transactions, i.e., sales and purchase come with
many upsides for its users. Following are the benefits of using any cryptocurrency;
Tax-free transactions; Since, any cryptocurrency is free from the intervention of a central
body or authority like government, bank or law-enforcement, taxes cannot be levied on them.
These authorities have no track of trails for the transactions made using, say, Bitcoin. It lies
out of their jurisdiction, and you save a lot of heavy taxes.
User anonymity; While some argue that it is the downside feature that feeds the black
economy, it has its bright side as well. The user of any cryptocurrency can remain
anonymous and protect his/her privacy and integrity. Not only it is the case with transaction
records, but with any personal data stored in the blockchain network system. Recent news
claimed that privacy in the digital world is a myth and ‘central authorities’ keep a regular
surveillance (Watch!) on online users. This feature surely adds to our right to privacy with
confidence.
Free of regulations; This is another upside while making transactions online with
cryptocurrency. Governments and central control parties usually have laws, norms, and limits
imposed on online sales and purchase. Cryptocurrency makes it impossible for them to
regulate it. Many might advocate that this might cause suspicious activities in the cyber-
world. But then again, protecting private data and identity are a part of global cyber
democracy.
Free from external influence; Since, Bitcoins, Litecoins, Ether, etc. are inbuilt properties of
a blockchain network, they cannot be affected by the state of ‘physical economy, ’ i.e.,
inflation, war, actions of the government & commodity prices. Only factors that affect the
value of a cryptocurrency are the size of its network, the computing power of the network,
number of digital coins available, number of miners willing to mine the coins and number of
users willing to pay using the cryptocurrency.
Minimum transaction fee; We have already seen digital platforms taking high transaction
fees for online purchases. With currencies like Bitcoin and Ether, the transaction fee levied
SixPL
by the respective network is minimum. This fee is important to run and maintain the network
and keep it secure.
Global usage; Travelling abroad requires the exchange of currencies. Example, if you decide
to travel from India to the USA, you need to convert your INR to USD. But having an e-
wallet with cryptocurrency enables you to use it worldwide. Digital coins can be exchanged
for any significant hard currency of a country. Or, just use it straight from your wallet!
6.2 Mining
Mining cryptocurrencies offer another excellent opportunity for its users. If you are willing to
join any suitable blockchain network and ‘invest’ your computing power to discover and
mine the ‘blocks,' you will be rewarded with digital coins. But, your usual PCs and Laptops
might not be sufficient enough for such enormous processing power. You will need some
special processors or ‘rigs’ and software to mine a virtual currency. These are the
requirements to start a digital-mining-rig for cryptocurrency rewards.
Get an e-wallet; This is important as to store the mined coins. Decide what currency you
want to extract (Based on profit research, etc.). Just setup any e-wallet suitable for that virtual
money. Now, it is time to get a mining rig.
Mining rig; A mining rig is nothing, but a specialized processor with its cooling system.
These processors are potent and operate on scales of Terahertz. They are defined by their
processing power or hash rate, i.e., TH/s. Higher the hash rate, higher will be the coin mining
efficiency, but electricity consumption will also be significant. Some rigs like Antminer are
very popular amongst Bitcoin miners. Just attach the rig to your PC or laptop and now it’s
time to get a mining software and a mining pool.
Mining software; You can get any reliable mining software online. Download it and install it
on your system. Some reliable software is BitMinter, BFGminer, CGminer, BTC miner, and
DiabloMiner. You can also check for recommendations made by your ‘rig’ manufacturer.
Once you are done, you are almost ready to start your cryptocurrency mining operation.
Mining pool; Once you have installed your rig on the computer, next step is to find a mining
pool. These are groups or teams of other miners throughout the world. Mining pools are
beneficial because miners combine their computing power to discover and solve the blocks
together. This strategy makes the process much faster and fair results can be expected.
Usually, the mining pool operates on ‘split share’ basis, points basis or simply currency split
basis. The profit is shared according to the individual miner’s processing power.
SixPL
Once you complete the final step, your rig is ready to start cryptocurrency mining.
Remember, the more powerful the rig processor is, the faster it will discover a block and
solve it.
6.3 Trading
Trading cryptocurrencies for profit is another widely spread practice throughout the globe.
This market is new, huge and adequately fragmented. Hence, getting a chunk of profit it is
not very difficult, as of now! Bitcoin, for example, can be traded globally as it works on a
digital platform. Every time currencies like this come into the news, it attracts more and more
investors and traders. This hype inflates the price of the digital coin. At least this has been the
trend in the past few years.
Why should you trade in cryptocurrencies?
The answer is simple. Cryptocurrencies are highly volatile. That means, their prices can rise
and drop rapidly. They have only gone up for significant cryptocurrencies like Ether, BTC,
Litecoin, etc. in the past three years. Bitcoin’s price floated between $450-$700 in 2014.
Today, in November 2017, 1 BTC equals $7447 US. One can only imagine the big window
of opportunity with this and other currencies soon.
The second reason to trade in digital currencies is that they are not officially tied to any
international stock-exchange board. Online virtual currency exchanges are open 24/7. Hence,
you can use them for trade at any time of the day. The third reason is that a digital coin can
be traded globally over the web. The transactions take place in a matter of seconds.
Sure, every trade comes with risks and benefits. It is the same with cryptocurrency trading.
But as new blockchain networks emerge, more secure systems will be formed to make virtual
currency trading even more risk-free and trustworthy.
6.4 Quick summary
● Cryptocurrency gives the user many beneficial opportunities.

● A virtual currency like Bitcoin can be used for private transactions without taxes.
● A user can ‘mine’ the currency on any associated network with a ‘mining rig.'
● Cryptocurrencies can be used for trading as they are volatile and the market is vast
and fragmented.
SixPL
Chapter 7 - Conclusion
Throughout our short journey, we understood about blockchain technology. We came to
know its features and applications. We also now have a basic understanding of
Cryptocurrency and its features. Get in touch with us to know more about Cryptocurrency
and Blockchain Technology.
Since blockchain and crypto economy is evolving at a rapid pace, we will continuously
update this e-book to include the latest development in the sector. In the next version of the e-
book, we will also include a brief guide for new investors and traders, Token Crowdsale and
ICOs (Initial Coin Offerings), Smart Contracts, and various career options in cryptocurrency
and blockchain economy.
Visit www.sixpl.com and subscribe to our newsletter to receive the latest edition of this e-
book. Follow us on Facebook, LinkedIn, and Twitter to stay updated on the most recent
developments in the technology, crypto and marketing domains.
Send us your feedback/queries/concerns at support@sixpl.com (We respond to every query).
For sales related queries, get in touch with us at sales@sixpl.com.
SixPL
Contact Us:
SixPL, Digitalimpulse Online Pvt. Ltd.
G 284, Sector 63, Noida, UP, India
Email – sales@sixpl.com
Mob - +91-9873436666
www.sixpl.com

Blockchain and Cryptocurrency For Dummies

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Blockchain and Cryptocurrency For Dummies

Uploaded by

Copyright:

Available Formats

Blockchain & Cryptocurrency

DIGITALIMPULSE ONLINE PVT LTD | www.sixpl.com

Chapter 3 - What is blockchain technology? ............................................ 9

We wish you all the best!

Chapter 1 - Objective of this eBook

1.2 At the end of this eBook, you will be able to

● Know what Blockchain technology is, it's concept & functioning

Chapter 2 - Blockchain technology & Cryptocurrency

2.1 Important terms & definitions

Chapter 3 - What is blockchain technology?

The basic idea behind blockchain technology is ‘decentralization’ of a network database

3.3 Quick summary

● A blockchain network is a decentralized network to store and process data

Chapter 4 - Features & applications of Blockchain technology

Autonomous organizations; Yes, this is already happening. Organizations like

4.4 Quick summary

● Blockchain network provides features like transparency, hyper-security, multipliable

5.4 Cryptocurrency exchanges & digital wallets

5.4.1 Cryptocurrency exchanges

5.5 Quick summary

● Cryptocurrency or virtual currency is a form of digital money secured with

Chapter 6 - What does cryptocurrency offer?

6.4 Quick summary

● Cryptocurrency gives the user many beneficial opportunities.

Send us your feedback/queries/concerns at support@sixpl.com (We respond to every query).

For sales related queries, get in touch with us at sales@sixpl.com.

You might also like