Cryptocurrency Fundamentals

AN INTRODUCTION TO

CRYPTOCURRENCY
FUNDAMENTALS

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 Cryptocurrency Fundamentals

INTRODUCTION
Cryptocurrency is probably the biggest new trend
in the domain of finance and technology. In a
comparatively smaller duration of time,
cryptocurrencies have successfully made their
way into discussions on transforming financial
infrastructures worldwide.
At the same time, the number of cryptocurrencies
has been expanding continuously with each
passing day.

Therefore, many people want to find more about cryptocurrency fundamentals

and develop a solid understanding of cryptocurrencies. Since the introduction of
the first-ever cryptocurrency, Bitcoin, in 2008, cryptocurrencies have been
through a lot.

Initially, cryptocurrencies faced uncertainty and skepticism from all circles before
gaining the hype. Now, they have also passed the disillusionment phase and are a
common terminology in discussions about tech. Even if cryptocurrencies are in the
initial stages as a technology category, they have matured gradually with better
proof of utility.

As of now, the market capitalization of all cryptocurrencies combined together

exceeds $850 Billion. On top of it, cryptocurrencies served as the foundation for
trade of more than $1 billion worth of digital art and assets in the first quarter of
2022.

Furthermore, cryptocurrencies also drive decentralized trading and lending

applications, which have almost $65 billion worth of assets locked in them. One
could not miss the fact that the use of cryptocurrencies in file storage, cross-
border payments, and community governance also presents favorable prospects
for future of cryptocurrencies.

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 Cryptocurrency Fundamentals

The growing maturity of the cryptocurrency domain would obviously invite interest
from technology leaders, senior enterprise executives, entrepreneurs, and the
general public. Therefore, a clear overview of cryptocurrency basics is an essential
requirement for learning more about crypto technology and its potential.

This eBook serves as an insightful guide on the basics of cryptocurrency with

different unique chapters. You can identify the technological foundation
underlying cryptocurrencies, i.e., blockchain, and learn more about it. In addition,
the eBook also reflects on the history of cryptocurrencies alongside a
comprehensive overview of their work. The eBook also offers an outline of crypto
jargon and the significance of crypto for the world. The final chapters of this eBook
will cover the use cases of cryptocurrency and future prospects for crypto.

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without 101 Blockchains’ prior written permission. While the information contained herein have been obtained from sources believed to be
reliable, 101 Blockchains disclaims all warranties as to the completeness or accuracy. Although 101 Blockchains research may address
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business, financial, investment and legal issues, 101 Blockchains does not provide any business, financial, legal or investment advice and this
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on this publication.
 Cryptocurrency Fundamentals

Table of contents

Chapter 1: Introduction to Cryptocurrency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

The Foundations of Cryptocurrencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Are Cryptocurrencies Popular? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Chapter 2: Role of Blockchain Technology in Crypto. . . . . . . . . . . . . . . . . . . . . . . . . . 8

Distributed Ledger Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Blockchain and Cryptocurrency: How Do They Fit Together? . . . . . . . . . . . . 10
Blockchain as a DLT for Cryptocurrencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Chapter 3: Evolution of Cryptocurrencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Chapter 4: Types of Cryptocurrencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Chapter 5: Working Principle of Cryptocurrencies . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Chapter 6: Significance of Crypto in the Modern World. . . . . . . . . . . . . . . . . . . . . . . 26

Chapter 7: Important Crypto Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Chapter 8: Cryptocurrency Use Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Chapter 9: Future of the Crypto Ecosystem. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

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 Cryptocurrency Fundamentals

CHAPTER 1

INTRODUCTION TO
CRYPTOCURRENCY

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 Cryptocurrency Fundamentals

The foremost highlight in any introduction to cryptocurrency would be the

definition of cryptocurrencies. Cryptocurrency is basically digital currency that
you can use for exchanging value online.

The primary foundation of cryptocurrency is blockchain technology. It provides the

decentralization for which cryptocurrencies are quite popular today.
Decentralization frees cryptocurrencies from the control of a central authority. As
a result, cryptocurrency holders have improved control over their money and the
freedom to use it as they please.

