Guide To Cryptocurrencies eBook PDF

 **Guide To** **Cryptocurrencies** **Course eBook** A concise introduction to cryptocurrencies and related technologies; including digital currencies, cryptography, blockchain, global financial systems, cryptocurrency wallets, cryptocurrency exchanges, DeFi (Decentralized Fi...

 **Guide To** **Cryptocurrencies** **Course eBook** A concise introduction to cryptocurrencies and related technologies; including digital currencies, cryptography, blockchain, global financial systems, cryptocurrency wallets, cryptocurrency exchanges, DeFi (Decentralized Finance), cryptocurrency mining, web3, Fintech (Financial technology), and NFTs (Non-Fungible Tokens). Mary Webb **PUBLISHED BY**:\ Zengage Learning\ 3 Germay Drive Suite 1020 Wilmington, DE 19804, USA Copyright © All rights reserved.\ No part of the contents of this eBook may be reproduced or transmitted in any form or by any means without the written permission of the publisher. If you need assistance, or have questions, related to this eBook, email Zengage Learning: [Email](mailto:[email protected]?subject=Zengage%20Learning%20eBook%20Assistance) or visit [Support](https://zengagelearning.com/support/) The information presented in this eBook, including URL and\ other Internet website references, may change without notice. Zengage Learning and the trademarks listed at zengagelearning.com on the "Trademarks" webpage are trademarks of the Zengage Learning group of companies and services. All other marks are property of their respective owners. **Chief Learning Officer:** Mark Robinson **Lead Editor:** Mary Webb **Instructional Design Editor:** Chris Matthews\ **Project Editor:** Pradip Singh\ **Editorial Production:** Pham Nhat Vuong\ **Technical Reviewer:** Marcus Young\ **Copy Editor:** Gloria Pierce\ **Graphic Designer:** Joel Hoffman **NOTE:** This eBook covers all modules in the Guide to Cryptocurrencies Course. Read it carefully to prepare for the associated assessment quiz. **You should read all study guides, and listen to podcasts, to prepare for the final exams and certificate.** {#section.TOCHeading} {#section-1.TOCHeading} Table of Contents {#table-of-contents.TOCHeading} ================= [Module One: Digital Currencies 4](#module-one-digital-currencies) [Module Two: Cryptography 14](#module-two-cryptography) [Module Three: Blockchain 15](#module-three-blockchain) [Module Four: Global Financial Systems 17](#module-four-global-financial-systems) [Module Five: Cryptocurrency Wallets 19](#module-five-cryptocurrency-wallets) [Module Six: Cryptocurrency Exchanges 21](#module-six-cryptocurrency-exchanges) [Module Seven: DeFi (Decentralized Finance) 22](#module-seven-defi) [Module Eight: Cryptocurrency Mining 24](#module-eight-cryptocurrency-mining) [Module Nine: Web3 26](#module-nine-web3) [Module Ten: Fintech (Financial Technology) 28](#module-ten-fintech) [Module Eleven: NFTs (Non-Fungible Tokens) 29](#module-eleven-nfts) Module One: Digital Currencies ==============================  **Welcome to Digital Currencies** **Lesson 1. Money, Currency, and Digital Currency** Money is any item, verifiable record, or **medium of exchange** symbolizing a **perceived value** that is generally accepted as payment for **goods** and **services** and repayment of debts. A currency is a **standardization** of money in any form, used or **circulated** as a **store of value** around the world; for example, dollar bills, coins, and gold. A **Digital Currency** is a type of asset, or currency, only used during **electronic transactions**. Digital Currencies are also called **electronic currency**, **electronic money**, **digital money**, or **cybercash**. They can be exchanged for other types of money or assets; but they lack a **physical form**. Cryptocurrencies, like bitcoin, are the most popular type of digital currency; this will change as more **national governments issue their own centralized digital currency.** **Lesson 2. Understanding Digital Currencies** **Digital currencies** exist only as electronic signals, or data, and hence do not have **physical forms or attributes**. **Electronic** (or **Digital**) **Wallets**, computers connected to the internet, and other types of networks, are used to implement **transactions** involving digital currencies. **Tangible**, or physical currencies, like **metal coins** or **paper bills**, have **physical characteristics** and attributes. **Tangible** simply means something that can be touched or felt. You can actually hold and touch a physical currency. You cannot hold an **electronic signal** or digital currency. **Physical possession** is required to make transactions involving tangible currencies. Physical and digital currencies have similar uses. Both can be used as an exchange of value to **pay for services** or **purchase goods**. Cross border **instant payments** and **transactions** are possible using digital currencies. People located in different countries, **connected to the same network**, are able to send and receive payments, in near **real-time**, using digital currency. **Lesson 3. Digital vs Fiat Currencies** There are both **centralized** and **decentralized** digital currencies. **Fiat money,** or **currency,** exists in physical form. Fiat currencies are **centralized** and controlled by a **system** of **production** and **distribution** by **central monetary entities, banks,** and **government** agencies. **Fiat money** is usually government-issued and is not backed by a physical commodity, such as silver or gold; the issuing government assures the value of fiat money. Popular **cryptocurrencies**, such as **Ethereum** and **Bitcoin** are decentralized. Digital currencies can be used to **transfer value**. Digital currencies require a new way of thinking when they are associated with the **purchase** and **sale** of **services** and **goods**. The entire framework of **monetary transactions** is extended by the implementation of digital currencies. Many types of networks, like **gaming** and **gambling**, are providing users of digital currencies, or **tokens**, with unforeseen capabilities relative to **transfer of value**. **Lesson 4. Types of Digital Money** **Digital money** (or digital currency) is an umbrella term that refers to any means of payment that exists purely in **electronic form**. Generally, there are **three different types** of digital currencies: **Virtual Currencies**, **Cryptocurrencies**, and **Central Bank Digital Currencies** (CBDCs). **Unregulated** digital currencies which are under the control of **founding organizations,** various **stakeholders,** or **developers** are known as **virtual currencies**. **Network protocols** can utilize **algorithms** to control virtual currencies. **Network protocols** are a set of rules, or **software** **code**, which determine how connected devices communicate across a network to exchange information. **Gaming network tokens** are very popular examples of virtual currencies; developers define and control the economics of these tokens. **Cryptocurrencies**, like Bitcoin and Ethereum, use cryptography to **verify** and **secure transactions** in a network. The network also uses **cryptography** to control and manage the creation of these digital currencies. **Cryptography** is a process of securely hiding or coding information so that only the person a message was intended for can decipher it. Although most cryptocurrencies remain **unregulated**, they are becoming more regulated each day. **Lesson 5. Central Bank Digital Currencies** (CBDCs) A **Central Bank**, national bank, monetary authority, or reserve bank, is an institution that manages the currency and monetary policy of a monetary union, government, or country. The central bank also **issues,** and **regulates**, digital currencies known as **Central Bank Digital Currencies** (CBDCs). **Fiat Currency** is sometimes supplemented, or replaced, with **Central Bank Digital Currencies**. Fiat currency can exist in both **digital** and **physical form**, while a CBDC is only available in **digital form**. More than a few nations are implementing plans to launch a **digital alternative**, or supplement, to their **fiat currencies**. Using CBDCs is expected to enhance the **security** and **speed** of **centralized payment systems**; also decreasing costs and reducing the risks of handling cash; as well as fostering greater **financial inclusion** for those without immediate access to **conventional banking services**. With the easier **cross-border payments** offered by CBDCs, the need for **foreign exchange** will