My First Step in Crypto and Bitcoin Investing for Kids and Beginners

By Sweet Smart Books

It is no secret that cryptocurrency is the talk of the town at present due to its skyrocketing prices and high return on investment. In 2021, the price of Bitcoin raised as high as $60000 making it gather both media and people's attention. Cryptocurrencies are complex financial instruments that are difficult to understand and follow. If you are a complete novice looking forward to investing in the market, learning about cryptocurrencies such as Bitcoin as well as the Blockchain design that supports them can seem like a daunting task. Although there are many books on the market, most of them aren't meant for beginners and cover complex topics. 

Sweet Smart Books presented this book focusing on explaining complex topics about Blockchain technology and Cryptocurrencies in a way that it can be easily understood by kids and beginners. A number of real-life examples and scenarios were used by the author of this book to explain different concepts in a friendly way so that readers are able to follow the bigger picture of what is happening. 

What are you going to learn from this book? 

The book starts with an introduction to different currency systems and financial instruments to extend itself into the basics of cryptocurrencies and Blockchain technology. 

This book focuses on topics such as 

Different currency systems 

Different financial instruments 

Centralization vs Decentralization 

Understanding the basics of cryptocurrencies 

Blockchain technology 

Understanding Bitcoin Mining 

Consensus mechanism 

Ethereum 

Smart contracts and how they work? 

Cardano 

Polkadot 

Risk management 

Investing in Cryptocurrency 

Technical and Fundamental Analysis 

And a lot more. 

• Language: English
• Publisher: Sweet Smart Books
• Release date: Sep 13, 2021
• ISBN: 9781737042662

Book preview

Introduction

Bitcoin and all other cryptocurrencies are having a wild run in 2021. In April of 2021, the price of Bitcoin reached a high of $64000, making everyone in the financial world discuss its future and potential. All cryptocurrencies, however, had a steep fall when Elon Musk, the CEO of Tesla and a long term outspoken supporter of cryptocurrencies, tweeted citing the environmental effects of Bitcoin mining as the reason for removing it as a payment option for Tesla Cars after one year. Within a few days, Bitcoin and other cryptocurrencies lost their value by over 30%. Since then, investors and financial experts have been discussing the profits and volatility of cryptocurrencies from a larger perspective. Irrespective of these hurdles, in the second half of 2021, Bitcoin has reclaimed its previous price value and is currently close to $50,000.

Bitcoin and the underlying blockchain technology are the next life-changing innovation of humanity. This book helps beginners and kids understand the complex topics of cryptocurrencies in a simple way. The book's author focuses on delivering complex basics about cryptocurrencies and money management in general for a wannabe investor. To understand the different topics mentioned in this book, a reader must understand the importance of decentralization, the goal of cryptocurrencies, and the importance of Blockchain technology.

Understanding the Importance of Decentralization

In 2008, the world went through a recession phase due to the housing bubble crisis in the US residential housing market. Because the United States has the largest economy globally, the housing bubble crisis affected all countries directly or indirectly. People lost homes, jobs, and their lifelong savings. The main culprit for this recession is banks, which were not transparent in what they were doing. Even though they were the culprits, the United States’ government bailed them out and helped them recover from their losses. In the end, banks’ clientele lost their savings because of the negligence of centralized institutions.

In simple words, all banks, monetary governments, and reserve banks are centralized institutions that control anything related to finance. Centralization is everywhere globally, and is highly significant in the financial arena.

During this time a white paper sent in a cryptographic mailing list sparked a discussion in internet forums. The white paper, written by unknown entity Satoshi Nakamoto, claimed they found a solution for the double spending problem that stood as a hurdle for digital currencies.

Many were unenthusiastic about its implementation, but soon it started a revolution among technical and financial enthusiasts. After a decade, Bitcoin, mentioned in the white paper, has become a weapon for investors who thrive on decentralization and the technology built upon this ideology.

In simple words, anything that is not controlled by a single entity and provides power to everyone involved is called a decentralized system. Cryptocurrencies and the Blockchain technology that supports them are the major decentralized systems that exist in the world.

To understand in-depth about currency, you need to first learn about different transaction systems that thrived in our world during different timeframes.

Different Transaction Systems

World and Humans have used different ways to make transactions right from our inception. Our ability to understand the concept of value and use it for specific transactions has made us primitive among all other species in the world. Understanding different transaction systems humans have used during different times in the evolution of society is vital for appreciating the concept of decentralization and cryptocurrencies that facilitate it.

Barter System

The barter system is the first transaction system that civilized humans used. Researchers have dated it back as far as Mayan civilizations, where citizens effectively used barter.

In a barter system, two parties involved in the transaction exchange items of the same value. For example, if you have two bags of rice, you might exchange it with a cobbler for a new pair of shoes. The problem with the barter system is it becomes complex when it extends to a large community. Also, it is not entirely logical as people may have rice but not need shoes.

Commodity Currency

The barter system was soon replaced by commodity currency in all the flourishing civilizations, including as Mesopotamian, Egypt, and Harappa. Precious commodities such as gold, silver, and diamonds are used while buying or exchanging items. Though silver is popular, gold has been the most popular commodity for exchanges for a long time.

While commodity currencies are considered better than the barter system, it has become inconvenient for individuals to carry them all the time. They are heavy and are also not uniform.

Fiat Currencies

All the problems with commodity currency started to fade away when banks began to provide banknotes for individuals who stored commodities such as gold in their reserves. People trusted banknotes when banks released them as an easy way to make transactions. With the success of this system, banks soon started to distribute banknotes without taking any gold into their reserves from citizens. Soon, these banknotes have turned into fiat currencies and are now being used by citizens of different currencies in the world.

USD, CAD, and EUR are some of the popular fiat currencies in the world right now.

Digital Currencies

With the inception of the internet, the concept of digital ledgers became popular. Instead of transacting with paper notes, people started to exchange money using digital currencies. Banks will update the user's ledger balance instantly whenever a transaction happens with a digital currency.

Companies such as PayPal and Payoneer have created a whole new payment mechanism to transfer money between businesses by providing assured protection. Digital currencies, however, are centralized and are controlled by a single entity, therefore every record can be monitored by government authorities if they want to. All digital currency platforms are also prone to hacking and can be a severe problem to individuals who don’t follow simple security guidelines.

Cryptocurrencies

Cryptocurrencies are decentralized currencies that individuals can transact from one party to another without being monitored or controlled by a regulatory body. Cryptocurrencies are also difficult to hack and cannot be deleted or modified once entered into the blockchain system.

Every transaction system has its own merits and flaws, and as a crypto enthusiast, you must understand both the risks and rewards they provide. The book's author is determined to provide enough information that can help you judge both rewards and risks associated with different cryptocurrencies.

How to Use This Book?

This book focuses on delivering complex cryptocurrency topics in a simple way for beginners. Usage of varied examples, real-life concepts can help both kids and adults unfamiliar with the subject understand the essence that is important from a bigger picture.

We suggest using mind-maps or other cognitive techniques such as passive recall to consume the knowledge efficiently.

Why We Wrote This Book?

The ongoing Bitcoin run has made many individuals interested in it. Even though many books are available for the topic, most of them were overwhelming as they use complex terms unfamiliar to a layman. This book focuses on delivering the required content for wannabe crypto enthusiasts in an easier way.

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