The Foundations of Cryptocurrencies

The first-ever cryptocurrency, Bitcoin, emerged as an electronic peer-to-peer
cash system based on blockchain technology. The anonymous founder of Bitcoin,
Satoshi Nakamoto, released a whitepaper on Bitcoin in 2008 followed by launching
the cryptocurrency in 2009. So, how did the notion of a peer-to-peer virtual
currency system gain momentum?

The value of cryptocurrencies depends largely on the cryptocurrency blockchain

relationship. Blockchain delivers the trustless, secure, decentralized, and
cryptographic traits in cryptocurrencies. It offers an immutable distributed ledger
with a record of all transactions, thereby ensuring transparency and integrity of all
transactions.

In simple words, blockchains ensure better tracking of financial activity with

promising assurance of all participants acting in good faith. Driven by
technological innovation, cryptocurrencies are popular for enabling people to
carry out financial transactions on their own. Every crypto holder is basically their
own bank.

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 Cryptocurrency Fundamentals

Are Cryptocurrencies Popular?

So, cryptocurrency has a lot of features, and it changes financial conventions by
huge margins. Does this imply a solid backing for the growth of cryptocurrencies?

If you take a look at the numbers, there were only a few cryptocurrencies in the
initial years following the launch of Bitcoins. In 2022, the number of
cryptocurrencies exceeded well above 9,000, with many new cryptocurrencies
and assets emerging every day.

Furthermore, people aspiring to learn cryptocurrency would also have some

doubts about the legal status of cryptocurrencies. As a matter of fact,
cryptocurrencies have been legally accepted in the United States.

On the other hand, the regulatory status of cryptocurrencies varies from country
to country. Most important of all, you must note that there is no written law
preventing you from transferring wealth through cryptocurrencies.

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 Cryptocurrency Fundamentals

Thousands of computers spread all over the world drive blockchain networks
without any single entity in control.

You could surely think of how cryptocurrencies can serve as the next big thing in
evolution of finance. The most crucial aspect driving the functionalities of
cryptocurrencies is blockchain technology.

With the power of blockchain technology, users can carry out financial
transactions with cryptocurrencies in trustless environments. How is blockchain
enabling the various attractive features of cryptocurrencies?

Let us dive into an overview of blockchain technology to understand what exactly

fuels the expanding crypto ecosystem. Learn more from our course on
Cryptocurrency fundamentals.

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 Cryptocurrency Fundamentals

CHAPTER 2

ROLE OF BLOCKCHAIN
IN CRYPTO

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 Cryptocurrency Fundamentals

The next important aspect in any discussion on cryptocurrency fundamentals after

the definition of cryptocurrencies is blockchain technology.

You know how blockchain is the technology behind cryptocurrencies from the
previous chapter. Now, let us learn more about blockchain technology to identify
how cryptocurrency and blockchain fit each other.

Blockchain is a decentralized distributed ledger technology

that utilizes cryptographic mechanisms for adding
immutable data in the ledgers.

In simple terms, you can think of the blockchain as a chain of blocks, where the
blocks store information about transaction records. Among the many new
technologies which emerged in the last decade, blockchain has been noticed for
its role in driving revolutionary technological progress.

A clear overview of what blockchain is and how it works can help you learn
cryptocurrency from a practical perspective.

Distributed Ledger Technology

One of the first things you should know to understand blockchain technology is
that it is a type of DLT or distributed ledger technology. The distributed ledger
technology itself is a secure ledger or system of transaction records, which utilizes
consensus of synchronized and replicated data distributed throughout multiple
instances.

You can think of the distributed ledger as a database present on different

independent computers, referred to as nodes. No specific authority, person, or
agency can take custody of data in a distributed ledger, thereby taking away
central authorities.

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 Cryptocurrency Fundamentals

Distributed ledger technologies or DLTs depend on nodes for determining network

state and securing the network through consensus mechanisms.

Some of the other popular examples of distributed ledger technologies include

Directed Acyclic Graph (DAG), Holochain, and Hashgraph. The cryptocurrency
blockchain association depends on the primary idea behind blockchain as a
distributed ledger technology.

Blockchain was one of the DLTs with an emphasis on recording transactions in

linear, time-stamped blocks.

Blockchain and Cryptocurrency: How Do They Fit Together?

The most prominent question which must be revolving around your mind right now
must be about how blockchain builds cryptocurrencies.

The term blockchain gives a lot away about its meaning in the terminology itself.
Block and chain are the two distinct terms you can figure out in the word
‘blockchain.’ The block is an independent record of all transactions on a blockchain
network, which is added to the blockchain after verification.

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 Cryptocurrency Fundamentals

All new transactions on the blockchain network should follow the same process
and are added to the next block.

Following the verification of a block, the block becomes a part of the linear chain
of blocks. The blocks are linked with each other through a cryptographic hash
function, starting from the first block to the recently completed block.

Blockchain as a DLT for Cryptocurrencies

Blockchain is a distributed ledger technology. It includes blocks of transaction
records in a linear chain, and no one can change the blocks once they are added
to the chain. Most important of all, the cryptocurrency blockchain association
becomes clear with the facility of decentralization.

Multiple nodes serve as custodians of data for verification

and securing transactions in the blocks.

Each node has a copy of the existing state of the blockchain, and there is no
possible way to change transaction data in verified blocks. Therefore, you can be
completely sure of security and transparency with the use of blockchain for
cryptocurrencies.

The final and most important aspect of blockchain technology that is relevant for
cryptocurrency basics is the consensus algorithm. Consensus algorithms serve as
vital instruments for achieving the trustless environment in a network with multiple
distributed nodes storing the same information.

In addition, consensus algorithms are also critical requirements for addressing the
problems of double-spending in crypto transactions and crypto stacking.

The two most popular consensus mechanisms right now are Proof of Work and
Proof of Stake algorithms. In addition, many other consensus mechanisms such as
practical Byzantine Fault Tolerance (pBFT), Delegated Proof of Stake (DPoS),
Proof of History, and Proof of Importance have also evolved on different
blockchain networks.

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 Cryptocurrency Fundamentals

With such a formidable influence on cryptocurrency fundamentals, blockchain

technology has also exhibited promising potential in many other sectors.

However, one would definitely wonder about the way in which blockchain
technology pushed the growth of cryptocurrencies over these years. The next
chapter dives into the history of cryptocurrencies to help you understand how they
have evolved over the years.

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 Cryptocurrency Fundamentals

CHAPTER 3

EVOLUTION OF
CRYPTOCURRENCIES

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 Cryptocurrency Fundamentals

If you want to learn cryptocurrency, there is no possible way you can think of
leaving out the history of crypto. Many of you may have assumed that
cryptocurrencies are a brand-new trend and might not have a history.

However, digital assets and the underlying technology have a history with some
profound milestones. Obviously, the first milestone in the history of crypto draws
attention towards the arrival of Bitcoin in 2008.

On the contrary, the concept of decentralized networks is considerably older than

Bitcoin itself. Where did the idea for cryptocurrency and blockchain come from?

Origins of Blockchain
Since blockchain is one of the crucial requirements for developing
cryptocurrencies, it is important to reflect on its history. The common perception
about origins of blockchain relates directly to the foundation of Bitcoin.

Even today, many people think that the blockchain technology we know today has
been inspired by the Bitcoin blockchain. As a matter of fact, the idea of blockchain
existed way before the concept of Bitcoin and cryptocurrencies.

Cryptographer David Chaum proposed the concept of anonymous and

cryptographic electronic money in 1983. He also created an application named
Digicash, which was actually an initial version of crypto applications. The
application facilitated the use of encrypted keys designated to users for
transferring funds.

Apart from David Chaum, many of the early pioneers in the world of crypto and
blockchain included Nick Szabo and the National Security Agency (NSA).
However, the introduction of Bitcoin for the first time changes the narrative of an
introduction to cryptocurrency in a different direction. Check out our blockchain
academy to better understand cryptocurrencies.