be reduced. The U.S. government, through the **Federal Reserve**, and authorized by **Congress**, will eventually issue its own central bank digital currency (CBDC) as the digital, or electronic, form of the U.S. dollar. There are substantial **privacy** and **security** concerns, possible impacts on **monetary policy**, and **operational management** issues, surrounding this inevitable implementation. **Lesson 6. Digital Currency Advantages** The advantages of digital currencies include **Faster Transaction and Transfer Executions**; **No Need for Manufacturing Facilities**; **Simpler Fiscal and Monetary and Policies**; and **Lower Transaction Costs.** **Faster Transaction and Transfer Executions** Being hosted on the same, or interconnected, **networks** virtually eliminates the need for **intermediaries** when executing transfers of digital currencies; this drastically reduces the amount of time required for those transfers to complete, making executions **very fast**. The lack of intermediaries during the payments process means that direct transactions between parties is possible; making digital currency transactions **low-cost** and, in most cases, **instantaneous.** Banks, or **clearinghouses**, involved in **traditional payment methods** cannot compete with the low-cost and increased speed of digital currency transactions; required **transparency** and **record keeping** are also enhanced with the use of digital currency electronic transactions. **No Need for Manufacturing Facilities** The production of physical currencies, like dollar bills and coins, requires **manufacturing facilities** for **printing** and **minting**. Digital currencies do not require the establishment of manufacturing facilities and hence there is no concern for potential **physical defects.** **Simpler Fiscal and Monetary and Policies** The **Federal Reserve System** produces and circulates money by working with **financial institutions** and **banks**. Primary functions of the Federal Reserve include **supervising** and **regulating banks**, conducting **national monetary policy**, maintaining **financial stability**, and providing **banking services**. With the implementation of **Central Bank Digital Currencies** (CBDCs), **government agencies** can simplify money circulation, and other distribution methods, by **disbursing payments** directly to the public; while also eliminating the need for **manufacturing facilities** and **transporting** operations. **Lower Transaction Costs** With digital currencies, users on the same **network** can interact **directly**; **consumers** can pay for products and services directly to the **merchants** who are in the same network environment. **Networks** can also **interconnect** with other networks, allowing for **lower cost transactions** between users when compared to **fiat** or physical currency exchanges. Since there is no **intermediary** adding **service fees** for **transaction processing**, digital currency transactions cost less. **Lesson 7. Other Digital Currency Advantages** Other advantages of digital currencies include **Decentralization**; **Anonymity**; and **Global Accessibility.** **Decentralization** As of now, most digital currencies are **decentralized**; meaning that they are not under the **control** of **financial institutions** or **governments**. Decentralization limits **censorship**, **manipulation**, and **interference** by governments or central banks. Due to decentralization, the **administrative** and **management** control over digital currencies is distributed over a **wide range** of **users** and **owners**. **Anonymity** **Personal data** is not disclosed during digital currency transactions. This provides users on the network with a significant level of **anonymity** and **privacy**. Anonymity offers protection through **confidentiality**, which helps participants keep their financial transactions secret. **Global Accessibility** An **internet connection** is all that is needed for anyone, **anywhere in the world**, to perform transactions with digital currencies. Digital currencies are giving people, who lack access to **traditional** **banking institutions**, a low cost, fast, and convenient way to buy and sell goods and services; they only need access to the **internet.