Blockchain Basics: What Are You Investing In?

For those that don’t know, the blockchain is a revolutionary ledger technology, smart contracts, real estate ownership, healthcare, insurance, lending, personal data protection, cryptocurrency.  The blockchain is, most simply, a digital, decentralized and inalterable ledger. What does this mean, exactly?

A ledger is a database technology used to record transaction histories and ownership; it is a definitive account of who has given what to who, and who owns what. Most ledger technologies are physical and they’re centralized -- they’re controlled by a central bank. This means that they are subject to the discretion and power of individuals, and are alterable and impermanent. This gives those ledger recording entities a tremendous amount of power over an individual’s financial transactions; it also means the ledger is vulnerable to manipulation.

Each block in the blockchain contains data on transaction history. The codes for the blocks are broken by miners. This adds the block to the blockchain, thereby rendering that data permanent and unchangable. 

As for the miners, they’re are a network of individuals (or, and more often, collectives), working to break the codes for each block of data being added to the blockchain. They are rewarded, in the cryptocurrency produced by the particular blockchain they are working on.

This is where you come in -- potential buyer and investor. These cryptocurrencies can be very valuable, and are valued at increasing heights, the more successful a particular blockchain and cryptocurrency is. 

Coinbase:

If you are just getting acquainted with cryptocurrencies and the Blockchain, I would suggest starting with a site like Coinbase.

If you want to trade in cryptocurrencies, you’re going to need a platform on which to trade them, and an intermediary to communicate within the network of traders.

Coinbase is a global digital asset exchange company (Coinbase Pro), providing a marketplace for digital currencies, and then sending information about the transactions that happen in its marketplace to the appropriate blockchain network, so that those transactions can be recorded in the blockchain. Coinbase serves as a digital wallet, too, where you can store the digital currencies you purchase on the platform. The currencies available on Coinbase? Bitcoin, Bitcoin Cash, Litecoin and Ether.

Essentially, if you are interested in trading digital currencies but don’t want to get bogged down in navigating the complexities of its underlying technology, platforms like Coinbase, and Coinbase in particular, are a simple, secure way into the world of crypto.  Buying and Selling Crypto:

In order to buy and sell cryptocurrencies on the platform, you will have to link an bank account, or debit card to your Coinbase account. (Wire transfers are also accepted on the platform, but only under specific conditions). Using a bank account or debit card offer different upsides and downsides.

Transactions made with funds in a bank account can take a while on Coinbase - generally about 4-5 days business days. And using an account allows users to buy and sell crypto, to deposit money in, and and withdraw money from their Coinbase account. Bank accounts are generally recommended if you are dealing with larger investments and purchases - at the time of writing, using a bank account allows for users to spend as much as $11,000 weekly .

Debit cards, on the other hand, allow you to buy cryptocurrencies available on the platform pretty much instantaneously. Simply by transferring funds from that card to the platform, you can purchase cryptocurrency in an instant. However, debit cards cannot be used to sell crypto, to deposit money in one’s account, or to withdraw money from one’s Coinbase account. On Coinbase, debit cards can be used exclusively to purchase crypto, and even then, only in smaller amounts. With a debit card, the limit is much lower than with a bank account.

Coinbase has gone to extensive lengths to simplify and streamline the the process of buying and investing in crypto. Essentially, Coinbase’s platform makes buying and selling crypto feel as familiar as buying and selling stocks.

The homepage shows each of the cryptocurrencies they sell, their current price, and their price, and the ways it has fluctuated over time horizons as specific as the last hour, and as zoomed out as a year, or the crypto’s entire existence. Take a look, here, courtesy of Coinbase: