I’ve been hitting up a lot of the Cryptocurrency Meetups in Chicago. My previous experience with Meetups has been disappointing, but the crypto Meetup scene is awesome. I recommend you check one out in your city if they have one. Joe hosts a weekly Meetup where he gives a presentation on cryptocurrency for beginners. Picture Chicago pub, back room, dim lights, the smell of beer musk and upwards of 50 people in a packed room. Totally reminded me of the classic Fight Club scene. I loved his talk so much that I filmed it. I also asked him if he could answer a few questions for those of us that don’t want to watch a 45 minute video:
In a nutshell, how does blockchain work?
BLOCKCHAINs are systems that combines software, cryptography, and economic game theory to architecturally and politically decentralize the contents of a distributed ledger. Let’s break that down. A ledger is a list of transactions. In the digital world, this is a database. These transactions follow a set of predetermined rules. The SOFTWARE is an open source protocol that allows the participants to find each other and verify that the transaction rules are followed. The CRYPTOGRAPHY protects the system like walls of a digital castle. It’s primary purpose is to make attacking the system more difficult than defending the system. The ECONOMIC GAME THEORY creates an equilibrium by aligning the interests of all stakeholders in the system.
Decentralization allows the stakeholders of an interaction to trust each other without the need for a third party. When a transaction occurs, the ledger must be updated. The consensus of distributed nodes protects the legitimacy of the transactions. The decentralization protects the consensus. Architectural decentralization spreads out the physical and digital locations for a bad actor to attack. This is achieved by having multiple nodes in different physical locations. Political decentralization is acheived by having the greatest number of people possible controlling these nodes. Blockchains promote the creation of nodes through and economic incentive. This incentive commonly called mining or minting allows participants in the network to be rewarded for running a node.
Blockchains allow a person(s) to control their own digital assets. They allow entities to trust the contents of a database without trust in a third party. The cannot be sensored or seized. The digital assets inherent in their design allows them to leverage network effects more quickly and efficiently than before. They will become the greatest incentive mechanism the world has ever known.
I really like your market cap slide, I can’t believe Apple has that much money. What is market cap? Why is it important for blockchain?
The Market Cap for Bitcoin is currently $61 Billion. That is the total value the entity represents. Since there is no owner of Bitcoin, just participants, the price of the asset is divided evenly amongst the total number of coins. Picture a pie with six slices. There are still six slices when more filling is added. The slices are larger. The filling is money and the slices are Bitcoins in this example. If you buy $100 of Bitcoins, the market cap would have to double to $120 billion for your money to double to $200. People should never worry about the price of the coin. Is the value of the asset moving up or down is the first question. The second is the speed with which it will move.
I wanna buy crypto, where should I go and why?
Coinbase is adding 30,000 plus followers per day. They have proven themselves trustworthy. The founders are publicly representing their company. It isn’t the best for advanced users, but for a beginner it is the easiest. Easy is important in a sector that is still in its infancy. If you want to make it fun, check out www.coinflashapp.com. They round up your change and invest it in your choice of Bitcoin and/or Ethereum.
Talk about Ethereum and ERC20 tokens, what are they? Why should anyone care?
Ethereum can store information and run code. It allows anyone to create a fork of the chain that uses the computing power of the network to run code and create a token that is protected by the Ethereum blockchain. The tokens created have the option of adhering to ERC20 Protocol standard (ERC23, ERC223) which allows the token to immediately interact with most Ethereum ready applications like wallets and exchanges. Ethereum is moving to a different consensus mechanism soon. It is not nearly a finished product. Their is opportunity for a competitor to come up, but there is also a big development community already working on Ethereum that will make it more difficult than most think it will be to displace it.
Okay, I just bought my first cryptocurrency on Coinbase, how do I keep it safe?
Three things. Use Two Factor Authentication (2FA) I recommend Google Authenticator rather than SMS because of social engineering concerns. Use a password manager. Most of my passwords look like this: fe%rgHHY!fdfd$$$fdfdnz1*2s Every one of my important passwords is different. I could not achieve this level of security without using a password manager. Use a VPN service if you use a public wifi. I highly recommend not exchanging cryptoassets at McDonald’s or Starbucks.
Wtf is mining?
I think the first answer really covers this!
Okay, that’s all I got. Check out the video for more info. I’m Lou and I built Coinflash, a web app that automatically invests your spare change into cryptocurrency like Bitcoin and Etherem. I also built Coinflash Trends, a work in progress that notifies you when Google trends is trending up for your cryptocurrency of choice. Check them out! You can follow me on twitter too. Lastly, I forgot to include this awesome slide in the video which is a page with links to tons of resources online:
