Chapter 1
Get started in crypto
New to crypto? We've listed below all the things that you need to know to get started, with short and simple explanations.
12 minutes|Yann Gerardi|Published 2023-02-23|Updated 2024-09-07
Chapter 1
New to crypto? We've listed below all the things that you need to know to get started, with short and simple explanations.
12 minutes|Yann Gerardi|Published 2023-02-23|Updated 2024-09-07
Bitcoin and the concept of cryptocurrency as we know it were born in 2008 as a way to get a natively digital form of money that wouldn't rely on any form of central authority to exist and to prevent double-spending. The philosophical purpose was to create a new form of online money defined by self-sovereignty (you can be your own bank) and censorship resistance (nobody can seize or block your funds).
A blockchain is a decentralized database technology, allowing to keep a public and immutable record of transactions without a central authority. That database is distributed across the computer nodes participating to a blockchain's network, which communicate between them to agree on the true state of the transaction history. That process is called a consensus mechanism, which can be very different between blockchains: Bitcoin uses a Proof-of-Work mechanism, which involves miners and computing power to operate the blockchain, while Ethereum uses a Proof-of-Stake mechanism, which involves validators and staked funds.
Examples of blockchains:
Although the term is used to designate all types of crypto-assets, a cryptocurrency is the native form of money of a given blockchain. It is the basic mean to send funds, pay for the cost of making a transaction, and reward the nodes running the network.
Examples of cryptocurrencies:
See the cryptocurrencies that we support >A token is a programmable digital asset that anyone can create on a blockchain. It can be used for payment, for investment or for governance, among other use cases. For example, we've made Bridge Protocol to let anyone create share-tokens, like the MPS or RealT tokens.
Stablecoins are tokens designed to have a value that follows the price of a fiat currency, like the USD or the CHF. Their purpose is to let users easily invest in and out of volatile crypto-assets while remaining on chain, and to denominate the price of other tokens in currencies that people are familiar with.
Examples of stablecoins:
An NFT is a special standard of token designed to be non-fungible, meaning that each token is unique, indivisible and non-interchangeable with other tokens. It is used for digital art and intellectual rights applications.
This term designates the address of your wallet on a blockchain. Just like you would use an email address to send a message to someone else, you use a public key to send funds to someone else. A public key is pseudonymous, meaning that its address and content is visible to all but by default nobody knows who it belongs to.
Examples of address formats:
Each public key is created with a corresponding private key, which gives the control over the public key and the funds associated with it.
⚠️ You must NEVER show your private key to someone else, or that person will be able to access your funds.
A secret phrase is a kind of advanced password, in the form of a series of 12 or 24 random words. It gives access to an unlimited amount of pairs of public-private keys on any blockchain, which basically allows you to have as many wallets as you want with a single "password" to protect.
⚠️ Just like a private key, you should NEVER reveal your secret phrase to someone else, or your funds will be lost.
A wallet is a software that contains your secret phrase in an encrypted way and provides you with an interface to make transactions with its content.
If you don't have a wallet yet we invite you to download Bridge Wallet, the mobile app that we've made to get started easily.
Examples of wallets:
A hardware wallet is a physical device that will store your secret phrase in a more secure way than software wallets. It uses a hardware mechanism to prevent your secret phrase to ever get in contact with the online world, as only signatures get out of the device to approve transactions. To use it, you must connect it to a compatible wallet app.
If you plan to invest significant funds into crypto, you should definitely store them on a hardware wallet.
Main hardware wallet brands:
As explained above, a private key gives access to a public key, and a secret phrase gives access to multiple pairs of public-private keys. If you lose access to your wallet software for any reason, your secret phrase is your only way to restore your wallet and its content on another wallet. Therefore, YOU MUST BACKUP your secret phrase in a secure way. More info in the dedicated guide:
Once you have a wallet and have backed up your secret phrase properly, it's time to buy some crypto on it!
⚠️ Please note that you should always start by buying the native crypto of the blockchain that you want to use, as it will be required to make transactions (see below).
List of native cryptocurrencies:
Technically speaking, you never own crypto per se but you own the ability to sign transactions for a given address. So when you make a transaction to send funds to someone, here's what happens:
⚠️ A blockchain transaction cannot be reverted once processed.
⚠️ Transactions can take from seconds to hours to be processed, depending on the blockchain.
In order to be able to make a transaction on the blockchain, you must have enough funds on your wallet to pay for the transaction cost.
That fee pays the computers running the blockchain, and must be paid in the network's native crypto (see Buying crypto above).
Each blockchain has different ranges of transaction costs, which can vary a lot depending on the network utilization. A transaction can cost up to several dozen dollars on Bitcoin or Ethereum, and a fraction of a cent on Bitcoin Lightning or Gnosis Chain.
Block explorers are the web browsers of the blockchain. They allow you to see in real time the transactions taking place on the network, and the detail of each address. By pasting your public address in their search field, you will be able to see your balance and the status of all the transactions you've made.
List of block explorers:
WalletConnect is an open source tool that enables a mobile wallet to easily connect to a web-based blockchain application like a DEX (see below), and interact with it from a smartphone.
Smart contracts are autonomous and self-executing pieces of code that live on the blockchain and perform a specific function when you interact with them (exchange, lending, voting, it can be anything). Being on the blockchain, anyone can create a smart contract, interact with one, read its code and audit it.
A Decentralized Exchange (DEX) is a set of smart contracts providing crypto exchange services. To use one, you simply need to connect your wallet to it and make swap transactions with it (exchange one token for another).
✅ With a DEX, you can trade crypto while always remaining in custody of your own funds.
Examples of DEX:
Examples of DEX aggregators:
A Centralized Exchange (CEX) is a company providing a crypto trading platform. You deposit fiat or crypto funds on it, then use them with their various trading services.
⚠️ With a CEX, the company running it has custody of your funds deposited there. They can get trapped when deposits/withdrawals are suspended, which happens regularly, or be completely lost if the CEX goes bankrupt (google "FTX").
Examples of CEX:
The two terms are frequently used in the crypto space to describe the dichotomy between custodial services where a third party has the potential to seize your funds in any way, and non-custodial services where nobody can seize your funds.
A bridge is a service designed to help you move funds across different blockchains. To use a bridge you connect your wallet to it, you send it funds from blockchain A and it sends you back funds on blockchain B.
Examples of bridges:
About the author
Yann is the head of marketing of Mt Pelerin. He fell down the rabbit hole of crypto at the end of 2017, when he joined the assembling team that would give birth to Mt Pelerin.
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