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 Cryptocurrency Fundamentals

Evolution of Cryptocurrencies – Infographic:

2020-2022
2009
Crypto lending, DeFi, CBDC
Bitcoin is released start to gain popularity

2011 2019
Bitcoin’s value passes $1 7 major crypto exchanges
threshold are hacked

2012 2018
Litecoin was released which EOS was introduced
offered faster transaction

2013 2017
Bitcoin’s value increases Over 1000 cryptocurrencies
beyond $1000 are listed on exchanges

2015 2016
Ethereum was released Waves and Zcash were
created

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 Cryptocurrency Fundamentals

Bitcoin Comes on the Scene

The year 2008 will always have its place in history for the massive financial crisis
engulfing the whole world. During this time, Satoshi Nakamoto, an anonymous
author, published a whitepaper on Bitcoin.

The whitepaper described Bitcoin as an electronic peer-to-peer cash system. The

concept of Bitcoin outlined in the whitepaper lays the groundwork for many
cryptocurrency basics you learn today.

Bitcoin offered a digital currency with the flexibility for transferring between peers
without any intermediaries. The whitepaper also showed how Bitcoin used
blockchain for creating an immutable and decentralized infrastructure. In addition,
blockchain also provides an ideal solution for double-spending issues through
time-stamping. Learn more from our course on Cryptocurrency fundamentals.

Second-Generation Networks
The world of cryptocurrency was not going to struggle with Bitcoin as the only
alternative available for everyone. Many of the early projects in the crypto domain
following the arrival of Bitcoin were primarily rip-offs and meme projects.

However, the second stage in the evolution of cryptocurrencies started after 2013
as developers shifted focus towards building serious projects.

One of the biggest players after Bitcoin in any introduction to cryptocurrency

would be Ethereum. The founder of Ethereum, Vitalik Buterin, identified some
profound limitations in Bitcoin, such as the inability to create other decentralized
applications.

As a result, the world witnessed the rise of Ethereum. It evolved as the first
blockchain network with desired capabilities for supporting smart contracts and
facilitating their execution. Smart contracts are independent and self-executing
pieces of code that do not require any interaction from developers or users.

During 2020-2022, the cryptocurrency sector introduced decentralized finance or

DeFi, various financial services on blockchain and even Central Bank Digital
Currencies that are reshaping the financial industry around the globe.

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 Cryptocurrency Fundamentals

A clear impression of the history of crypto definitely offers a comprehensive

understanding of cryptocurrency blockchain interplay and how they complement
each other.

However, the two most prominent mentions in the history of crypto as of now are
Bitcoin and Ethereum. Are there no other cryptocurrencies? The following chapter
offers you an overview of the different types of cryptocurrencies you can find now.

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 Cryptocurrency Fundamentals

CHAPTER 4

TYPES OF
CRYPTOCURRENCIES

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 Cryptocurrency Fundamentals

When you take a look at the existing crypto market, you can see a lot of hype
around Bitcoin and Ethereum. However, any individual with fluent awareness of
the crypto ecosystem would know a different.

As a matter of fact, the present crypto ecosystem has over 9000 different
cryptocurrencies. Most of them serve the same objective of electronic peer-to-
peer cash transactions, while many others have evolved to offer some unique use
cases and solutions.

Bitcoin is undoubtedly the first-ever cryptocurrency that gained massive levels of

popularity in mainstream media.

However, there is more to the cryptocurrency fundamentals than just Bitcoin. If

you want to develop a better understanding of different types of cryptocurrencies,
you need to understand three important terms. Let us start without any delays.

Altcoin, Coin, and Token

An altcoin is one of the common terms you might come across while exploring
cryptocurrency basics, and you don’t have to struggle to understand its meaning.
As the name implies, it is some form of alternative coin. In simple terms, altcoins
are basically any digital currency other than Bitcoin.

Even if altcoins might seem like the followers of Bitcoin, they account for almost
half of the $2 trillion market cap of the cryptocurrency market.

While many altcoins are perceived as risky cryptocurrencies without any finished
products or laid-out plans, some of them are well-established. For example,
Ethereum is an altcoin with its own blockchain and the special functionalities of
decentralized applications and smart contracts.

The two other terms which are significant entries in discussions on cryptocurrency
blockchain examples are coin and token. Many beginners utilize the words token
and coin in an interchangeable manner, assuming that they are similar.

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 Cryptocurrency Fundamentals

However, coins and tokens are completely different variants of cryptocurrencies.

A coin refers to the native cryptocurrency of a blockchain network hosted on the
network itself. Bitcoin, Litecoin, and Ether are the best examples of coins in
cryptocurrencies.

On the other hand, a token is different as it is a cryptocurrency hosted on different

blockchain network. Generally, cryptocurrency tokens are standardized
decentralized applications or dApps, which serve as a component of the
expanding smart contract ecosystem.
Types of cryptocurrencies – Infographic:

Utility Security Payment

Tokens Tokens Tokens

Stablecoin Non-fungible Exchange

Tokens Tokens

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 Cryptocurrency Fundamentals

Some of the notable players in the smart contract ecosystem include Ethereum,
Solana, Polkadot, and many others. Examples of popular tokens in the crypto
space right now include UNI, AAVE, YFI, USDT, and others.

Stablecoins
The overview of different types of cryptocurrencies in a discussion on
cryptocurrency fundamentals would never skip stablecoins. Stablecoins are the
answer to one of the most prominent concerns associated with cryptocurrencies.

The value of cryptocurrencies depends on the perception of their utility, and

changes in such perception can lead to fluctuation of cryptocurrency value.
Therefore, stablecoins are a credible door to crypto adoption as they have the
backing of cash or gold reserves along with value pegged at a one-to-one ratio
with fiat currency.

The overview of different types of cryptocurrencies creates the ideal basis for
moving towards the working of cryptocurrencies. How do cryptocurrencies use
blockchain technology for facilitating transactions in practical applications?

Let us find out more in the next chapter, which deals with the working of
cryptocurrencies.

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 Cryptocurrency Fundamentals

CHAPTER 5

WORKING PRINCIPLE OF
CRYPTOCURRENCIES

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 Cryptocurrency Fundamentals

Many of you must have guessed the answer to this question from the first instance.
Blockchain helps in driving the world of cryptocurrency, and we have covered the
basics of blockchain and how it fits with crypto in a previous chapter. Now, it is
important to understand the working of cryptocurrency by taking blockchain into
consideration.

Blockchain offers the digital ledger for a cryptocurrency, and a copy of the ledger
is available on all computers or nodes in the network. Any particular system does
not have control over the ledger.

The overview of cryptocurrency basics clearly emphasized how blockchain can

drive better transparency and trust while strengthening crypto data security.
However, it is also important to dive deeper and reflect on the broader implications
that blockchain brings for cryptocurrencies.

What Makes a Cryptocurrency Attractive?

The advantages of blockchain technology are a common highlight for all
cryptocurrencies. Therefore, the differentiating aspect of all cryptocurrencies is
the uniqueness of the underlying blockchain network.

Better the blockchain network, the more popular the cryptocurrency will be. So,
what encourages people to invest their time, efforts, and resources in
cryptocurrencies? The assurance of a trustless environment through consensus
and transparency of all transactions on the network offers you the best answer for
the same.

How Do I Access Cryptocurrencies?

In order to use a specific cryptocurrency, you need a crypto wallet. Create your
own crypto wallet, and you can purchase cryptocurrencies of your choice directly
from the wallet or through an exchange.

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 Cryptocurrency Fundamentals

Interestingly, one of the important highlights in cryptocurrency basics refers to the

way in which people can access cryptocurrencies.

Crypto holders do not have to store their assets in conventional bank accounts.
On the contrary, you get digital addresses with public and private keys for
empowering crypto users to transfer funds.

The private keys help you in unlocking and sending cryptocurrencies, while the
public keys serve as the receiving address. Public keys are available to almost
anyone and could help the crypto holders in receiving cryptocurrency from a
sender.
Types of Crypto Wallets – Infographic:

HOT WALLETS

Desktop Web Mobile

Wallets Wallets Wallets

COLD WALLETS

Paper Hardware
Wallets Wallets

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 Cryptocurrency Fundamentals

You can clearly witness how cryptocurrencies are attractive for the right reasons.
In addition, you also discovered a brief overview of the simple and flexible
approach to utilizing cryptocurrencies. All of these aspects build a deeper
understanding of the cryptocurrency blockchain connection and the appeal of
buying crypto.

However, it is also important to wonder about the possibilities for the adoption of
cryptocurrencies on a large scale. Do people and institutions need
cryptocurrencies? Find the answer to this question in the next chapter which
reflects on the reasons for which the world needs cryptocurrencies.
Crypto wallet security – Infographic:

Use Cold Keep Your Backup

Storage Mobile Your
Device Wallets
Safe

Keep your Stay alert for Don’t share

holdings phishing your wallet
private scam information

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 Cryptocurrency Fundamentals

CHAPTER 6

SIGNIFICANCE OF CRYPTO
IN THE MODERN WORLD

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 Cryptocurrency Fundamentals

Every new tool or technology crafted in human history has been associated with a
specific purpose. The introduction to cryptocurrency shows how they are
decentralized, secure, and anonymous with the assurance of trustless
environments for financial transactions.

What purpose do they serve for the average person? Banks and digital financial
tools for retail users already provide convenient and secure approaches for
accessing financial services. So, why should the world switch to cryptocurrencies
from banks and other financial institutions?

The diverse use cases of cryptocurrencies like Bitcoin and the value advantages
of blockchain technology are obviously the first points one can find as reasons for
the adoption of cryptocurrencies.

However, it is important to find out why the world needs cryptocurrencies when
banks provide the desired utility and comfort for accessing financial services. The
answer points out the ability of cryptocurrency to enable unbanked people to
access financial services. Learn more from our course on Cryptocurrency
fundamentals.

A Case for the Unbanked Population

The functionalities of cryptocurrencies have been making all the noise in
developed countries. However, users in developed countries with stable financial
and political landscapes do not have any special need for cryptocurrencies.
Cryptocurrency fundamentals showcase that they eliminate the need for trust.

On the contrary, there is no problem of trust with financial institutions and central
governments in developed countries.

However, citizens from countries where people could not trust their banks or
governments are in dire need of cryptocurrencies. For example, people in a
country with a collapsing economy without any ability to purchase foreign fiat
currencies can use cryptocurrencies.

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 Cryptocurrency Fundamentals

Real-World Example of the Importance of Crypto

The example of Nigeria shows how cryptocurrencies like Bitcoin can replace banks
in many practical use cases. According to reports, the crypto trading volume on a
monthly basis in 2022 amounted to almost $92 billion.

Some of them have claimed that the shift to crypto was largely driven by the high
commission rates charged by Nigerian banks for cash transfers.

In addition, the humongous inflation rate of 16% leads to the adoption of crypto as
the banking system in Nigeria. Some of the crypto investors from Nigeria also
suggested that Bitcoin served as the best alternative to avoid frozen bank
accounts.

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 Cryptocurrency Fundamentals

CHAPTER 7

IMPORTANT CRYPTO
TERMS

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 Cryptocurrency Fundamentals

The strong foundation for implementing cryptocurrencies in the real world

definitely shows how important they are. However, any beginner might struggle in
coming to terms with crypto jargon.

The detailed overview of cryptocurrency basics practically offers all the insights
required for understanding various terms in the crypto landscape. On the other
hand, you may come across many technical terms and slang in the literature
pertaining to cryptocurrencies.

A comprehensive understanding of all crypto-related terms gives you the

confidence to navigate the crypto space without any worries.

You need to take note of the significant ones in the beginning. Here are some
notable crypto terms you should know before you dive into the practical
applications or use cases of cryptocurrency. Check out our blockchain academy
to better understand cryptocurrencies.

Address

Address is the string of characters and serves as the bank account of an individual
where they can store, receive as well as send cryptocurrency. Each crypto address
is unique.

Decentralized Apps

Decentralized Apps or dApps are another important highlight in crypto jargon in

any introduction to cryptocurrency. They are a practical application of blockchain
or cryptocurrency, generally featuring a smart contract.

DeFi

DeFi is the acronym for Decentralized Finance, a massive movement that has been
gaining momentum in the crypto space recently.

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 Cryptocurrency Fundamentals

The DeFi movement focuses not only on trading decentralized cryptocurrencies

but also on ensuring that it happens in a decentralized manner. As of now, some
of the popular DeFi projects include decentralized exchange protocols and lending
platforms.

Fork

Fork is another important term in crypto jargon you must know for understanding
the cryptocurrency blockchain interplay better. The fork is basically a situation in
which a blockchain-based network or cryptocurrency divides into two distinct
projects with their unique set of governing principles and code.

Gas

Many of you may confuse Gas for the fuel you need to run your cars. In the crypto
space, Gas is the cost of computing resources required for completing
transactions on the Ethereum blockchain. Users have to pay a specific Gas fee for
validating their transaction on Ethereum.

Halving

Halving is also one of the significant entries in crypto jargon as it defines a major
evolutionary trait of Bitcoin. It is basically the process of reducing the rewards for
mining Bitcoin by half after successful mining of 210,000 blocks. Halving ensures
restrictions on exponential increase in the circulating supply of Bitcoin.

Hash Rate

Hash Rate is a critical element in crypto jargon, especially for its role in
cryptocurrency fundamentals. The hash rate is basically an estimate of the
processing power and computing resources required for crypto mining.

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 Cryptocurrency Fundamentals

HODL

HODL is a slang you would come across frequently in the crypto landscape for
various reasons. The basic idea underlying HODL is that investors should hold on
to their crypto assets even in the event of a dip in prices. In simple terms, HODL
implies the belief and loyalty of users in a specific cryptocurrency.

ICO

Initial Coin Offering or ICO is the method blockchain projects follow for raising
money and launching their different virtual currency networks. ICOs became quite
a popular term in the crypto space in 2017 and 2018 with the hyped frenzy around
cryptocurrencies.

Mining

Mining is an unavoidable term in cryptocurrency basics as it is the process of

creating new cryptocurrencies. Miners receive rewards for validating transactions
and securing a network in the form of new tokens.

NFT

Non-fungible tokens or NFTs also qualify as a prominent mention in crypto jargon

for the unparalleled levels of attention they have been receiving recently. NFT is a
new type of digital asset which allocates ownership of virtual assets such as a
digital collectible or virtual artwork.

Wallet

Another significant term in crypto jargon is a wallet. The cryptocurrency wallet is

basically similar to a physical wallet which stores the keys to your cryptocurrencies
on a blockchain network.

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 Cryptocurrency Fundamentals

CHAPTER 8

CRYPTOCURRENCY
USE CASES

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 Cryptocurrency Fundamentals

An overview of the cryptocurrency fundamentals starting from its definition to the

outline of crypto jargon, clearly establishes how it promises technology innovation.
It can provide secure and open access to financial services while empowering
users to become their own banks.

However, it is also important to wonder how cryptocurrencies can find applications

in the real world. You need to take a look at the following cryptocurrency use cases
to identify how they are valuable to the world.

Universal Access to Banking

Almost 2 billion people in the world cannot access banking services due to various
issues. Unstable governments, civil wars, hyperinflation, and fraudulent banking
institutions offer a solid foundation for one of the first use cases of
cryptocurrencies right now.

As discussed in a previous chapter, people in Nigeria have adopted Bitcoin as a

financial infrastructure rather than trusting the banks.

Digital multisignature wallets can help in transferring cryptocurrencies without

relying on traditional banks. As a result, people who don’t have a bank account
could easily access banking services alongside creating a store of value with
cryptocurrencies.

Decentralized Applications and Smart Contracts

The overview of cryptocurrency basics generally refers to financial applications.

However, Ethereum changed the narrative about use cases of cryptocurrencies by
introducing decentralized applications and smart contracts.

In addition, Ethereum also introduced the ERC-20 standard for better classification
of tokens in the crypto landscape. ERC20 standard tokens and smart contracts
serve as the basis for many blockchain-based assets like utility tokens.

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 Cryptocurrency Fundamentals

The utility tokens can offer privileges to users for accessing dApps or selected
services in crypto ecosystems. For example, you can access services in online
games such as CryptoKitties with ERC20 standard tokens.

In addition, you can also find examples of crypto loans among the cryptocurrency
use cases, which help a company in transferring shares to investors.

