Maven Learning
The Maven Educational Page
Welcome to the Maven Learning Page. This page is aimed to provide help for investors just starting on their journey to experienced investors that would like to brush up or expand on their knowlegde. This is also a space where experienced investors can share their knowledge.
We would like to encourage members to ask questions to which we can then post answers here.
Beginners guide
1. What is Cryptocurrency?
Cryptocurrency, sometimes called crypto-currency or crypto, is any form of currency that exists digitally or virtually and uses cryptography to secure transactions. Cryptocurrencies don’t have a central issuing or regulating authority, instead using a decentralized system (Defi) to record transactions and issue new units. Essentially its a digital currency, not like a bank issued currency (FIAT).
1 a. How Does It Work
Cryptocurrencies are supported by a technology known as blockchains, which maintains a tamper-resistant record of transactions as a hash and keeps track of who owns what. The use of blockchains addressed a problem faced by previous efforts to create purely digital currencies: preventing people from making copies of their holdings and attempting to spend it twice.
Individual units of cryptocurrencies can be referred to as coins or tokens, depending on how they are used. Some are intended to be units of exchange for goods and services, others are stores of value, and some can be used to participate in specific software programs such as games and financial products.
Proof-of-Work (PoW) is a mechanism Bitcoin uses to regulate
the creation of blocks and the state of the blockchain. Proof-of-Work provides
an objective way for all members of the Bitcoin network to agree on the state
of the blockchain and all Bitcoin transactions.
Proof-of-Stake (PoS) is an alternative consensus mechanism to Proof-of-Work, developed and used by a few alternative cryptocurrencies. In the Proof-of-Stake model, stakers—the PoS equivalent of miners—lock up funds in a special smart contract. Every time a new block is needed by the network, an algorithm grants a specific staker the opportunity to publish the next block. The algorithm selects the staker via lottery, depending on each staker’s percentage of total staked funds. For example, if a single staker controls 30% of all funds staked on a given network, they have a 30% chance of mining the next block.
Proof-of-Work forces miners to make trillions of numerical guesses in order to produce a valid block, and thanks to the difficulty adjustment, miners collectively find one block every 10 minutes on average.
1 b. What Is A Blockchain
Blockchain technology is an advanced database mechanism that
allows transparent information sharing within a business network. A blockchain
database stores data in blocks that are linked together in a chain. The data is
chronologically consistent because you cannot delete or modify the chain
without consensus from the network. As a result, you can use blockchain
technology to create an unalterable or immutable ledger for tracking orders,
payments, accounts, and other transactions. The system has built-in mechanisms
that prevent unauthorized transaction entries and create consistency in the
shared view of these transactions.
1 c. Mining
Bitcoin mining is the process by which new bitcoins are entered into circulation. It is also the way the network confirms new transactions and is a critical component of the blockchain ledger’s maintenance and development. “Mining” is performed using sophisticated hardware that solves an extremely complex computational math problem. The first computer to find the solution to the problem receives the next block of bitcoins and the process begins again.
Cryptocurrency mining is painstaking, costly, and only sporadically rewarding. Nonetheless, mining has a magnetic appeal for many investors who are interested in cryptocurrency because of the fact that miners receive rewards for their work with crypto tokens.
1 d. What Is Staking?
Staking is when you lock crypto assets for a set period of time to help support the operation of a blockchain. In return for staking your crypto, you earn more cryptocurrency.
Many blockchains use a proof of stake consensus mechanism. Under this system, network participants who want to support the blockchain by validating new transactions and adding new blocks must “stake” set sums of cryptocurrency.
Staking helps ensure that only legitimate data and transactions are added to a blockchain. Participants trying to earn a chance to validate new transactions offer to lock up sums of cryptocurrency in staking as a form of insurance.
If they improperly validate flawed or fraudulent data, they may lose some or all of their stake as a penalty. But if they validate correct, legitimate transactions and data, they earn more crypto as a reward.
2 a. What Is The Difference Between a Coin and a Token
Token vs Coin: What is a Token
Tokens often get called digital coins. However, this isn’t correct. There is a major difference! Tokens are created on existing blockchains. In fact, thanks to the creation and facilitation of smart contracts, the most common blockchain token platform are Ethereum. Tokens that are built on the Ethereum platform are known as ERC-20 tokens.
In simple words, the crypto coin is native to its blockchain asset. The Bitcoin blockchain coin is BTC. There is ETH on the Ethereum blockchain. These assets store value and work as a medium of exchange, similar to traditional currencies. It is why crypto coins are also called cryptocurrencies.
Another unique feature of all crypto coins is the way they are created. Typically, coins are mined using a Proof-of-Work (PoW) consensus mechanism or earned using a Proof-of-Stake (PoS) mechanism.
2 b. What is an Exchange
Cryptocurrency exchanges work similarly to a broker, giving you the tools to buy and sell cryptocurrencies like Bitcoin, Ethereum, and Tether. The best cryptocurrency exchanges make it easy to buy and sell the currencies you want with low fees and strong security features. An online trading platform that is used to buy, sell and exchange cryptocurrencies. Exchanges convert fiat currency (dollars, Euros, etc.) to crypto (Bitcoin, Ethereum, etc.), and vice versa.
