So you wanna be a crypto trader, eh?
In the continuing spirit of educating newcomers to the crypto space, today I'm going to be going over the difference between coins and tokens; what that means for wallets and where to store them, and a brief introduction to mining. If you're new to crypto and haven't read the previous entries in this series, please take the time to check them out:
https://steemit.com/cryptocurrency/@j0z0r/getting-started-in-cryptocurrency
https://steemit.com/crypto/@j0z0r/so-how-exactly-do-you-do-your-own-research
https://steemit.com/cryptocurrency/@j0z0r/buying-selling-with-a-plan
If you've read those and followed along, you're ready for the next step. So far along the way, I have glossed over or outright ignored a few important key concepts in crypto because we needed to get started and get our hands dirty to begin to understand the process before delving too deep into the details. But now that you have some practice buying and selling as well as transferring, we need to lay a better foundation for moving forward. We're going to discuss the different between all these different coins and tokens and what it means for you trying to buy and store them.
Why are there so many cryptocurrencies?
As a beginner looking at CMC, it can be bewildering to see that there are over 1000 cryptocurrencies. Why do we need so many? What do they all do? Leave behind your primitive idea that these are all just different forms of money, because not all of them are meant to be used as such. The first coin that we will look at in-depth is Ethereum (ETH). Ethereum is worth something and can be used as a currency. However, it's worth something because it represents a chunk of processing time on a global computer. All those miners processing ETH transactions? They're each a little piece of the computation power of the ETH network. ETH is capable of smart-contracts, which is revolutionary. Imagine if contracts automatically executed and people were paid weekly without any outside interference... That's what ETH does. It also provides a network in which these contracts are executed. Anyone can make their own custom token in ETH with very little coding knowledge and about $15 in ETH last I checked. If you make a token with the ETH network, it follows the protocol called ERC-20. So if you see a token and it says it's ERC-20, that means someone made it on the ETH network. Very importantly, it also means you can store it in an ETH wallet IF YOU CONTROL THE PRIVATE KEYS!!!! Please don't mistake that statement and send an ERC-20 token to an ETH address on an exchange! Your funds will be lost! But if it's https://myetherwallet.com or a paper wallet, then those wallets can hold ERC-20 tokens as well as ETH.
An example of ERC-20 tokens:
REQ
LINK
NET