Asset-backed Tokens

Another promising area of applications of cryptocurrencies is evident in the case

of asset-backed tokens. When compared to utility tokens, asset-backed tokens
offer intrinsic value associated directly with a physical asset. Tokenization of
assets provides better prospects for liquidity pools of real-world assets.

Connecting with IoT

The most promising highlights for the crypto sector in recent times have been
drawing attention towards the possible inclusion of IoT technologies.

IOTA is the best example to showcase how cryptocurrencies can serve the
foundation of an environment where machines can trade resources and services
with each other.

IOTA has successfully entered into a collaboration with a leading car manufacturer
for testing a smart crypto wallet technology.

Drivers could use the smart wallet technology for earning credits to pay for road
tolls, parking fees, or smart charging. Drivers can earn the credits by enabling data
reporting functionalities in the vehicles for informing authorities about road
conditions.

One could clearly notice that cryptocurrency use cases exceed well beyond the
scope of digital currencies alone. The incorporation of smart contracts and
distributed computing abilities in cryptocurrencies can expand the list of real-
world applications of cryptocurrencies in the future.

35 © 2023 101blockchains. All rights reserved

 Cryptocurrency Fundamentals

Where are cryptocurrencies headed from here? Let us discover the answer in the
concluding chapter of this eBook which reflects on the future of cryptocurrencies.
Cryptocurrency Use Cases – Infographic:

Decentralized
Universal
Applications
Access to
and Smart
Banking
Contracts

Connecting Asset-backed
with IoT Tokens

36 © 2023 101blockchains. All rights reserved

 Cryptocurrency Fundamentals

CHAPTER 9

FUTURE OF THE
CRYPTO ECOSYSTEM

37 © 2023 101blockchains. All rights reserved

 Cryptocurrency Fundamentals

Cryptocurrencies have come a long way from the whitepaper by Satoshi Nakamoto
in 2008 to a massive thriving ecosystem. With more than 9000 cryptocurrencies
circulating worldwide, they have truly revolutionized many conventional
perspectives on finance, investments, transactions, and the stock market.

The massive hype around cryptocurrencies definitely leads to some well-founded

concerns regarding the future of crypto compliance. However, a clear overview of
the future prospects for cryptocurrencies can resolve such uncertainties with
ease.

If you want to find out more about the future of cryptocurrency blockchain
applications, then you must understand how they are faring now.

Some industry statistics might help you perceive a detailed impression of the
potential of cryptocurrencies for future growth.

– First of all, there is no way one can ignore the massive market capitalization
of the cryptocurrency sector. The overall market capitalization of the global
crypto market is $846 Billion as of December 2022.
– Another important highlight in crypto statistics that shows favorable
promises for its future refers to the daily trading volume. On average, the
daily trading volume for crypto rounds up to $120 billion.
– As of now, more than 32% of small businesses in the US accept crypto as a
valid form of payment. On top of it, around 27% of Americans have
expressed their support for adopting Bitcoin as legal tender.
– You should also note that the number of transactions on Ethereum scaled
close to 1 million transactions on a daily basis.
– Furthermore, statistics also indicate that the worldwide ownership rate of
cryptocurrency stands presently at 3.9%. So, you have roughly over 300
million crypto users all over the world right now. In addition, crypto users
also have the support of over 200 different cryptocurrency exchanges for
active trading.

All these numbers paint a favorable picture of the cryptocurrency landscape. On

the other hand, the statistics also present viable hints at expanding the ways in
which crypto can become more relevant in the future. Within just a decade, there
are over 300 million people using crypto.

38 © 2023 101blockchains. All rights reserved

 Cryptocurrency Fundamentals

In addition, cryptocurrency and blockchain have served as critical factors for

fueling the rise of new trends like NFTs and DeFi.

The basic principles of decentralization, immutability, transparency and

accessibility would drive many other promising applications of cryptocurrencies in
the future. Learn more from our course on Cryptocurrency fundamentals.

The incorporation of smart contracts and dApps in the crypto ecosystem also
presents many plausible opportunities for the future of crypto. Start exploring
more about cryptocurrencies right now and identify their true potential. Check out
our blockchain academy to better understand cryptocurrencies.

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 Cryptocurrency Fundamentals

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