Crypto basics

Cryptocurrency is a digital form of currency that's transferred peer-to-peer, without using a third party, such as a bank.

A blockchain is like a digital accountant, which maintains a ledger of every single transaction in the network, and makes that ledger completely transparent to anyone in the world to see and validate its accuracy.

You can use cryptocurrencies to buy or sell things like you can with actual currencies. Cryptocurrencies are also used in art, gaming, and financial products.

Decentralized applications (dApps) are just like the internet apps you interact with on a daily basis, except that they're built on top of blockchains. Users can directly connect their wallets to dApps and interact with them in a variety of ways.

A decentralized autonomous organization, or DAO, is an organization whose rules are embedded in code, usually smart contracts. This allows DAOs to operate without single rulers or authorities. There are often governance mechanisms within DAOs that allow its members to vote on various actions or proposals.

Non-fungible Tokens (NFTs) represent unique assets that are not interchangeable. Ownership of these assets is represented on the blockchain. These tokens represent some of the biggest use cases for the Ethereum network, and consequently, the ethereum token.

Proof of work is a consensus protocol that requires miners to work to solve complex mathematical problems. This computational "work" keeps networks secure and verifies cryptocurrency transactions.

As of March 2022, there are over 18,000 cryptocurrencies. 

A crypto wallet is a physical device or software program where you can hold cryptocurrency.

An altcoin, or alternative coin, refers to any cryptocurrency that is not bitcoin. Altcoins exist on a number of blockchains and often have different features than bitcoin.

A decentralized network is not run by a single authority, such as a bank. Instead, the control is shared by everyone who wants to take part in the network.

Smart contracts are like law contracts, or even just casual agreements, where if a certain condition is met then there is a predetermined output or transaction.

Smart contracts are the basis for decentralized applications, which are made up of one or more smart contract agreements. Smart contract platforms like Ethereum enable decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs).

Staking is the process of locking up capital to become a validator of the blockchain. Similar to miners on the Bitcoin network, validators on a proof of stake network validate and organize new transactions.

With proof of stake, miners are replaced with validators posting and confirming transactions, and competition is replaced with randomization.

Mining is the process through which blockchain networks, like Bitcoin, verify transactions. It's called mining because new coins are released into circulation when transactions are approved.

Miners use computing energy and effort to solve very complex equations. Miners are rewarded with the blockchain's native cryptocurrency for solving these equations and validating transactions.