Kiana danial, tiana laurence, peter kent, tyler bain, michael g

If you want to find out what blockchains are, the basics of how to use them, which cryptocurrencies are lucrative investments, and what hardware is needed for cryptocurrency mining, this

Cryptocurrency ALL-IN-ONE by Kiana Danial, Tiana Laurence, Peter Kent, Tyler Bain, Michael G. Solomon Cryptocurrency All-in-One For Dummies® Published by: John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, www.wiley.com Copyright © 2022 by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the Publisher Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions Trademarks: Wiley, For Dummies, the Dummies Man logo, Dummies.com, Making Everything Easier, and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc and may not be used without written permission All other trademarks are the property of their respective owners John Wiley & Sons, Inc is not associated with any product or vendor mentioned in this book LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: WHILE THE PUBLISHER AND AUTHORS HAVE USED THEIR BEST EFFORTS IN PREPARING THIS WORK, THEY MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CONTENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES REPRESENTATIVES, WRITTEN SALES MATERIALS OR PROMOTIONAL STATEMENTS FOR THIS WORK THE FACT THAT AN ORGANIZATION, WEBSITE, OR PRODUCT IS REFERRED TO IN THIS WORK AS A CITATION AND/ OR POTENTIAL SOURCE OF FURTHER INFORMATION DOES NOT MEAN THAT THE PUBLISHER AND AUTHORS ENDORSE THE INFORMATION OR SERVICES THE ORGANIZATION, WEBSITE, OR PRODUCT MAY PROVIDE OR RECOMMENDATIONS IT MAY MAKE THIS WORK IS SOLD WITH THE UNDERSTANDING THAT THE PUBLISHER IS NOT ENGAGED IN RENDERING PROFESSIONAL SERVICES THE ADVICE AND STRATEGIES CONTAINED HEREIN MAY NOT BE SUITABLE FOR YOUR SITUATION YOU SHOULD CONSULT WITH A SPECIALIST WHERE APPROPRIATE FURTHER, READERS SHOULD BE AWARE THAT WEBSITES LISTED IN THIS WORK MAY HAVE CHANGED OR DISAPPEARED BETWEEN WHEN THIS WORK WAS WRITTEN AND WHEN IT IS READ NEITHER THE PUBLISHER NOR AUTHORS SHALL BE LIABLE FOR ANY LOSS OF PROFIT OR ANY OTHER COMMERCIAL DAMAGES, INCLUDING BUT NOT LIMITED TO SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR OTHER DAMAGES For general information on our other products and services, please contact our Customer Care Department within the U.S at 877-762-2974, outside the U.S at 317-572-3993, or fax 317-572-4002 For technical support, please visit https://hub.wiley.com/community/support/dummies Wiley publishes in a variety of print and electronic formats and by print-on-demand Some material included with standard print versions of this book may not be included in e-books or in print-on-demand If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com For more information about Wiley products, visit www.wiley.com Library of Congress Control Number: 2021950430 ISBN 978-1-119-85580-4 (pbk); ISBN 978-1-119-85581-1 (ebk); ISBN 978-1-119-85582-8 (ebk) Contents at a Glance Introduction Book 1: Cryptocurrency Basics CHAPTER 1: What Is a Cryptocurrency? CHAPTER 2: How Cryptocurrencies Work 15 CHAPTER 3: Introducing Cryptocurrency Wallets 27 CHAPTER 4: Different Types of Cryptocurrencies 43 Book 2: Blockchain Basics 59 CHAPTER 1: CHAPTER 2: CHAPTER 3: CHAPTER 4: CHAPTER 5: CHAPTER 6: CHAPTER 7: Introducing Blockchain 61 Picking a Blockchain 73 Getting Your Hands on Blockchain 81 Beholding the Bitcoin Blockchain 91 Encountering the Ethereum Blockchain 101 Getting Your Hands on Hyperledger 115 Financial Technology 123 Book 3: Bitcoin 133 CHAPTER 1: Bitcoin Tech Explained 135 Buying, Using, and Selling Bitcoin 155 CHAPTER 3: Taking Control of Your Wallet (and Hodling Your Bitcoin) 191 CHAPTER 4: Keeping Your Bitcoin Safe 227 CHAPTER 2: Book 4: Ethereum CHAPTER 1: 249 Getting to Know Ethereum Exploring Use Cases for Ethereum Examining the Ethereum Ecosystem and Development Life cycle Getting and Configuring Ethereum Development Tools Building Your First Ethereum Apps Discovering Smart Contracts Writing Your Own Smart Contracts with Solidity Testing Ethereum Apps Deploying Ethereum Apps 251 259 273 289 309 325 347 373 391 Book 5: Cryptocurrency Investing 405 CHAPTER 2: CHAPTER 3: CHAPTER 4: CHAPTER 5: CHAPTER 6: CHAPTER 7: CHAPTER 8: CHAPTER 9: CHAPTER 1: Why Invest in Cryptocurrencies? 407 CHAPTER 2: Recognizing the Risks of Cryptocurrencies 423 CHAPTER 3: Cryptocurrency Exchanges and Brokers Identifying Top-Performing Cryptocurrencies CHAPTER 5: Diversification in Cryptocurrencies CHAPTER 6: Getting Ahead of the Crowd: Investing in ICOs CHAPTER 7: Stocks and Exchange-Traded Funds with Cryptocurrency Exposure 439 455 467 479 CHAPTER 8: Cryptocurrency Futures and Options Dealing with the Dollar and Other Fiat Currencies CHAPTER 10: Using Technical Analysis CHAPTER 11: Short-Term Trading Strategies CHAPTER 12: Long-Term Investing Strategies CHAPTER 13: Minimizing Losses and Maximizing Gains CHAPTER 14: Using Ichimoku and Fibonacci Techniques CHAPTER 15: Taxes and Cryptocurrencies 499 507 517 529 543 551 561 569 Book 6: Cryptocurrency Mining 577 CHAPTER 4: CHAPTER 9: CHAPTER 1: 491 Understanding Cryptocurrency Mining Exploring the Different Forms of Mining Mining Made Simple: Finding a Pool and Preparing an Account Picking a Cryptocurrency to Mine Gathering Your Mining Gear Setting Up Your Mining Hardware Running the Numbers: Is It Worth It? Reducing Negatives and Gaining an Edge Running Your Cryptocurrency Business 579 589 609 629 659 681 707 733 753 Index 775 CHAPTER 2: CHAPTER 3: CHAPTER 4: CHAPTER 5: CHAPTER 6: CHAPTER 7: CHAPTER 8: CHAPTER 9: Table of Contents INTRODUCTION About This Book Foolish Assumptions Icons Used in This Book Beyond the Book Where to Go From Here 2 3 BOOK 1: CRYPTOCURRENCY BASICS CHAPTER 1: What Is a Cryptocurrency? Beginning with the Basics of Cryptocurrencies The definition of money Some cryptocurrency history Key crypto benefits Common crypto and blockchain myths 10 Risks 11 Gearing Up to Make Transactions 12 Wallets 12 Exchanges 12 Communities 13 Making a Plan Before You Jump In 14 CHAPTER 2: How Cryptocurrencies Work 15 Explaining Basic Terms in the Cryptocurrency Process Cryptography Nodes Mining Proof of work Proof of stake Proof of importance Transactions: Putting it all together Cruising through Other Important Crypto Concepts Adaptive scaling Decentralization Harvesting Open source Public ledger Smart contracts Table of Contents 15 17 18 18 19 19 20 20 21 21 21 21 22 22 22 v Stick a Fork in It: Digging into Cryptocurrency Forks What is a fork, and why forks happen? Hard forks and soft forks Free money on forks CHAPTER 3: Introducing Cryptocurrency Wallets 27 Defining Cryptocurrency Wallets A few important terms How a wallet works Looking at Different Types of Wallets Online wallet Mobile wallet Desktop wallet Hardware wallet Paper wallet Choosing a Crypto Wallet Based on security Based on your crypto ownership Based on transaction fees Based on anonymity Keeping Your Wallet Secure Back up your wallet Have multiple wallets Add more security levels Update your software Remember where you hide it! CHAPTER 4: 23 23 24 25 27 28 29 30 31 32 33 34 35 36 37 37 38 38 39 39 40 40 41 41 Different Types of Cryptocurrencies 43 Celebrating Celebrity Cryptocurrencies by Market Cap 43 Bitcoin 45 Ethereum 46 Ripple .48 Cardano 50 Other top ten major cryptos 52 Top 100 major cryptos 53 Cryptocurrencies by Category 53 Payment cryptos 54 Privacy cryptos 55 Platform cryptos 55 Exchange-specific cryptos 56 Finance/fintech cryptos 57 Legal and property cryptos 57 vi Cryptocurrency All-in-One For Dummies BOOK 2: BLOCKCHAIN BASICS 59 CHAPTER 1: Introducing Blockchain 61 Beginning at the Beginning: What Blockchains Are What blockchains Why blockchains matter The Structure of Blockchains Blockchain Applications The Blockchain Life Cycle Consensus: The Driving Force of Blockchains Blockchains in Use Current blockchain uses Future blockchain applications CHAPTER 2: Picking a Blockchain 73 Where Blockchains Add Substance Determining your needs Defining your goal Choosing a Solution Drawing a blockchain decision tree Making a plan CHAPTER 3: 73 74 75 76 77 78 Getting Your Hands on Blockchain 81 Diving into Blockchain Technology Creating a secure environment Buying your first Bitcoin Building a Private Blockchain with Docker and Ethereum Preparing your computer Building your blockchain CHAPTER 4: 61 62 63 64 66 66 68 69 70 71 82 82 85 86 87 89 Beholding the Bitcoin Blockchain 91 Getting a Brief History of the Bitcoin Blockchain The New Bitcoin: Bitcoin Cash Debunking Some Common Bitcoin Misconceptions Bitcoin: The New Wild West Fake sites No, you first! Get-rich-quick schemes Mining for Bitcoins Making Your First Paper Wallet Table of Contents 92 94 96 97 97 98 98 98 99 vii CHAPTER 5: CHAPTER 6: 101 Exploring the Brief History of Ethereum Ethereum: The Open-Source World Wide Computer Decentralized applications: Welcome to the future The power of decentralized autonomous organizations Hacking a Blockchain Understanding smart contracts Discovering the cryptocurrency Ether Getting Up and Running on Ethereum Mining for Ether Building your first decentralized ­autonomous organization Uncovering the Future of DAOs Putting money in a DAO Building smarter smart contracts Finding bugs in the system Creating Your Own ERC-20 Token 102 103 104 105 108 108 109 109 110 110 112 112 113 113 114 Getting Your Hands on Hyperledger 115 Getting to Know Hyperledger Identifying Key Hyperledger Projects Focusing on Fabric Investigating the Iroha project Diving into Sawtooth Building Your System in Fabric Building Asset Tracking with Hyperledger Composer Working with Smart Contracts on Hyperledger 116 117 117 117 119 121 121 122 Financial Technology 123 Hauling Out Your Crystal Ball: Future Banking Trends Moving money faster: Across borders and more Creating permanent history Going International: Global Financial Products Border-free payroll Faster and better trade Guaranteed payments Micropayments: The new nature of transactions Squeezing Out Fraud 123 125 126 127 129 129 130 130 131 BOOK 3: BITCOIN 133 Bitcoin Tech Explained 135 Understanding That There Is No Bitcoin! Discovering the Bitcoin Ledger So where is this “Bitcoin ledger”? Bitcoin uses a blockchain ledger 136 136 137 138 CHAPTER 7: CHAPTER 1: viii Encountering the Ethereum Blockchain Cryptocurrency All-in-One For Dummies supply chain, 269–270 tax payment, 270 voting, 271 Ethereum Classic (ETC), 742 Ethereum dApp testing choosing right test blockchain, 374–375 deploying dApp to test Ethereum blockchain deploying code to the Ganache blockchain, 378–379 telling Truffle to use Ganache blockchain, 376–378 fixing bugs, 388–389 handling errors in Solidity, 386–387 logging activity in smart contracts, 387–388 logging and handling errors, 386–388 overview, 373 steps in testing lifecycle, 375 testing for software quality, 375–376 writing tests for dApps in JavaScript, 384–386 testing using command line, 379–384 writing tests from beginning, 373 Ethereum development environment development tools, availability of, 290–291 installing block chain client, 291–294 installing IDE, 304–307 installing test blockchain, 295–298 installing test environment, 298–304 overview, 288 validating, 310–313 Ethereum Foundation, 290 Ethereum Improvement Proposals (EIPs), 349–350 Ethereum Request for Comments (ERC) documents, 349–350 Ethereum virtual machine (EVM), 253, 281 Ethereum Wallet, 37 Ethermine, 614 Ethernet, 686 ethOS, 702 eToro, 509–510 euro, 512 eurozone, 531 event risk, 469 events defining, 365–366 implanting in Solidify, 365 overview, 363–364 triggering, 366–367 exchange rate, 156–157, 181–182 exchange rate risk, 469 exchanges brokers, 183 centralized, 440–442 Coinbase, 172–181 dangers of, 184–185 decentralized, 442–444 defined, 440 Ethereum, 257 exchange rate, 156–157, 181–182 factors in choosing, 445–449 fees, 447, 553–554 hybrid, 13, 444–445 payment methods, 448 safety check, 429 selling on, 764 trading platforms, 183 types of, 182–183 exchange-specific cryptos, 56–57 exchange-traded funds (ETFs), 124, 452–453, 459, 496–497 execution flow, 344 executive risk, 468 exhaust heat, using, 734–735 Exodus, 34, 38 F F2Pool, 614, 615 Fabric, 116, 121 See also Hyperledger fake account, 207 fast moving average, 527 FBAR (Foreign Bank Account Report), 575 Federal Reserve, 508 fees, 447 fiat currency, 8–9, 50, 261, 411, 471, 473, 580 fiat/crypto pairing, 441–442 Fibonacci retracement levels, 565–569 Fibonacci sequence, 564 field programmable gate array (FPGA), 705 15-day moving average, 527 51 percent attack, 62, 595, 613 Filecoin, 53 fill-or-kill order, 549 Index 781 finance/finance tech cryptos, 57 financial risk, 468 financial technology (fintech) border-free payroll, 129 creating permanent history with, 126 faster and better trade, 129–130 and future banking trends, 123–125 global financial products, 127–129 guaranteed payments, 130 micropayments, 130–131 moving money faster with, 125–126 overview, 122 $5 wrench attack, 205–206 fixed-income securities, 409 flow of execution statements, 344 FlyPool, 615 FOMO (fear of missing out), 427, 765 foreign exchange market (forex) as an alternative investment, 411–412 brokers, 515 versus crypto market, 515 diversifying with, 471–472 and economic calendars, 516 forex account, 515 news, 516 resources for, 515–516 Forex Coffee Break (online course), 411, 471, 516, 547 Forex Diva, 411 forging, 598 fork choice rule, 67 forks 782 causes of, 22 decisions, 743–747 defined, 740–741 described, 22 free money on, 25 hard, 24–25, 107, 108 replay protection, 743 soft, 24–25 and taxes, 575 forums, 650 Foundry USD, 614 four-hour chart, 537–539 fraud, 267 fraudulent transactions, 98 Free Software Foundation, 760 FreelanceForCoins, 186 FTX, 183 FUD (fear, uncertainty, and doubt), 427 Fugger, Ryan, 48 full nodes, 63, 140 full pay-per-share (FPPS), 616 full-node software, 199 fully validating nodes, 140 fundamental analysis, 457 futures financial, 501–502 hedging, 500–501 margin trading, 501 versus options, 502 overview, 499–500 speculating, 501 G game theory, 594 Ganache, 378–379 downloading and installing, 295–298 exploring test environment, 313–314 Cryptocurrency All-in-One For Dummies hooking up with Truffle, 376–378 testing dApps with, 392–393 gas (Ethereum) See also Ethereum charges, 341 computing fees, 340–342 defined, 109, 323 fueling code with, 282–283 gas cost, 323, 341 gas limit, 324, 341 gas price, 324, 341 transaction fees, 341 unused gas, 341 Gemini, 183, 185, 442 genesis block, 606 Geth (Go Etherium), 291–295 get-rich-quick schemes, 98 gift tax, 760 gifting, 760 GitHub, 86, 116, 648–649, 656 GitHub Desktop, 86 Go Etherium (Geth), 291–295 gold, 413 Goldman Sachs, 460 good til canceled (GTC) order, 549 good til time order, 549 Google Pay, 185 government/regulation risk, 468 GPU (graphics processing unit), 644, 696–697 GPU rigs See also ASIC rigs; mining hardware building your own, 690–700 buying online, 689–690 central processing unit, 694–695 fans, 699–700 frame, 691–693 graphical processing units, 696–697 hard drive, 699 memory, 698 motherboard, 693–694 operating system, 700 power supply, 698–699 riser cards and cables, 697 graphical user interface (GUI), 290 greed, 555 gross domestic product (GDP), 411, 509 gross income, 768 Guarda, 32 Gyft, 756 H halving events, 749–750 hard drive, 699 hard forks, 24–25, 107, 108 hardware wallets, 34–35, 139–140, 196–198 harvesting, 20, 21–22 hash rate, 611, 636, 651–652, 655, 660–662, 701–702, 710 hash rate units, 638 hashes and hashing, 17, 92, 141–142, 711–712 See also cryptography head and shoulders bottom (technical analysis), 525–526 head and shoulders (technical analysis), 526 heat discharge, using, 734–735 hedging, 500–501 hierarchical deterministic (HD) wallets, 201 historical estimates, 730–732 Hive OS, 703 hodling, 418, 757–759 holding, 425 Honeyminer, 703 Hoskinson, Charles, 50 hot wallets, 28, 139–140, 194 hourly chart, 536–537 housing ratio, 434 How Many Confs, 764 Howell, James, 229 Huobi Pool, 614 hybrid exchanges, 13, 444–445 hybrid proof of stake/proof of work, 601–605 Hyperledger Composer, 121–122 Fabric, 116, 121 Iroja project, 117–119 overview, 115–116 Sawtooth, 119–120 smart contracts, 122 I IBM, 460 Ichimoku Kinko Hyo (technical analysis) buy signals, 556, 563 components, 562 described, 528, 559 and Fibonacci, 566–569 interpretations, 563–564 overview, 561 sell signals, 564 Ichimoku Secrets (Danial), 411, 540, 556 Icon (ICX), 56 identity theft, 267 ideological empowerment freedom from government control of currency, 420–421 and sharing economy, 419–420 unbanked, 421 underbanked, 421 immediate or cancel order, 549 income, 424–425 income taxes, 570, 572 indexes, 498 indicators, 539–540 inflation, 509 initial coin offerings (ICOs) as blockchain innovation, 70 blockchains, 485 community support, 485 cryptocurrency uses, 484 defined, 256–257, 479 developers and management behind, 484 Ethereum application, 264–265 holding tokens after your purchase, 486–487 how it works, 480 versus initial public offerings, 481 investing in, 483–487 launching your own, 487–489 listings, 483–484 outline of investment process, 486 overview, 14 price action after, 485 prototype or code, 484 in the US, 482 initial public offerings (IPOs), 481 Innosilicon, 670 Innovation Shares NextGen Protocol ETF, 497 Index 783 integrated development environment (IDE), 304–307 Interactive Brokers Group, 494, 500 interest rates futures, 501–502 risks, 469 and U.S dollar, 508 Internal Revenue Service (IRS), 569 Internet, 673, 686 Internet Archive, 760 Internet Computer, 53 Internet of Things (IoT), 265 Invest Diva, 13, 411, 471, 492, 512 Invest Diva Diamond Analysis (IDDA), 417, 457, 494–495, 508 Invest Diva’s Guide to Making Money in Forex (Danial), 411, 450, 457, 471 investing in cryptocurrencies capital appreciation, 414–417 dividends, 418, 424–425 growth potential, 416–417 historical returns, 415–416 income potential, 417–419 overview, 407 planning, 14 versus traditional investments bonds, 409–410 forex, 411–412 precious metals, 413–414 stocks, 408–410 Investinin (website), 55 investment behavior, 518 IOCoin, 741 Iroha project See also Hyperledger mobile app development, 119 784 Sumeragi blockchain, 118–119 Ixcoin, 741 J JAG Argueta, 571 Japanese yen, 513 JavaScript, 384–386 Jaxx, 33 joule, 664 K Keccak-256 algorithm, 275 KeepKey, 35, 198 Kent, Peter, 591, 671 Key Stack, 196 keyloggers/keystroke loggers, 236 know your customer (KYC) rules, 105, 125, 127 knowledge current events, 739–740 forking, 740–745 resources, 738–739 KOIN, 497 Kovan test blockchain, 395, 400 Kraken, 183, 442 Kryptex, 613, 660 KuCoin, 442 KuCoin Shares (KCS), 57 L Lansky, Jan (cryptocurrency academic), 582 ledger address, 144–145 Bitcoin, 136–138 sending transaction messages to, 149–150 Ledger Nano S, 35, 198 Cryptocurrency All-in-One For Dummies Ledger.com, 37 legal cryptos, 57–58 leverage, 451 Libbitcoin, 199 LibertyX, 169 Lightning in a box, 198 Lightning Network, 225–226 Lightning wallets, 202 limit orders, 538, 548–549 limited confidence proof of activity (LCPoA), 607 Lindy Effect, 650 line charts, 518 Linux Foundation, 116 liquidity, 443, 446–447 liquidity providers, 449 liquidity risk, 430–431 Lisk (LSK), 56 listening nodes, 140 Litecoin, 53, 592, 614, 660, 742–743 LitecoinPool, 614 Living Room of Satoshi, 756 LocalBitcoins.com, 171 log bloom, 276 long-term capital gain taxes, 548, 570–571, 573 long-term investing See also short-term trading limit orders, 548–549 overview, 543–544 personal goals, 545 portfolio objectives, 545–546 psychological levels, 547 stop-loss order, 549 strategies, 546–548 and taxes, 548 when to sell, 547–548 losses aversion to, 552 avoiding greed, 555 and exchange fees, 553–554 getting out of bad investments, 554–555 and measuring returns, 552–553 minimizing, 552–555 taking partial profits, 555 lower highs, 426 M mainnet, 391 Make Your Money Work for You PowerCourse (online course), 491, 518 margin trading, 500–501 market capitalization, 43–44, 437, 463 market indicators, 761–764 market risk, 469 market sentiment, 457, 494–495 market value realized value (MVRV) ratio, 762 masternodes, 604 Mayer Multiple, 761 McCaleb, Jed, 48 Medium, 505, 535 memory, 336 Merkle Report, 739 Merkle tree, 93 Messari, 722, 739 metal wallets, 195–196 MetaMask, 34, 84–85, 400–402 Metcalfe’s Law, 652–654 micropayments, 130–131 Microsoft, 460, 493 Microsoft Visual Studio Code IDE, 305–307 microtransactions, 225 The Millionaire Next Door (Danko), 760 Minerall Pool, 614 miners defined, 18 proof-of-stake, 585 proof-of-work, 585 roles of, 581–582 and validators, 597 MineShop, 681 MineXMR.com, 615 mining APU (accelerated processing unit), 644 ASIC, 644 Bitcoin, 98–99, 186 calculators, 611, 633– 637, 647 cloud, 626–627 collective trust, 587 competition, 749 consensus algorithms, 584–585 cost of facilities, 716–717 CPU (central processing unit), 644 defined, 18, 580–581 delegated proof of stake, 605 described, 18 duration, 610, 615, 615–617 electricity costs, 717–718 ether, 110 evaluating your resources, 748–750 expanding/upgrading operation, 757, 773 GPU (graphics processing unit), 644 hybrid proof of stake/proof of work, 601–605 ideal conditions, 586 income taxes, 570, 572 location requirements, 672–679 and making cryptocurrency worthy, 582–584 nodes, 138 overview, 9, 579 picking up cryptocurrency algorithms, 637–644 goals, 630–632 mineability, 630–633 profitability calculator, 47 profitability comparison sites, 633–637 profitability factors, 708–722 proof of burn, 606–607 proof-of-stake, 596–601 proof-of-work, 589–595 round, 610, 615 taxes, 767–769 mining death spiral, 770 Mining Express, 614 mining hardware ASIC, 660, 681–689 cost, 667, 708–709 CPU mining, 700–701 efficiency, 713–715 GPU rigs, 689–700 hash rate, 660–662, 710 life span, 667–669 maintenance costs, 715–716 manufacturers ASIC rigs, 670 GPU rigs, 671 power consumption, 662–667 selecting, 659–669 upgrading, 734–735 mining software pool mining, 701–705 solo mining, 705–706 Mining Store, 681 MiningSky, 681 MiningStore, 670 minting, 598 Mist, 34 Index 785 mix hash, 276 Mladjenovic, Paul, 491, 503 mnemonic phrase, 203 mobile app development, 119 mobile wallets, 32–33 Monero (XMR), 55, 592, 615, 660, 742–743 money, definition of, money printing, 9–10 MoneyGram, 170 monthly expenses, 726–727 Moon, 755 Moonpay, 209 Mother of Dragons, 703 motherboard, 693–694 moving average, 761 moving average convergence divergence (MACD), 495, 528 moving averages (MAs), 527–528 Mt Gox, 184, 429 MultiMiner app, 99, 704 multiple wallets, 40 multiple-signature (multi-sig) wallets, 201, 219–225, 246 mutual funds, 452 Mycelium, 36, 37 MyEtherWallet, 32, 36, 37 myNode One, 198 N Nakamoto, Satoshi, 28, 45, 92 Nanopool, 614, 615 NatSpec, 335 neckline (technical analysis), 525 negative press, 465 NEM blockchain platform, 20, 21–22 NEO, 56, 606 786 net worth ratio, 434 NetBSD, 740 network value to transactions ratio (NVTr), 761–762, 763 networks, 65–66 New Zealand dollar, 513 news, 464–465 NewsBTC, 505 NEXT, 445 NiceHash, 613, 660, 702–703 99Bitcoins.com, 37 NodeJS, 298–302 nodes, 16, 18, 64, 655, 656 Nodl, 198 nonce, 274 nonfarm payrolls, 509 notifications, 209–210 NVT signal, 762 NXT, 599 O Office of Foreign Assets Control (OFAC), 127 OMG Network (OMG), 57 on-chain transaction, 444 1inch, 444 online profitability calculators, 728–729 online wallets, 31–32 opcode, 281 open source, 22 operating system, 700 options calls, 503 defined, 502 versus futures, 502 puts, 503 risks, 503 orphaned blocks, 601 OS on a stick, 244 Cryptocurrency All-in-One For Dummies overall network hash rate, 611 overclocking, 714 Overstock, 493 over-the-counter (OTC) markets, 449 ownership, 368–369 P Paid by Coins, 757 PancakeSwap, 444 PandaMiner B Pro Series, 681 paper wallets, 35–36, 99–100, 195 participant structure, 351, 356 passwords See also security centralized backup, 234 password-management software, 233–235 rules for, 233 strong, 40 patience, 557 payment cryptos, 54–58 payment token smart contracts, 349–350 payment tokens, 348 payouts, 612 Paypal, 448, 453 pay-per-last N Shares (PPLNS), 617 pay-per-share (PPS), 616 peak, identifying, 557–559 Peercoin (PPC), 596, 604 peer-to-peer network, 138–140 permissioned blockchains, 62, 77 person-to-person trading, 170–172 phishing, 236–239 Piixpay, 756 pivot levels, 538 PIVX, 604 platform cryptos, 55–56, 437–438 Plausible Deniability option, 207 political instability risk, 469 Polkadot, 52 Poloniex, 183 Polygon, 53 Polymath (POLY), 57–58 pool mining See also mining account, setting up, 622–625 and benchmarking, 713 block earnings, 721–722, 725–726 criteria in choosing, 612 fees, 620 hot it works, 610–611 ideology, 618 incentives and rewards, 615–617 largest pools, 613–615 payouts, 612 percentage of total network, 620–622 reputation, 618–620 researching, 626–627 share, 616–617 software, 701–705 starting points, 612–613 Poolin, 614 Populous (PPT), 57 port-out scam, 242 position trading, 534–535 power consumption, 662–667, 718–719 power delivery units, 674–675, 684–685 power supplies, 675–676 precious metals, 413–414 premined distributions, 594 Premium Investment Group, 13, 52, 429, 457–461, 492, 512, 516, 535, 550, 555, 556, 568 prepayment risk, 410–411 price action, 466 privacy, 11 privacy cryptos, 55, 438 private blockchains, 62, 77, 86–89 private key, 29, 147–148, 149–150, 152, 192–193, 229–231, 671 product structure, 351, 356 profitability and efficiency mining different cryptos, 734–735 reducing electricity bills, 736–738 upgrading equipment, 734 using exhaust heat, 734–735 factors in, 708–722 historical estimates, 730–732 online calculators, 728–729 return on investment, 722–727 profits bottom buying, 556 identifying peaks, 557–559 maximizing, 556–559 patience as a virtue, 557 proof of activity (PoA), 607 proof of burn (PoB), 606–607 proof of capacity (PoC), 607 proof of elapsed time (PoET), 120, 607 proof of importance (PoI), 20 proof of reserve, 446 proof-of-stake (PoS), 19–20, 64, 67, 103, 418, 585, 596–601 proof-of-work (PoW), 19, 64, 69, 252, 585, 589–595 property cryptos, 57–58 Propy (PRO), 57–58 ProtonVPN, 83–84 proving the negative, 132 public blockchains, 62, 77 public key, 29 public key encryption, 147–148 public ledger, 22 pump-and-dump scheme, 446, 540 pure currency changes, 262 Purpose Bitcoin ETF, 124 Purse, 755 put options, 503 Q QR codes, 162 Qtum (QTUM), 56 QuadrigaCX, 184 quantitative easing, 10, 420–421 quote currency, 472 Qurrex, 445 R random access memory (RAM), 698 range trading, 533–534 ransomware, 236 RaspiBolt, 199 reader’s/writer’s problem, 584 Reality Shares Nasdaq NexGen Economy ETF, 497 realized market capitalization, 762 receipt root, 276 recent shared maximum pay-per-share (RSMPPS), 617 Index 787 Red Cross, 760 Reddit, 13, 462 Refinitiv, 156 registration structure, 351, 356–357 regulation event risk, 432 regulation risk, 432 reinvesting, 771–772 reinvestment risk, 469 relative strength index (RSI), 495, 528 replay protection, 743 resistance levels, 523, 534 return on investment (ROI) See also profitability block earnings, 723–726 calculating, 726–727 and expenses, 726–727 formula, 722 solo mining, 723–725 returns, measuring, 552–553 reward, 426 rig, 580 “right to be forgotten” rules, 127 ring signatures, 592 Rinkeby test blockchain, 395, 399–400 Ripple (XRP) background, 48 versus Bitcoin, 48–49 characteristics, 49–50 described, 57 market cap, 48 Ripple Labs, 48 RipplePay, 48 riser cards and cables, 697 risks crypto hype, 427–428 liquidity, 430–431 management of 788 diversifications, 437–438 emergency fund, 434–435 patience, 435–437 tolerance, 433–434 overview, 11–12, 423 regulation, 432 versus reward, 426 risk-return tradeoff, 425 security risk, 428 systematic, 469 tax, 432–433 unsystematic, 468 vanishing, 431 volatility, 430 Robinhood, 85, 492 Ropsten test blockchain, 394, 399 rule of three, 477 S Samourai, 39 Samourai Dojo, 199 satellite Internet, 673 SatoshiLabs, 37 saucer bottom (technical analysis), 525–526 saucer top (technical analysis), 526 Sawtooth See also Hyperledger deploying, 121 described, 119–120 EndPoint Registry, 120 IntegerKey, 120 MarketPlace, 120 proof of elapsed time, 120 transaction family, 120 scalping, 533 scams, 97–98 scheduled transactions, 246–247 Cryptocurrency All-in-One For Dummies scored based system (SCORE), 617 scrypt mining, 592 sea shells as currency, 590–591 secure environment Brave browser, 83 creating, 82 MetaMask, 84–85 ProtonVPN, 83–84 Secure Sockets Layer (SSL) client certificates, 63–64 Securities and Exchange Commission (SEC), 124, 482, 540 security, 370, 446, 651–652 security risk, 428–429 seed, 195, 205–206, 229–231 Seedplate, 196 self-executing contracts, 22 sell limit order, 549 selling, 761–764 semantics errors, 389 semi-centralized exchanges See hybrid exchanges sentimental analysis, 457, 461–465 Serpent, 280 SHA-256 mining hardware, 660–662 ShapeShift, 183, 184 sharding, 67 shared maximum pay-pershare (SMPPS), 617 sharing economy, 419–420 short-selling, 451 short-term analysis methods four-hour chart, 537–539 hourly chart, 536–537 indicators, 539–540 overview, 535 30-minute chart, 536–537 short-term capital gain taxes, 571, 573 short-term trading See also long-term investing day trading, 530–532 overview, 529–530 position trading, 534–535 range trading, 533–534 risks, 540–541 silver, 413 SIM swapping, 242–243 simjacking, 242 slow moving average, 527 Slush Pool, 612, 614, 615, 725–726 smart auction, 122 smart contract cryptos, 55–56 smart contracts building, 113 coding your first, 316–317 creating, 351–357 defined, 22, 46, 82 defining in Solidity, 335–336 described, 108–109, 253, 278–279 designing, 315 events, 363–367 on Hyperledger, 122 logging activity in, 387–388 minimal functionality, designing for, 371 overview, 325–326 ownership, 368–369 payment token, 349–350 running your first compiling code, 319–320 deploying code, 320–322 invoking code’s functions, 322–323 steps in, 316 writing code, 318–319 security, 370 supply chain, 326–332, 350–351, 355–356 social consensus, 655–656 soft forks, 24–25 software wallets, 199 Solana, 52 Solidity commenting your code, 334–335 conditional and iteration statements, 344–345 controlling execution flow, 344 data handling in, 336–340 data types, 337 declaring valid compiler version, 334 defining your smart contracts, 335–336 error handling and exceptions, 345–346 handling errors in, 386–387 importing external code, 335 as language of smart contracts, 280 main sections, 333 overview, 332–333 visibility modifiers, 342–343 writing your own smart contracts, overview, 347 solo mining, 705–706, 723–725 solutions, 711–712 Soros, George, 417 speculating, 500–501 speculative trading, 529 Spend, 756 Square Cash, 454 stack, 336 Stack Exchange, 739 stake, 19 staking, 425, 599 standard of value, 413 state root, 276 state taxes, 574 Steemit, 462 Steinberg, Joseph, 84 Stellar, 53 Stellar Lumens (XLM), 57 stock index futures, 502 stocks with crypto trading exposure, 494 with cryptopayment exposure, 493 disadvantages of, 409–410 dividends, 408 with exposure to cryptos, 492–496 overview, 408–409 stop-loss order, 540, 549 storage, 336 Strike, 186 subscriber identity module (SIM), 242 Substratum (SUB), 56 Sumeragi blockchain, 118–119 super nodes, 140 supply and demand, 462 supply chain blockchain solutions to, 327–332 capabilities, 348–349 data types, 348 described, 326–327 design specifications, 348–351 Ethereum application, 269–270 functions, 360–361 managing assets on, 330–331 obstacles to implementation, 327–328 paying for services, 329–330 smart contract, 350–351, 355–356 support groups, 13 Index 789 support levels, 426, 522, 534, 556 SushiSwap, 444 swing trading, 533–534 Swiss franc, 513 symmetric encryption, 17 syntax errors, 389 systematic risk, 469 Szabo, Nick, 767 T taxes and crypto forks, 575 evaluating taxable income from crypto transactions, 574–576 experts, 571 income taxes, 570, 572 on international crypto investments, 575–576 long-term capital gain taxes, 548, 570–571, 573 minimizing, 572–574 and mining, 767–769 not forgetting, 757 overview, 569–570 reducing, 545 risks, 432–433 short-term capital gain taxes, 571, 573 state tax, 574 trading tax, 574 TD Ameritrade, 500 technical analysis basics of, 518–521 bearish reversal patterns, 526 bullish reversal patterns, 525–526 channels, 523–524 Invest Diva Diamond Analysis, 457 790 overview, 517–518 psychology factor, 521 resistance levels, 523 for selecting cryptos, 466 support levels, 522 time factor, 520 trends, 523–525 Telegram, 13, 462 Terra, 52 testing environment, 257 Tether, 52 30-minute chart, 536–537 time preference, 668 timestamp, 276 TokenTax, 769 Tor Project, 760 total supply, 464 trading platforms, 183 TradingView, 13, 562 transaction fees, 582 transaction root, 276 transactional cryptocurrencies, 437 transactions, 20, 62 trends, 521, 523–525 Trezor, 35, 37, 198 Truffle creating project, 310–311 downloading and installing, 302–304 editing Truffle config file, 311–313 hooking up with Ganache, 376–378 trustless systems, 82, 131–132, 580–581 Turing complete, 278 Turing-complete programming languages, 103–104 two-factor authentication (2FA), 40, 201, 239–242, 446 Cryptocurrency All-in-One For Dummies U Umbrel, 199 unbanked, 10, 421 uncle block, 274, 601 uncle hash, 276 underbanked, 421 unemployment rate, 509 Uniswap, 52, 444 United Way, 760 unspent transaction outputs, 214 unsystematic risk, 468 upcoming events, 465 Upfolio (website), 55 upgrading equipment, 734 U.S dollar versus Bitcoin, 509–510 factors affecting, 508–509 USD Coin, 52 V validation/validators, 597, 605 Van Der Laan, Wladimir, 95 vanishing risk, 431 vault wallets, 203 VeChain (VEN), 53, 56 ViaBTC, 614 Viper, 280 Virgin Galactic, 755 virtual machine (VM), 281 virtual private network (VPN), 83–84 visibility modifiers, 342–343 Visual Studio Code IDE, 305–307 volatility risk, 430 volume, 463 VS Code, 316, 352 W WalletGenerator, 36 wallet(s) addresses, 28, 193, 210– 211, 214 backing up, 214–215 Bitcoin, 152–153 cold, 28, 138, 194 custodial versus private, 231–232 defined, 27–28, 152 Ethereum, 257 factors in choosing anonymity, 38–39 crypto ownership, 37–38 security, 37 transaction fees, 38 finding, 199–201 hardware brain wallets, 195 defined, 139–140 hardware wallets, 196–198 metal wallets, 195–196 paper wallets, 195 hot, 28, 139–140, 194 how it works, 29–30 importing or recovering, 215–217 multiple-signature, 219–225 notes to keep in mind, 168 overview, 12 paper, 99–100 program, 152 receiving Bitcoin, 207–208 safety check, 430 security backing up, 39–40 encryption, 40 multiple wallets, 40 password, 40 remembering where it is hidden, 41 two-factor authentication, 40 updating software, 41 setting up, 201 creating 24-word seed, 205–206 creating and securing, 202–205 fake account for increased security, 207 following the money, 214 notifications, 209–210 sending Bitcoin, 211–213 software, 199 storing private keys on, 671 types of, 30–36 uses of, 192–194 wampum, 590 Water Project, 760 watts, 662 web wallets, 31–32, 198 weighted decision matrix, 74–75 Whatsminer, 670 WhatToMine, 729 white papers, 459 WikiLeaks, 760 Wikipedia, 649, 760 Winklevoss, Tyler and Cameron, 244 witnesses, 605 Wood, Gavid, 332–333 WorkingForBitcoin, 186 Wrapped Bitcoin, 53 Wuille, Peter, 95 X XBTeller, 169 xCoins, 448 XEM, 20, 21–22 XRP, 462 Y Yahoo Finance, 509 Z Zaif, 184 Zcash (ZEC), 55, 592–593, 615, 747–748 ZenLedger, 769 Index 791 About the Authors Kiana Danial is author of Cryptocurrency Investing For Dummies She is an awardwinning, internationally recognized personal investing and wealth management expert She’s a highly sought-after professional speaker, author, and executive coach who delivers workshops and seminars to corporations, universities, and investment groups She frequently appears as an expert on many TV and radio stations and has reported on the financial markets directly from the floor of the New York Stock Exchange and Nasdaq Kiana has been featured in the Wall Street Journal, TIME magazine, Forbes, TheStreet.com, and many other publications as well as on CNN.  She has won numerous awards, including Best Financial Education Provider at Shanghai Forex Expo in 2014, New York Business Women of Influence Honoree in 2016, and the Personal Investment Expert of the Year award from Wealth & Finance International in 2018 Born and raised in Iran as a religious minority, she was awarded a scholarship from the Japanese government to study electrical engineering in Japan, where she obtained two degrees in that field and conducted research on quantum physics in classes taught in Japanese Being the only woman and foreigner in her classes made her decide to dedicate her life to empowering minorities, especially women in male-dominated industries Tiana Laurence is the author of Blockchain For Dummies, 2nd Edition She is a blockchain pioneer, investor, and start-up founder She is a founder of Factom, Inc., a software company that builds innovative technology within the blockchain space She loves writing about emerging technologies and helping the average person understand them Her passion is growing great companies, and she loves helping young aspiring entrepreneurs learn about business and technology Tiana has a BA in business and leadership from Portland State University Peter Kent is co-author of Bitcoin For Dummies, 2nd Edition and Cryptocurrency Mining For Dummies He has been explaining technology to ordinary people for almost 40 years through his more than 60 books (including SEO For Dummies and Complete Idiot’s Guide to the Internet), corporate consulting, online courses, ­seminars and workshops,and court testimony (as an expert witness in ­technology-related litigation) He recently created an 8-hour video course on working with cryptocurrency (Crypto Clear: Blockchain and Cryptocurrency Made Simple) See ­CryptoOfCourse.com Tyler Bain is co-author of Bitcoin For Dummies, 2nd Edition and Cryptocurrency Mining For Dummies He has been in the cryptocurrency mining trenches gaining experience in the ecosystem for several years He’s a professional engineer registered in the state of Colorado and studied engineering with an electrical specialty at the Colorado School of Mines in Golden, Colorado He has consulted with cryptocurrency mining firms, currently works as an electrical engineer for a local utility cooperative, and is an avid cryptocurrency and Bitcoin miner He is also an active member of the Institute of Electrical and Electronics Engineering and the Rocky Mountain Electrical League, and he has advised the Electric Power Research Institute His passions include financial and transportation electrification, peer-to-peer systems, and the electrical grid Michael G. Solomon, PhD, CISSP, PMP, CISM, PenTest+, is author of Ethereum For Dummies He is a security, privacy, blockchain, and data science author, consultant, and speaker who specializes in leading teams in achieving and maintaining secure and effective IT environments As an IT professional and consultant since 1987, Dr Solomon has led project teams for many Fortune 500 companies and has authored and contributed to more than 20 books and numerous training courses From 1998 until 2001, he served as computer science instructor in the Kennesaw State University Computer Science and Information Sciences (CSIS) department He is a professor of Cyber Security and Global Business with Blockchain Technology at the University of the Cumberlands and holds a PhD in Computer Science and Informatics from Emory University Publisher’s Acknowledgments Executive Editor: Steven Hayes Production Editor: Tamilmani Varadharaj Editorial Project Manager and Development Editor: Christina Guthrie Cover Image: © Wit Olszewski/Shutterstock Compiling Editor: Nicole Sholly Copy Editor: Marylouise Wiack Technical Editor: Mark Hemmings WILEY END USER LICENSE AGREEMENT Go to www.wiley.com/go/eula to access Wiley’s ebook EULA