99Bitcoins Final Exam

Cryptocurrency is digital money secured with cryptography, unlike game tokens, paper bills, or bonds.

Bitcoin was the first successful cryptocurrency, launched in 2009, but it was not the first digital currency. Earlier attempts at digital currencies, including projects like Ecash, B-money, Bit Gold, and others, predated Bitcoin by decades, but failed to solve the double-spending and Byzantine Generals problems, which are central to trustless and decentralized money. Bitcoin’s breakthrough was providing a solution to these issues, making it the first widely successful cryptocurrency

A blockchain is a decentralized digital ledger that securely records transactions across many computers.

Bitcoin has no central authority and is instead maintained by a distributed network of nodes worldwide.

An Ethereum gas fee is a payment to validators for processing and securing transactions on the network.

The Bitcoin halving is when mining rewards are cut in half, which takes place roughly every four years, reducing the rate of new supply.

Bitcoin’s supply is capped at 21 million coins, hard-coded into its protocol. Unlike Fiat money, Bitcoin has a finite supply

A DAO is a Decentralized Autonomous Organization governed by smart contracts and community voting instead of a central authority.

Decentralized exchanges differ from centralized ones because they let users trade without accounts, banks, or intermediaries. There is no centralized authority in control of the exchange, it is simply a protocol that runs on smart contracts.

Uniswap (UNI) is a decentralized exchange that lets users swap tokens without intermediaries.

Chainlink (LINK) is known for providing oracles that bring real-world data onto blockchains for smart contracts.

Privacy coins like Monero differ from Bitcoin by concealing the sender, receiver, and transaction amounts.

Monero (XMR) is considered a privacy coin because it hides transaction details to protect user anonymity. While Bitcoin is pseudonymous, Monero is completely anonymous and transactions are not transparent. 

Ripple (XRP) was designed to enable fast and inexpensive cross-border payments for banks and financial institutions.

Binance Coin (BNB) is primarily used for paying trading fees on Binance and powering the Binance Smart Chain ecosystem.

Solana is often used for NFTs due to its lower fees and faster transaction speeds compared to Ethereum. It is also a top option for memecoins for similar reasons. 

NFTs differ from cryptocurrencies because each one is distinct and represents unique ownership of digital or physical assets.

NFT stands for Non-Fungible Token, meaning each token is unique and cannot be exchanged on a one-to-one basis like regular crypto.

Ethereum is the largest altcoin by market cap, second only to Bitcoin overall. That said, market cap is an ever changing metric.

Staking involves locking up crypto to help secure a blockchain network and, in return, earn rewards for participation.

There are many different acronyms and abbreviations in crypto to memorize. DeFi means Decentralized Finance, offering financial services without banks or intermediaries. 

Cardano is known for its research-driven, academic approach to blockchain development.

Solana supports smart contracts, unlike Bitcoin Cash or Dogecoin. Solana is similar to Ethereum in the sense that there is an entire ecosystem built on the underlying protocol. 

A smart contract is an automated blockchain program that executes when conditions are met.

Ethereum introduced smart contracts, enabling programmable applications beyond simple payments. Smart Contract capability introduced a whole new world of possibilities to cryptocurrencies, essentially birthing Web3

Hackers can intercept your login data on public Wi-Fi, risking theft of your funds.

Guaranteed profits are a major red flag for scams, since no crypto investment is risk-free.

A wallet stores your private keys, which are what allow you to access and spend your crypto.

The safest way is to write it on paper and keep it in a secure, offline, fireproof location. Seed phrases stored online, in emails, on websites, or on your phone are not safe. 

A seed phrase is a set of backup words that can restore or recover your wallet and funds to the same or another device.

Because addresses are long and mistakes can’t be undone, funds sent to the wrong address are lost forever.

Hot wallets are internet-connected for convenience, while cold wallets are offline for maximum security.

A rug pull is when developers or insiders take investor funds and vanish, leaving worthless tokens behind.

If you don’t control your private keys, the exchange actually controls your crypto. That leaves you susceptible to any risks the exchange may have, including hacks or mistakes. 

2FA adds an extra login step, like a phone code, to protect your account from hacks.

You should ignore it as a scam, since no legitimate service ever asks for your private key.

That scam is called phishing, where attackers impersonate trusted sources to steal information.

There are many risks when using cryptocurrencies but none are more dangerous than hacks and scams, and users must brush up on their knowledge of internet security when engaging in crypto. Exchanges are targets for hacks and failures, so users risk losing funds they don’t control.

Bitcoin is decentralized and not controlled by banks or governments, unlike fiat currency.

Mining means creating new blocks and verifying transactions, securing the blockchain while rewarding miners.

Blockchain is transparent because anyone can view all transactions on the network publicly, even though identities remain pseudonymous.

A public address is a shareable code others use to send you crypto, similar to a bank account number.

A private key is like a password that proves ownership of crypto stored in a wallet. It is the passcode needed to gain control over the funds in a wallet. 

Bitcoin is valuable because people agree it has worth, and it has a scarce supply, unlike fiat currency.

Stablecoins are crypto assets pegged to stable assets like the U.S. dollar, the Euro, or gold to avoid wild price swings.

Ethereum is the leading platform for smart contracts and dApps, not just a payment coin. Ethereum is often referred to as a "world computer" and the next evolution of the internet.

Writing your seed phrase on paper and storing it offline keeps it safe from hackers and malware.