** Many less developed regions, with few banking options, can benefit from digital currencies. **Lesson 8. Disadvantages of Digital Currencies** The disadvantages of digital currencies include **Processing and Storage Issues**, **Potential Unauthorized Access**, **Irreversible Process**, **Unpredictable Value**, and **Scarcity of Use**. **Processing and Storage Issues** A **secure** **application** that **stores passwords** and **payment information**, a **digital** **wallet**, is necessary for the **storage** and **processing** of digital currencies. Other requirements include, an **internet connection** and **services** related to **smartphone**, **computers**, and other devices used in performing digital currency transactions. **Potential Unauthorized Access** Since they function across **networks** of **software** and **interconnected hardware devices**, digital currencies are susceptible to **hacking** and other **unauthorized access** attempts. **Hackers** have already made some digital currencies **useless** by contaminating the **software**, and **stole** digital currencies from **online wallets**. Securing digital currencies will be an ongoing effort and concern. **Irreversible Process** Digital currency **transactions**, on the network, **cannot be reversed**. Once a user **completes** a digital currency transaction, it is **permanent**. **Fraudulent activity**, or **errors**, can have devastating effects. **New users** must be sure to know exactly what they are doing when conducting digital currency transactions. Without **regulation**, or a **central** **authority**, over digital currencies, users have **little recourse**, or **protection**, when problems or errors occur. **Unpredictable Value** **Investing** in, or **trading** digital currencies can be **highly volatile**, having **erratic price movements**. Company, or investor, **sentiment** has been known to result in sudden, and drastic, changes in the price of digital currencies. These price swings are particularly prevalent during **initial offerings**. **Scarcity of Use** **Transactions** using digital currencies are **not very common**. **Merchants**, and other businesses, have not yet fully adopted the **technology** associated with **direct payments** via digital currencies. The use of digital currencies continues to grow around the world, limited mostly by lack of **government** and **global bank** control. This **scarcity** of use impedes the current **technological development** of digital currency **networks**. **Lesson 9. The World of CBDCs** **CBDCs** (Central Bank Digital Currencies) are being issued by **governments**, and **central banks** worldwide. Some **countries**, and **banks,** considering, or issuing, their own **digital currency** include **England**, **China**, **Canada, European Union,** and **Sweden**. **England: **The **Bank of England** is looking into the prospect of launching the \"**Britcoin**\" cryptocurrency. The UK\'s payment system would be backed by a digital currency, which could also reduce the nation\'s dependence on cash. **China: **Since 2020, the **People\'s Bank of China** (PBOC) has been testing the **digital yuan**, also known as **e-CNY**, in a number of Chinese localities. Millions of Chinese citizens currently utilize the digital yuan, which is intended to be used for retail transactions. **Canada: **The **Bank of Canada** has been conducting research and consultations on the idea of creating a CBDC. **EU: **A digital euro that may be issued by the **European Central Bank** (ECB) and used for retail transactions within the Eurozone is being investigated. **Sweden: **Also, since 2020, Sweden\'s **Riksbank** has been testing the **e-krona** digital currency. The e-krona is being created to complement Sweden\'s diminishing use of currency and to give the general public access to a safe and effective payment system. **Lesson 10. Digital Currency Evolution** Ironically, **developing nations** are leading in digital currency **adoption** and **implementation**. Several countries, including **India**, **Nigeria**, **China**, and the **Bahamas**, have already established their own digital currencies. Many cryptocurrencies, like **Ethereum**, have experienced phenomenal **growth in value**; they are still highly volatile, **speculative,** and pose a **significant risk** of **total loss** in value. Due to the **high volatility** and **complexity** of digital currencies, **merchant acceptance** has been slow, even in countries that have already adopted the technology. The use of **stablecoins** is helping many companies limit current **risks** associated with digital currency transactions. The value of **stablecoins** is **fixed** to the price of **fiat currency**. Some stablecoin **issuers** are involved in **speculative markets**, exposing them to a complete loss in value. The issuance of **Central Bank Digital Currencies** by government-controlled **financial institutions** is experiencing **steady growth** around the world. **CBDCs** are stored in **digital wallets** the same way as **cryptocurrencies**. Financial institutions, like **central banks**, can **control** the **issuance** and **availability** of digital currencies through these online wallets. Module Two: Cryptography ======================== **Welcome to Cryptography** Brief intro... **Lesson 1.** **Lesson 2.** **Lesson 3.** **Lesson 4.** **Lesson 5.** **Lesson 6.** **Lesson 7.** **Lesson 8.** **Lesson 9.** **Lesson 10.** **Lesson 11.** **Lesson 12.** Module Three: Blockchain ========================  **Welcome to Blockchain** Brief intro... **Lesson 1.** **Lesson 2.** **Lesson 3.** **Lesson 4.** **Lesson 5.** **Lesson 6.** **Lesson 7.** **Lesson 8.** **Lesson 9.** **Lesson 10.** **Lesson 11.** **Lesson 12.** Module Four: Global Financial Systems ===================================== **Welcome to Global Financial Systems** Brief intro... **Lesson 1.** **Lesson 2.** **Lesson 3.** **Lesson 4.** **Lesson 5.** **Lesson 6.** **Lesson 7.** **Lesson 8.** **Lesson 9.** **Lesson 10.** **Lesson 11.** **Lesson 12.** Module Five: Cryptocurrency Wallets ===================================  **Welcome to Cryptocurrency Wallets** Brief intro... **Lesson 1.** **Lesson 2.** **Lesson 3.** **Lesson 4.** **Lesson 5.** **Lesson 6.** **Lesson 7.** **Lesson 8.** **Lesson 9.** **Lesson 10.** **Lesson 11.** **Lesson 12.** Module Six: Cryptocurrency Exchanges ==================================== **Welcome to Cryptocurrency Exchanges** Brief intro... **Lesson 1.** **Lesson 2.** **Lesson 3.** **Lesson 4.** **Lesson 5.** **Lesson 6.** **Lesson 7.** **Lesson 8.** **Lesson 9.** **Lesson 10.** **Lesson 11.** **Lesson 12.** Module Seven: DeFi ================== (Decentralized Finance) =======================  **Welcome to (DeFi) Decentralized Finance** Brief intro... **Lesson 1.** **Lesson 2.** **Lesson 3.** **Lesson 4.** **Lesson 5.** **Lesson 6.** **Lesson 7.** **Lesson 8.** **Lesson 9.** **Lesson 10.** **Lesson 11.** **Lesson 12.** Module Eight: Cryptocurrency Mining =================================== **Welcome to Cryptocurrency Mining** Brief intro... **Lesson 1.** **Lesson 2.** **Lesson 3.** **Lesson 4.** **Lesson 5.** **Lesson 6.** **Lesson 7.** **Lesson 8.** **Lesson 9.** **Lesson 10.** **Lesson 11.** **Lesson 12.** Module Nine: Web3 =================  **Welcome to Web3** Brief intro... **Lesson 1.** **Lesson 2.** **Lesson 3.** **Lesson 4.** **Lesson 5.** **Lesson 6.** **Lesson 7.** **Lesson 8.** **Lesson 9.** **Lesson 10.** **Lesson 11.** **Lesson 12.** Module Ten: Fintech =================== (Financial Technology) ====================== **Welcome to Fintech (Financial Technology)** Brief intro... **Lesson 1.** **Lesson 2.** **Lesson 3.** **Lesson 4.** **Lesson 5.** **Lesson 6.** **Lesson 7.** **Lesson 8.** **Lesson 9.** **Lesson 10.** **Lesson 11.** **Lesson 12.** Module Eleven: NFTs =================== (Non-Fungible Tokens) =====================  **Welcome to NFTs (Non-Fungible Tokens)** Brief intro... **Lesson 1.** **Lesson 2.** **Lesson 3.** **Lesson 4.** **Lesson 5.** **Lesson 6.** **Lesson 7.** **Lesson 8.** **Lesson 9.** **Lesson 10.** **Lesson 11.** **Lesson 12.** **NOTE:** Thanks for taking the time to read the Guide to Cryptocurrencies eBook. You can use this eBook standalone or as a transcript while listening to the course audio podcast. If you need assistance, or have questions, related to this eBook, email Zengage Learning: [Email](mailto:[email protected]?subject=Zengage%20Learning%20eBook%20Assistance) or visit [Support](https://zengagelearning.com/support/) Mark Robinson, Chief Learning officer, Zengage Learning