Week 15: Cryptocurrency and Blockchains

Agenda

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Presentation

Homework:

This is a complicated topic! Use the videos to help you understand more. Consider setting up your own cryptocurrency account (start small!). Also, view the advanced videos on blockchains for better understanding how they work.

Recording:

What a complex but different class! View the recording from Tuesday's class here.

Handout: Full Guide to Cryptocurrency

Bonus: Beginner's Guide to Cryptocurrency (Tom's Guide)

Presentation

Zoom classroom: https://sdccd-edu.zoom.us/j/9191959460?pwd=OXh0RE9ZTVZTWElTMUQ0ZzAxQzExdz09

Passcode: emeritus

Overview of lesson: A simple guide to cryptocurrency

What Is Cryptocurrency?

Cryptocurrency is digital money — you can't hold it in your hands, but you can use it online, just like using a debit card or PayPal. You might have heard of Bitcoin, which is the most famous one. These digital coins let people send money to each other without using a bank.

Think of it as "online cash" that lives on your computer or phone.

It's protected by secret computer codes called encryption, making it very secure.
It's not controlled by a bank or government. Instead, it's shared across many users around the world.
You can use it to buy things online or send money, but you need to understand how to use it safely.

We will use this video as an introduction to our class.

Types of cryptocurrency

Traditional digital money vs cryptocurrency

Using Cryptocurrency: Trusted exchanges, digital wallets

How Do I Use Cryptocurrency?

If you're curious to try it out, here are some simple steps:

Choose a Digital Wallet
- Think of this as your purse for digital money.
- Some options: mobile apps like Coinbase Wallet, Trust Wallet, or a hardware wallet for extra safety.
Buy Cryptocurrency
- Use a trusted exchange like Coinbase, Kraken, or Gemini.
- You can use a bank card or account.
Store It Safely
- Keep your wallet's password and recovery key written down in a safe place.
- Avoid sharing it with anyone.
Use or Hold
- Use your crypto to buy from merchants who accept it.
- Or hold it like an investment (remember, the value can go up or down!).
Watch Out for Scams
- Never trust someone who promises huge profits.
- If something sounds too good to be true, it probably is.

Example: Buying Bitcoin safely

Step 1: Create a Coinbase Account (example: Go to www.coinbase.com or download the Coinbase app.

Step 2: Add a Way to Pay (example: In Coinbase, go to “Settings” → “Payment Methods”)

Step 3: Buy Bitcoin (example: Open the Coinbase app, Tap “Buy”, Select Bitcoin (BTC), Type in $25, Choose your payment method, Review and tap “Buy Now”

Step 4: Where Is It Stored? (Coinbase’s wallet but you can soon n move it to a separate wallet app for extra safety—like Coinbase Wallet.)

Step 5: Check Your Bitcoin: Open the Coinbase app, Tap “Assets” to see how much you have

Step 6: Keep It Safe: Use a strong password, Turn on 2-step security, Never share your account info or password, Be careful with emails or phone calls about crypto

Great video to get started with buying bitcoins

Keeping things safe: The blockchain

What is Blockchain? Your Secure Digital Record Book

Blockchain is the technology that makes most cryptocurrencies possible. Think of it as a special kind of record book or ledger with these key features:

Shared by many: Identical copies exist on thousands of computers worldwide
Organized in blocks: Information is bundled into "blocks" that link together
Cannot be secretly changed: Once recorded, information can't be altered without everyone noticing

How It Stays Safe: The Blockchain

The blockchain is a special kind of digital notebook. It records every transaction in a way that cannot easily be changed.

Imagine:

Everyone has a copy of the same notebook.
When you send cryptocurrency to someone, a new "page" is added with the details.
Once it’s added, it’s locked in place and can't be erased.

This shared system makes it very hard to cheat or hack because the information is stored in many places at once.

Blockchain technology uses three main features to keep information secure:

Encryption: Transforms transaction details into secret codes (called "hashes"), protecting data from unauthorized access (like putting your information in a strong safe)
Decentralization: The blockchain ledger is shared across many computers worldwide, so there's no single point of failure (like having copies of your important documents in multiple secure locations)
Immutability: Once transactions are added to the blockchain, they can't be altered, ensuring the data is trustworthy and permanent (like writing in permanent ink that cannot be erased)

8 minute video which explains blockchains

7 minutes learn more about the cryptographic hash

18 minute video which shows us how SHA256 Hash works (advanced topic!)

8 minute video which discusses the public and private keys and signing

Common Terms to Know

Cryptocurrency: Digital money that uses special codes for security, existing only on computers

Blockchain: A shared digital record book that keeps track of transactions

Bitcoin: The first and most famous type of cryptocurrency

Altcoin: Any cryptocurrency that is not Bitcoin

Mining: Using powerful computers to solve math puzzles to approve transactions and create new coins

Staking: Locking up some of your cryptocurrency to help run the network and earn rewards

Digital Wallet: A secure place on your computer, phone, or a special device to store your digital money

Decentralized: Not controlled by one single bank, company, or government

Encryption: Turning information into a secret code to keep it safe from others

Stable coin: A cryptocurrency that tries to keep its value steady

Private Key: A secret code that gives you access to your cryptocurrency

Public Key: An address others can use to send you cryptocurrency

Keeping your digital money safe

To keep your cryptocurrency safe:

• Use strong, unique passwords for all accounts

• Enable two-factor authentication when available

• Keep the majority of your cryptocurrency in cold storage

• Never share your private keys or recovery phrases with anyone

• Be extremely cautious of emails, messages, or phone calls about cryptocurrency

• Always double-check wallet addresses before sending cryptocurrency

Important Considerations and Risks

Price Volatility: Values Can Change Dramatically: Most cryptocurrencies experience significant price changes. Values can rise or fall by 10% or more in a single day. Only consider using money you can afford to lose, and understand that cryptocurrency is not typically suitable for retirement funds or emergency savings.

Scam Awareness: The cryptocurrency world has unfortunately attracted scammers. Be alert:

Investment scams: Promises of guaranteed high returns or "insider information"
Fake websites: Lookalike websites that steal your information
Romance scams: Someone you meet online asking for cryptocurrency
Impersonation scams: People claiming to be from government agencies demanding payment in cryptocurrency

Red flags to watch for: Pressure to act quickly, Guaranteed returns, Requests to share your private keys, Unsolicited investment opportunities

Cryptocurrency regulations are still developing in many countries:

Rules vary widely between countries and states
Tax treatment of cryptocurrency is complex
Consumer protections may be limited compared to traditional banking

What this means for you: Understand that using cryptocurrency may not offer the same protections as traditional financial services. There's often no customer service department to call if something goes wrong.

Final thoughts

Cryptocurrency is a new way to send, store, and think about money. While it can be exciting, it's also important to move carefully and learn the basics.

Stay curious, stay safe, and always ask questions before diving in.

Tip: You don’t need to buy a whole Bitcoin! You can buy a small piece, like buying a slice of cake instead of the whole thing.

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