2 c. How Does an Exchange Work?
A cryptocurrency exchange is a marketplace where buyers and sellers can trade one cryptocurrency for another, or exchange it for fiat money. This is primarily done through the utilisation of a live order book. The order book displays live buy and sell orders, directly impacting the exchange rate of the respective cryptocurrency. Since each exchange calculates the price based on its own trading volume, an exchange with more users is likely to provide more market-relevant prices. This is why there are often slight discrepancies in the price of cryptocurrencies amongst different exchanges.
3 a. Wallets
A cryptocurrency wallet is an application that functions as a wallet for your cryptocurrency. It is called a wallet because it is used similarly to a wallet you put cash and cards in. Instead of holding these physical items, it stores the passkeys you use to sign for your cryptocurrency transactions and provides the interface that lets you access your crypto.
Modern cryptocurrency wallets make the blockchain accessible to everyone. When cryptocurrency was first introduced, sending cryptocurrency was a manual task that required entering long keys. Today, the software does most of it for you.
Most modern wallets generate a twelve-word mnemonic seed phrase. An example phrase could be “airport bedroom impression sample reception protection road shirt…” which seems random but is created and linked to your keys by your wallet. You can use the phrase to restore the wallet if the device is lost or damaged. These words should be carefully stored in a safe place because anyone who finds them will be able to access your cryptocurrency.
3 b. Hot Wallet or Cold Wallet?
There are two subcategories of wallets, hot and cold. A hot wallet has a connection to the internet or to a device that has a connection, and a cold wallet has no connection. Lastly, there are three subcategories of wallets—software, hardware, and paper. Each of these types is considered either a hot or cold wallet.
So, you can have a software hot wallet or a hardware cold or hot wallet. These are the most common types, but you may also encounter other combinations
Wallet safety is essential, as cryptocurrencies are high-value targets for hackers. Some safeguards include encrypting the wallet with a strong password, using two-factor authentication for exchanges, and storing any large amounts you have offline.
4 a. What Do The Different Types of Coins and Tokens Do?
4 a 1 – Stable coins
Stablecoins are cryptocurrencies whose value is pegged, or tied, to that of another currency, commodity, or financial instrument. Stablecoins aim to provide an alternative to the high volatility of the most popular cryptocurrencies, including Bitcoin (BTC), which has made crypto investments less suitable for common transactions.
Stablecoins attempt to peg their market value to some external reference, usually a fiat currency. They are more useful than more-volatile cryptocurrencies as a medium of exchange. Stablecoins may be pegged to a currency like the U.S. dollar or to the price of a commodity such as gold or use an algorithm to control supply. They also maintain reserve assets as collateral or through algorithmic formulas that are supposed to control supply.
4 a 2 – Utility tokens
A utility token is a cryptocurrency on a smart contract blockchain that serves a specific function in a crypto project’s ecosystem. Unlike cryptos like Bitcoin (BTC), utility tokens aren’t designed to be a real-world medium of exchange. Instead, a utility token only has a use case within its respective smart contract protocol.
Most often, utility tokens aren’t mined into existence like Bitcoin or Litecoin. Instead, Web3 project leaders “pre-mine” their utility tokens and send them to team members, early investors, and the
Apart from being used to raise funds, utility tokens can also be used to create unique incentive schemes that enable people to perform certain actions within an ecosystem knowing they will be compensated for it.
4 a 3. Meme Coins/tokens
Meme coins/tokens are a cryptocurrency genre loosely defined as having an exuberant online community supporting the currency’s growth. They are sometimes identified with animated character or animal meme images. During the recent cryptocurrency boom, top currencies to gain meme coin status included Dogecoin and Shiba Inu. The category extends to lesser-known currencies such as Baby Doge and Dogelon Mars. While Baby Doge and Dogelon Mars earn fewer headlines, they still maintain nine-figure market capitalizations.
Our economic system is not set up to incentivize people to deal with many of the challenges we have today. For example, most people would agree that people should be responsible for using cleaner energy sources and cleaning up the environment. However, because there is no clear business model in place for such an initiative under our current system, any company that sets out to clean the environment will almost certainly have to operate as a non-profit.
4 a 4. Coins (Network Coins)
In short a coin is native to its network, BTC for bitcoin, ETH for ethereum, ADA for Cardano, XRP for rippple etc. these coins are finite and determined by the smart contract for the network, as previously discussed some are mined, some are available on launch. the main function of the network coin is to store the value of the network, the same as any FIAT currency, its the value of the asset. these network coins will then act as a medium of exchange, buying/selling, or transferring for goods/services. Coins are the closest to FIAT currencies that people are familiar with. In all instances without holding some of the network coin to pay fees etc then you would be unable to perform any transactions on the network.
Intermediate guide
Coming Soon……..
Coming Soon……….
Pro Hints and Tips
Coming Soon…….
Coming Soon…….
